Apple's Music Streaming App Rules Breach Antitrust Law, EC Says

Apple rules imposed on music streaming app developers violate EU competition law, the European Commission said. Its tentative findings in a statement of objections announced Friday tentatively said Apple has a dominant position in the market for distribution of music streaming apps through its App Store. For app developers, it's the only gateway to consumers who use the smart mobile devices running on Apple's iOS operating system, the EC said. Apple devices and software form a "closed ecosystem" in which the company "controls every aspect of the user experience for iPhones and iPads." The App Store is part of that ecosystem, and it's the only app store iPhone and iPad users can turn to for downloading apps for their mobile devices. Consumers are loyal to the brand and don't switch easily, so to service iOS users, app developers must distribute their apps via Apple's store, subject to mandatory and non-negotiable rules. Two rules are under investigation: (1) Mandatory use of Apple's proprietary in-app purchase system (IAP) for distribution of paid digital content, on which Apple charges a 30% commission on all subscriptions bought, and (2) "Anti-steering provisions" that hamper app developers from telling users about alternative -- and generally cheaper -- purchasing possibility outside of apps. These rules distort competition in the market for music streaming services by hiking the costs of competing music streaming app developers, raising consumer prices, the EC said. They make Apple the intermediary for all IAP transactions. Spotify had complained. "At the core of this case is Spotify's demand they should be able to advertise alternative deals on their iOS app, a practice that no store in the world allows," an Apple spokesperson said. Spotify doesn't pay Apple any commission on over 99% of its subscribers, and just 15% on those remaining subscribers acquired through the App Store. The EC argument on Spotify's behalf "is the opposite of fair competition," said the spokesperson. A recent Senate Judiciary Antitrust Subcommittee hearing on app store competition "heard troubling allegations about Apple and Google's behavior," said Chairwoman Amy Klobuchar, D-Minn.: The EC would "only reaffirm" that app store policies and conduct need careful scrutiny in the U.S. as well. The European Consumer Organisation welcomed the charges.