SPOT Spotify Technology SA

By Valentina Pop in Brussels and Sam Schechner in Paris 

Music-streaming service Spotify Technology SA has filed an antitrust complaint in Europe against Apple Inc., a new salvo in the broader battle over how and whether to rein in alleged wrongdoing by tech giants.

Spotify's complaint, filed late Monday to the antitrust arm of the European Union, alleges that Apple in recent years has abused its control over which apps appear in its App Store. The restrictions, Spotify claims, are designed to restrict music-streaming services that compete with Apple's own Apple Music.

Spotify claims that Apple made it difficult for rival subscription services to market themselves to users without using Apple's payment system, which generally takes a 30% cut of transactions. Spotify's app doesn't face the same restrictions on in the Play store run by Alphabet Inc.'s Google, Spotify said. Spotify also said Apple at times rejected security updates of its app and threatened to kick it out of its App Store for allegedly anticompetitive reasons.

"Apps should compete on merits, not who owns the app store," said Horacio Gutierrez, Spotify's general counsel.

Apple didn't immediately respond to a request for comment.

A spokesman for the European Commission, the EU's antitrust enforcer, confirmed that they received the Spotify complaint "which we are assessing under our standard procedures."

Spotify's complaint -- the first official one made public at the EU level about Apple's App Store -- escalates the global battle over how to regulate tech giants on topics ranging from privacy and taxation to hate speech and competition.

The European Commission in 2016 ordered Apple to repay $14.5 billion in tax breaks to Ireland, a decision that earned competition commissioner Margrethe Vestager the nickname "tax lady" from President Trump. In following years, the commission slapped Google with record fines totaling $7.7 billion in 2017 and 2018 for alleged anticompetitive behavior, has implemented a strict new privacy law that has spawned many investigations and is close to approving new copyright rules aimed at making tech giants pay more money to music companies and news organizations.

Underpinning many of these battles is a central question: What responsibilities should be placed on companies that serve millions of businesses and billions of consumers with services that some contend are essential?

Some activists and politicians on both sides of the Atlantic argue that big tech companies have become like utilities, and should be regulated as such. Sen. Elizabeth Warren, the Massachusetts Democrat running for president, went further last week, calling for companies like Amazon.com Inc. and Facebook Inc. to be broken up.

One major subject of debate is what obligations should be placed on companies that operate platforms used by thousands of other businesses. The EU, for instance, last year said it was opening a preliminary probe into whether Amazon is unfairly competing against merchants that sell goods via its online-retail platform. The EU also is close to approving new regulation that would mandate that online platforms be more transparent and predictable in the terms they offer companies that rely on them.

The U.K. government on Wednesday published a report from a government-appointed panel recommending tighter antitrust oversight of big tech firms, also highlighting the issue.

It isn't clear what the EU will do with the complaint from Spotify, one of Europe's biggest recent tech successes. The current European Commission will reach the end of its term later this year, following parliament elections in May, leaving little time to make significant progress on a new investigation. Spotify has also complained informally to the EU several times about similar issues in recent years.

In late 2017, for instance, the company and other streaming firms sent the EU a letter complaining about the behavior of both Apple and Alphabet Inc.'s Google, which runs the Play store for apps that run on Android devices. Spotify didn't rule out pursuing the issue in the U.S., too.

Deezer, another music streaming firm that complained in 2017, on Wednesday said they supported Spotify in their antitrust challenge and that they looked forward to the commission's response.

A spokesman for Google didn't immediately respond to a request for comment.

In a blog post published Wednesday, Spotify Chief Executive Daniel Ek contended that Apple's rules "purposely limit choice and stifle innovation at the expense of the user experience -- essentially acting as both a player and referee to deliberately disadvantage other app developers."

As part of its complaint, Spotify alleges that Apple created a series of what it claims were unjustified or arbitrary obstacles for rivals to favor its own Apple Music service.

"Once Apple became not only a platform provider, but also a direct competitor, their incentive to disadvantage rival services, like Spotify, became even greater and their restrictions started to become more frequent and extreme," Mr. Gutierrez, the general counsel, said.

Anne Steele

contributed to this article.

Write to Valentina Pop at valentina.pop@wsj.com and Sam Schechner at sam.schechner@wsj.com

(END) Dow Jones Newswires

March 13, 2019 07:35 ET (11:35 GMT)

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