EU Commission investigates Apple’s anti-steering efforts

Context

In 2019, the Spotify filed a complaint with the European Commission against Apple. The complaint was about rules and fees developers must pay Apple when in-app payments or subscriptions are involved. Spotify has to pay the Apple a percentage of any subscriptions secured through Apple’s App Store, which effectively makes a Spotify subscription more expensive. In particular when the consumer signs up through an iPhone or iPad than through the Spotify’s website. This additional premium was nicknamed ‘Apple Store Tax’.

Furthermore, Spotify criticized Apple for not allowing developers to inform users about alternative payment methods. In April 2021, the European Commission accused Apple of distorting competition, stating that rivals were forced to raise their costs. The EU Commission has issued a statement of objections against Apple, focusing on two rules that the company imposes on music streaming app developers: the mandatory use of Apple’s proprietary in-app purchase system (IAP), which charges a 30% commission fee on all subscriptions, and anti-steering provisions that limit developers’ ability to inform users of alternative purchasing options.

It is worth mentioning that Apple faced legal challenges in other parts of the world regarding its enforcement policy of in-app purchases. In the Netherlands, company was fined a significant amount after failing to adhere to an order to permit dating apps to use alternative payment systems. However, this issue was later resolved when Apple made concessions and allowed for alternatives. India’s competition regulator also imposed similar scrutiny on Apple’s IAP.

In June 2022, Spotify and other companies, including rival Deezer, wrote an open letter to the EC’s Commissioner for Competition, urging them to make a decision quickly.

Anti-steering

On February 2023, The European Commission’s announced that is no longer concerned with in-app payments. The EC believes it has a stronger case by focusing on Apple’s anti-steering efforts and has issued a new Statement of Objections to replace the previous one two years ago. The EC has now focused squarely on Apple’s anti-steering efforts, which it says could breach Article 102 of the Treaty on the Functioning of the European Union (TFEU), concerned with preventing price-fixing and practices that promote monopolies.

In a recent update, the EU antitrust regulator is seeking more information on Apple’s mobile payment system, specifically regarding accusations of restricting rivals’ access to its Near-Field Communication technology. This request for information comes three months after Apple defended itself at a hearing.
Even when the EC reaches a final decision, there will likely be a lengthy appeals process where Apple will fight its corner. The Commission can impose a fine of up to 10% of Apple’s global turnover. Depending on how the case unfolds, Apple may even have to remove contractual obligations with developers, allowing companies like Spotify to link from their iPhone apps to subscription portals elsewhere.