European Union’s investigation on Apple, Facebook and Microsoft raise grievances over AppStore policies

Apple Inc. logo
Apple Inc. logo

Controversy tends to surround around Apple, as Microsoft and Facebook alleged Apple on how they treat their gaming applications. A few weeks back we saw Apple, Facebook, Amazon, and Google featured in the Congressional Hearing in the United States of America regarding antitrust.

Since then the European Union had started several investigations on Amazon and Apple to check if they abide by their rules. In the United States hearing fingers were pointed on how Apple treats applications that feature in their app store. They were blamed for charging different rates on different applications to be featured in the AppStore. Also, several proves of internal chats were also found where it was proved of Apple’s mentality to hike up the commission rate to feature applications in their AppStore. Though they did not hike the price, in reality, there is nothing stopping them from doing that in the future.

European Union(EU) in June had joined in to look into the matter. They had started an investigation on Apple in four different aspects. Three of these investigations are on how Apple assesses its applications in the app store.

Overview of the investigations:

They said the company, which is slowly moving towards the two trillion marks, might have violated several competition rules set by the Union. They are also looking into how Apple forces its users to use their own in-app purchasing system and does not let the developers inform the users of cheaper alternative purchasing systems outside the AppStore. Apple charges a 30% commission on all transactions that happen via their own In-app Purchase System (IAP).

The investigation is said to follow up after several complaints that the European Union received from an array of companies including Spotify and an e-book/audiobook distributor. They are looking into how Apple’s set rules are impacting the competition in music streaming and the ebook/audiobook market.

The European Union had put forward a set of rules to even the competition in the market. These rules also hold back the so-called “big” companies from invading area of the smaller companies and provide a fair playground for the new upcoming organization.

Margrethe Vestager, executive vice president in charge of the competition rules said on the press release, “Mobile applications have fundamentally changed the way we access the content. Apple sets the rules for the distribution of apps to users of iPhones and iPads. It appears that Apple obtained a “gatekeeper” role when it comes to the distribution of apps and content to users of Apple’s popular devices.”

“We need to ensure that Apple’s rules do not distort competition in markets where Apple is competing with other app developers, for example, with its music streaming service Apple Music or with Apple Books. I have therefore decided to take a close look at Apple’s App Store rules and their compliance with EU competition rules,” she added.

On this basis the Union had started an investigation against the tech giants. If proven, they will be found guilty on EU competition rules on the anti-competitive agreement between the companies  (Article 101 of the Treaty on the Functioning of the European Union (TFEU)) and/or on breaching another rule of the abuse of a dominant position (Articles 102 TFEU).

Complaints:

On the 11th of March 2019, the competitor of Apple’s own music application pointed out, these two rules in Apple’s license agreement with the developers. They also associated the AppStore guidelines and claimed that these guidelines had an impact on the competition for the music streaming services.

After a preliminary investigation done by the Commission, they had raised concerns and agreed with the claims that this can have an impact on the competition of the music streaming application.

The companies had to abandon the subscription fee or had to boost up the price and make the subscribers pay for the apple commission to bring in their own profit which was bad for their business. However, they were not allowed to inform users of other cheaper ways to avail of the subscription elsewhere.

On the 5th of March, 2020 another complaint was raised against Apple. This time the complaint came from an e-book and audiobook distributor. The ebook and audiobook distributor is a direct competitor of the Apple Books application. The complaints are similar to Spotify’s complaint, but they also raised concerns with regard to the distribution of e-books and audiobooks.

Recent complaints from Facebook and Microsoft:

Now in the latest edition, two US heavyweight companies, namely Microsoft and Facebook have launched their own concerns about the AppStore rules. The rules which are already receiving a tremendous level of criticism in the industry are said to provide an uneven playing field to compete with the iPhone makers.

Reuters printed statement of Arriana Podesta, the commission spokesperson, on the matters of new claims that Facebook and Microsoft made. She said that the commission is aware of the concerns regarding Apple’s AppStore rules.

Apple, however, denied all claims and said that the rules are set so that a fair playing field is maintained for the developers. They also claimed that the rules protect their customers. The tech titans said that applications of different developing companies are allowed on AppStore, including Sony’s PlayStation Remote and Valve’s SteamLink. They also informed that, if required, the developers can also reach the users via the web browsing application Safari, where they can build stores and services.

Last week, Facebook had stated that their gaming application which was listed in the AppStore could only function as a streaming service and the users could not play games on it.

The chief operating officer of Facebook also claimed that they were forced by Apple to remove the gameplay functionality of the application and only after that did the application receive Apple’s approval.

Microsoft, who has its own game streaming service called the Project xCloud said that Apple’s store is the only platform that still does not allow the users to use cloud gaming services and denies users to subscribe to services like Xbox Game Pass as reported by Reuters. They also were told by an email statement from the Tech conglomerate about how Apple consistently treats the gaming applications differently and has a more lenient set of rules for non-gaming applications although they consist of interactive content.

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