European Commission Opens Formal Investigations Into Apple Pay and Apple's App Store

European Commission Opens Formal Investigations Into Apple Pay and Apple's App Store

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The European Commission has announced two formal investigations into Apple's practices regarding Apple Pay and the App Store.

Following a preliminary investigation, the Commission has concerns that Apple's terms, conditions, and other measures related to the integration of Apple Pay for the purchase of goods and services on merchant apps and websites on iOS/iPadOS devices may distort competition and reduce choice and innovation.

In addition, Apple Pay is the only mobile payment solution that may access the NFC “tap and go” technology embedded on iOS mobile devices for payments in stores. The investigation will also focus on alleged restrictions of access to Apple Pay for specific products of rivals on iOS and iPadOS smart mobile devices.

Following Spotify's complaint about unfair business practices, The Commission will investigate in particular two restrictions imposed by Apple in its agreements with companies that wish to distribute apps to users of Apple devices:

(i) The mandatory use of Apple's own proprietary in-app purchase system “IAP” for the distribution of paid digital content. Apple charges app developers a 30% commission on all subscription fees through IAP.

(ii) Restrictions on the ability of developers to inform users of alternative purchasing possibilities outside of apps. While Apple allows users to consume content such as music, e-books and audiobooks purchased elsewhere (e.g. on the website of the app developer) also in the app, its rules prevent developers from informing users about such purchasing possibilities, which are usually cheaper.

The Commission will investigate the possible impact of Apple's App Store practices in particular on competition in music streaming and e-books/audiobooks. It notes that these practices may ultimately harm consumers by preventing them from benefiting from greater choice and lower prices.

If proven, the practices under investigation may breach EU competition rules on anticompetitive agreements between companies (Article 101 of the Treaty on the Functioning of the European Union (TFEU)) and/or on the abuse of a dominant position (Articles 102 TFEU).

The EU says the in-depth investigations will be carried out as a matter of priority and notes their opening does not prejudge the outcome.

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European Commission Opens Formal Investigations Into Apple Pay and Apple's App Store

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