The European Commission on March 4 fined Apple over €1.8 billion (around $2 billion) for abusing its dominant position in the market for the distribution of music streaming apps on iOS. The case dates back to a 2019 complaint filed by Spotify (and later joined by another unnamed company) over the company’s App Store policies, specifically the fees charged by Apple and the requirement to use Apple’s in-app purchase system. However, the scope of the probe was later narrowed down to Apple’s anti-steering rules, which prevented apps like Spotify from informing their users within the app about lower prices available outside of the app, such as on the web. Apps were also not allowed to include links in their apps leading users to the app developer’s website to make a purchase.
The Commission concluded that Apple’s anti-steering provisions amounted to unfair trading conditions that negatively affected the interests of iOS users: “Apple’s conduct, which lasted for almost ten years, 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. Moreover, Apple’s anti-steering provisions 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.”
Along with the fine, the Commission has ordered Apple to remove the anti-steering provisions.
Spotify published a statement welcoming the decision. “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. […] By requiring Apple to stop its illegal conduct in the EU, the EC [European Commission] is putting consumers first. It is a basic concept of free markets—customers should know what options they have, and customers, not Apple, should decide what to buy, and where, when and how,” the company said.
Spotify CEO Daniel Ek shared the following video on X:
The @EU_Commission finally ruled against Apple today. A lot of you have been asking for my take on what this means and what will – and won’t – change. I made a video with my thoughts including why this is a good first step, but also why there’s still more to be done. pic.twitter.com/pdICn2Jq6S
— Daniel Ek (@eldsjal) March 4, 2024
Apple has decided to appeal this decision. “Today, Spotify has a 56 percent share of Europe’s music streaming market — more than double their closest competitor’s — and pays Apple nothing for the services that have helped make them one of the most recognizable brands in the world. A large part of their success is due to the App Store, along with all the tools and technology that Spotify uses to build, update, and share their app with Apple users around the world,” Apple said in a passioned statement where it argues that Spotify gets all the benefit of the App Store and pays Apple nothing.
Notably, this decision comes two days before the EU’s landmark Digital Markets Act (DMA) goes into force. The DMA forces Apple to make much more substantial changes to its App Store policies than the above decision. For instance, starting March 6, Apple will allow third-party app stores and billing systems on iOS for the first time. However, Spotify and other developers have argued that the changes made by Apple “make a mockery of the DMA” because Apple has made the terms of the new policy untenable for developers. Over 34 developers have asked the European Commission to look into Apple’s compliance. You can read more about the changes made by Apple in response to the DMA, as well as the criticism it has received, in our explainer here.
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