European Union smacks Apple with $2 billion fine over music streaming

AppleInsider

The European Union has levied a massive fine against Apple for anticompetitive behavior in a market that it does not hold the dominant position -- music streaming.

Spotify's App Store icon (left), Apple Music (right)

The fine was announced live by The European Commission's competition head, Margarethe Vestager. In levying the fine, she said that Apple violated antitrust rules by not allowing developers to tell users in the App Store that there were other options other than Apple Music.

"For a decade, Apple abused its dominant position in the market for the distribution of music streaming apps through the App Store," Vestager said. "They did so by restricting developers from informing consumers about alternative, cheaper music services available outside of the Apple ecosystem. This is illegal under EU antitrust rules, so today we have fined Apple over [2 billion euro]."

Apple Music is either the third or fourth largest streamer in the European Union. Spotify holds the lead position with about 56% of the European streaming market.

Spotify has made a statement, and is clearly pleased with the fine.

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.

By requiring Apple to stop its illegal conduct in the EU, the EC is putting consumers first. It is a basic concept of free markets-- customers should know what options they have, and customers, not Apple, should decide what to buy, and where, when and how.

Beyond saying that it will appeal, Apple has already made a statement regarding the matter.

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.

The primary advocate for this decision -- and the biggest beneficiary -- is Spotify, a company based in Stockholm, Sweden. Spotify has the largest music streaming app in the world, and has met with the European Commission more than 65 times during this investigation.

Today, Spotify has a 56 percent share of Europe's music streaming market -- more than double their closest competitor's -- and pays Apple nothing for the services that have helped make them one of the most recognizable brands in the world. 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.

We're proud to play a key role supporting Spotify's success -- as we have for developers of all sizes, from the App Store's earliest days.

Later on in the statement, Apple makes a clear point about Spotify's market position in the EU.

"The reality is that European consumers have more choices than ever," Apple says. "Ironically, in the name of competition, today's decision just cements the dominant position of a successful European company that is the digital music market's runaway leader."

The entire statement spells out Apple's fee structure, Spotify's use of the App Store, and what Spotify gets from Apple being on the App Store.

Back in 2019, Spotify complained to the EU that Apple was abusing its monopoly by forcing developers to use the App Store's payment system. At the same time, the music streamer claimed that Apple was also unfairly denying it the ability to inform users of lower prices on its website.

In response, the EU began an investigation, and in 2021 issued a preliminary report. That report did say that Apple was in breach of EU laws over the promotion restrictions, or anti-steering measures.

Perhaps in response to these probes, Apple changed the payout structure of the App Store, with a new 15% tier for subscriptions that extend over a first year, instead of the blanket 30% that Spotify still claims Apple demands on all subscriptions.

Apple also made a new free reader tier of apps to deal with complaints such as this from Spotify and others.



Read on AppleInsider

avon b7

This is part of what the EU had to say:

"Today's decision 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 (‘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.

Apple's conduct, which lasted for almost ten years, may have led many iOS users to pay significantly higher prices for music streaming subscriptions because of the high commission fee imposed by Apple on developers and passed on to consumers in the form of higher subscription prices for the same service on the Apple App Store.

... "

Apple makes no reference to its anti-competitive behaviour in its statement and instead tries to put the spotlight on Spotify, its European nature and music streaming.

Draco

Another EU money grab. 

I hope these costs are directly passed along to purchasers of Apple products in Europe. 

rezwits

$2 Billion?!?  wow just like?, "just like that"

foregoneconclusion

avon b7 said:

This is part of what the EU had to say:
"Today's decision 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 (‘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.

Nutshell: EU is arguing that smartphone users only have access to information that's inside the App Store and apps. They're totally ignoring the fact that an iPhone also has access to the internet, social media, phone calls/texts, email and push notifications. Apple doesn't control the content in any of those. The idea that consumers in 2024 have no idea where to get information without the app telling them is TOTALLY BONKERS. 

teejay2012

The EU does not generate enough profit for Apple to be happy about a $2B fine. That is going to hurt. Why for all this, when Apple was responding to DMA and making accommodations for their anti steering practices?... Because Margrethe Vestager is still very angry from losing the Irish tax case, which was over ruled on appeal as it did not provide proof of wrong doing. I think on appeal the same could happen here, as the EU commission is not the same as EU courts which adhere to the law and not vendetta driven. Apple could have allowed more information to music customers of course, but Spotify and Daniel Ek are nasty pieces in this. US tech companies have every right to become paranoid about future business in the EU, as clearly they are being targeted, to the advantage of EU companies. The corruption is obvious imo, but I suppose that is what businesses are all about. In the future, I doubt Apple will leave the EU, but certainly the products and services in the EU will differ, and likely will be more expensive.

AppleZulu

avon b7 said:

This is part of what the EU had to say:

"Today's decision 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 (‘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.

Apple's conduct, which lasted for almost ten years, may have led many iOS users to pay significantly higher prices for music streaming subscriptions because of the high commission fee imposed by Apple on developers and passed on to consumers in the form of higher subscription prices for the same service on the Apple App Store.

... "

Apple makes no reference to its anti-competitive behaviour in its statement and instead tries to put the spotlight on Spotify, its European nature and music streaming.

