Apple Faces Two Antitrust Investigations in the EU

The EU Cracks Down on Silicon Valley

The European Union recently launched two antitrust investigations into Apple (AAPL), one related to the company’s Apple Pay platform and the other surrounding the App Store. Depending on the results of the inquiry, Apple may be required to change its business practices and could be fined as much as 10% of its annual revenue. Apple has denied accusations of anticompetitive behavior and said it welcomes the opportunity to show the European Commission it is fostering a competitive environment.

These antitrust investigations come after a string of other probes by the EU into Silicon Valley companies including Facebook (FB), Google (GOOGL), and Amazon (AMZN). The EU has raised concerns about a number of these companies controlling a marketplace while also acting as a business competing in that marketplace.

Many of these tech companies are also facing antitrust scrutiny at home from Congress, The Justice Department, and The Federal Trade Commission. Investors will be watching closely to see how investigations unfold in the EU and what impact that might cause for the companies globally.

Examining Apple’s App Store Policies

One of the EU’s investigations will focus on Apple’s App Store policies and whether or not they comply with competition rules.

Several companies have filed complaints against Apple, including Rakuten (RKUNY), Japan’s largest e-commerce company. The firm claims that Apple not only promotes Apple Books over other similar services but also charges 30% commission on ebooks sold through the App Store, making it difficult to compete.

Similarly, Spotify (SPOT), the Stockholm-based music streaming giant, filed complaints with the EU about Apple squelching competition on the App Store to promote its Apple Music service.

Apple Pay Under Scrutiny

The EU’s other investigation will examine Apple’s Apple Pay services. Because the company keeps a close hold on the Near Field Communication capabilities of its iPhones and Apple Watches, financial institutions are unable to create their own apps using Near Field Communication, which could compete with Apple Pay. During the pandemic, the popularity of contactless payment skyrocketed, which prompted scrutiny of payment features from authorities.

In a statement, Apple explained , “At the end of the day, our goal is simple: for our customers to have access to the best app or service of their choice, in a safe and secure environment. We welcome the opportunity to show the European Commission all we’ve done to make that goal a reality.”

Both formal investigations started yesterday in Brussels and investors will be watching how they progress in the weeks to come.

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