Apple braces for EU investigation after Spotify complaint

Apple is bracing itself for a formal antitrust investigation by Brussels after the iPhone maker was accused by the music streaming service Spotify of anti-competitive behaviour.

Margrethe Vestager, the European commissioner for competition, is said to be poised to launch an inquiry over claims that one of the world’s most valuable companies has behaved unlawfully by abusing the dominant position of its of its app store in the market.

Spotify, which has reached 100 million paying subscribers, alleges that Apple, one of its fiercest rivals alongside Amazon, is using the store to favour its own Apple Music service. Apple charges digital content providers such as Spotify a 30% fee for using its payment system for any subscriptions sold in its App Store.

The Financial Times reported on Monday that the European commission had decided there were grounds for a formal investigation, following a complaint filed by Spotify in March, and that an announcement could be expected within weeks.

A European commission spokesman said: “The commission has received a complaint by Spotify, which we are assessing under our standard procedures.”

Vestager has been a thorn in the side of US tech companies. Google alone has been handed more than €8bn (£6.8bn) in EU fines in a series of antitrust cases.

Apple could be liable to pay up to 10% of its global turnover, although companies can avoid fines if they commit to changing their behaviour.

In 2017, Vestager forced Apple to pay €13bn in back taxes after ruling its tax deal with the Irish government amounted to illegal state aid. The company and the Irish government have appealed and a decision is expected from the European general court later this year.

Spotify, a Swedish company, which listed on the New York Stock Exchange just over a year ago, is embroiled in a battle with rivals such as Google’s Play Music, YouTube Music, Amazon and Tidal.

It has a market value of about $25bn (£19bn), making it one of Europe’s few significant tech successes.

At the time of its complaint to the European commission over Apple’s alleged unlawful behaviour, Daniel Ek, Spotify’s co-founder and chief executive, wrote a blog describing the charge on subscription services as an unfair “tax”.

He wrote: “Apple requires that Spotify and other digital services pay a 30% tax on purchases made through Apple’s payment system, including upgrading from our free to our premium service.

“If we pay this tax, it would force us to artificially inflate the price of our premium membership well above the price of Apple Music. And to keep our price competitive for our customers, that isn’t something we can do.”

Ek further argued that the complaint to Brussels was not about seeking “special treatment” but the same tariff as non-music streaming apps such as Uber and Deliveroo, which are not subject to the 30% App Store charge.

“This is not a Spotify v Apple issue,” he said. “We should all be subject to the same fair set of rules and restrictions, including Apple Music.”

An Apple spokesman denied Spotify’s claims, adding that the company only charged apps that were not free to use.

He said: “Apple connects Spotify to our users. We provide the platform by which users download and update their app. We share critical software development tools to support Spotify’s app building. And we built a secure payment system — no small undertaking — which allows users to have faith in in-app transactions. Spotify is asking to keep all those benefits while also retaining 100 percent of the revenue.”

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