The European Union has fined Apple €1.84 billion (just under $2 billion) for breaching antitrust rules in the market for music streaming services on its mobile platform, iOS.
The penalty is focused on Apple’s application of anti-steering provisions, which put restrictions on music streaming apps’ abilities to tell consumers about cheaper offers outside Apple’s App Store.
The iPhone maker has its own music streaming service, Apple Music, and rivals — such as Spotify — have argued the restrictions put them at a disadvantage compared to the iOS and App Store operator.
Today the Commission said the restriction had prevented European consumers from making a free choice.
“Apple’s rules ended up in harming consumers,” said the EU’s competition chief, Margrethe Vestager, speaking during a Commission press conference to announce the decision. “Critical information was withheld so that consumer could not effectively use or make informed choices.
“Some consumers may have paid more, because they were unaware that they could pay less if they subscribed outside of app. And other consumers may not have managed at all to subscribe to their preferred music streaming provider because they simply couldn’t find it.”
“The Commission found that Apple’s rules result in withholding key information on prices and features of services from consumers. As such they are neither necessary nor proportionate for the provision of the App Store on Apple’s mobile devices,” she added. “We therefore consider them to be unfair trading conditions as they were unilaterally imposed by a dominant company.”
The penalty follows a March 2019 antitrust complaint by Spotify – which argued Apple’s App Store rules “purposely limit choice and stifle innovation at the expense of the user experience”, and accused the iPhone maker of deliberately disadvantaging other app developers by being both “a player and referee”.
Back in June 2020, the EU announced a formal antitrust investigation of the App Store — saying then that it was concerned conditions and restrictions applied by the tech giant, such as anti-steering provisions preventing developers from informing users of cheaper ways to pay for content outside Apple’s store, may be distorting competition.
A formal EU statement of objections duly followed, in April 2021, when the Commission accused Apple of operating its App Store in a way that distorts competition in the market for music streaming services.
However almost two years after that the EU refined the case — issuing a revised statement of objections which dropped an earlier charge related to Apple’s requirement that music streaming apps use its own payment processing tech and fully focused on the anti-steering provisions.
Last month, the FT reported Apple was facing a €500 million antitrust penalty over music streaming. But the fine announced by the Commission today is considerably higher. The penalty breaks down into a fine on Apple for breaching the EU’s rules — of around €40 million — but on top of that Vestager said a “lump sum” has been added (i.e. €1.8 million) to “account for the non-monetary harm caused to consumers and to achieve deterrence”.
“The fine we impose today reflects both Apple’s financial power and the harm that Apple’s conduct inflicted on millions of European users,” she said, noting that the total penalty represents 0.5% of the iPhone maker’s worldwide turnover.
From today, the Commission has also ordered Apple not to apply anti-steering provisions on music streaming apps. “From now on, Apple will have to allow music streaming developers to communicate freely with their own users — be that within the app, by email or any other ways of communicating,” said Vestager.
From Thursday, Apple will also be barred from applying anti-steering provisions on any iOS apps under the bloc’s ex ante competition reform, the Digital Markets Act (DMA), as it has been designated a gatekeeper, and iOS and the App Store are regulated as core platform services, under that (separate) pan-EU law.
Penalties under the DMA can scale up to 10% of annual turnover (or higher for repeat offenders). The Commission is the sole enforcer of the DMA on gatekeepers.
