Apple set to face formal EU antitrust review over Spotify complaint

The EU has studied the complaint as well as surveyed users, competitors, and others in the industry, which led to the official investigation.

Reports confirm that the European Union will launch an official probe of Apple Inc. in the coming few weeks over an antitrust complaint filed by Spotify. Earlier this year, Spotify, the music streaming company, had complained to the antitrust agency of EU that Apple’s 30% cut of revenue effectively represented a tax on competitors.

Apparently, this dispute came as the iPhone maker shifted into new business areas that competed with third parties on its platform. Apple said that it only takes 30% from paid subscriptions and doesn’t charge for distributing free apps on its platform. The company also said that the rate drops to 15% for subscriptions extending more than a year.

However, in case of Spotify, Apple stated that several customers of the music streaming service use the ad-supported, free product and only a small portion of the subscriptions fall under revenue-sharing model of Apple.

According to Financial Times, the EU has studied the complaint as well as surveyed users, competitors, and others in the industry which led to the official investigation. The authorities have not set any deadlines for the investigation yet. 

Supposedly, EU enforcers have been successful in pushing companies to amend any business practices they consider illegitimate and fines could go as high as a 10th of their worldwide sales.

Sources familiar with the matter informed that Apple previously fired back at Spotify, the Stockholm-based company, saying that music streaming giants are looking to avail all the benefits without contributing to the marketplace. Spotify in turn said that Apple routinely blocked a few of its product upgrades like integration with the Apple Watch and the Siri digital assistant.

Seemingly, in the past week, Spotify had touched 100 million paid subscribers, which was a first for any online music service, and also added more customers in the latest quarter.

Source credit: https://www.bloomberg.com/news/articles/2019-05-05/eu-to-start-formal-probe-on-spotify-s-apple-complaint-ft-says