The European Commission has fined Apple more than €1.8 billion for “abusing its dominant position” in the market for the distribution of music streaming apps to iPhone and iPad users through its App Store.
It is the first time that Apple has been fined by the European Commission. The case dates back almost a decade following a formal complaint by Spotify. Apple said it will appeal.
The Commission found that Apple applied restrictions on app developers preventing them from informing iOS users about alternative and cheaper music subscription services available outside of the app. This is illegal under EU antitrust rules.
Apple will have to remove terms that prevent developers telling subscribers about alternative subscription methods.
“For a decade, Apple abused its dominant position in the market for the distribution of music streaming apps through the App Store,” said Margrethe Vestager, executive vice-president in charge of competition policy.
“They did so by restricting developers from informing consumers about alternative, cheaper music services available outside of the Apple ecosystem. This is illegal under EU antitrust rules, so today we have fined Apple over €1.8 billion.”
The European Commission said Apple’s conduct 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”.
In a statement, Spotify said: "Today’s decision marks an important moment in the fight for a more open internet for consumers. The European Commission (EC) has made its conclusion clear: Apple’s behaviour limiting communications to consumers is unlawful. This decision sends a powerful message – 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. Of course, Apple Music, a competitor to these apps, is not barred from the same behaviour. By requiring Apple to stop its illegal conduct in the EU, the EC is putting consumers first. It is a basic concept of free markets – customers should know what options they have, and customers, not Apple, should decide what to buy, and where, when and how."
Apple hit back at the EC ruling in a statement which stated that the biggest beneficiary of the ruling, Spotify, “has the largest music streaming app in the world, and has met with the European Commission more than 65 times during this investigation”.
“The decision was reached despite the Commission’s failure to uncover any credible evidence of consumer harm, and ignores the realities of a market that is thriving, competitive, and growing fast,” said Apple.
Apple’s statement noted that Spotify pays them “nothing”.
“That’s because Spotify – like many developers on the App Store – made a choice,” said Apple’s statement. “Instead of selling subscriptions in their app, they sell them on their website. And Apple doesn’t collect a commission on those purchases.
“All told, the Spotify app has been downloaded, redownloaded, or updated more than 119 billion times on Apple devices. It’s available on the App Store in over 160 countries spanning the globe. And there are many more ways Apple creates value for Spotify, at no cost to their company…
“It takes continuous effort and a lot of investment for Apple to make the tools, the technology, and the marketplace that Spotify uses every day. We’ve even flown our engineers to Stockholm to help Spotify’s teams in person. And the result is that when a user opens the Spotify app, listens to music on their commute, or asks Siri to play a song from their library, everything just works. And again – Spotify pays Apple nothing.”
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