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Apple’s EU Battles Set to Heat Up as Epic U.S. Trial Plays Out

Bloomberg logoBloomberg 5/18/2021 Aoife White and Natalia Drozdiak
a close up of a sign: Vodacom, Alibaba Look to Boost South Africa Sales With Super-App © Photographer: Thomas Trutschel/Photothek Vodacom, Alibaba Look to Boost South Africa Sales With Super-App

(Bloomberg) -- While Apple Inc.’s attentions turned to a California court clash with Epic Games Inc., Europe’s top antitrust enforcer issued a reminder that the tech giant’s legal battles across the Atlantic are also heating up.

EU Competition Commissioner Margrethe Vestager warned that a probe into the company’s Apple Pay product is moving ahead on top of an investigation -- escalated last month -- into how the iPhone maker requires software developers to use its in-app purchasing system.

The Apple Pay case is “quite advanced” and “is something that we’re pushing forward,” Vestager said in an interview with Bloomberg News.

Apple Chief Executive Officer, Tim Cook, is slated to testify as soon as this week in the high-stakes trial with Epic Games, which could upend the multibillion-dollar marketplace for apps which run on mobile phones around the world.

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Vestager said that while the EU is “following that very closely,” because of an Epic complaint filed in the EU in February, her team will not be swayed by the eventual U.S. ruling.

“We would have to do our own thing no matter the outcome of the U.S. casework,” she said, pointing to the differences between EU and U.S. antitrust law and markets.

Apple Pay is the only mobile payment solution that can use the iPhone’s near-field communications “tap and go” functionality to make contactless payments. British and Dutch competition authorities are also examining the service.

Probes into Apple, Amazon.com Inc. and Google don’t mean “that the tech sector has completely cleaned up,” Vestager said. “We have called in the cavalry” to “fundamentally change behavior” with new rules that would set curbs on so-called gatekeeper companies that determine access to some digital services.

While the EU is weighing potential rules over how phones should grant access to rival payment providers, she sees a need for more urgent action from antitrust enforcers.

“Legislation also takes a long time and a lot can happen in the market in the meantime if we don’t investigate,” she said.

Epic is one of many developers that have accused Apple of locking developers in its App Store by onerous contractual obligations. Apple has rebuffed the allegations saying its iPhone payment system keeps customers secure.

Regulatory Woes

The Cupertino, California-based company’s regulatory woes have intensified in recent months as software firms lined up to criticize the levies Apple and Alphabet Inc.’s Google charge outside developers for using their digital distribution platforms.

Apple declined to comment on Vestager’s remarks. The company said last month that developers “want all the benefits of the App Store but don’t think they should have to pay anything for that.”

Apple already reacted last year by halving the fees it charges to most developers who sell software and services on the App Store.

It lowered a fee to 15% from 30% for developers who generate as much as $1 million in yearly revenue from their apps and those who are new to the store. Apple says many apps pay no fees in return for the company’s efforts to host and maintain the security of the store.

More stories like this are available on bloomberg.com

©2021 Bloomberg L.P.

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