iPhone maker Apple has been slapped with a €1.8 billion (R37 billion) fine in the European Union (EU) for abusing its dominant position in the market for the distribution of music streaming apps to iPhone and iPad users (iOS users) through its App Store.
In a statement, the European Commission (EC) says, in particular, it found Apple applied restrictions on app developers, preventing them from informing iOS users about alternative and cheaper music subscription services available outside of the app (anti-steering provisions). This is illegal under EU anti-trust rules.
In 2019, Swedish-based music streaming service Spotify complained to the EU about Apple abusing its market dominant position in the region. This resulted in the commission charging the iPhone maker last year.
Apple yesterday issued a statement saying it will appeal the fine. “Today, the European Commission announced a decision claiming the App Store has been a barrier to competition in the digital music market,” says the company.
“The decision was reached despite the commission’s failure to uncover any credible evidence of consumer harm, and ignores the realities of a market that is thriving, competitive and growing fast.”
According to Apple, the primary advocate for this decision – and the biggest beneficiary – is Spotify.
“Spotify has the largest music streaming app in the world, and has met with the European Commission more than 65 times during this investigation.
“Today, Spotify has a 56% share of Europe’s music streaming market – more than double their closest competitor’s – and pays Apple nothing for the services that have helped make them one of the most recognisable brands in the world. A large part of their success is due to the App Store, along with all the tools and technology that Spotify uses to build, update and share their app with Apple users around the world.
“We’re proud to play a key role supporting Spotify’s success – as we have for developers of all sizes, from the App Store’s earliest days.
“So, while we respect the European Commission, the facts simply don’t support this decision. And as a result, Apple will appeal.”
Putting consumers first
Spotify has welcomed the decision, saying it is an “important moment in the fight for a more open internet for consumers”.
It says this decision sends a powerful message – no company, not even a monopoly like Apple, can wield power abusively to control how other companies interact with their customers.
“Apple’s rules muzzled Spotify and other music streaming services from sharing with our users directly in our app about various benefits – denying us the ability to communicate with them about how to upgrade and the price of subscriptions, promotions, discounts, or numerous other perks.
“Of course, Apple Music, a competitor to these apps, is not barred from the same behaviour. By requiring Apple to stop its illegal conduct in the EU, the EC is putting consumers first. It is a basic concept of free markets – customers should know what options they have, and customers, not Apple, should decide what to buy, and where, when and how.
“While we appreciate the EC addressing this important case, we also know that the details matter. Apple has routinely defied laws and court decisions in other markets. We’re looking forward to the next steps that will hopefully clearly and conclusively address Apple’s long-standing unfair practices.”
Spotify notes that while it is pleased this case delivers some justice, it does not solve Apple’s bad behaviour towards developers beyond music streaming in other markets around the world.
“Our work will not be done until we succeed in securing a truly fair digital marketplace everywhere, and our commitment to helping to make this a reality remains unwavering.”
Total user control
The European Commission adds that Apple is the sole provider of an App Store where developers can distribute their apps to iOS users throughout the European Economic Area (EEA).
It points out that Apple controls every aspect of the iOS user experience and sets the terms and conditions that developers need to abide by to be present on the App Store and be able to reach iOS users in the EEA.
The commission’s investigation 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, it states.
“Apple’s conduct, which lasted for almost 10 years, 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 and passed on to consumers in the form of higher subscription prices for the same service on the Apple App Store,” says the commission.
Margrethe Vestager, the commission’s executive vice-president in charge of competition policy, comments: “For a decade, Apple abused its dominant position in the market for the distribution of music streaming apps through the App Store.
“They did so by restricting developers from informing consumers about alternative, cheaper music services available outside of the Apple ecosystem. This is illegal under EU anti-trust rules, so today we have fined Apple over €1.8 billion.”
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