EU fines Apple 1.8 billion for abuse of dominant position in music streaming market

Brussels – Three years after opening a formal complaint against Apple over possible abuse of a dominant market position in the music streaming market, the European Commission opted for the harshest decision yet. A 1.8 billion euro fine, to be paid for practices that are “illegal under EU antitrust rules,” through which the Cupertino company restricted third-party developers from informing consumers about alternative and cheaper music subscription services available outside the Apple ecosystem.

EU Commission Vice-President for Digital and Commissioner for Competition Margrethe Vestager announced the fine against the U.S.-based multinational technology company at a specially convened press conference today (March 4).  After three years of investigation and assessment, the Commission confirmed the concerns that emerged in the spring of 2021 about specific violations regarding anti-steering provisions — those measures designed to prevent an app from redirecting the user to an external online store. In other words, Apple made it nearly impossible for iOS users (of iPhones and iPads) to learn about and subscribe to music streaming apps outside the App Store or indirectly imposed higher fees.

The Commission noted that Apple is currently the sole provider of the App Store, where developers can distribute their apps to iOS users throughout the European Economic Area (EEA), and “controls every aspect of the iOS user experience and sets the terms and conditions that developers need to abide by” to reach users in the App Store. The anti-steering provisions prohibit third-party app developers from informing iOS users within their apps about the prices of subscription offers available on the Internet, as well as price differences between in-app subscriptions. The ban is also on including links that lead iOS users to the app developer’s website and the ability for the developers to contact their newly acquired users.

“These anti-steering provisions are neither necessary nor proportionate for the protection of Apple’s commercial interest and “negatively affect the interests of iOS users, who cannot make informed and effective decisions” about music streaming apps to use on their device. In practical terms, this means that “for almost ten years” iOS users may have been paying “significantly higher” prices because of the high fees imposed by Apple to developers and passed on to the end consumer in the form of higher subscription prices. Added to this is the non-monetary damage “in the form of a degraded user experience,” since iOS users had to perform a “cumbersome” search before finding the desired offering, “or they never subscribed to any service because they did not find the right one on their own.”

Taking into account the duration and severity of the infringement, the total turnover, and the fact that “incorrect information was provided in the administrative procedure,” the European Commission imposed a fine of 1.8 billion euros, “proportionate to Apple’s global revenues and is necessary to achieve deterrence.” As the Commission points out, this is a lump sum fine, made necessary because “a significant part of the harm caused by the infringement consists of non-monetary harm, which cannot be adequately accounted for under the revenue-based methodology.” In addition, the U.S. company was ordered to remove the anti-steering provisions and to “refrain from repeating the infringement or from adopting practices with an equivalent object or effect in the future.”