EU antitrust regulators focus on Apple's 'anti-roll' restrictions on developers

La European Commission (EC) has confirmed a previously issued preliminary opinion according to which Apple's so-called "antisteering" practices, which prevent developers from informing users of alternative payment options, constitute unfair business practices.

However, in an improved statement of objections sent to Apple and published The EC has also recently said it is dropping a further charge against the tech giant in relation to how Apple imposes its own in-app purchase (IAP) payment technology on music streaming service providers. The EC wrote:

Today's Statement of Objections clarifies that the Commission is no longer ruling on the legality of the IAP obligation for the purposes of this antitrust investigation, but is instead focusing on the contractual restrictions Apple placed on app developers that prevent them from informing iPhone and iPad users of alternative music subscription options at lower prices outside of the application and choose them effectively.

The story so far

The saga dates back almost four years, when Spotify filed a complaint against Apple with the European Commission for alleged restrictive rules and what it called the "Apple tax", a fee that developers must pay to Apple when it comes to in-app payments or subscriptions.

The fact of the matter is that Spotify has to pay Apple a percentage of all subscriptions it gets through the Apple App Store, a fee that Spotify has to pass on to its own customers, which means that a Spotify subscription it's more expensive when a consumer signs up through an iPhone or iPad than through Spotify's own website. On the other hand, since Apple offers a competing service – Apple Music – Spotify argued that this puts Apple at an advantage, since it can offer its own music streaming service at a cheaper price.

In addition, Spotify also took issue with how Apple prevents developers from informing consumers of alternative payment methods. For example, Spotify is prohibited from saying in its App Store description notes or in the app itself that users can get a $3 cheaper monthly subscription through Spotify.com.

And it is on this second argument that the EC is now focusing.

Actually, not much has happened in this case in the four years since Spotify filed its complaints. In April 2021, the EC issued a formal statement of objections against Apple with the preliminary view that Apple's app store rules were distorting competition in the music streaming market by forcing rivals to increase their costs. . A few weeks ago, Spotify and a group of co-signers, including rival Deezer, posted a open letter to the EC Competition Commissioner, Margrethe Vestager, basically asking her to hurry up with her decision.

While today's announcement could be interpreted as some sort of breakthrough, it still doesn't signal anything close to a final decision. As the EC itself points out today, it is simply a "procedural step" that removes one of its previous areas of interest from its sights: it replaces a statement of objections issued two years ago with a new statement of objections.

Legal disputes

It should be noted that Apple is facing legal challenges in other countries over its IAP enforcement policy. In the Netherlands, Apple was hit with heavy fines after failing to comply with an order to allow dating apps to use alternative payment systems, although this was later resolved after Apple offered concessions to allow alternatives. So today's news that the EC is no longer dealing with in-app payments may come as a surprise to some.

That said, this move is likely to have been taken to expedite proceedings, and means that the EC believes it has a stronger case to focus on Apple's efforts to prevent unfair competition, which it claims could breach the Article 102 of the Treaty on the Functioning of the European Union (TFEU), which deals with avoiding price fixing and practices that promote monopolies.

In a statement to TechCrunch, Spotify's general counsel Eve Konstan urged the EC to reach a speedy conclusion in this case.

"Today, the European Commission has sent a clear message that Apple's anti-competitive behavior and unfair practices have hurt consumers and hurt developers for far too long," Konstan said. "We urge the Commission to take a swift decision in this case to protect consumers and restore fair competition on the iOS platform."

However, even when the EC reaches a final decision, there will likely be a lengthy appeals process in which Apple will fight for your interests. If, after that, the Commission sticks to its guns, it can impose a fine of up to 10% of Apple's global turnover, which was nearly $400.000 billion last year. And, of course, Apple would be forced to remove existing contractual obligations between it and developers, meaning Spotify and similar companies could link from their iPhone apps to subscription portals elsewhere.

"Apple will continue to work with the European Commission to understand and respond to their concerns, while promoting competition and choice for European consumers," an Apple spokesperson said in a statement sent to TechCrunch. "We are pleased that the Commission has reduced its case and no longer challenges Apple's right to charge a fee for digital products and to require the use of In-App payment systems that users trust. The App Store has helped Spotify become the leading music streaming service across Europe and we look forward to the European Commission ending its pursuit of an unsubstantiated complaint."