Unveiling the €1.8 Billion Fine Imposed on Apple by the European Commission for Abusive Rules Against Music Streaming Providers
Background of the claim
In June 2020, the Commission opened formal proceedings into Apple’s rules for app developers on the distribution of apps via the App Store. In April 2021, the Commission sent Apple a Statement of Objections, which was replaced by another Statement of Objections in February 2023. Apple provided a final response in May 2023, and the Commission issued its final decision on 04 March 2024.
The sanctioned conduct
Apple is the owner of the App Store, a platform where developers can distribute their apps to iOS users. As the owner of the platform, Apple sets the terms and conditions that developers need to abide by to be present in the App Store, including communications between app developers and end-users and the ability to conclude transactions outside the AppStore.
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 own newly acquired users, for instance by email, to inform them about alternative pricing options after they set up an account.
The European Commission considered that these anti-steering provisions were neither necessary nor proportionate for the protection of Apple’s commercial interests concerning the App Store on Apple’s smart mobile devices. Moreover, these prohibitions negatively affected the interests of iOS users, who could not make informed and effective decisions on where and how to purchase music streaming subscriptions for use on their devices.
Apple’s conduct, which lasted for almost ten years, may have led many iOS users to pay significantly higher prices for music streaming subscriptions because of the high commission fee imposed by Apple on developers and passed on to consumers in the form of higher subscription prices for the same service on the Apple App Store1. 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.
According to the European Commission, these restrictions constituted a breach of Article 102 TFEU, which prohibits dominant firms from abusing their market power.
Similarity to Epic Games v Apple case in the US
The conduct that was sanctioned in this case is quite similar to the controversy between Epic and Apple in the US. In that case, the main triggering event occurred when Epic breached Apple’s rules and updated the Fortnite app to allow consumers to pay Epic directly for in-app currency at a discount, rather than paying traditionally via Apple’s App Store. Consequently, Apple pulled the game from the App Store within hours of this violation and Epic brought a claim against Apple.
In the ruling, District Judge Yvonne Gonzalez Rogers concluded that Epic’s arguments had failed to outweigh the general public interest in requiring private parties to adhere to their contractual agreements. As a result, Judge Rogers ruled in favour of Epic Games, Inc. for violation of Califonia’s Unfair Competition Law (with a separate injunction issued over anti-steering practices) and in favour of Apple, Inc. on all other counts.2
On 16 January 2024, after an excruciating legal battle, the US Supreme Court concluded the entire dispute declining to hear appeals by either Apple or Epic Games, rendering permanent the anti-steering provisions against Apple, but otherwise making Apple the big winner of that dispute.
The aftermath
Is it a coincidence that the European Commission issued its final decision shortly after the final ruling from the US Supreme Court?
It is interesting to see that there is alignment between European and US authorities when it comes to antitrust cases against Big Tech companies. It is more so, considering that the new Digital Markets Act imposes a new list of Dos and Dont’s to gatekeepers, and from 07 March 2024, Apple and all the gatekeepers are restrained from imposing anti-steering obligations on app developers.
As an iOs user, all I can hope is that the EC’s economic sanction and new anti-steering obligations will truly be translated into better prices for everyone.
Tech Law Geeks 
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