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by Jason Snell & Dan Moren

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European Commission launches antitrust investigations into App Store, Apple Pay

The European Commission, the EU’s executive arm, launched two separate antitrust investigations of Apple on Tuesday. The first deals with the App Store:

The European Commission has opened formal antitrust investigations to assess whether Apple’s rules for app developers on the distribution of apps via the App Store violate EU competition rules. The investigations concern in particular the mandatory use of Apple’s own proprietary in-app purchase system and restrictions on the ability of developers to inform iPhone and iPad users of alternative cheaper purchasing possibilities outside of apps.

It seems like it was only a matter of time before Apple ran afoul of the EU antitrust concerns, especially after Spotify complained last year.

The EC is particularly focusing on Apple’s requirement of its proprietary in-app purchase system, and the requisite 30-percent cut that the company takes of those transactions. There seems to have been some signs of this softening in recent years, such as the limited ability to purchase video content in app and lowering subscriptions to a 15-percent cut after a year, but it remains a contentious issue. Additionally, the EC is not thrilled that Apple doesn’t let app developers advertise other ways for users to get content, which has long resulted in a sub-par experience on iOS that requires a lengthy explanation of, say, how to buy a book for an e-book reader.

The second investigation is related to Apple Pay, namely the inability of third-party apps to use an Apple device’s NFC technology for their own payment system:

The investigation concerns Apple’s terms, conditions and other measures for integrating Apple Pay in merchant apps and websites on iPhones and iPads, Apple’s limitation of access to the Near Field Communication (NFC) functionality (“tap and go”) on iPhones for payments in stores, and alleged refusals of access to Apple Pay.

Which is to say, the only way to use tap-and-pay systems on your iPhone or Apple Watch is via Apple Pay. Your credit card company, or PayPal, Square, or other payment system, is stuck using QR codes or other methods, unless they agree to Apple Pay’s terms. The EC announcement references “alleged restrictions of access to Apple Pay for specific products of rivals on iOS and iPadOS smart mobile devices,” though it does not spell out those complaints.

While both of these investigations are taking place in Europe, they could have far-reaching implications for Apple’s operations around the world.

In a statement to The Verge and elsewhere, Apple said:

“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…We don’t think that’s right — we want to maintain a level playing field where anyone with determination and a great idea can succeed.”

However, the wheels of justice grind exceedingly slow, so this is probably only the beginning of what’s likely to be a lengthy process. Don’t expect anything to change overnight.