EU Commission Fines Apple €1.8 Billion Over Abusive App Store Rules



The European Commission has fined Apple over €1.8 billion for abusing its dominant position on the market for the distribution of music streaming apps to iPhone and iPad users (‘iOS users’) through its App Store. In particular, the Commission found that Apple applied restrictions on app developers preventing them form informing iOS users about alternative and cheaper music subscription services available outside the app (‘anti-steering provisions’). This is illegal under EU antitrust rules.

The infringement

Apple is currently the sole provider of an App Store where developers can distribute their apps to iOS users throughout the European Economic Area (‘EEA’). Apple controls every aspect of the iOS user experience and sets the terms and conditions that developers need to abide by to be present on the App Store and be able to reach iOS users in the EEA.

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. 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 newly acquired users, for instance by email, to inform them about alternative pricing options after they set up an account.

Reuters reported Brussels on Monday fined Apple 1.84 billion euros ($2 billion) for thwarting competition from music streaming rivals via on its App Store, the iPhone maker’s first ever penalty for breaching EU rules.

A basic penalty of 40 million euros was inflated by a huge lump sum included as a deterrent – a first for the European Union’s antitrust authorities. 

According to Reuters, Apple said it would appeal the decision. A ruling at the Luxembourg-based General Court, Europe’s second-highest, is likely to take several years. Until then, Apple will have to pay the fine and comply with the EU order.

CNBC reported the European Commission, the European Union’s executive arm, on Monday hit Apple with a 1.8 billion euro ($1.95 billion) antitrust fine for abusing its dominant position in the market for the distribution of music streaming apps.

Apple also banned developers of music streaming apps from providing any instructions about how users could subscribe to these cheaper offers, the commission alleged.

In my opinion, it would be smarter for Apple to pay the fine and move on, rather than trying to fight the European Commission.