The European Commission has fined Apple more than €1,8 billion for abusing its dominant market position for the distribution of music streaming applications to iPhone and iPad users ("iOS users") through the App Store.
In particular, the Commission found that Apple imposed restrictions on app developers, preventing them from informing iOS users about alternative and cheaper music subscription services available outside the app ("anti-targeting provisions"). This is illegal under EU antitrust rules.
Apple is currently the only provider of an App Store where developers can distribute their apps to iOS users in the European Economic Area ("EEA"). Apple controls every aspect of the iOS user experience and sets the terms and conditions that developers must comply with in order to be present in the App Store and reach iOS users in the EEA.
The Commission's investigation found that Apple prohibits developers of music streaming apps from fully informing iOS users of alternative and cheaper music subscription services available outside the app and from providing any instructions on how to subscribe to such offerings . In particular, the anti-targeting provisions prohibit app developers from:
- Informing iOS users in their apps about the prices of subscription offers available on the internet outside of the app.
- Informing iOS users in their apps about price differences between in-app subscriptions sold through Apple's in-app purchase mechanism and those available elsewhere.
- Including links in their apps that direct iOS users to the app developer's website where alternative subscriptions can be purchased. App developers were also prevented from contacting their own newly acquired users, for example via email, to inform them of alternative pricing options after they had created an account.
Today's decision concludes that Apple's anti-targeting commission amounts to unfair trading conditions in breach of Article 102(a) of the Treaty on the Functioning of the European Union ("TFEU"). These anti-targeting provisions are neither necessary nor proportionate to protect Apple's commercial interests in relation to the App Store on Apple's smart mobile devices and adversely affect the interests of iOS users, who cannot make informed and effective decisions about where and how to buy. music streaming subscriptions for use on your device
Apple's behavior, which has lasted nearly a decade, may have caused many iOS users to pay significantly higher prices for music streaming subscriptions because of the high tax Apple imposed on developers and passed on to consumers in the form of higher subscription prices for the same service on the Apple App Store. Additionally, Apple's anti-targeting provisions led to non-monetary harm in the form of a degraded user experience: iOS users either had to engage in cumbersome search before finding their way to relevant offers outside the app, or they didn't. never subscribed to any. service because they did not find the right one on their own.
The fine was set on the basis of the Commission's 2006 Fines Guidelines (see press release and MEMO).
When setting the level of the fine, the Commission took into account the duration and gravity of the infringement, as well as Apple's total turnover and market capitalization. It also took into account the fact that Apple presented incorrect information in the administrative procedure.
In addition, the Commission decided to add to the basic amount of the fine an additional lump sum of EUR 1,8 billion to ensure that the total fine imposed on Apple is sufficiently dissuasive. Such a lump sum fine was necessary in this case because a significant part of the damage caused by the infringement consists of non-monetary damage, which cannot be properly accounted for under the income-based methodology as set out in the Commission's Guidelines of 2006 on fines. In addition, the fine must be sufficient to deter Apple from repeating the present infringement or a similar infringement; and cause other companies of similar size and resources to commit the same or a similar violation.
The Commission concluded that the total amount of the fine of more than €1,8 billion is proportionate to Apple's global revenues and is necessary to achieve deterrence.
The Commission also ordered Apple to remove the anti-targeting provisions and to refrain from repeating the infringement or adopting practices with an equivalent object or effect in the future.
Today, @EU_Commission has fined @Apple 1.84 bn € for abusing its dominant position on the market for the distribution of #music #streaming #apps.
👉@Apple illegally restricted #app developers' ability to inform #users about cheaper options to buy🎶, outside the🍏ecosystem.
- Margrethe Vestager (@vestager) March 4, 2024
