Tech

EU launches antitrust probes into Apple's App Store and Apple Pay

Key Points
  • The Commission, the executive arm of the EU, said it will assess whether Apple's rules for app developers on the distribution of apps via the App Store breach EU competition rules. 
  • With regards to Apple Pay, the Commission said it will look at Apple's terms and conditions for integrating Apple Pay in merchant's apps and websites, Apple's limitation of access to NFC technology, and alleged refusals of access to Apple Pay. 
  • Apple could be fined billions of dollars if it is found guilty. 
EU Commissioner for Competition Margrethe Vestager addresses a press conference on two state aid cases at the European Commission in Brussels on October 4, 2017.
Emmanuel Dunand | AFP | Getty Images

The European Commission announced Tuesday that it's launching two antitrust investigations into Apple's App Store rules and the Apple Pay platform. 

The Commission, the executive arm of the EU, said it will assess whether Apple's rules for app developers on the distribution of apps via the App Store breach EU competition rules. 

While companies can place their apps on the App Store at no cost, Apple charges companies 30% from in-app purchases and 30% on subscriptions for the first year, then 15% thereafter. 

Spotify, which competes directly with Apple Music, feels this is unfair and filed a formal complaint in March 2019. Kobo, an e-reader company that competes with Apple Books, has also filed a complaint.  

Executive Vice-President Margrethe Vestager, in charge of competition policy, said in a statement: "Mobile applications have fundamentally changed the way we access content. Apple sets the rules for the distribution of apps to users of iPhones and iPads."

"It appears that Apple obtained a 'gatekeeper' role when it comes to the distribution of apps and content to users of Apple's popular devices. We need to ensure that Apple's rules do not distort competition in markets where Apple is competing with other app developers, for example with its music streaming service Apple Music or with Apple Books. I have therefore decided to take a close look at Apple's App Store rules and their compliance with EU competition rules."  

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With regards to Apple Pay, the Commission said it will look at Apple's terms and conditions for integrating Apple Pay in apps and websites, Apple's limitation of access to NFC technology, and alleged refusals of access to Apple Pay. 

"It appears that Apple sets the conditions on how Apple Pay should be used in merchants' apps and websites," Vestager said.

"It also reserves the 'tap and go' functionality of iPhones to Apple Pay. It is important that Apple's measures do not deny consumers the benefits of new payment technologies, including better choice, quality, innovation and competitive prices. I have therefore decided to take a close look at Apple's practices regarding Apple Pay and their impact on competition." 

The European Commission has the power to shut down tech services and charge U.S. tech firms 10% of their annual revenues. Apple said it was "disappointing" that the Commission is listening to "baseless complaints" from a small number of businesses.

"Throughout our history, Apple has created groundbreaking new products and services in some of the most fiercely competitive markets in the world. We follow the law in everything we do and we embrace competition at every stage because we believe it pushes us to deliver even better results," the company said in a statement. 

"We developed the App Store with two goals in mind: that it be a safe and trusted place for customers to discover and download apps, and a great business opportunity for entrepreneurs and developers. We're deeply proud of the countless developers who've innovated and found success through our platform. And as we've grown together, we've continued to deliver innovative new services — like Apple Pay — that provide the very best customer experience while meeting industry-leading standards for privacy and security." 

"At the end of the day, our goal is simple: for our customers to have access to the best app or service of their choice, in a safe and secure environment. We welcome the opportunity to show the European Commission all we've done to make that goal a reality."

The EU has launched other anti-trust investigations into Google, Amazon, and Facebook in recent months.