Apple faces two EU anti-competition probes

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Apple faces two European Commission probes into whether it has broken competition rules.

One investigation centres on iPad and iPhones being limited to installing apps from Apple’s own App Store, among other restrictions imposed on third-party developers.

The other involves Apple Pay, with one issue being that other services cannot use the iPhone’s tap-and-go facility.

Apple said it was “disappointing” the EU was “advancing baseless complaints”. And it accused companies that had raised allegations against it of wanting a “free ride”.

“Our goal is simple: for our customers to have access to the best app or service of their choice, in a safe and secure environment.”

Apple is also under scrutiny in the US where the House Judiciary Committee is reported to have asked for its chief executive Tim Cook to appear alongside other tech leaders to answer questions about anti-trust concerns.

The latest development comes days before Apple holds its annual developers conference.

The investigation into Apple’s App Store stems from a complaint raised by the music streaming service Spotify.

Last year, it raised two specific concerns:

  • the only way developers can sell content and/or subscriptions directly within an iOS app is via Apple’s own system
  • publishers cannot tell users within their apps that the same items can be bought elsewhere – for example via the service’s own website

Apple typically charges apps a 30% cut of any sales, although that rate falls to 15% for the second and later years of any subscription.

Publishers often sell media and other digital goods at a lower price when bought outside of their apps, but consumers can be unaware of the fact.

Since Apple only allows apps to be downloaded from its own store, and has repeatedly updated its mobile operating system to prevent “jailbreaks” that circumvent this rule, it is argued that third-parties have little option but to comply with its conditions.

Apple has already claimed its app ecosystem generated more than half a trillion dollars in sales and other billings last year, saying the vast majority of that was not subject to it taking a commission.

But its relationships with some developers have become strained. In recent days, one has called on Apple to reduce its standard cut from 30% to 20% while another has accused the firm of operating a “capricious and inconsistent review process” that can cause delays to the release of even minor app updates.

The only alternative is to offer their products as web-based services, which can limit their functionality.

“Apple’s anti-competitive behaviour has intentionally disadvantaged competitors, created an unlevel playing field, and deprived consumers of meaningful choice for far too long,” said Spotify in response to the latest development. “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.”

The Apple Pay investigation centres on a technology that allows iPhones and Apple Watches to make tap-and-go payments. It also lets users buy goods via an app or website without having to give their payment card details to the seller.

The European Commission has concerns about the conditions imposed on services that have added the facility. It also has reservations that alternative payment tech cannot make use of the near field communication (NFC) chips in Apple’s products to work with contactless payment terminals.

By contrast, Samsung phones – for example – let their NFC chips be used for both Samsung Pay and Google Pay.

“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,” said Margrethe Vestager, the EU’s Competition Commissioner and Executive Vice President.

The commissioner added that she had not set a deadline for the investigations to be completed.