EU slams €1.8bn fine on Apple over music streaming restrictions

The European Union (EU) has fined Apple the sum of €1.8 billion for favouring its own music streaming service rather than rivals.

According to a statement by the EU on Monday, Apple did not fully inform their device users about alternative and cheaper subscription services for more than a decade.

As a result, iPhone and iPad users paid “significantly higher prices for music streaming subscriptions”.

“The Commission’s investigation found that 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,” the EU said.

“In particular, the anti-steering provisions ban app developers from: Informing iOS users within their apps about the prices of subscription offers available on the internet outside of the app.

“Informing iOS users within their apps about the price differences between in-app subscriptions sold through Apple’s in-app purchase mechanism and those available elsewhere.

“Including links in their apps leading iOS users to the app developer’s website on which alternative subscriptions can be bought.

“App developers were also prevented from contacting their own newly acquired users, for instance by email, to inform them about alternative pricing options after they set up an account.

“Moreover, Apple’s anti-steering provisions led to non-monetary harm in the form of a degraded user experience: iOS users either had to engage in a cumbersome search before they found their way to relevant offers outside the app, or they never subscribed to any service because they did not find the right one on their own.”

Elaborating on the fine, the EU said it took into account the duration and gravity of the infringement as well as Apple’s total turnover and market capitalisation.

The commission also said it factored in that Apple “submitted incorrect information in the framework of the administrative procedure”.

“In addition, the Commission decided to add to the basic amount of the fine an additional lump sum of €1.8 billion to ensure that the overall fine imposed on Apple is sufficiently deterrent,” the statement reads.

“Such lump sum fine was necessary in this case because a significant part of the harm caused by the infringement consists of non-monetary harm.”

Meanwhile, the fine was issued due to a complaint by streaming service Spotify which launched a five-year investigation focused on how Apple prevented app developers from telling users of cheaper ways to pay for subscriptions without going through an app.

The investigation found that Apple stopped streaming services, such as Spotify, from letting users know how much subscription offers cost outside of Apple apps, such as Apple Music.

In its response, 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”.

Meanwhile, the EU has also opened a separate antitrust investigation into Apple’s mobile payments service, and the company has promised to open up its tap-and-go mobile payment system to rivals in order to resolve it.

‘PUT CUSTOMERS FIRST’

On its part, Spotify said the EU judgement shows the significance of putting customers first.

“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 customer,” the company said in a statement.

“Apple’s rules muzzled Spotify and other music streaming services from sharing with our users directly in our app about various benefits.”

Spotify added that by requiring Apple to stop its illegal conduct in the EU, “the EC is putting consumers first. 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”.