In context: With every passing quarter, Apple tree announces a new record in services revenue, which has quickly grown to become the visitor'southward second biggest revenue stream later on the iPhone. The problem -- at least in the eye of EU regulators and Apple'south competitors in the services industry -- is that it managed to attain this performance by gatekeeping the App Store and using unfair policies to keep any competition at bay.

Apple is currently facing several antitrust battles across the US, Europe, and Commonwealth of australia, for allegedly exerting monopolistic ability over the App Shop and using it to put competitors at a disadvantage. This has even led to the creation of a "Coalition for App Fairness" to promote freedom of choice and the thought of alternative app stores in the Apple ecosystem.

Post-obit a complaint made by Spotify in 2022 regarding Apple tree'due south supposedly unfair licensing agreements for streaming app developers that operate in the App Store, the European Commission started an antitrust investigation into the matter. Today, it published the preliminary results, which are nothing short of bad news for Apple, who could be fined to the tune of 10 percent of its 2022 revenue, or effectually $27.5 billion.

The Committee establish the Cupertino behemothic is in violation of Eu competition rules, at least when it comes to the music streaming market. Regulators explain that Apple tree's App Store rules "distort contest in the market for music streaming services by raising the costs of competing music streaming app developers," leading to higher prices for consumers who purchase subscriptions using Apple's in-app system on iPhone and iPad.

This is only the beginning of a formal procedure where Apple tree will have 12 weeks to review the Committee's concerns, equally detailed in a Statement of Objections. Notable among these concerns are the mandatory use of Apple tree'southward in-app purchase system, as well equally the "anti-steering provisions" that severely limit developers in their ability to advertise alternative purchasing options outside apps.

Spotify CEO Daniel Ek welcomed the findings, noting that "fairness is the key to competition. With the European Commission's Statement of Objections, we are ane step closer to creating a level playing field, which is so important for the entire ecosystem of European developers."

Understandably, Apple isn't then thrilled with the Commission's findings. In a statement, the company explained that "Spotify has become the largest music subscription service in the earth, and we're proud of the part we played in that. Spotify does non pay Apple tree any committee on over 99% of their subscribers, and only pays a xv% commission on those remaining subscribers that they acquired through the App Store."

The Cupertino company believes the antitrust example is rooted in Spotify'due south want to advertise alternative deals for its premium service inside the iOS app, which would be "a practice that no store in the world allows." As for the Commission's preliminary determination, Apple believes the cut it takes on in-app subscriptions is essential in maintaining the App Store equally a trusted and reliable place for consumers to observe apps and games.

Withal, this antitrust instance against Apple is simply 1 of several being investigated past the European Committee. Last year, Kobo subsidiary Rakuten complained about Apple taking a 30 percent cut on eBook sales while running a competing service -- Apple Books, which doesn't incur the same costs. Then in that location's the special bargain that allows Amazon to bypass Apple tree's standard fee when information technology comes to selling content through its Amazon Prime Video app on iOS.

Apple'due south biggest antitrust headaches will likely be caused by the Eu'southward growing interest in learning more than on how Apple is using App Store rules to thwart its biggest competitors in the gaming space, namely Epic, Microsoft, Google, Facebook. To top it off, the exclusivity of Apple Pay, which makes upward five percentage of global card transactions and is set up to double by 2025, is besides on the European union regulator's crosshairs.

Image credit: Evan Agostini | AP

In an try to deflect some of these antitrust complaints, Apple concluding yr reduced the committee fee to 15 percent for App Store developers making less than $1 million, but that didn't alter the public perception on the matter. The decision is estimated to touch 98 per centum of developers, who also happen to account for less than five pct of the App Store's annual revenue.

We also know from courtroom filings that Apple's chief argument for acting like a gatekeeper in the case of its App Store is that developers can ever create web apps to bypass information technology. Game streaming services are a bang-up example of that, with services similar Stadia and GeForce Now working well through their respective web-based clients, which could encourage more developers to adopt that distribution model.

In the meantime, EU regulators are working on sweeping new rules nether the Digital Markets Act and the Digital Services Act. Both are expected to have a major impact in how tech giants similar Apple operate, such as putting an end to practices like self-preferencing -- in the instance of Apple, that would be using the App Store search rankings to upsell its ain apps and bury the competitors down the list.