Apple to Face Anti-trust Charges against Apple Tax by European Commission
It’s been two years since Spotify filed an anti-trust charge against Apple over concerns about its own ‘Apple Tax’ policy. The same case has been filed by Rakuten next year alleging that it is cruel for Apple to charge 30% commission on E-books. Now it is time for the European Commission to follow up on these charges to investigate whether Apple has broken the EU rules for its own app store policies.
What actually happened in 2019 and 2020?
In 2019, Spotify, a music streaming provider, claimed that Apple had unfair business deals for unevenly enforcing app store policies which made Spotify look like rivals. The in-app payment policy is that it only allows iOS software developers to use individual IPA transaction processing system. It helps Apple to gain 30% commission from different purchases. But some companies do not have to pay the commission fee to Apple, which is popularly known as Apple Tax. Spotify became a non-exempt player which acts like a competitor. Additionally, Apple restricted a few rules and regulations to the software developers who chose not to use the IPA system.
According to Chief Executive Daniel Ek, if Spotify wanted to pay the tax then it would showcase the company was willing to pay the artificially inflated price of premium membership above the stated Apple music. If the company avoided the payment then Apple was ready to restrict various types of technical and experience limited options on Spotify. The restrictions includes not able to promote paid offerings like subscriptions inside apps, not able to display any options or buttons to external product pages, marketing or promotional emails to the existing customers.
What is IPA?
iOS App Store Package (IPA) is an application archive file which is only used to store an iOS app. Each file involves a binary and exclusively installed on an Apple device. One cannot download IPA in iPhones and iPads.
In 2020, Rakuten, a Japanese tech company for TV streaming service, followed the Spotify steps and filed anti-trust charges against Apple tax to the European Commission. Rakuten claimed that the company was crushed by the app store policies. It focused on the Apple’s E-book business rather than the streaming process. It has its own sub-company known as Kobo which is hosted on app store.
We already know that the in-app payments charge 30% Apple tax on every purchase. From Kobo’s point of view, if the company wanted to sell e-books via the app then it is forced to pay 30% commission to Apple. Thus, Kobo wants the readers to visit the official website and buy e-books and audio books from there just like Amazon and Flipkart.
These two cases show that Apple is acting as a player as well as a referee to make disadvantages for the other non-Apple developers. Apple has continuously defended the brand image and put blame on these companies to destroy the image in the market. It claimed that Apple always focuses on the wellbeing of all kinds of developers and trying to provide an economic ecosystem in the industry.
This week we will get to see whether these accusations of abusing monopoly are really a gossip or truth. Telegram is also in the line after Spotify and Rakuten to file a formal complaint against Apple’s anti-trust case. The European Commission needs much more information and witness to take a decisive action.