Background
The European Union has been investigating Apple since 2019 for its music streaming services, accusing Apple of unfairly leveraging its market power to restrict music streaming services from competing.
In 2020, the EU revised its charges against Apple, focusing on the core claims of anti-competitive practices and the anti-competitive effects of Apple’s policies.
This article will discuss the revised charges against Apple in further detail and explore the case’s implications.
Apple’s dominance in the music streaming market
Apple has long been dominating the music streaming market, raising some concerns from the European Union. It started in 2016 when European Competition Commissioner Margrethe Vestager opened an antitrust investigation into Apple’s payment policies for music streaming services. The case claimed that Apple was using its power to stack the deck against competitors, which gave its service, Apple Music, an unfair advantage.
The EU investigation homes in on Apple’s App Store rules, which require developers of music streaming services to pay a 30% commission on all subscriptions processed through the App Store platform – while other forms of digital purchases, such as electronic books and movies, attract a lower 15% commission fee. This so-called “Apple tax” has already been reduced to 15% for smaller businesses under pressure from regulators due to their anti-competitive practices. But larger firms like Apple and Netflix remain subject to the higher rate.
In April 2021, the EU announced that it was now bringing revised charges against Apple over its practices related to streaming services, demonstrating growing unease with powerful market positions held by tech companies in Europe including those related to data protection and privacy as antitrust issues. As part of these new charges against Apple, EU officials argued that “Apple had abused a dominant position in online music streaming by favoring unpaid over paid users of their app store for certain services”. However, the investigations are still ongoing and it remains unclear what penalties or regulations could follow if any irregularities are found.
EU’s competition law and Apple’s alleged breaches
The EU’s competition law prohibits anti-competitive agreements and practices by companies that could limit consumer choice or push up prices. In April 2021, the European Commission (EC) announced that it had opened a formal investigation into Apple’s alleged abuses of competition law in music streaming.
Specifically, the EC is concerned that Apple may have breached EU competition rules by entering into certain agreements with major music streaming services such as Spotify and Deezer. These agreements allegedly gave Apple a competitive advantage in negotiating terms with these companies, including fees for premium streaming services.
The EC is also investigating whether Apple imposed unfair terms on its app developers about charges levied on customers subscribing to music streaming services using ApplePay. The EC’s investigation will consider whether these practices limit the ability of competing music streaming services to compete effectively against Apple’s service, Apple Music.
In addition, the EC will examine whether Apple’s restrictions on app developers’ ability to access rival payment solutions prevent them from developing and distributing innovative solutions to their customers at competitive prices. The investigation will also consider whether Apple imposed unfair charges on app developers using its “Apple Store platform” to access devices such as iPhones or iPads.
Apple Faces Revised Charges Over Music Streaming From EU
The European Commission recently issued revised charges against multinational technology company Apple Inc. The charges allege that the company’s App Store policies breach EU competition rules by unfairly limiting music streaming choice and raising prices.
The revised charges come after a preliminary investigation found that Apple’s practices could create “an artificial and unfair advantage” in the market.
Let’s take a look at the specifics of the charges.
Apple’s alleged anti-competitive practices
On July 16th, 2020, the European Union (EU) issued revised charges of anti-competitive practices against Apple Inc., for allegedly abusing its power within the music streaming market.
Apple is accused of restricting music streaming services to push customers into using their own Apple Music product rather than competing services.
The EU’s antitrust commissioner, Margrethe Vestager, has explained that European consumers and competition in the market have suffered from Apple’s practices. The new charges include concerns about restrictive conditions imposed by Apple on music streaming apps and developers who wish to use their app store for downloading apps such as Spotify and Deezer. In addition, the EU alleges that these app store rules do not apply equally to Apple Music developed by the company.
The investigation was opened in April 2019 when the European Commission sent a Statement of Objections to Apple regarding potential violations of EU competition law about its Digital Distribution through iTunes Store and App Store and its restrictions in iOS App Distribution. If found guilty, the company may face fines as high as 10% of worldwide annual revenue or €1 billion ($1.2 billion). This could be one of the largest ever imposed on a tech company by antitrust regulators.
Apple’s alleged refusal to provide access to music streaming services
The European Commission (EC) has outlined revised charges against Apple for its alleged refusal to access its music streaming services. The charges focus on the company’s involvement in licensing and distributing music on iTunes, alleging that Apple is creating a monopoly in the market.
In July of 2018, the EC began investigating Apple for anti-competitive behavior regarding its agreements with Deezer and Spotify for music streaming services. The EC claims that Apple is using unfair terms when providing access to music streaming and feels that the company is attempting to eliminate competition from rival companies such as Deezer and Spotify.
