EU hits Apple with music streaming charge in boost for Spotify
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[May 01, 2021] By
Foo Yun Chee
BRUSSELS (Reuters) -EU regulators accused
Apple on Friday of distorting competition in the music streaming market,
siding with Spotify in a case that could lead to a hefty fine and
changes in the iPhone maker's lucrative business practices.
The preliminary findings are the first time Brussels has levelled
anti-competitive charges against Apple, although the two sides have had
bruising clashes in the past, most notably a multibillion-dollar tax
dispute involving Ireland.
Apple, Spotify and other parties can now respond. If the case is
pursued, the EU could demand concessions and potentially impose a fine
of up to 10% of Apple's global turnover - as much as $27 billion,
although it rarely levies the maximum penalty.
Apple found itself in the European Commission's crosshairs after
Sweden-based Spotify complained two years ago that the U.S. tech giant
unfairly restricted rivals to its own music streaming service Apple
Music on iPhones.
The EU competition enforcer, in its so-called statement of objections
setting out the charge, said the issue related to Apple's restrictive
rules for its App Store that force developers to use its own in-app
payment system and prevent them from informing users of other purchasing
options.
European Competition Commissioner Margrethe Vestager said there were
clear signs Apple's App Store rules were affecting music streaming
rivals' business development and affecting app developers more widely.
"They (app developers) depend on Apple App Store as a gatekeeper to
access users of Apple's iPhones and iPads. This significant market power
cannot go unchecked as the conditions of access to the Apple App Store
are key for the success of app developers," she told a news conference.
Vestager said Apple should end restrictive practices and refrain from
doing anything that would replicate them.
She also said other authorities were looking into the issue.
"We have contact with other jurisdictions doing similar cases, that
could be the Dutch, the Australians, the Americans," she said, adding
she was also interested in the app gaming market, although it was early
days.
Apple rebuffed the EU charge.
"Spotify has become the largest music subscription service in the world,
and we're proud of the role we played in that," it said in a statement.
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A 3D-printed Apple logo is seen in front of a displayed European
Union flag in this illustration taken September 2, 2016.
REUTERS/Dado Ruvic/Illustration
"They want all the benefits of the App Store but don't think they should
have to pay anything for that. The Commission's argument on Spotify's
behalf is the opposite of fair competition," it added.
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Spotify welcomed the EU move, describing it as "a critical step toward
holding Apple accountable for its anticompetitive behavior, ensuring
meaningful choice for all consumers and a level playing field for app
developers."
Reuters was first to report about the imminent EU antitrust charge in
March.
Spotify, one of Europe's few global success stories in consumer
technology, is the market leader in music streaming with 356 million
active users and 158 million paid subscribers.
Apple Music, launched more recently in 2015, is estimated to have more
than 70 million subscribers although the company does not give a
separate figure for that part of its business.
Competition between the two companies has intensified in recent weeks,
with both seeking to build their customer base via supremacy in the
market for podcasts.
"Europe’s consumers expect and deserve access to a full range of music
streaming services without their choices being restricted or prices
being inflated unfairly by internet gatekeepers," said European consumer
organisation BEUC.
The EU charge comes a week before Apple's face off with Epic Games in a
U.S. antitrust trial following a lawsuit by the "Fortnite" creator
alleging that Apple has abused its dominance in the market for mobile
apps.
Epic has complained to the Commission on the same issues.
Last month, the UK Competition and Markets Authority opened an
investigation into Apple after complaints the iPhone maker's terms and
conditions for app developers were unfair.
(Reporting by Foo Yun Chee, additional reporting by Keith Weir in London
and Supantha Murkherjee in Stockholm. Editing by Philip Blenkinsop and
Mark Potter)
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