EU takes a bite out of Apple with $2B in-app purchase fine

Cupertino blames Spotify, says Commission is just giving preference to another European company

Apple's anti-steering provisions that prevent music streaming apps from directing users outside the App Store for paid services were smacked down in the European Union today and earned the iGiant a fine of more than €1.8 billion ($1.95 billion).

The European Commission said Apple's policies "amount to unfair trading conditions" and "are neither necessary nor proportionate for the protection of Apple's commercial interests."

"Apple will have to open the gates to its ecosystem, to allow end users to easily find the apps they want, pay for them in any way they want, and use them on any device they want," EU antitrust chief Margrethe Vestager said of the decision. 

Apple's anti-steering rules have prevented developers from directing users outside the App Store – thereby circumventing Apple's 30 percent commission – for in-app purchases and subscriptions. As part of the EC decision, Apple is being forced to end the use of anti-steering provisions in the bloc, but this restriction applies only to music streaming apps, an EC spokesperson told The Register.

Vestager described Apple's anti-competitive conduct as having gone on for nearly a decade, resulting in iOS users paying "significantly higher prices for music streaming subscriptions." The anti-steering provisions also led to a "degraded user experience," Vestager said, as users were forced to "engage in a cumbersome search" to find cheaper prices outside the App Store because the anti-steering rule also prevented developers from telling users about cheaper prices available elsewhere.

Unlike the EC decision, the outcome of Epic Games' fight against Apple in the US after the latter banned the former's hit game Fortnite from the App Store for circumventing in-app purchase restrictions resulted in a striking down of Apple's anti-steering provision across the board.

That said, the EU isn't without broader rules to prevent Apple from using anti-steering provisions outside of music streaming apps.

The EU's Digital Markets Act (DMA), set to go into effect on March 7, is forcing Apple to open up iOS across Europe by, among other things, allowing third-party app stores and non-Apple browser engines on iOS devices. We're told by EU officials that the DMA also includes broad anti-steering provisions that, in effect, have the same result as the Apple vs Epic decision in the US.

This is all Spotify's fault

Apple was quick to point a finger at music streaming service Spotify for the EC's decision, which it said today was reached "despite the Commission's failure to uncover any credible evidence of consumer harm."

"The primary advocate for this decision – and the biggest beneficiary – is Spotify," Apple claimed in a statement, adding that the Swedish company met with EC officials "more than 65 times during this investigation."

Apple claims Spotify controls 56 percent of the European music streaming market, and doesn't pay Apple a dime despite the App Store significantly contributing to its success.

"A large part of their success is due to the App Store, along with all the tools and technology that Spotify uses to build, update, and share their app with Apple users around the world," Apple said. "But free isn't enough for Spotify. They also want to rewrite the rules of the App Store – in a way that advantages them even more."

Spotify, for its part, said today that the EC's decision sends the message that "no company, not even a monopoly like Apple, can wield power abusively to control how other companies interact with their customers."

"By requiring Apple to stop its illegal conduct in the EU, the EC is putting consumers first," Spotify added. 

Apple, naturally, disagrees, saying that the EC's decision is simply "an effort … to enforce the DMA before the DMA becomes law," and "cements the dominant position of a successful European company that is the digital music market's runaway leader."

Apple intends to appeal the EC's decision, though what outcome that would have with DMA enforcement beginning in mere days isn't clear. Apple may simply be seeking a way out of the EU's fine, which is still a pittance for the company. It had a net income of around $34 billion in the last quarter alone. ®

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