Taking a Bite at the Apple: Ensuring a Level-Playing-Field for Competition on App Stores

Abstract

A number of competition authorities around the globe have started investigating Apple’s position as a “mobile apps gatekeeper”. In particular, after receiving a complaint by music streaming service Spotify in March, the European Commission recently sent out formal requests for information to assess whether Apple abuses its dominance towards app developers and publishers. Additionally, the Dutch competition authority ACM opened a probe into Apple’s alleged favoring of own apps over those of rivals, and similar procedures have been initiated in Russia and China. Competition law scrutiny is not limited to public enforcement. On May 13, 2019, the U.S. Supreme Court allowed an antitrust class action against Apple filed by consumers to move forward (Apple v Pepper). In the EC investigation, on which this article focuses, Spotify alleges that Apple is disadvantaging its rivals, in particular by imposing a “competitor tax” on them. The investigation aims at exploring the interplay between Apple’s mobile operating system (“iOS”), its “App Store”, in-app purchase functionalities, and Apple’s own music streaming service(s). This interplay affects many companies. In fact, media companies, press publisher associations, and screen time/parental control app developers have raised very similar concerns to those of Spotify, arguing that their respective apps are being disadvantaged. The investigations into Apple’s practices have strong similarities to past and ongoing investigations into the other big tech players: Amazon, Google, and Microsoft. One common ground of these investigations is concern about the neutrality of vertically-integrated dominant platforms. Having benefitted from vibrant participation on their multi-sided platforms and resulting indirect network effects for years, dominant platforms may have been incentivized into squeezing the business-side of their plat-forms to increase overall revenues (also with a view to counter stagnations in their ancient core business models (e.g. iPhone or ad sales), which has been seen as some form of “rent-seeking”). Akin to Amazon, Google, and Microsoft, operating both a dominant platform and services made available via such platform, has created a strong conflict of interest for Apple, as it now benefits from commercially favoring its own services via its platform.