The European Commission has fined Apple more than 1.8 billion euros over the App Store’s oppressive rules for music streaming providers. According to Brussels, the company has abused its dominant position in the market for distributing music streaming apps to iPhone and iPad users (iOS users) through its App Store. In particular, the Commission found that Apple restricted app developers from informing iOS users about alternative, cheaper music subscription services available outside of the app. This is illegal under EU antitrust rules.
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Apple – explains the Commission – is currently the only provider of an App Store where developers can distribute their apps to iOS users throughout the European Economic Area. Apple controls every aspect of the iOS user experience and sets the terms and conditions that developers must meet to be featured on the App Store. The Commission’s investigation found that Apple prohibits developers of music streaming apps from fully informing iOS users about alternative, cheaper music subscription services available outside of the app and from providing instructions on how to subscribe to them. offers. In particular, the ‘anti-change’ provisions prohibit app developers from: informing iOS users within their apps about the prices of subscription offers available on the Internet outside the app; inform iOS users within their apps about price differences between in-app subscriptions sold through Apple’s in-app purchase mechanism and those available elsewhere; include links in their apps that direct iOS users to the app developer’s website where alternative subscriptions can be purchased. Application developers were also prevented from contacting their newly acquired users, such as via email, to inform them about alternative pricing options after they created an account. “Apple’s behavior, spanning nearly a decade, may have led many iOS users to pay significantly higher prices for music streaming subscriptions due to high fees imposed by Apple on developers and passed on to consumers in the form of higher subscription prices. high for developers. same service on the Apple App Store. The rules imposed by Apple resulted in non-monetary damage in the form of a worsened user experience: iOS users had to engage in a complicated search before finding relevant offers beyond outside the app, or they have never subscribed to any service because they haven’t found the right one on their own”, highlights the European executive.
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When setting the amount of the fine, the Commission took into account the duration and gravity of the infringement as well as Apple’s total turnover and market capitalisation. And it also took into account the fact that Tim Cook’s company “provided incorrect information in the administrative procedure”. The Commission has decided to add an additional lump sum of €1.8 billion to the basic amount of the fine to ensure that the overall fine imposed is sufficiently deterrent. This flat-rate fine, Brussels indicates, “was necessary in this case because a significant part of the damage caused by the violation consists of non-monetary damage, which cannot be adequately accounted for according to the revenue-based methodology, as established in the Commission’s guidelines on fines of 2006″. Furthermore, “the fine must be sufficient to deter Apple from repeating the current or similar infringement; and to deter other companies of similar size and with similar resources from committing the same or similar violation.” Today’s is one of the highest fines imposed by the EU, which then ordered the Cupertino company to eliminate the provisions in question and to refrain from repeating the infringement or from adopting practices having an equivalent object or effect in the future. Competition Commissioner Margrethe Vestager says that “for a decade Apple has abused its dominant position in the market for the distribution of music streaming apps through the App Store. It did this by preventing developers from informing consumers about alternative, cheaper music services available outside the Apple ecosystem.”
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Apple’s response
“Today the European Commission announced a decision that the App Store represents a barrier to competition in the digital music market. The decision was made despite the Commission’s failure to uncover credible evidence of consumer harm and ignores the reality of a thriving, competitive and rapidly growing market. The main supporter of this decision – and the biggest beneficiary – is Spotify, a company based in Stockholm, Sweden. Spotify has the largest music streaming app in the world and has met the European Commission more than 65 times during this investigation.” Apple stated this in a note in response to the European Commission’s decision to fine the company 1.8 billion euros. “Today, Spotify holds a 56% share of the European music streaming market – more than double that of its closest competitor – and pays Apple nothing for the services that have helped make them one of the most recognizable brands in the world. part of their success is due to the App Store, along with all the tools and technology that Spotify uses to create, update and share its app with Apple users around the world“, he explains further. “Starting as a small startup in Stockholm, Sweden, Spotify has grown their company into the largest digital music business in the world. They have a share of over 50% of the European market, and on iOS Spotify has an even higher share than to Android. But that’s only part of the picture, because the European digital music market has absolutely exploded. Companies are competing for new customers. Consumers have many options to choose from. And last year there were almost 160 million of subscribers – compared to 25 million in 2015 – with an incredible annual growth rate of 27%. Companies like Google, Amazon, Deezer, SoundCloud and Apple compete every day to win customers, but Spotify is at the top”, we read again. “Despite this 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, has made a choice. Instead of selling subscriptions in their app, they sell them on the their website. And Apple does not collect a commission on those purchases. Overall, the Spotify app has been downloaded, redownloaded or updated more than 119 billion times on Apple devices. It is available on the App Store in more than 160 countries worldwide world. And there are many other ways Apple creates value for Spotify, at no cost to the company: Our engineering helps ensure that Spotify apps can work seamlessly with Siri, CarPlay, Apple Watch, AirPlay, Widgets and more. Like any developer, Spotify can access Apple’s more than 250,000 APIs (and uses 60 of our frameworks) so its apps can connect via Bluetooth, send notifications, play audio in the background on a user’s device, and more again,” Apple continues.
“But free isn’t enough for Spotify. They also want to rewrite the rules of the App Store, in a way that further benefits them. Like many businesses, Spotify uses email, social media, text messaging, web ads, and many other ways to reach potential customers. Under the App Store player rule, Spotify can also include in its app a link to a web page where users can create or manage an account. We introduced the player rule years ago in response to feedback from developers like Spotify. And many reading apps use this option to connect users to a web page, from e-readers to video streaming services. Spotify could do this too, but they chose not to. Spotify instead wants to bend the rules in its favor by incorporating subscription prices into its app, without using the App Store’s in-app purchase system. They want to use Apple’s tools and technologies, distribute them on the App Store, and benefit from the trust we’ve built with users, without paying Apple anything for it. In short, Spotify wants more,” Apple accuses. “In 2015, Spotify began cooperating with the European Commission on an investigation with little basis in reality. They argued that the digital music market was stalling and that Apple was holding competitors back. Unfortunately for them, Spotify has continued to grow and, thanks in part to the App Store, has eclipsed every other digital music business in the world. Over the next eight years and in over 65 meetings with Spotify, the European Commission tried to build three different cases. At every turn, they narrowed the scope of their claims, but each theory had a couple of features in common: no evidence of consumer harm, European consumers have more choices than ever in a digital music market that has grown so rapidly exponential. In just eight years, it went from 25 million subscribers to nearly 160 million – with over 300 million active listeners – and Spotify was the biggest winner. “No evidence of anti-competitive behavior: eight years of investigations have never produced a valid theory explaining how Apple hindered competition in such a clearly thriving market,” the company further states.
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