EU Says Apple's App Store Breaks Anti-Trust Rules As Court Showdown With Epic Games Looms
EU Says Apple's App Store Breaks Anti-Trust Rules As Court Showdown With Epic Games Looms
BY TYLER DURDEN FRIDAY, APR 30, 2021 - 09:04 AM
A long-awaited legal showdown between Apple and
"Fortnite" maker Epic Games will start May 3,
when a federal judge will hear arguments as Epic alleges that
Apple's control of the iOS app store, and the fees it charges developers, makes
it an illegal monopoly, the EU's anti-trust czar Margrethe Vestager (who has a
reputation for attacking American tech giants on anti-trust grounds) has just launched
a similar crusade of her own.
Via a charge sheet issued Friday, Vestager and the EU have
determined that Apple is guilty of antitrust violations for allegedly abusing
its control of its app store when it comes to music-streaming apps like
Spotify, a European company that competes against Apple's "Apple
Music" with its popular music-and-podcast streaming app, and which
complained to Vestager about Apple.
While that sounds reasonable at first brush, it's worth noting
the specific practice that Vestager finds offensive: And
that's Apple's practice of charging commissions as high as 30% on some of its
most popular apps. That's virtually the same issue that Epic and Apple will be
battling over.
"By setting strict rules on the App Store that disadvantage
competing music streaming services, Apple deprives users of cheaper music
streaming choices and distorts competition," said Margrethe Vestager, who
is in charge of competition enforcement at the European Commission.
Fortunately for Apple, the company will have a chance to argue
its case before the European Commission hands down a final decision. However,
if found guilty, Apple could face a fine of up to 10% of its annual revenue and
be forced to adjust its business practices, though it can also
appeal any decision in court.
Spotify isn't the only company complaining to European
regulators: Epic Games also lodged an antitrust complaint with the commission
against Apple back in February on similar grounds.
"We will not stand idly by and allow Apple to use its
platform dominance to control what should be a level digital playing
field," Epic founder and Chief Executive Tim Sweeney said at the time.
The US legal dispute started last summer when
Epic sued Apple after Apple removed Fortnite from the App store over Epic's
decision to create an in-app workaround that allowed customers to circumvent
Apple's commissions, despite the company's explicit
threats that it would ban Fortnite if Epic tried to deprive Apple of what the
company sees as hard-earned revenue.
The EU
formally opened its app store case last year. The
bloc is also probing Apple over its treatment of payment providers and app
developers in its Apple Pay ecosystem, as well as its imposition of its in-app
payments system for competing providers of e-books. The case deepens the EU's
long-running battle with Apple over tax and competition issues, which dates all
the way back to when the bloc forced the company to pay back taxes to the Irish
government.
As WSJ points
out, at the core of the EU case against Apple is a question that is
increasingly being asked by antitrust regulators and experts globally: What
responsibilities should be placed on companies that serve millions of
businesses and billions of consumers with services that many now consider
"essential".
In December, the EU also proposed a new bill that would impose
new requirements on so-called gatekeeper businesses, defined
as companies with high earnings and market capitalizations with more than
10,000 active business customers or 45 million active end users in the bloc.
The ramifications of this new law would be felt by Apple,
Facebook, Amazon and Google, while few European firms would be impacted.
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