Apple was until yesterday the only American internet giant to have been spared fines for violating European Union competition rules, an honor that has faded with the announcement of a penalty of 1,840 million euros for having abused the dominant position in the distribution of streaming music.
For a decade, “Apple imposed restrictions on app developers that prevented them from telling iOS users about out-of-app music subscription services,” favoring its services, Apple Music, denounced in a press conference the vice-president of the Community Executive and responsible for Competition, Margrethe Vestager. Specifically, the Californian company prevents third-party companies from informing users about subscription options outside of iPhone and iPad apps. “This is illegal under European antitrust laws,” and has prevented “millions of European consumers” from making informed decisions on the issue, as well as forcing them to pay higher prices, Vestager added. .
Brussels has ordered Apple to stop these practices entirely, not just in the streaming music sector. The investigation began following a complaint from the Swedish company Spotify, the main online music platform in Europe. After six years of investigations, the Commission has come to the conclusion that Apple has engaged in “unfair commercial practices” against its rivals to favor its app, Apple Music, a relatively new argument within European competition law.
The Cupertino company imposes “non-negotiable” conditions on app developers, such as a ban on informing users about the different subscription options inside or outside their apps, including links to these services or putting -contact them directly, for example by mail, about other cheaper alternative subscription routes, since they do not have to pay a commission to the manufacturer of the i-Phones, says the Commission. Brussels does not question the percentage that Apple charges app developers in the App Store (30%), but the restrictions themselves.
This extra cost makes the products significantly more expensive, which is why Spotify, Netflix and other companies have given up on attracting subscribers this way and it is only possible to hire their services online. Brussels says these provisions have particularly hurt smaller operators such as Deezer and SoundCloud. “Now they will be able to compete in terms of prices”, said Vestager.
Given some leaks, the fine from Brussels was expected to be around €500 million, hence the surprise caused by Vestager’s announcement, which explained that the figure resulting from the simple application of the guidelines on penalties would have been a minuscule amount, 40 million (the equivalent for Apple to “a parking ticket”, he said), which is why it was chosen to apply the provisions that allow an additional amount of way that acquires a deterrent character. The tip that has been applied to the base penalty, 1,800 million, represents 0.5% of the company’s global business volume.
Apple then announced that it intends to appeal the fine. “The decision has been taken despite the Commission’s inability to discover any credible evidence of harm to consumers and ignores the realities of a booming, competitive and growing market”, he criticized in a harsh statement in which he emphasized that the main beneficiary of all this will be the leading company in the music streaming sector in the EU, Spotify. Those responsible for Spotify have met “65 times” with the Commission. Vestager announced the findings of the investigation just days before the European Digital Markets law comes into effect.
