The European Commission (EC) has imposed a hefty fine of €1.8 billion on Apple for its abuse of dominance in the market for the distribution of music streaming apps to iOS and iPadOS users through its App Store. The Commission found that Apple had implemented restrictions on app developers, preventing them from informing iOS users about alternative and cheaper music subscription services available outside of the app. These restrictions, known as ‘anti-steering provisions’, were deemed illegal under EU antitrust rules.
The investigation conducted by the EC revealed that Apple prohibited music streaming app developers from fully informing iOS users about alternative and cheaper music subscription services outside of the app. Additionally, app developers were restricted from providing any instructions on how to subscribe to such offers. The official press release from the European Commission states that these actions by Apple constituted unfair trading conditions, which were unnecessary and disproportionate for the protection of Apple’s commercial interests.
Essentially, iOS users have the option to subscribe to third-party music streaming services either through the App Store or directly on the service’s website. Subscribing through the website is generally cheaper since Apple does not receive a commission. However, Apple’s anti-steering provisions prevent app developers from including links in their apps leading users to their websites for subscription purposes. Furthermore, developers are not allowed to contact newly acquired users via email to inform them about alternative pricing options after setting up an account.
The European Commission’s decision concludes that these provisions imposed by Apple create unfair trading conditions and negatively impact the interests of iOS users. Users are unable to make informed decisions on where and how to purchase music streaming subscriptions. The EC also highlights that Apple’s conduct may have led many iOS users to pay significantly higher prices for music streaming subscriptions due to the high commission fee imposed on developers.
In addition to the €1.8 billion fine, the EC has ordered Apple to remove the anti-steering provisions and refrain from engaging in similar infringements in the future. The fine amount was determined to be sufficiently deterrent for Apple and other companies of similar size.
Apple has expressed its intention to appeal the decision and released a press release in which it criticizes Spotify, referring to it as the primary advocate for the EC’s ruling. Apple claims that Spotify holds a majority share of the European market and pays nothing to Apple, despite the role played by the App Store in enabling its success. Spotify has chosen not to sell subscriptions through the App Store to avoid the associated commission fees.
Apple argues that Spotify aims to bend the rules in its favor by embedding subscription prices in its app without using the App Store’s In-App Purchase system. Apple emphasizes that Spotify benefits from Apple’s tools and technologies and the trust built with users, all without paying anything in return. Apple concludes its press release by stating that today’s decision ironically cements the dominant position of a successful European company, referring to Spotify as the digital music market’s runaway leader.
It remains to be seen how this fine and the subsequent appeals will shape the future of the relationship between Apple, app developers, and the distribution of music streaming apps on iOS devices.
