European Commission opens two Apple antitrust investigations

16 Jun 2020144 Views

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An iPhone displaying an early Apple Pay announcement. Image: © bloomicon/Stock.adobe.com

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The European Commission has launched two antitrust investigations into Apple, looking at practices related to the App Store and Apple Pay.

Today (16 June), the European Commission announced that it has opened two new antitrust investigations examining Apple’s practices with Apple Pay and the App Store.

In both investigations, the European Commission is assessing whether Apple’s conduct is in violation of EU competition rules.

The Commission is investigating Apple’s terms and conditions for the integration of Apple Pay in merchant apps and websites, and alleged refusals of access to this technology.

It is also looking into the company’s practices on its App Store, following separate complaints made by Spotify and an e-book distributor, which raised concerns about Apple’s impact on music streaming and the sales of e-books and audiobooks.

The investigation into Apple Pay

For Apple Pay, the European Commission will examine Apple’s terms, conditions and other measures for integrating Apple Pay in merchant apps and websites on iPhones and iPads, as well as limitation of access to the near-field communication (NFC) functionality on iPhones for payment in stores, and alleged refusals of access to Apple Pay.

Apple Pay is the tech company’s proprietary mobile payment platform, which offers similar services to Google Pay. Apple Pay is also the only mobile payment app that can use NFC ‘pay and go’ technology on iOS devices.

Executive vice-president Margrethe Vestager, who is in charge of competition policy, said there has been an “accelerated” growth in the use of mobile payment solutions during the Covid-19 pandemic, with increasing online payments and contactless payments in stores.

“It appears that Apple sets the conditions on how Apple Pay should be used in merchants’ apps and websites. It also reserves the ‘tap and go’ functionality of iPhones to Apple Pay,” she said.

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“It is important that Apple’s measures do not deny consumers the benefit 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.”

After a preliminary investigation, the Commission has raised concerns about the company’s terms and conditions for the integration of Apple Pay, stating that the use of the technology “may distort competition and reduce choice and innovation”.

As well as looking at how Apple limits the use of NFC technology in its devices, the investigation will also focus on alleged restrictions of access to Apple Pay for specific products from rivals on iOS and iPadOS devices.

The app store investigation

The European Commission simultaneously opened a formal antitrust investigation to assess whether Apple’s rules for app developers violate EU competition rules.

Looking specifically at rules related to the distribution of apps, this investigation will focus on Apple’s proprietary in-app purchase system and restrictions on the ability of developers to inform iPhone and iPad users of alternative cheaper purchasing possibilities outside of apps.

This investigation concerns the application of these rules to all apps that compete with Apple’s own apps and services in the European Economic Area.

“Mobile applications have fundamentally changed the way we access content,” Vestager said. “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.”

Vestager added that the Commission wants to ensure 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.

Kelly Earley is a journalist with Siliconrepublic.com

editorial@siliconrepublic.com