As I’ve covered repeatedly in this blog, tech giants such as Apple and Google are facing heightened antitrust scrutiny here at home. But such scrutiny also extends well beyond our borders, and a strong argument can be made that European regulators have taken antitrust regulation of the technology sector even more seriously than their counterparts in the United States. This is evident from the recent “Statement of Objections” that the European Commission sent Apple on April 30, 2021 concerning Apple’s App Store and its treatment of music streaming apps.
According to the European Commission’s press release, the Statement of Objections “follows-up on a complaint by Spotify,” a streaming competitor to Apple Music, both of which are sold through the App Store. The press release notes that a “Statement of Objections is a formal step in Commission investigations into suspected violations of EU antitrust rules.”
The European Commission is taking issue with two rules that Apple imposes on music streaming apps. First, Apple requires end-users to use Apple’s in-app purchase system (“IAP”) to acquire digital content. Apple charges app developers a 30% commission fee on all subscriptions bought through the mandatory IAP and “[t]he Commission’s investigation showed that most streaming providers passed this fee on to end users by raising prices.” Second, Apple uses “Anti-steering provisions” which limit the ability of app developers to inform users of alternative purchasing possibilities outside of apps, which are usually cheaper. The end result is that “users of Apple devices pay significantly higher prices for their music subscription services or they are prevented from buying certain subscriptions directly in their apps.”
If proven, the European Commission asserts that Apple’s conduct infringes Article 102 of the Treaty on the Functioning of the European Union (TFEU) that prohibits the abuse of a dominant market position. According to the press release, Apple may now “reply in writing and request an oral hearing to present their comments on the case before representatives of the Commission and national competition authorities.”
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Faruqi & Faruqi, LLP focuses on complex civil litigation, including securities, antitrust, wage and hour, personal injury and consumer class actions as well as shareholder derivative and merger and transactional litigation. The firm is headquartered in New York, and maintains offices in California, Delaware, Georgia and Pennsylvania.
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About David Calvello
David Calvello is an Associate in Faruqi & Faruqi, LLP’s New York office. He mainly practices in the area of antitrust litigation with a focus on competition in the pharmaceutical industry. In law school, David was an editor for the Pace International Law Review and competed in the Willem C. Vis International Commercial Arbitration Moot in Vienna, Austria.
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