The European Commission announced on Monday that it has fined Apple over €1.8B for abusing its dominant position in the music streaming market on the App Store.

The announcement comes in response to Apple’s restrictions imposition on app developers, preventing them from informing iOS users about alternative and cheaper music subscription services outside of the App Store.

This is illegal under EU antitrust rules, says the EC.

Margrethe Vestager, Executive Vice-President in charge of competition policy, says, “For a decade, Apple abused its dominant position in the market for the distribution of music streaming apps through the App Store. They did so by restricting developers from informing consumers about alternative, cheaper music services available outside of the Apple ecosystem. This is illegal under EU antitrust rules, so today we have fined Apple over €1.8B.”

The Infringement

Apple is the sole provider of an App Store where developers can distribute their apps to iOS users throughout the European Economic Area (‘EEA’). 

According to the Commission’s investigation, Apple imposed a ban on music streaming app developers from fully informing iOS users about alternative and cheaper music subscription services available outside of the app and from providing any instructions about how to subscribe to such offers.

The anti-steering provisions also restricted app developers from:

• Informing iOS users within their apps about the prices of subscription offers available on the internet outside of the app.
• Informing iOS users within their apps about the price differences between in-app subscriptions sold through Apple’s in-app purchase mechanism and those available elsewhere.
• Including links in their apps leads iOS users to the app developer’s website on which alternative subscriptions can be bought. App developers were also prevented from contacting their own newly acquired users, for instance, by email, to inform them about alternative pricing options after they set up an account.

Apple’s anti-steering provisions have been found to violate Article 102(a) of the Treaty on the 

Functioning of the European Union (‘TFEU’) due to unfair trading conditions.

“These anti-steering provisions are neither necessary nor proportionate for the protection of Apple’s commercial interests about the App Store on Apple’s smart mobile devices and negatively affect the interests of iOS users, who cannot make informed and effective decisions on where and how to purchase music streaming subscriptions for use on their device,” says EC.

Apple’s conduct for almost a decade may have led to higher prices for music streaming subscriptions for iOS users, explains EC. 

Apple imposed a high commission fee on developers, and this cost was passed on to consumers in the form of higher subscription prices for the same service on the Apple App Store.

The fine

According to EC, the fine imposed on Apple was based on the Commission’s 2006 Guidelines on fines. 

In determining the level of the fine, the Commission considered the duration and gravity of the infringement, as well as Apple’s total turnover and market capitalisation. 

Furthermore, the Commission decided to add a lump sum of €1.8B to the basic fine to ensure that the overall fine imposed on Apple is sufficiently deterrent. 

Such a lump sum fine was deemed necessary because a significant part of the harm caused by the infringement consists of non-monetary harm, which cannot be properly accounted for under the revenue-based methodology as set out in the Commission’s 2006 Guidelines on Fines.

The Commission concluded that the total amount of the fine of over €1.8 billion is proportionate to Apple’s global revenues and is necessary to achieve deterrence. 

The Commission has also ordered Apple to remove the anti-steering provisions and refrain from repeating the infringement or adopting practices with an equivalent object or effect in the future.