EU commission slaps Apple with $2 billion fine over App store rules

European Union antitrust regulators have slapped Apple with a hefty fine of €1.84 billion (approximately $2 billion) over its App store policies. The EU Commission has now prohibited Apple from obstructing music services from advertising cheaper subscription deals outside of its own platform.

Apple app store policy

The announcement comes after an extensive investigation into Apple's practices regarding the distribution of music streaming apps through the App Store. The Executive Vice-President in charge of competition policy, Margrethe Vestager condemned Apple's actions saying it abused its dominant position in the market.

"For a decade, Apple abused its dominant position in the market by restricting developers from informing consumers about alternative, cheaper music services available outside of the Apple ecosystem. This is illegal under EU antitrust rules", said Margrethe Vestager, Executive Vice-President in charge of competition policy.

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The Commission pointed out that Apple for years has prohibited music app developers to reveal the entire information about alternative and more affordable subscription services outside of the App Store. The firm has also prevented app providers from sharing instructions on how to subscribe to such offers, stifling competition and consumer choice.

Apple's response to EU commission

Meanwhile, Apple has contested EU's decision arguing that the Commission failed to uncover credible evidence of consumer harm or anti-competitive behaviour. It further accused Spotify of seeking to rewrite the rules of the App Store to gain unfair advantages without contributing to Apple's ecosystem.

EU's fine also comes at a time when Apple has been preparing to revise its app distribution rules in compliance with the EU's Digital Markets Act, allowing third-party app marketplaces on the iPhone for the first time.

While announcing its intention to appeal the decision, Apple has maintained its position that the App Store has fostered a competitive environment and provided valuable opportunities for developers.

“Today, the European Commission announced a decision claiming the App Store has been a barrier to competition in the digital music market. The decision was reached despite the Commission’s failure to uncover any credible evidence of consumer harm, and ignores the realities of a market that is thriving, competitive, and growing fast,” Apple said in a statement.

Investigation into Apple

In 2020, Spotify filed an antitrust complaint against Apple's "Apple Tax" and restrictive App Store policies. Over time into the investigation, the Commission's focus shifted towards App Store rules that limited developers' ability to inform users about alternative payment options.

In response to EU's ruling,

Spotify, a major player in the music streaming industry, criticised Apple's behaviour, stating that Apple's rules hindered its ability to communicate directly with users about subscription prices and promotions, while Apple Music, its competitor, faced no such restrictions.

“This decision sends a powerful message — no company, not even a monopoly like Apple, can wield power abusively to control how other companies interact with their customers. Apple’s rules muzzled Spotify and other music streaming services from sharing with our users directly in our app about various benefits — denying us the ability to communicate with them about how to upgrade and the price of subscriptions, promotions, discounts, or numerous other perks. Of course, Apple Music, a competitor to these apps, is not barred from the same behaviour,” Spotify said in a statement.