Apple's App Store Policies Face Criticism And Investigation

Apple's policies and fees for its App Store - and possibly its efforts around music streaming - are anti-competitive and add significant additional cost to their own customer's purchases. At least this is the view of music industry insiders, according to The Verge. In any case, recent news of the company facing scrutiny in the US and EU is long overdue.

The EU Treaty has specific controls around mis-use of market dominance outlined in article 102 of the Treaty on the functioning of the European Union.

The article states:

Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States."
Such abuse may, in particular, consist in:
(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
(b) limiting production, markets or technical development to the prejudice of consumers;
(c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
(d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

The question is whether the EU decides Apple's exclusive ability to install software on iOS devices constitutes a dominant position. A large market share would normally be considered to demonstrate dominance with the onus on Apple to demonstrate otherwise.

If the court agrees then Apple's policy of preventing apps directing users to an external payment mechanism would seem to me to be an abuse of both example (b) and (d) and its enforcement of 30% fees on service subscriptions would seem to be an abuse of example (c). 

Apple's defence would presumably be that customers are able to purchase their hardware elsewhere and avoid this issue. Or buy their subscriptions off device. Both would appear to be shaky arguments given the EU's brand and product loyalty tests.

Unfortunately the intricacies of the legal system at this level go beyond the amateur interest I have, but I know some readers out there are professionally involved, so I'd love to hear your views.

Image: Wikimedia:Lonpicman 


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