Apple Faces Billions in Fines for Potentially Abusing EU Rules

Apple Pay on iPhone Credit: Nathan Dumlao
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The European Commission announced that it is launching not one, but two antitrust investigations against Apple. One inquiry focuses on Apple’s App Store practices, while the other looks at Apple Pay. Apple could face billions in fines if it is unable to defend itself against these accusations.

Apple App Store

The European Union Commission will explore whether Apple acts as a gatekeeper and “distorts competition” with its App Store policy and its Apple Pay system by working as a gatekeeper.

The App Store investigation originated from a complaint by Rakuten that was filed this March. In its filing, Rakuten argued that its anti-competitive for Apple to take 30% of its e-book sales while promoting its own Apple Books platform.

“Apple sets the rules for the distribution of apps to users of iPhones and iPads. We need to ensure that Apple’s rules do not distort competition in markets where Apple is competing with other app developers … I have, therefore decided to take a close look at Apple’s App Store rules and their compliance with EU competition rules.”

European Commission Executive Vice president, Margrethe Vestager

Earlier Spotify Complaint

This complaint is similar to an earlier filing by Spotify that expressed concern over the 30% Apple Tax that company charges for every subscription purchased through iOS App Store. The Spotify complaint is still being investigated by the European Commission.

Apple also faces another criticism from Tile, which claims the Cupertino company is limiting third-party tracking services in favor of Apple’s Find My app. This latter complaint may gain some traction if Apple releases its rumored AirTags, which offer Tile-like tracking for devices and other objects.

Apple Pay

The European Commission also is investigating Apple’s payment service to see if the company is unfairly favoring its own Apple Pay platform. The Commission will look to see if Apple’s practice of blocking access to the NFC technology in its iPhones puts other payment services at a competitive disadvantage.

Apple’s Response

Apple, for its part, disagrees with these accusations and vehemently denies any wrongdoing in these matters.

“It’s disappointing the European Commission is advancing baseless complaints from a handful of companies who simply want a free ride and don’t want to play by the same rules as everyone else.”

Apple to Recode

The stakes are high as Apple faces fines that could be as steep as 10 percent of its annual revenue. It also could face claims from other individual businesses and even customers if found guilty.

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