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The European Union (EU) Commission has fined Apple €1.84 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 platform operator.
The commission said the restriction had prevented European consumers from making a free choice.
Speaking during a press conference to announce the decision on Monday, the EU’s competition chief, Margrethe Vestager, said Apple’s rules ended up harming consumers.
“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 device. We therefore consider them to be unfair trading conditions as they were unilaterally imposed by a dominant company,” she said.
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.”
The EU had in June 2020 announced a formal antitrust investigation of the App Store, saying 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.
Financial Times had in February reported that Apple was facing a €500 million antitrust penalty over music streaming. But the fine announced by the Commission on Monday 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 billion) 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,” Vestager said.
She added that the total penalty (€1.8 billion) representing 0.5% of the iPhone maker’s worldwide turnover.
The Commission also ordered Apple not to apply anti-steering provisions on music streaming apps.
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 both iOS and the App Store are regulated as core platform services, under that pan-EU law. Penalties under the DMA can scale up to 10% of annual turnover (or higher for repeat offenders).
Apple reaponds
Apple has responded to the EU Commission’s antitrust decision.
Reacting in a blog post, Apple claimed enforcers failed to uncover “any credible evidence of consumer harm, and ignores the realities of a market that is thriving, competitive, and growing fast.”
The blog post accuses Spotify of wanting to rewrite the rules of the App Store to suit its commercial interests. Apple argues the music streaming platform has spent the best part of a decade attempting to fashion competition complaints with “little grounding in reality.”
Its blog post implies EU enforcers have been unduly influenced by complaints from a homegrown tech startup.
“What’s clear is that this decision is not grounded in existing competition law. It’s an effort by the Commission to enforce the DMA [Digital Markets Act] before the DMA becomes law. The reality is that European consumers have more choices than ever. Ironically, in the name of competition, today’s decision just cements the dominant position of a successful European company that is the digital music market’s runaway leader,” it added.