EU To Investigate Apple’s Music Service

Apple has landed in European Union regulators’ radar over a complaint by rival music streaming service Spotify, which has prompted a formal inquiry by the EU, according to the Financial Times.

The EU’s investigation was triggered by Spotify’s complaint that the iPhone maker is disadvantaging rivals. Spotify contends Apple abuses its App Store dominance to favor its own streaming service over competitors. The music service is specifically upset that Apple charges digital content providers a 30 percent fee for subscriptions sold via the App Store. Music subscription services have to pay the fee but not other service-oriented apps like Uber, reported the paper.

People familiar with the probe told the news outlet that after reading the complaint and interviewing customers, rivals and market players the EU decided to launch the formal investigation. The EU will investigate Apple on antitrust grounds, noted the report.  The EU has the power to levy fines against Apple as well as force it to change its business practices.

Spotify has long been the leader in the streaming music market with more than 100 million paid subscribers but Apple has gained on it.  It ended February with 28 million paid subscribers compared to 26 million from Spotify. Apple Music’s growth rate was around 3 percent while Spotify is growing at a monthly rate of about 2 percent.

Spotify still has more paid subscribers worldwide, and users in general, as it has a free option that’s ad-supported. Apple Music does not offer a free option. Spotify has 207 million users worldwide, 96 million of whom pay for the service. Apple Music has 50 million users worldwide. Spotify CEO Daniel Ek has long bemoaned its rivalry with Apple, recently saying in a March interview that the battle had become “untenable.” The CEO vowed to raise prices if Apple maintained its 30 percent fee.

Apple has responded to the antitrust lawsuit by calling it “misleading rhetoric.” It said Spotify reaps the benefits by being on the App Store but doesn’t want to make any contributions, according to the report.