EU fines Apple €1.8bn over App Store restrictions on music streaming

Apple has been fined €1.8bn (£1.5bn) by the EU after an investigation found it had limited competition from music streaming services such as Spotify.

The fine is nearly four times higher than expected as the European Commission attempts to show it will act decisively on tech companies who abuse their dominant position in the market for online services.

The European competition commissioner, Margrethe Vestager, said a smaller fine would have been nothing more than the equivalent of a parking fine and the €1.8bn was designed to act as a deterrent against a repetition of such practices by Apple or others.

“I think it is important to see that if you are a company who is dominant and you do something illegal, it will be punished. We want to show our resolve that we will go into these cases.”

As a result of the anti-competitive practices, the public ended up paying more than they should have for music streaming, she said.

“Apple’s rules ended up harming consumers. Critical information was withheld so that consumers could not effectively use or make informed choices. Some consumers may have paid more because they weren’t aware that they can pay less if they subscribed outside of the app,” Vestager said.

The case followed complaints made by Spotify and centred on Apple’s App Store as the sole gateway for iphone apps.

“Apple’s conduct, which lasted for almost 10 years, may have led many iOS users to pay significantly higher prices for music streaming subscriptions,” the European Commission said in a statement.

Vestager said consumers may have paid two or three euros a month more for music streaming because of the lack of open competition. However, she conceded that the fine would not be distributed to customers who had been allegedly exploited but to individual member states.

She said the fine represented 0.5% of Apple’s global turnover.

The tech company disadvantaged users by restricting app developers from openly promoting cheaper music subscription services available outside the Apple “ecosystem” , the commission found.

“Music streaming developers were not allowed to inform the users inside their own apps of cheaper prices for the same subscription on the internet,” in an “anti-steering” practice, she said.

“They were also not allowed to change links in their apps to the consumers to their websites and pay lower prices there,” she told a press conference in Brussels.

Under the Digital Markets Act (DMA), tech companies were given six months from August last year to comply with new rules that will force them to allow fair competition from rivals.

The deadline on Thursday to comply is expected to result in immediate changes on the IoS and Android app stores.

Spotify, the world’s biggest music streaming service, has argued that the restrictions benefit Apple’s rival music streaming service, Apple Music.

Spotify and other app providers have been longstanding critics of Apple’s App Store, which they argue stifles competition by charging a 30% fee on apps and in-app purchases.

However, Apple has announced plans to allow EU customers to download apps on to iPhones outside the App Store, in response to the introduction of the trading bloc’s DMA, which has been brought in to regulate major tech firms such as Apple, Microsoft and Mark Zuckerberg’s Meta.

Responding to the fine, Apple said: “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.

“The primary advocate for 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 with the European Commission more than 65 times during this investigation.

“Today, Spotify has a 56% 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 recognisable 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 added that it intended to appeal.

Spotify said: “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.

“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.”

Max von Thun, the Europe director of the Open Markets Institute, which researches the impact of corporate monopolies, said the large fine “sets a positive precedent which the EU would do well to draw on in future enforcement actions against tech giants”.

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The tech companies were given six months from August last year to comply with a full list of dos and don’ts under the new laws, after which they could be fined up to 10% of their turnover.