In its continued efforts to reign in the market power of U.S. tech giants, the European Commission has fined Apple €1.8 billion ($1.95 billion) over what it calls “abusive App store rules for music streaming services”. The EU’s competition watchdog found that “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,” which it deems illegal under EU antitrust rules. Apple’s conduct, the Commission found, has harmed consumers in several ways. Firstly, because it may have led them to pay higher prices than necessary and secondly, because it may have degraded their user experience by forcing them to “engage in a cumbersome search” for relevant offers outside of the app.
The fine, which amounts to roughly 0.5 percent of Apple’s annual revenue, is the third largest antitrust penalty imposed against a U.S. tech company by the European Commission, which had previously fined Google €4.3 and €2.4 billion in 2018 and 2017, respectively, for antitrust violations related to unfairly promoting its search engine on Android and giving an unfair advantage to its own shopping service on Google Search.
While Spotify hailed Monday’s announcement as “an important moment in the fight for a more open internet for consumers,” who “should know what options they have and decide what to buy, and where, when and how,” Apple was less thrilled with the European Commission’s ruling. In a scathing response titled “The App Store, Spotify, and Europe’s thriving digital music market”, Apple took particular offense in the role that Spotify played in the investigation, claiming that the music streaming market leader was both “the primary advocate” and “the biggest beneficiary” of the decision. Apple points out that its iOS platform and app ecosystem helped Spotify become the dominant player in music streaming the Swedish market leader having to pay for it. “When it comes to doing business, not everyone’s going to agree on the best deal. But it sure is hard to beat free. But free isn’t enough for Spotify. They also want to rewrite the rules of the App Store — in a way that advantages them even more.”
Aside from saying that the entire investigation had “little grounding in reality,” Apple also criticized the timing of the Commission’s decision. It comes just before the Digital Markets Act, which has identified Apple as one of six gatekeepers in digital markets, takes effect, forcing Apple to comply with new rules anyway. “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 before the DMA becomes law,” Apple said in the statement, which ends in the company announcing its plans to appeal the decision.