At the center of the current revised charge against Apple is the allegation that it has not provided any access or prompt discounts for rival companies to give them an equal opportunity at competing with iTunes. Moves such as these would also allow rival companies to offer consumers better value for their money. The EC are now expecting a response from Apple within four months on whether they will comply with any requests set out by The European Commission.
If this case moves forward successfully it could be a major victory against monopolies in Europe, and potentially even worldwide, fortifying regulations to prevent market abuse amongst large tech firms. It remains to be seen how successful these efforts will be, however if found guilty it could have profound implications on their operations moving forwards.
Implications
The European Commission has recently levied new charges against Apple, alleging that the company is abusing its dominant position in the music streaming market by excluding rival music streaming services from its App Store. This ruling has wide-reaching implications for Apple, tech companies, and consumers.
In this article, we will discuss the implications of this ruling.
Impact on Apple’s music streaming business
The European Commission’s decision to file revised charges against Apple could significantly impact the tech giant’s digital music streaming business. The EC has charged Apple with anti-competitive business practices by restricting rivals in the market, particularly about its Apple Music streaming service. In particular, they allege that Apple used unfair business practices when it forced music streaming companies to provide different commissions when people sign up through the App Store and demanded free access to the App Store for its streaming service.
If found guilty of these charges, Apple could face large fines, significant restrictions on its ability to dictate contracts with music streaming companies or even be forced to sell off its streaming services such as Apple Music. The implications of this decision could have a seismic effect on the digital music streaming services market and change the way people consume music online.
With regards to consumers, if this case results in changes that prevent certain companies from gaining an advantage due to their close relationship with platforms such as the App Store, then this could benefit them in terms of choice and affordability. It remains unclear how exactly this case will play out but it will be important for companies and consumers alike to follow any developments closely.
Potential fines and sanctions
If the European Union (EU) finds Apple guilty of operating in violation of antitrust laws, potential fines and sanctions could be imposed. Fines could range from 0.5%-15% of Apple’s global turnover for the year before the infringement, which may be as high as USD 19 billion.
In addition, the EU may issue an order preventing Apple from engaging in anti-competitive practices or continuing to discriminate against music streaming services by charging them higher fees than it does for its services.
Furthermore, although the antitrust proceedings concern only Apple Music streaming service, the ruling would apply to all other music streaming services operating in Europe and directly competing with Apple Music. This means that no single service could dominate or discriminate within the music streaming market in Europe.
The potential implications of this case go beyond Europe as well, since other companies may take note and alter their practices elsewhere to avoid similar legal action against them.
Conclusion
The European Commission has filed revised charges against Apple for hindering competition in the music streaming market. This follows an investigation into Apple’s alleged abuse of a dominant position in music streaming services, specifically its Apple Music product.
The Commission alleges that Apple imposes unfair terms and conditions on music streaming providers. This includes requiring the use of its payment processing service and charging different fees to app developers depending on whether they offer their apps to customers through the App Store, with higher fees levied on those offering competing music streaming services. These restrictive practices have meant that Apple’s competitors have been unable to compete with its music streaming service, resulting in reduced consumer choice and higher prices.
The Commission has proposed a fine of up to 10% of annual turnover if Apple is guilty of anti-competitive behavior. In addition, it has asked the company to amend its App Store terms to ensure fair competition between different types of online audio-visual services offered in Europe. If found guilty, Apple could be subject to substantial fines or force it to make changes that could significantly impact its ability to monetize some of its services going forward.
Potential outcomes of the case
The EU has recently revised its charges against tech giant Apple related to its music streaming service, which could have serious implications for the company. The European Commission has accused Apple of having unfair market practices that potentially violate EU antitrust regulations.
This means that if the case is ruled in favor of the EC, Apple could face significant financial penalties or remedies such as changing its business model. In addition, Apple could be forced to pay damages to affected competitors in certain areas of music streaming. It is unclear how much these charges would amount to but they are likely to be substantial.
Furthermore, a ruling favoring the EC could mean that Apple would have to implement new restrictions on its practices that currently limit competition in the music streaming industry. This could include implementing price transparency and allowing rival companies more access to their platform so they can compete fairly.
Ultimately, it will be up to the European Court of Justice or a national court in an EU member state to decide on this case. As a result, it remains uncertain what consequences will arise from this proceedings. However, the outcome will have lasting repercussions for Apple and other businesses involved with music streaming services going forward.
