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Published on May 3, 2021 by Holly Porter

What’s been going on in the commercial world over the past week? Read on to find out!

Apple Faces Legal Action

This week, Big Tech giant Apple has faced increased legal pressure. Apple is currently involved with two big disputes.

Firstly, the European Commission has issued a preliminary conclusion that Apple breached EU competition rules by distorting competition. The full trial still needs to be held. The charges were initially brought by the co-founder of Spotify two years ago, who complained that Apple limited choice and stifled innovation by charging high commission fees and forbidding streaming app developers from advertising alternative subscription methods. The official European Commission statement reads: “Apple’s rules distort competition in the market for music streaming by raising the costs of competing music streaming app developers. This, in turn, leads to higher prices for consumers for their in-app music subscriptions on IOS devices”. If the full trial is decided against Apple, the company will be forced to change its policies and face a hefty fine. Under EU antitrust rules, a violation can result in a fine of 10% of the company’s global turnover.

At the same time, Apple is facing antitrust pressure in the US. This is part of a series of ongoing investigations into the fairness of Apple’s 30% commission charge for in-app purchases from the company’s App Store. As a result of the pressure, Apple cut its commission rate from 30% to 15% for any developer that earns less than £1m in annual revenue but the company maintains the original 30% was a standard industry average. Epic Games, the makers of Fortnite, have brought these anti-competition claims in the US, with the trial set to begin this week. The American video game and software developer removed Fortnite from Apple’s App Store as a result of the 30% commission charge. The game remained downloadable from Apple’s rivals such as Google Play. It is estimated that Apple earned more than $360m from Fortnite in the three years after its release in 2017.

Legal action is not uncommon for Big Tech companies, which have been subjected to a number of antitrust, cybersecurity, and data privacy hearings and trials over the last few years. However, this week’s trial will see Apple CEO Tim Cook give testimony for the first time. In this particular dispute, US political opinion is united. Both Democrats and Republicans recognise that Apple’s App Store operates as a ‘literal monopoly’ (Senator Klobuchar – D).

Talking points: What are the consequences for Apple if the company loses either dispute, given app commission is essentially a business model in its own right? Are Spotify’s claims largely PR and headline-grabbing as opposed to based on legal fact?


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UK Economy Set for Record Growth

After a 9.8% contraction in 2020, the UK economy is now predicted to grow by 6.8% in 2021. This marks an increase from a 5% growth prediction made in January. If EYI Item Club’s predictions are correct, this would mark the fastest annual growth income since 1941.

The new prediction comes as the UK experiences a surge in consumer confidence and optimism as the country progresses through the end of lockdown stages. Furthermore, April’s flash purchasing manufacturing index (PMI), the economic indicator that measures future manufacturing trends was stronger than expected. If consumer confidence and spending continues at their current rate, the UK will attain its pre-pandemic economy by the middle of 2022. Given the UK had the worst economic performance of the G7 in 2020, this marks a dramatic shift.

Talking point: How does the UK’s economic recovery compare with other European countries?

 

 

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