Apple Inc. is the subject of two new European Commission antitrust investigations that will seek to determine if the company broke competition law with the App Store and Apple Pay.

The European Commission, the EU’s executive branch and antitrust regulator, announced the probes today. The action follows regulatory complaints from some of Apple’s competitors. 

The investigation into the App Store will focus on Apple’s policies around in-app purchases, which were the subject of a recent U.S. Supreme Court case. Apple allows developers to process in-app purchases using only its own IAP payment processing service and takes a 30% fee on transactions. Additionally, the App Store has a rule that prevents developers from advertising alternative buying methods to IAP inside an app’s interface.

EC antitrust officials will probe these practices to determine whether they harm competition in the App Store. One of the main concerns is that Apple’s 30% fee may make it difficult for rivals to make their apps price-competitive. Last year, for instance, Spotify Technology SA filed a complaint in the EU saying that if it were to pay Apple’s commission, it would be forced to inflate membership prices above the price of Apple Music.

The Spotify complaint was reportedly a key driver behind the European Commission’s decision to open the probe. Kobo, Rakuten Inc.’s popular eBook service, has raised similar concerns about the App Store before the European Commission. 

The EC can respond to antitrust violations by issuing fines or ordering a company to change business practices. If Apple is found to have violated competition law and is ordered to loosen its policies around in-app payments, it would have a big impact on the mobile ecosystem.  The App Store drove an estimated $519 billion in sales of physical and digital goods and services during 2019 alone.

“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,” EC Executive Vice President Margrethe Vestager said in a statement. “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.”

For Apple’s part, it said in a statement that “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.”

The second investigation the EU announced today focuses on Apple Pay, the iPhone maker’s mobile payment service and digital wallet. 

The EC will scrutinize the conditions that the company sets for using Apple Pay in merchant apps and websites to ensure they don’t limit consumer choice. Regulators will also look into allegations that Apple has prevented rival services from using the “tap and go” feature in iOS. The feature allows users to pay in stores using their handsets. 

“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,” Vestager said. “I have therefore decided to take a close look at Apple’s practices regarding Apple Pay and their impact on competition.”

Photo: atmtx/Flickr