Regulators in the European Union (EU) hit Apple with a huge fine for anti-competitive rules for third-party App Store apps in the Spotify streaming case.
Following years of investigations prompted by Spotify’s complaint, the European Commission has finally reached its decision: the App Store has indeed posed a barrier to competition in the digital music market.
Putting its money where its mouth is, the Commission fined the Cupertino company a massive €1.8 billion, or approximately $1.95 billion, a decision Apple plans to appeal. The fine is “necessary to achieve deterrence”, notes the ruling.
In a harshly-worded statement on Apple Newsroom, Apple accused the Commission of attempting to “enforce the Digital Markets Act (DMA) before it becomes law.”
Apple found guilty in Spotify’s App Store streaming case
The European Commission published its ruling on Monday, March 4, 2024. Apple has been found guilty of stiffing competition in the market for music streaming by prohibiting third-party App Store apps from informing users about more affordable subscription prices available outside the app.
“For a decade, Apple abused its dominant position in the market for the distribution of music streaming apps through the App Store,” the Commission’s competition head, Margarethe Vestager, is quoted in the press release.
“They did so by restricting developers from informing consumers about alternative, cheaper music services available outside of the Apple ecosystem.”
The Commission found that Apple “applied restrictions on app developers preventing them from informing iOS users about alternative and cheaper music subscription services available outside of the app.”
The controversial rule, so-called anti-steering provisions, has long irked third-party developers and is the reason why apps like Netflix launch to a login screen without even informing you that a subscription is available to purchase outside of the app.
Apple reacts with a harshly worded statement
“This is illegal under EU antitrust rules,” the Commission noted, likening Apple’s rule to “unfair trading conditions.” The anti-steering provision is against common sense, especially if you’re a developer on its receiving end,
Instead of letting the dust quietly settle, Apple’s response to the decision is a pretty unbelievable read that reveals just how much it’s frustration by the decision.
But like a seven-year-old, Apple’s arguments are petulant and childish. The statement attacks both the Commission and Spotify, noting Spotify owes much of its success to the App Store. Apple acknowledges that Spotify is the world’s top music-streaming service, with a 56 percent share in Europe.
In several places, the statement underscores that Spotify doesn’t pay anything to Apple because it chose to not offer subscriptions directly in the app.
The scrutiny continues, whether Apple likes it or not
It also confirms Apple will soon comply with the DMA, “and our plans include changes to the rules challenged here” as if that changes the fact that the rules Apple is now changing are the very same rules that have existed for years, making music-streaming apps less convenient than necessary.
“The reality is that European consumers have more choices than ever,” Apple’s statement reads. “Ironically, in the name of competition, today’s decision just cements the dominant position of a successful European company that is the digital music market’s runaway leader.”
Apple will release iOS 17.4 within days, bringing several changes for European users in response to the DMA, including sideloading, alternative app stores (like MacPaw’s Setapp Mobile), web payments, etc.