EU Announces Investigations into App Store In-App Purchase Rules and Apple Pay

The European Commission today said it has opened two formal antitrust investigations into Apple's App Store and Apple Pay mobile payment system.

The first investigation will assess whether Apple's rules for app developers on the distribution of apps via the ‌App Store‌ violate EU competition rules.

It will focus in particular on the mandatory use of Apple's own in-app purchases system and restrictions on the ability of developers to inform iPhone and iPad users of alternative cheaper purchasing possibilities outside of apps.

The investigation follows up on separate complaints by Spotify and ebook distributor Kobo on the impact of the ‌App Store‌ rules on competition in music streaming and e-books/audiobooks.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: "Mobile applications have fundamentally changed the way we access 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."

The second investigation into ‌Apple Pay‌ follows a preliminary EC investigation that flagged concerns regarding Apple's terms, conditions, and other measures related to the use of ‌Apple Pay‌ that may distort competition and reduce choice and innovation. In addition, the EC notes that ‌Apple Pay‌ is the only mobile payment solution that can access the NFC "tap and go" technology embedded in Apple's devices for in-store payments.

Responding to the announcements, a spokesperson for Apple gave the following statement:

"We developed the App Store with two goals in mind: that it be a safe and trusted place for customers to discover and download apps, and a great business opportunity for entrepreneurs and developers.

"We're deeply proud of the countless developers who've innovated and found success through our platform. And as we've grown together, we've continued to deliver innovative new services — like Apple Pay — that provide the very best customer experience while meeting industry-leading standards for privacy and security.

"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."

There is no legal deadline for bringing an antitrust investigation to an end, and the duration of an antitrust investigation depends on a range of factors that can take years to work through, but the EC said it will carry out its investigations "as a matter of priority."