(BRUSSELS) – The European Commission fined Apple over EUR 1.8 billion Monday for abusing its dominant position on the market for distribution of music streaming apps through its App Store.
In particular, the Commission found that Apple applied restrictions on app developers preventing them from informing iPhone and iPad (‘iOS) users about alternative and cheaper music subscription services available outside of the app (‘anti-steering provisions’). This is illegal under EU antitrust rules.
“For a decade, Apple abused its dominant position in the market for the distribution of music streaming apps through the App Store,” said EC vice-president Margrethe Vestager: “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.”
As sole provider of an App Store where developers distribute apps to iOS users in the EU and EEA, Apple controls every aspect of the iOS user experience and sets terms and conditions for developers’ presence on the App Store.
The Commission says its investigation 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. In particular, the anti-steering provisions ban app developers from:
- Informing iOS users within their apps about prices of subscription offers available on the internet outside of the app.
- Informing iOS users within their apps about price differences between in-app subscriptions sold through Apple’s in-app purchase mechanism and those available elsewhere.
- Including links in their apps leading iOS users to the app developer’s website on which alternative subscriptions can be bought. App developers were also prevented from contacting their own newly acquired users, for instance by email, to inform them about alternative pricing options after they set up an account.
The EU’s conclusion is that Apple’s anti-steering provisions are unfair trading, being neither necessary nor proportionate for the protection of Apple’s commercial interests in relation to the App Store on Apple’s smart mobile devices and negatively affect the interests of iOS users, who cannot make informed and effective decisions on where and how to purchase music streaming subscriptions for use on their device.
The EU says Apple’s conduct over the last decade 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.
Apple’s anti-steering provisions also led to ‘non-monetary harm’ in the form of a degraded user experience: iOS users either had to engage in a cumbersome search before they found their way to relevant offers outside the app, or they never subscribed to any service because they did not find the right one on their own.
Further information on antitrust damages actions, including a practical guide on how to quantify antitrust harm, is available here.
