EU Fines Apple Over EUR 1.8 Bln For Abusive App Store Rules

The European Commission said fined Apple Inc. over 1.8 billion euros for abusing its dominant position through its App Store on the market for the distribution of music streaming apps to iPhone and iPad users or iOS users.

In pre-market activity on Nasdaq, Apple shares were losing around 1.3 percent to trade at $177.37.

According to the Commission, the tech major applied restrictions on app developers, preventing them from informing iOS users about alternative and cheaper music subscription services available outside of the app. The EU antitrust rules consider this as illegal.

Throughout the European Economic Area or EEA, Apple is at present the sole provider of an App Store where developers can distribute their apps to iOS users. The iOS user experience’s every aspect is controlled by Apple, which also 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 region.

As per the Commission’s investigation, Apple bans music streaming app developers from fully informing iOS users about alternative and cheaper music subscription services available outside of the app. The firm also stops them from providing any instructions about how to subscribe to such offers.

It was found that, Apple’s 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, as well as about the price differences between in-app subscriptions sold through Apple and those available outside.

Apple provisions also ban app developers from including links in their apps leading iOS users to the app developer’s website on which alternative subscriptions can be bought.

These developers were also prevented from contacting their own newly acquired users to inform them about alternative pricing options after they set up an account.

Apple’s conduct, which lasted for almost ten years, likely caused many iOS users to pay significantly higher prices for music streaming subscriptions due to the high commission fee imposed by Apple on developers, the Commission said. This would have caused higher subscription prices to consumers for the same service on the Apple App Store.

There were also non-monetary harm in the form of a degraded user experience.

The Commission now concludes that Apple’s anti-steering provisions amount to unfair trading conditions, in breach of Article 102(a) of the Treaty on the Functioning of the European Union or TFEU.

“These anti-steering provisions are neither necessary nor proportionate for the protection of Apple’s commercial interests in relation to the App Store on Apple’s smart mobile devices and negatively affect the interests of iOS users, who cannot make informed and effective decisions on where and how to purchase music streaming subscriptions for use on their device,” it said.

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