Apple Fined Nearly $2B By European Commission In Spotify Case

Apple has been fined €1.8B ($1.95B) for breaking antitrust rules in Europe over music streaming.

The EU’s European Commission issued the heavy penalty, Apple’s first ever of its kind, after ruling the tech giant had prevented the likes of Spotify from informing consumers about “alternative and cheaper music subscription services” outside of the App Store.

The EC said this amounted to Apple “abusing its dominant position” — effectively restricting Apple handset users using its operating system (iOS) to its own services and payment methods. This was “illegal under EU antitrust rules,” the watchdog said.

The fine is nearly four times the €500M that had been expected, and Apple is expected to contest the verdict.

The EC said an investigation had found Apple “bans 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.”

It added Apple’s practices, which last nearly a decade, reduced consumers’ ability to make informed choices about their purchases and may have forced them to pay “significantly higher prices for music streaming subscriptions because of the high commission fee imposed by Apple on developers,” which could have been passed on.

The case had began in 2019 when Sweden-based music streamer Spotify complained to European officials over the restrictions and Apple charging 30% fees at the App Store. In July 2020, the Commission opened formal proceedings into Apple’s rules for app developers.

Along with the fine, Apple has been ordered to remove anti-steering provisions that lead consumers away from other services and told to refrain from repeating the infringement or adopting similar practices in future.

“For a decade, Apple abused its dominant position in the market for the distribution of music streaming apps through the App Store,” said Margrethe Vestager, Executive Vice-President in charge of competition policy at the European Commission. “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.”

Apple criticized the decision and said it will challenge, and claimed there was no evidence consumers had been harmed. It also hit out at Spotify, which is Europe’s largest music streaming service.

“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 company said in a statement.

“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 recognizable 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.

“We’re proud to play a key role supporting Spotify’s success — as we have for developers of all sizes, from the App Store’s earliest days.”