The EU competition commission did some basic research and made a decision to go ahead with a formal antitrust investigation, according to Financial Times. The investigation would follow a complaint from rival Spotify Technology SA, which has argued that the 30% cut Apple takes from developers after consumers complete an in-app purchase makes it challenging for companies to compete against Apple.
According to the Financial Times, Spotify filed an official European Union complaint in March.
More specifically it is the fact that Spotify would have to pay Apple 30 percent of each subscription when a user converted from the free version of the music streaming platform to the premium variant. However, Apple has already rejected Spotify's implications stating that Spotify was driven by "financial motivations" and wanted to benefit from the App Store's infrastructure without contributing to it.
The EU could require Apple to change this business practice if it deems that it prevents fair competition between Apple Music and other streaming services, and it can also impose a fine of up to 10 percent of Apple's global turnover. Conversely, not paying the tax results in "a series of technical and experience-limiting restrictions on Spotify", complains Ek, such as limiting communications with Spotify customers. "Over time, this has included locking Spotify and other competitors out of Apple services such as Siri, HomePod, and Apple Watch", Spotify says. According to Clifford Chance, a lawyer who worked with Spotify's complaint, several other groups had similar issues with Apple's stiff tax but were afraid of raising the issue.More news: ‘Watchmen’ Gets an Official Teaser Trailer and an Army of Rorschachs
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Apple responded to Spotify's complaint by saying that it has "approved and distributed almost 200 app updates on Spotify's behalf, resulting in over 300 million downloaded copies of the Spotify app".
A war of words broke out between the two companies, with Apple claiming that "Spotify wouldn't be the business they are today without the App Store ecosystem".
The EU is well known for taking on tech giants, fining Google €1.49 billion (US$1.67 billion) in March over antitrust violations in search ads.