The European Commission announced a €1.8 billion fine for Apple on 4 March, claiming the company had abused its dominant position among music streaming providers.
This is the third largest fine imposed on a company for violating EU rules. The first two places go to Google, which has been fined €4.34 billion by the EU in 2018 and €2.42 billion in 2017.
The Commission claimed that Apple took advantage of its dominant market position by distributing music streaming apps to iPhone and iPad users through its App Store.
Apple’s restrictions have prohibited app developers from informing iOS users about alternative and more affordable music subscription services outside the app, which is called “anti-steering provisions” and violates EU antitrust rules.
Margrethe Vestager, the Commission’s executive vice president in charge of competition policy, stated on Monday:
“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.”
According to Apple’s statement on Monday, “the primary advocate for this decision – and the biggest beneficiary – is Spotify.” Apple believes the popular Swedish streaming music platform will benefit from the decision.
According to the anti-steering provisions, developers also could not include links in their apps that direct iOS users to the app developer’s website where alternative subscriptions could be purchased. Developers were also unable to contact newly purchased users via email or other means to inform them of alternative pricing options after they had created an account.
According to the ruling, Apple’s anti-regulatory provisions constitute unfair trade terms in breach of the Treaty on the Functioning of the European Union. The Commission considers that these provisions are detrimental to the interests of iOS users and are not necessary or proportionate to Apple’s commercial interests.
The regulator considers that many iOS users have been paying higher prices for music streaming subscriptions due to the substantial fees charged by Apple to developers, which have subsequently been passed on to consumers through inflated subscription prices in the App Store for identical services.
The Commission imposed a fine on Apple, taking into account the duration and seriousness of the infringement, as well as Apple’s turnover and market capitalisation. It also required Apple to remove anti-steering provisions and avoid similar infringements in the future.
According to Spotify, the fine imposed by the Commission made it clear that “people’s behaviour limiting communications to consumers is unlawful.”
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 noted that the App Store contributed to Spotify’s success, but the music streaming app did not pay Apple, as Spotify, like many other developers, preferred to sell subscriptions on its website rather than in the app, thereby bypassing Apple’s commissions. The company also claimed that Spotify continued to expand and surpass all other digital music businesses around the world, which Apple argued was in part due to the App Store.
While commending the Commission’s action, Spotify emphasised the need for a comprehensive solution against Apple’s persistent unfair practices in various global markets.
“Apple will have to comply with the full list of do’s and don’ts under the DMA [the EU’s Digital Services Act].”
The Act would take effect on 6 March, Vestager announced at a press conference on Monday.
