European Union Fines Apple €1.84 Billion for Antitrust Violations in Music Streaming Market on iOS
Apple has been hit with a €1.84 billion fine by the European Union for violating antitrust rules in the music streaming market on its mobile platform, iOS. The penalty is a result of Apple’s anti-steering provisions, which restrict music streaming apps from informing consumers about cheaper offers outside of Apple’s App Store. This has put rival services like Spotify at a disadvantage. The EU’s competition chief, Margrethe Vestager, stated that Apple’s rules have harmed consumers by withholding critical information and preventing them from making informed choices.
The European Commission launched an antitrust investigation into the App Store in June 2020, expressing concerns about the conditions and restrictions imposed by Apple. The focus was on anti-steering provisions that prevent developers from informing users about cheaper ways to pay for content outside of the App Store. In April 2021, the Commission accused Apple of distorting competition in the music streaming market. The penalty announced today is considerably higher than the previously reported €500 million fine.
As part of the decision, the Commission has ordered Apple to remove anti-steering provisions on music streaming apps. This means that developers will be able to communicate freely with their users and inform them about alternative payment options. Additionally, under the Digital Markets Act (DMA), Apple will be barred from applying anti-steering provisions on any iOS apps. The DMA designates iOS and the App Store as core platform services and imposes penalties of up to 10% of annual turnover for non-compliance.
Apple has responded to the decision with a blog post criticizing the EU’s enforcement. The company claims that there is no credible evidence of consumer harm and accuses Spotify of wanting to rewrite the rules of the App Store to suit its own interests. Apple argues that European consumers have more choices than ever and that the decision cements Spotify’s dominant position in the digital music market.
The response from developers critical of Apple’s DMA proposal is that the company is exploiting its dominance and setting up complex trade-offs. A coalition of 34 app developers and associations, including Spotify and Epic Games, wrote an open letter urging the European Commission to take action against Apple. They argue that the new fee structure in Apple’s proposal maintains and amplifies its exploitation of app developers.
Apple’s response to the DMA includes unbundling the App Store fee structure, allowing developers to choose between existing terms or new terms with more options. However, Apple will introduce a Core Technology fee for apps that exceed a certain threshold. The company’s approach is unlikely to lead to a significant reduction in its take on iOS developers.
The EU’s decision against Apple marks a policy shift, focusing on consumer exploitation rather than exclusionary conduct. The Commission has emphasized the need for compliance with the DMA and expects Apple to open its gates to allow users to easily find apps, pay for them in any way they want, and use them on any device.
While Apple has made a U-turn on blocking Progressive Web Apps (PWAs) following backlash and complaints, it continues to face criticism from developers regarding its fee structure under the DMA. Some argue that Apple is prioritizing its own profitability by not allowing developers to pay less.
Spotify has welcomed the Commission’s finding and hopes that further steps will address Apple’s unfair practices. The company believes that customers should have the freedom to choose what to buy and where, when, and how.
Overall, the EU’s decision against Apple highlights the need for fair competition in the music streaming market and aims to protect consumers’ rights and choices.
