Apple is Abusing Market Power in Music Streaming Market

Apple hampers competition in the music streaming market by requiring other music streaming services to use Apple’s payment system.

 

That is the preliminary conclusion of the European Commission in an investigation that Brussels started after complaints from Spotify. The market watchdog is also concerned that apps in the App Store cannot report that taking out a subscription is cheaper outside of the App Store.

By requiring Spotify to use Apple’s payment system, with the US company getting a 30 percent commission on each payment, Apple puts its Swedish competitor behind. Compared to Apple’s music streaming service Apple Music, Spotify has to make up more costs, leading to more expensive subscriptions.

Apple does not prohibit companies from offering cheaper subscriptions outside of the App Store. The European Commission is concerned that the iPhone maker forbids companies to advertise this in the app. This may also lead to consumers paying too much.

The committee sees Apple as a gatekeeper for which apps get access to the App Store, but the company is also a direct competitor to various apps with its services. “By imposing strict rules that penalize competing music services, Apple withholds cheap music streaming from consumers and disrupts the market,” said Commissioner Margrethe Vestager.

The commission’s indictment is the first step towards a possible fine for Apple. First, the American company can report its point of view to Brussels.

If Apple is convicted, it could have consequences for the company’s earnings model. It also demands a 30 percent commission from companies other than music streaming services, and they too are not allowed to advertise in their app for the possibility of taking out cheaper subscriptions.

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