EU to charge Apple over its in-app payment system rules

Apple was charged by EU antitrust regulators on Friday of abusing its dominance in the music streaming market via restrictive rules, the first case out of four that could lead to a hefty fine and changes in its lucrative business model.

IPhone maker Apple found itself in the European Commission’s crosshairs following a complaint by Swedish music streaming service Spotify two years ago, which said that Apple unfairly restricts rivals to its own music streaming service Apple Music on iPhones.

The EU competition enforcer in its so-called statement of objections setting out the charge said the issue related to Apple’s restrictive rules for its App Store that force developers to use its own in-app payment system and prevent them from informing users of other purchasing options.

“By setting strict rules on the App store that disadvantage competing music streaming services, Apple deprives users of cheaper music streaming choices and distorts competition,” European Competition Commissioner Margrethe Vestager said in a statement.

“This is done by charging high commission fees on each transaction in the App store for rivals and by forbidding them from informing their customers of alternative subscription options,” she said.

This is the first EU antitrust charge against Apple, a move that could lead to fines of as much as 10% of its global turnover. Reuters was the first to report about the imminent EU antitrust charge in March.

Apple will have the opportunity to respond to the EU charges before the EU competition enforcer makes a final ruling. It can offer concessions to stave off the fine without any finding of wrongdoing.

The EU charge comes a week before Apple’s face off with Epic Games in a U.S. antitrust trial following a lawsuit by the “Fortnite” creator alleging that Apple has abused its dominance in the market for mobile apps.

Epic has complained to the Commission on the same issues.

Last month, the UK Competition and Markets Authority opened an investigation into Apple after complaints the iPhone maker’s terms and conditions for app developers were unfair.