The European Commission has fined Apple €1.8 billion for “abusing its dominant position” in the music streaming space on iOS devices.
In a statement, the regulator said 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 said that such anti-steering provisions were illegal under EU antitrust rules and amounted to “unfair trading conditions”. It added these rules were “neither necessary nor proportionate” to protecting Apple’s commercial interests and negatively affected iOS users.
“Apple’s conduct, which lasted for almost ten 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,” read the ruling.
As well as a fine, the EC has ordered Apple to remove the anti-steering provisions and refrain from repeating the infringement or adopting practices that will have the equivalent effect.
The Commission said it hoped the fine would deter Apple from repeating the infringement of its rules, it stated.
Apple fights back as Spotify celebrates
The decision is the culmination of an investigation that began in 2020 after a complaint from Spotify about Apple’s dominant market position and that the music streaming service could not promote better deals to its users.
Spotify has welcomed the EC’s decision. It said the fine sent a powerful message that “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,” read a statement from Spotify.
“Of course, Apple Music, a competitor to these apps, is not barred from the same behaviour.”
Apple, meanwhile, has criticised the ruling, which it said was reached “despite the Commission’s failure to uncover any credible evidence of harm”. It also claimed Spotify was trying to “rewrite the rules of the App Store” to give it an advantage in a music streaming space it already dominates.
Apple said it will appeal the ruling.
Digital Markets Act
The EC’s ruling comes just before the EU’s Digital Markets Act comes into force from March 7th. The new regulations aim to create a framework designed to keep large online platforms – or ‘gatekeepers’, of which Apple is one – from abusing their dominant market positions and to create a “fairer business environment” for all companies.
In response to the impending deadline to comply with the new regulations, Apple recently announced a series of rules changes for the App Store in the EU. This included the ability for publishers to opt-in to new rules that drop Apple’s revenue share to 17% – or 10% for some developers – if they use an alternative marketplace or payment option.
However, Apple will also introduce a ‘core technology fee’, which charges €0.50 for each first annual install per year over one million downloads for installs from the App store and/or an alternative marketplace.
PocketGamer.biz has previously spoken with analysts, publishers and payment providers about the rule changes and what they mean for the industry.
