Apple Pay and App Store Face Antitrust Investigations by European Union
The European Union has started its antitrust investigations against Apple Pay and App Store. The EU had been looking into complaints against Apple's antitrust behaviour since last year, specially after Spotify's complaint, and has finally started formal investigations. Meanwhile, Apple has rejected a new app due to its lack of in-app purchases, which has raised new concerns regarding its policies which hurt third-party app developers and services in the App Store.
EU Investigates Apple's Antitrust Practices
The antitrust investigation revolves around App Store's 30% cut that Apple charges for third-party app subscriptions. It also covers Apple's OS updates and API changes which limit rival companies from competing on a level playing field against Apple Music. However, since Spotify had first complained about this, Apple has made many changes to its platforms to allow third-party music apps that same access to features that its own Music app does.
The second major issue is regarding Apple Pay and how the company has restricted NFC chips on its devices so that third-party payment services cannot utilize them. The deep integration that Apple Pay gets with iPhone, iPad and Apple Watch, is simply not available to any other competing service.
Apple is not happy with the investigation and criticized it in a statement to Reuters:
“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.”
Apple Continues to Attract Complaints Against App Store
This bit of news coincides with Apple's rejection of 'Hey', a new email app from the makers of Basecamp, the popular project management solution. David Heinemeier Hansson, CTO of Basecamp, was vocal on Twitter regarding the rejection. Apple's reason was that the paid app does not allow users to sign up via in-app purchase - users can only create a paid account for 'Hey' from its website.
Wow. I'm literally stunned. Apple just doubled down on their rejection of HEY's ability to provide bug fixes and new features, unless we submit to their outrageous demand of 15-30% of our revenue. Even worse: We're told that unless we comply, they'll REMOVE THE APP.
— DHH (@dhh) June 16, 2020
The surprising thing about this fiasco is that Apple already allows this business model for other apps. You can buy a paid subscription for services like Netflix or Spotify from their websites, and continue to login and use these apps on any iOS device. The business model is also used by apps like Spark and Edison, which do not provide in-app purchases either.
But this is preposterously false and inconsistent. The Basecamp app has been in the App Store for YEARS offering access to a subscription bought elsewhere. The store is FULL of apps doing just that. Even other email apps! A few examples we compiled: pic.twitter.com/MYC1KF1Xfr
— DHH (@dhh) June 16, 2020
Apple explained its position to David Pierce at Protocol:
Apple told me that its actual mistake was approving the app in the first place, when it didn't conform to its guidelines. Apple allows these kinds of client apps — where you can't sign up, only sign in — for business services but not consumer products. That's why Basecamp, which companies typically pay for, is allowed on the App Store when Hey, which users pay for, isn't. Anyone who purchased Hey from elsewhere could access it on iOS as usual, the company said, but the app must have a way for users to sign up and pay through Apple's infrastructure. That's how Apple supports and pays for its work on the platform.
You will not find many people who would be understanding of Apple's position on this issue. If other apps like Spotify and Netflix, which are purchased by consumers, not businesses, can be used why would a smaller app like 'Hey' be penalized.
We have reached out to Apple for a comment.