EU opens competition probes into Apple's App Store and Apple Pay

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK

The European Union has opened two competition investigations into Apple’s (AAPL) App Store and its Apple Pay service.

The European Commission announced the twin probes on Tuesday, saying it would investigate whether the services broke EU competition rules.

A spokesperson for Apple said the investigations were “disappointing” and founded on “baseless complaints.”

Apple iTunes and App Store vouchers. (Matthew Horwood/Getty Images)

“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 spokesperson said.

The App Store investigation concerns a requirement that developers use Apple’s in-app purchase system when building apps for its platform. Investigators are concerned this could artificially increase prices for consumers and decrease choice.

“Apple sets the rules for the distribution of apps to users of iPhones and iPads,” EU competition commissioner Margrethe Vestager said in a statement. “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.”

The investigation follows a complaint from Spotify and an unnamed e-book distributor, which claimed Apple’s rules hurt their ability to compete against the Californian tech giant. Spotify first complained in March last year, with the e-book publisher complaining in March 2020.

A spokesperson for Spotify said: “We welcome the European Commission’s decision to formally investigate Apple, and hope they'll act with urgency to ensure fair competition on the iOS platform for all participants in the digital economy”

EU competition watchdog executive vice-president Margrethe Vestager. (Thierry Monasse/Getty Images)

Separately, Vestager said she would investigate Apple Pay, the digital wallet and payment service introduced by Apple on its devices in 2014.

The European Commission has concerns that Apple Pay’s terms and conditions may limit competition. It is also investigating whether Apple restricts access to ‘tap and go’ technology on its devices, denying rival payment services the opportunity to benefit.

“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,” Vestager said in a statement.

A spokesperson for Apple said: “It's disappointing the European Commission is advancing baseless complaints from a handful of companies who simply want a free ride, and don't want to play by the same rules as everyone else. We don’t think that’s right — we want to maintain a level playing field where anyone with determination and a great idea can succeed.”

In a separate release on Monday (15 June), Apple said its App Store facilitated more than half a trillion dollars in sales in 2019, with 85% of money going to developers and app owners.

The European Commission’s investigations are the latest in a string of major competition and tax probes involving US tech giants. In 2016, Vestager ordered Apple to pay Ireland €13bn (£12bn, $15bn) in back taxes — the largest corporate tax fine in history. Apple is contesting the decision.