The European Union decided that there’s enough evidence to justify a formal investigation into Apple’s business practices. This is a result of Spotify’s accusation that Apple is using its control of the App Store to squeeze out competition.
Apple Music and Spotify are battling in the streaming music business. And the iPhone maker has a big advantage: its rival must fork over 15 percent to 30 percent of its subscription fees that go through the App Store, depending on how long the subscription has been going on.
That’s why Spotify no longer allows new customers to subscribe through the App Store.
Spotify went nuclear
In March, the Swedish company escalated the dispute by filing a legal complaint against Apple with the European Commission (EC). At the time, Spotify CEO Daniel Ek wrote, “After trying unsuccessfully to resolve the issues directly with Apple, we’re now requesting that the EC take action to ensure fair competition.”
The EU competition commission did some basic research and decided to go ahead with a formal antitrust investigation, according to Financial Times.
As its name suggestions, the commission is the EU’s chief body charged with enforcing its rules on competition. It has the power to levy fines against companies it decides are breaking those rules. Fines can be as much as 10 percent of a company’s annual revenue.
The EU competition commission‘s investigation of the App Store is expected to go on for months, if not years.
While Apple hasn’t yet commented on the decision by the EU competition commission, it did release a strong statement after Spotify made its complaint in March.
Apple said at that time:
“After using the App Store for years to dramatically grow their business, Spotify seeks to keep all the benefits of the App Store ecosystem — including the substantial revenue that they draw from the App Store’s customers — without making any contributions to that marketplace.”