Europe Penalizes Apple for Anti-Competitive Practices Against Music Apps

The European Commission has recently imposed a hefty financial penalty on the tech giant, Apple, amounting to 1.8 billion euros. This action comes as a result of accusations that the company has been unjustly leveraging its market power in the music streaming distribution sector through practices that are deemed unfair within its App Store. The controversy primarily revolves around specific rules that Apple has imposed, which the European Union argues have put a limit on the ability of companies like Spotify and other competitors of Apple Music to promote alternative methods for users to subscribe to their services. Apple, on the other hand, has swiftly denied these accusations and announced its plans to appeal the decision. They issued a press release characterized by strong tones, contesting the Commission’s conclusions and arguing that there is no concrete evidence of harm to consumers. Apple further underlines its vision of a healthy, competitive, and rapidly expanding market.

This fine represents the culmination of an investigation that has spanned over a decade, which was reinforced by a formal complaint lodged by Spotify in 2019. The magnitude of the fine, which was calculated based on Apple’s global revenues, is intended to serve as a deterrent, according to the European Commission. The investigation brought to light how Apple’s policies hindered developers of music streaming apps from informing iOS users about alternatives for subscribing to services outside the App Store. These alternatives might be more economical, thus bypassing the 15-30% commissions that Apple applies on in-app purchases. The rules in question explicitly prohibited developers from informing users about the possibility of alternative payment methods, existing price differences, or from directing users toward developers’ websites to purchase subscriptions outside of the App Store.

According to the European Commission, such restrictions amount to a practice of unfair trading conditions, thereby rendering them effectively illegal under EU law. As part of the penalty, Apple has been instructed to abolish such anti-directive restrictions going forward. Despite the ruling, Apple has already started to amend its policies following the initiation of the EU investigation, in some instances alleviating previously enforced restrictions. The most recent App Store policies now permit so-called “reader apps”, including Spotify, to incorporate external links for account management and payment options, as well as permitting free email communication with their users. Furthermore, Apple has announced the impending introduction of new trading conditions for developers in the EU, aligning with the Digital Markets Act, which should theoretically provide greater freedoms to Spotify and other music streaming services.