The European Union has levied a hefty fine of €1.84 billion (roughly $2 billion) on Apple for breaching antitrust rules in the market for music streaming services on its iOS platform. This penalty centers around Apple’s use of “anti-steering provisions,” which restrict music streaming apps from informing users about cheaper subscription options outside of the App Store.
This decision stems from concerns raised in a March 2019 antitrust complaint filed by Spotify. The complaint accused Apple of hindering competition by limiting consumer choice and innovation through its App Store rules. Specifically, Spotify argued that Apple’s dual role as both “a player and referee” in the market unfairly disadvantaged other app developers like them.
Following an investigation launched in June 2020, the EU formally charged Apple in April 2021 with distorting competition in the music streaming market through its App Store practices. This initially included charges related to Apple’s mandatory use of its own in-app payment processing system. However, the final ruling focuses solely on the anti-steering provisions.
The EU argues that these anti-steering measures prevent users from making informed choices by withholding crucial information about alternative pricing and features. This potentially leads to consumers paying more than necessary or being unable to find their preferred music streaming service altogether.
While initial reports suggested a potential €500 million fine, the final penalty is significantly higher. This sum is comprised of two parts: a base fine of €40 million for breaching EU regulations and a “lump sum” of €1.8 billion to compensate for the non-monetary harm inflicted upon consumers and to deter similar practices in the future. Notably, the total penalty represents a mere 0.5% of Apple’s global turnover.
Beyond the fine, the EU has also ordered Apple to permanently cease its use of anti-steering provisions in music streaming apps. This means that effective immediately, music streaming developers on iOS will have the freedom to communicate directly with their users through various channels, including within the app, via email, and through other methods, to inform them about alternative pricing options outside the App Store.
Furthermore, under the recently enacted Digital Markets Act (DMA), Apple will be prohibited from implementing anti-steering provisions on any iOS app. This is because Apple has been designated as a “gatekeeper” under the DMA, and the iOS operating system and App Store are classified as “core platform services” subject to specific regulations. Notably, the DMA empowers the EU to impose penalties of up to 10% of annual turnover (or even higher for repeat offenses) on non-compliant gatekeepers.
This landmark decision by the EU sets a strong precedent for fair competition within app ecosystems and empowers users to make informed choices regarding music streaming services and potentially beyond. It also demonstrates the EU’s growing resolve to regulate the conduct of major tech companies within its borders.