EU Investigates Apple Pay, App Store

The European Union (EU) has launched antitrust investigations into potential violations by Apple of competition laws in its Apple Pay service and App Store, The Wall Street Journal reported.

The decision by the European Commission, an arm of the 27-nation bloc, follows complaints by Spotify, the music streaming giant, and an unnamed eBook distributor.

At issue is Apple’s mandatory use of its proprietary in-app purchase system (IAP), which limits the ability of developers to inform iPhone and iPad users of cheaper alternatives.

In addition, the Commission said it would investigate IAP for the distribution of paid digital content, where Apple charges developers a 30 percent commission on all subscription fees.

If found guilty, Apple could face a fine of up to 10 percent of its annual revenue and be forced to amend its business practices.

Margrethe Vestager, EU’s executive vice president in charge of competition rules, said she wants to make sure Apple’s practices do not deny consumers the benefits of new payment technologies, the report said.

The case has urgency, she added, because growing use of mobile commerce has been accelerated by the coronavirus crisis, with increasing online payments and contactless payments in stores.

Spotify welcomed the investigation.

“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, the WSJ reported.

Apple has denied the allegations and defended its practice of taking a piece of sales through its Apple store.

“It’s disappointing the European Commission is advancing baseless complaints from a handful of companies who simply want a free ride, and don’t want to play by the same rules as everyone else,” an Apple spokesman said.

This is not the first time Vestager has taken on Apple. Four years ago, she ordered Ireland to take back €13 billion ($14.7 billion) in alleged tax benefits from Apple, to enforce EU rules against illegal state aid.

The EU’s investigative division has been busy.

Last week, PYMNTS reported the EU established the European Financial and Economic Crime Center, a new unit to wage war against financial crime amid an economy struck by the coronavirus pandemic.

Europol, EU’s police department, launched the 65-person investigative division to fight fraud and money laundering.  “The fallout from the COVID-19 pandemic has weakened our economy and created new vulnerabilities from which crime can emerge,” Europol head Catherine de Bolle said.