On March 4, 2024, the European Union (EU), after a five year long investigation, fined Apple nearly $2 billion over unfair trade practices related to music streaming for iOS users. Apple was accused of making unfair rules and regulations for the developers of the music streaming applications. The fine imposed by the EU is one of the largest antitrust penalties which was unanticipated even by antitrust lawyers.
The speculation was brought forth by Spotify, a music streaming application, in 2019 claiming that Apple was practicing anti-competitive practices by ensuring that the Apple Store limited user choices, thereby, restricting the user experience. Daniel Ek, the CEO of Spotify, stated that Apple required Spotify and other digital services to pay a 30% tax on purchases made through Apple’s payment system. This inflated the price of the Premium Membership and essentially constituted a special preference for Apple Music by keeping lower membership prices. Even after repeated requests by Spotify, the companies could not find an amicable solution which resulted in the involvement of the EU.
The EU released a statement on March 4, 2024 reporting that the investigations conducted suggested that Apple’s policies restricted application developers, which intervened with user satisfaction and their ability to alternative and cheaper music streaming subscriptions. The Commission found that Apple’s anti-steering provisions ensured that application developers could not inform the iOS users within their application about offers available outside the application and the price difference between the subscriptions sold through Apple’s in-app purchase mechanism and those available elsewhere. The investigations also found that Spotify could not provide links to send the iOS users directly to the original website to access alternate subscriptions, nor could they contact the newly acquired subscribers through email to provide the alternate pricing information. The EU found Apple in violation of Article 102 of the Treaty on the Functioning of the European Union and Article 54 of the European Economic Area Agreement which prohibit the abuse of a dominant position.
The fine imposed by the EU is one of the highest fines ever imposed on a single company other than Google, which was fined €4.34 billion and €2.42 billion in two separate cases. When asked about the same, Margrethe Vestage, the Executive Vice President of the EU said “For a decade, Apple abused its dominant position in the market for the distribution of music streaming apps through the App Store” and “[The fine] reflects both Apple’s financial power and the harm that Apple’s conduct inflicted on millions of European users”.
Apple’s plan of action is to appeal against the findings of the EU as they claim that the EU’s decision lacks “credible evidence of consumer harm” and disregards the competitive nature of the market. Furthermore, they claim that the decision benefits only Spotify who themselves control more than fifty-percent of the European market.