Apple has been slapped with a hefty fine of €1.84 billion (approximately $2 billion or Rs 16,568 crore) by European Union antitrust regulators in response to its App Store policies. The ruling from the EU Commission prohibits Apple from obstructing music services from advertising cheaper subscription deals outside of its own platform.
The decision, announced by the EU Commission on Monday, follows an extensive investigation into Apple's practices regarding the distribution of music streaming apps through the App Store. Margrethe Vestager, Executive Vice-President in charge of competition policy, condemned Apple's actions, stating, "For a decade, Apple abused its dominant position in the market by restricting developers from informing consumers about alternative, cheaper music services available outside of the Apple ecosystem. This is illegal under EU antitrust rules."
The Commission highlighted Apple's prohibition on music streaming app developers from fully informing iOS users about alternative and more affordable subscription services outside of the App Store. Additionally, Apple prevented app providers from sharing instructions on how to subscribe to such offers, stifling competition and consumer choice.
In response to the ruling, Spotify, a major player in the music streaming industry, criticised Apple's behaviour, stating that Apple's rules hindered its ability to communicate directly with users about subscription prices and promotions, while Apple Music, its competitor, faced no such restrictions.
“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,” Spotify said in a statement.
Apple, on the other hand, fiercely contested the decision, arguing that the Commission failed to uncover credible evidence of consumer harm or anti-competitive behaviour. The company accused Spotify of seeking to rewrite the rules of the App Store to gain unfair advantages without contributing to Apple's ecosystem.
This ruling is the culmination of an investigation initiated in 2020 after Spotify filed an antitrust complaint against Apple's "Apple Tax" and restrictive App Store policies. Over time, the Commission's focus shifted towards App Store rules that limited developers' ability to inform users about alternative payment options.
While Apple has made some concessions, such as allowing developers to advertise payment methods outside of the iOS app, critics argue that these changes are insufficient to address the concerns raised by regulators and developers. The EU's fine comes as Apple prepares to revise its app distribution rules in compliance with the EU's Digital Markets Act, allowing third-party app marketplaces on the iPhone for the first time.
Apple has announced its intention to appeal the decision, maintaining its position that the App Store has fostered a competitive environment and provided valuable opportunities for developers. As the tech giant gears up for legal battles in Europe, the ramifications of this ruling are likely to reverberate across the global tech industry.
“Today, the European Commission announced a decision claiming the App Store has been a barrier to competition in the digital music market. 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,” Apple said in a statement.
“Despite that success, and the App Store’s role in making it possible, Spotify pays Apple nothing. That’s because Spotify — like many developers on the App Store — made a choice. Instead of selling subscriptions in their app, they sell them on their website. And Apple doesn’t collect a commission on those purchases. When it comes to doing business, not everyone’s going to agree on the best deal. But it sure is hard to beat free. In 2015, Spotify started working with the European Commission on an investigation with little grounding in reality. They claimed the digital music market had stalled, and that Apple was holding competitors back. Unfortunately for their case, Spotify continued to grow — and thanks in part to the App Store, eclipsed every other digital music business in the world,” the statement concluded.
“The European Commission is issuing this decision just before their new regulation — the Digital Markets Act (DMA) — comes into force. Apple is set to comply with the DMA in days, and our plans include changes to the rules challenged here. 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. The reality is that European consumers have more choices than ever. Ironically, in the name of competition, today’s decision just cements the dominant position of a successful European company that is the digital music market’s runaway leader,” the statement concluded.