Apple’s App Store Draws Antitrust Scrutiny in European Union

LONDON — Apple’s App Store helped usher in the smartphone economy, leading to the birth of now-ubiquitous services such as Instagram, Uber and Candy Crush, and providing a transformative new way for people to shop from their phones.

But for companies that wanted to offer their products through Apple’s digital store, there has always been a catch: To reach customers, you had to agree to Apple’s terms and conditions, including sharing certain data with the company and giving them a percentage of any future sales made through the iPhone or iPad app.

Now European regulators are questioning whether Apple’s terms go too far.

On Tuesday, the European Commission, the executive body of the European Union, said it had opened a formal antitrust investigation to determine if the terms Apple imposes on app developers violate competition rules. The commission said it also launched a separate investigation to see whether Apple is boxing out rivals to its mobile payments system, Apple Pay.

The new probes come as officials in Brussels and Washington are scrutinizing the power of the world’s largest technology platforms. Apple, Amazon, Facebook and Google are being investigated by antitrust authorities over their growing power, particularly their position as gatekeepers upon which other companies depend on to reach customers.

“Apple obtained a ‘gatekeeper’ role when it comes to the distribution of apps and content to users of Apple’s popular devices,” said Margrethe Vestager, the European Commission vice president in charge of competition policy. “We need to ensure that Apple’s rules do not distort competition in markets where Apple is competing with other app developers,” she added.

The case against Apple stems from a complaint made last year by Spotify, whose music-streaming service competes with Apple Music. Spotify and others have criticized Apple for imposing rules and charging a fee of up to 30 percent on anything sold through its App Store. Spotify argued the fee constituted a tax that violated competition laws and merited an investigation. In March, the European Commission said an e-book and audiobook distributor that it didn’t identify filed a similar complaint.

“Apple’s anticompetitive behavior has intentionally disadvantaged competitors, created an unlevel playing field, and deprived consumers of meaningful choice for far too long,” Spotify said in a statement Tuesday. “We welcome the European Commission’s decision to formally investigate Apple, and hope they’ll act with urgency to ensure fair competition on the iOS platform for all participants in the digital economy.”

On Monday, European authorities said a preliminary investigation showed the complaints had merit.

Josh Rosenstock, a spokesman for Apple, said the company disagreed with the European Commission’s decision to start the investigations, describing the complaints that it is breaking antitrust laws as “baseless.”

“Throughout our history, Apple has created groundbreaking new products and services in some of the most fiercely competitive markets in the world,” he said. “We follow the law in everything we do and we embrace competition at every stage because we believe it pushes us to deliver even better results.”

In Europe, the world’s largest technology companies have long been viewed with suspicion as they have consolidated power over the digital economy. In 2016, the European Commission ordered Ireland to collect 13 billion euros in unpaid taxes from Apple, worth about $14.7 billion today. The antitrust authorities have also issued billions of dollars in fines against Google for antitrust violations in recent years, while Amazon and Facebook are also facing fresh scrutiny.

Tuesday’s announcement about Apple is just one step in what could be a yearslong process. The commission could spend a year or more investigating the company’s practices before determining whether to bring charges.

In addition to Apple’s App Store policies, European authorities are investigating the Apple Pay payments service that allows people to make purchases within apps or in shops with an iPhone or Apple Watch. The questions surround the requirements that companies must agree to when integrating Apple Pay into apps or websites. The commission said it would review how the company controls access to “tap and go” technology for rival payment systems on Apple devices.

“It is important that Apple’s measures do not deny consumers the benefits of new payment technologies, including better choice, quality, innovation and competitive prices,” Ms. Vestager said.

The Apple investigation is part of a multifront challenge that the biggest tech companies are grappling with around the world.

In Germany and Britain, lawmakers are debating changes to antitrust laws that would make it easier for authorities to bring tech cases. European Union officials are debating a digital services law with wide-ranging implications, including potential liability rules for harmful content spread on social media, as well as expanded powers for regulators to quickly step in against what they conclude are unfair business practices. Australia, India and Brazil are also cracking down.

In the United States, Amazon, Apple, Google and Facebook are facing investigations from the Justice Department, Federal Trade Commission and Congress, as well as many states.

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