The EU's Competition Commission said Apple uses restrictions within its App store that prevent rivals from informing iPhone and iPad users of cheaper alternatives to Apple Music while charging higher fees that distort competition.
EU rules allow for fines that could reach 10% of Apple's annual sales, which hit $275.5 billion in the fiscal year ending on September 28. The Commission levied a record $5 billion fine against Goggle parent Alphabet (GOOGL) - Get Report in 2018 following a lengthy investigation into contracts that tie makers of android-operated smartphones to the exclusive sale of its apps.
“App stores play a central role in today's digital economy. We can now do our shopping, access news, music or movies via apps instead of visiting websites," said the Commission's Executive Vice President, Margrethe Vestager. "Our preliminary finding is that Apple is a gatekeeper to users of iPhones and iPads via the App Store. With Apple Music, Apple also competes with music streaming providers."
"By setting strict rules on the App store that disadvantage competing music streaming services, Apple deprives users of cheaper music streaming choices and distorts competition," she added. "This is done by charging high commission fees on each transaction in the App store for rivals and by forbidding them from informing their customers of alternative subscription options.”
Apple shares were marked 0.7% lower in early trading following the EU charges and changing hands at $132.60 each.