Apple’s App Store Draws Antitrust Scrutiny in European Union
LONDON — Apple’s App Store helped usher in the smartphone economy, leading to the birth of now-ubiquitous services such as Instagram, Uber and Candy Crush, and providing a transformative new way for people to shop from their phones.
But for companies that wanted to offer their products through Apple’s digital store, there has always been a catch: To reach customers, you had to agree to Apple’s terms and conditions, including sharing certain data with the company and giving them a percentage of any future sales made through the iPhone or iPad app.
Now European regulators are questioning whether Apple’s terms go too far.
On Tuesday, the European Commission, the executive body of the European Union, said it had opened a formal antitrust investigation to determine if the rules Apple imposes on app developers violate competition rules. The commission said it also launched a separate investigation to see whether Apple is boxing out rivals to its mobile payments system, Apple Pay.
The new probes come as officials in Brussels and Washington are scrutinizing the power of the world’s largest technology platforms. Apple, Amazon, Facebook and Google are being investigated by antitrust authorities over their growing power, particularly their position as gatekeepers upon which other companies depend on to reach customers.
“Apple obtained a ‘gatekeeper’ role when it comes to the distribution of apps and content to users of Apple’s popular devices,” said Margrethe Vestager, the European Commission vice president in charge of competition policy. “We need to ensure that Apple’s rules do not distort competition in markets where Apple is competing with other app developers,” she added.
The case against Apple stems from a complaint made last year by Spotify, whose music-streaming service competes with Apple Music. Spotify and others have criticized Apple for imposing rules and charging a fee of up to 30 percent on anything sold through its App Store. Spotify argued the fee constituted a tax that violated competition laws and merited an investigation. In March, the European Commission said an e-book and audiobook distributor that it didn’t identify filed a similar complaint.
“Apple’s anticompetitive behavior has intentionally disadvantaged competitors, created an unlevel playing field, and deprived consumers of meaningful choice for far too long,” Spotify said in a statement Tuesday. “We welcome the European Commission’s decision to formally investigate Apple, and hope they’ll act with urgency to ensure fair competition on the iOS platform for all participants in the digital economy.”
Josh Rosenstock, a spokesman for Apple, said the company disagreed with the European Commission’s decision to start the investigations, describing the complaints that it is breaking antitrust laws as “baseless.”
“Throughout our history, Apple has created groundbreaking new products and services in some of the most fiercely competitive markets in the world,” he said. “We follow the law in everything we do and we embrace competition at every stage because we believe it pushes us to deliver even better results.”