News hardware Apple: the European Union wants the skin of the apple
An investigation has just been opened by the European Commission concerning an abuse of a dominant position by Apple. The App Store would not respect the laws of free competition in terms of streaming service.
Apple commissions that put competitors at a disadvantage
The European Commission finds that Apple is using its dominant position in the distribution of applications. In the viewfinder of Europe, streaming services competitor Apple Music. The application distribution service being the only way to install an app on an iPhone.
The European Commission also notes the high retention of customers in the Apple ecosystem. It is rare for a user to have only one product or service from the Apple brand. As a result, developers must comply with Apple’s conditions.
The investigation group
to Apple two main problems in the commercial strategy of the Cupertino company:
- The obligation to use the purchase system integrated into the App Store. This charges 30% of the price of an application or subscription. Ultimately iOS users pay a more expensive subscription,
- Apple would put blinders on its customers. The Commission wants to demonstrate that users are not informed that it is possible to pay less for their subscription by buying it outside the Apple ecosystem.
Serious consequences for Apple
This investigation is very important for Apple, because it could cost them a lot of money. If the firm is found guilty, the fine could amount to 10% of the company’s turnover.
This is one more investigation for Apple. The Commission is already dealing with another file around the Apple Pay payment. If this investigation is successful, it could also lead to a fine of up to 10% of turnover.
If neither of the two investigations finds wrongdoing, then there is still a new piece of legislation called the “Digital Markets Act”. This should be voted on in the final version between September and October 2022. It provides in particular for the end of the exclusivity of application stores. Apple would therefore be obliged to allow other Stores to download applications under iOS. By failing to comply with this law, Apple is once again liable to a fine of 10% of turnover.
The two investigations of the European Commission would be subject to this future law. Especially since sending a letter directly to the investigating company means that the Commission has evidence. All this remains at the stage of the hypothetical. This is an investigation and if they are unsuccessful, it will be a bill, not yet fully passed. It’s a safe bet that lobbying in the European Assembly must be strong on the part of GAFAM.