Today the European Commission (EC) has fined Apple a whopping €1.8 billion for abusing its dominant position in the market for the distribution of music streaming apps to iOS and iPadOS users through its App Store. The Commission found that “Apple applied restrictions on app developers preventing them from informing iOS users about alternative and cheaper music subscription services available outside of the app”, so-called ‘anti-steering provisions’. This, according to the EC, is illegal under EU antitrust rules.
The EC’s investigation of the matter found that “Apple bans music streaming app developers from fully informing iOS users about alternative and cheaper music subscription services available outside of the app and from providing any instructions about how to subscribe to such offers”, the official press release states.
Basically, if you’re on iOS, you can subscribe to third party music streaming services through the App Store, or directly on the service’s website. The latter option is cheaper since Apple doesn’t get its cut as it does if you go the App Store route, but you wouldn’t know this if you weren’t following tech news since Apple prohibits any advertising of the disparity, for obvious financial reasons.
Apple’s anti-steering provisions ban app developers from even including links in their apps leading iOS users to the developer’s website to subscribe. They also can’t contact newly acquired users by email to inform them about alternative pricing options after they set up an account.
Today’s decision by the EC concludes that these provisions amount to “unfair trading conditions”, being “neither necessary nor proportionate for the protection of Apple’s commercial interests” while negatively affecting the interests of iOS users, “who cannot make informed and effective decisions on where and how to purchase music streaming subscriptions”.
Apple’s longstanding conduct “may have led many iOS users to pay significantly higher prices for music streaming subscriptions because of the high commission fee imposed by Apple on developers”. Moreover, the EC stresses this behavior on Apple’s part led to “non-monetary harm in the form of a degraded user experience”.
The €1.8 billion fine sum was decided in order to ensure that it’s “sufficiently deterrent” for Apple itself, but also deterring other companies of a similar size from committing a similar infringement. The EC has additionally ordered Apple to remove the anti-steering provisions and to refrain from repeating the infringement “or from adopting practices with an equivalent object or effect in the future”.
Apple vowed to appeal the decision, and issued a press release on the matter in which it’s very aggressive towards Spotify, which it calls “the primary advocate” for the EC’s decision. According to Apple, Spotify has a more than 50% share of the European market and “pays Apple nothing” despite “the App Store’s role” in making its success possible. That’s because Spotify doesn’t sell subscriptions through the App Store, having chosen not to pay ‘the Apple tax’ for that.
Apple goes on – “free isn’t enough for Spotify”, it “wants to bend the rules in their favor by embedding subscription prices in their app without using the App Store’s In-App Purchase system”, using “Apple’s tools and technologies” and benefitting from the trust Apple’s built with users, “and pay Apple nothing for it”.
Apple ends its resentment-filled press release like this: “Ironically, in the name of competition, today’s decision just cements the dominant position of a successful European company that is the digital music market’s runaway leader”.
