The European Commission has imposed a fine of €1.8 billion on Apple for its “abuse of dominant position” in the music streaming sector on iOS devices.
According to a statement released by the regulator, Apple has been preventing music streaming app developers from informing iOS users about alternative and more cost-effective music subscription services available outside of the app. This restriction also includes prohibiting developers from providing instructions on how to subscribe to these services.
The European Commission deemed these anti-steering provisions as illegal under EU antitrust laws, describing them as unfair trade conditions. These rules were considered unnecessary and disproportionate in safeguarding Apple’s commercial interests, resulting in a negative impact on iOS users.
The ruling highlighted that Apple’s actions over nearly a decade may have caused many iOS users to pay higher prices for music streaming subscriptions due to the high commissions imposed on developers by Apple, which were ultimately passed on to consumers in the form of increased subscription fees for the same service on the Apple App Store.
In addition to the fine, the European Commission has mandated Apple to remove the anti-steering provisions and refrain from engaging in similar violations or implementing practices with equivalent effects.
The Commission expressed hope that the fine would dissuade Apple from violating its regulations in the future.
Apple Responds Amid Spotify’s Approval
The decision culminates from an investigation initiated in 2020 following a complaint from Spotify regarding Apple’s dominating market position and the restriction preventing the music streaming service from promoting better deals to its users.
Spotify has publicly praised the EC’s decision, stating that the imposed fine conveys a clear message that no company, even a dominant entity like Apple, should misuse power to control other companies’ interaction with their customers.
Apple, on the other hand, has criticized the ruling, arguing that the Commission reached its decision without any credible evidence of harm. It also accused Spotify of attempting to rewrite the rules of the App Store to gain an advantage in a music streaming market where it already holds a dominant position.
Apple has stated its intention to appeal the ruling.
Digital Markets Act
The European Commission’s decision comes just before the implementation of the EU’s Digital Markets Act on March 7th. The new regulations aim to establish a framework that prevents large online platforms, such as Apple being classified as ‘gatekeepers’, from abusing their dominant market positions and create a fairer business environment for all companies.
In response to the impending deadline for compliance with the new regulations, Apple recently announced several rule changes for the App Store in the EU. These changes include allowing publishers to opt-in to new rules that reduce Apple’s revenue share to 17% (or 10% for certain developers) if they opt for an alternative marketplace or payment option
However, Apple will also introduce a ‘core technology fee’ which charges €0.50 for each first annual install per year over one million downloads from the App Store or an alternative marketplace.
PocketGamer.biz has previously discussed with analysts, publishers, and payment providers about the implications of these rule changes on the industry.