That’s because it’s absurd for the company that holds more than half the market to accuse another company that has a much smaller market share of “anti-competitive behavior” in that market. It becomes doubly absurd when you consider that much of that market wouldn’t even exist without the mobile platform created by Apple and then copied by its competitors. 

When Spotify launched in 2006, streaming music was limited primarily to stationary, plugged-in computers. There were mp3 players and iPods that made downloaded music portable, but Apple had to invent the iPhone, push phone companies into broadband, and then introduce the App Store for Spotify to become relevant. Samsung, Google and others followed, expanding Spotify’s opportunities for riding the broadband mobile platform wave. 

Spotify then used that platform to disrupt the purchased digital music market, and Apple supplanted iTunes with Apple Music in response. 

As with Epic, Spotify just wants a free ride. That’s what this is all about. 

Honestly, when you add to this the fact that Spotify also notoriously pays artists significantly less for their content than Apple, they come off as pretty parasitic, when you think about it. 

rorschachai

Kick Spotify off the App Store and tell them they’re free to use one of the third-party “app marketplaces” that will be available in the EU soon. Shouldn’t be a problem for them since Apple supposedly provides nothing of value.

avon b7

foregoneconclusion said:

avon b7 said:

This is part of what the EU had to say:
"Today's decision 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 (‘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.

Nutshell: EU is arguing that smartphone users only have access to information that's inside the App Store and apps. They're totally ignoring the fact that an iPhone also has access to the internet, social media, phone calls/texts, email and push notifications. Apple doesn't control the content in any of those. The idea that consumers in 2024 have no idea where to get information without the app telling them is TOTALLY BONKERS. 

That’s not what the EU is arguing and largely why I copy/pasted part of their defence of the punishment. 

Apple wilfully used anti competitive practices. Those practices went on for ten years and were brought to the attention of the authorities. An investigation was launched. The fine is the result.

Can you at least see why anti-steering is seen as harming competition? 

It's irrelevant that Apple 'changed its ways' not too long ago. 

What is relevant is that someone at Apple sat down and pushed that rule through in the first place. 

Perhaps the EU should dig further to see if there was any red flag raised at the mere thought of it. That is the kind of thing the US DoJ would do. 

Apple’s response is the 'bonkers' bit. 

gatorguy

teejay2012 said:

Because Margrethe Vestager is still very angry from losing the Irish tax case, which was over ruled on appeal as it did not provide proof of wrong doing.

The case is still on-going as far as I know, with Vestager filing to overturn the 2nd highest EU court's ruling about two years ago. Justice moves slow.  

The most recent news on it was not in Apple's favor. Yup, you even read it here.
https://appleinsider.com/articles/23/11/09/apples-14-billion-tax-trial-should-start-over-says-eu

Now back to the regularly scheduled program. 

avon b7

AppleZulu said:

avon b7 said:

This is part of what the EU had to say:

"Today's decision 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 (‘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.

Apple's conduct, which lasted for almost ten years, may have led many iOS users to pay significantly higher prices for music streaming subscriptions because of the high commission fee imposed by Apple on developers and passed on to consumers in the form of higher subscription prices for the same service on the Apple App Store.

... "

Apple makes no reference to its anti-competitive behaviour in its statement and instead tries to put the spotlight on Spotify, its European nature and music streaming.

That’s because it’s absurd for the company that holds more than half the market to accuse another company that has a much smaller market share of “anti-competitive behavior” in that market. It becomes doubly absurd when you consider that much of that market wouldn’t even exist without the mobile platform created by Apple and then copied by its competitors. 

When Spotify launched in 2006, streaming music was limited primarily to stationary, plugged-in computers. There were mp3 players and iPods that made downloaded music portable, but Apple had to invent the iPhone, push phone companies into broadband, and then introduce the App Store for Spotify to become relevant. Samsung, Google and others followed, expanding Spotify’s opportunities for riding the broadband mobile platform wave. 

Spotify then used that platform to disrupt the purchased digital music market, and Apple supplanted iTunes with Apple Music in response. 

As with Epic, Spotify just wants a free ride. That’s what this is all about. 

Honestly, when you add to this the fact that Spotify also notoriously pays artists significantly less for their content than Apple, they come off as pretty parasitic, when you think about it. 

Marketshare has little to do with anti-competitive behaviour or the fines. 

One of my old clients (plastics industry) received and invite to a meeting of the main industry players (worldwide players) in the field. I think the meeting took place in Germany. 

Once there it quickly became clear that the agenda was an attempt at price fixing. My client quickly pulled out, not wanting anything to do with it. 

The company proposing all this was from the US. 

That same company (probably seeing the risks) reported the meeting to the EU and my client got a multi million euro fine - just for being there. 

The US company escaped a fine as it was the whistleblower. Isn't that ironic!? 

The fine stood. However the client did not hold a dominant (or even near dominant position in the industry). 

Which part of anti-steering within the context of a multi billion dollar app store business was not anti-competitive? 

radarthekat

avon b7 said:

This is part of what the EU had to say:

"Today's decision 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 (‘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.

Apple's conduct, which lasted for almost ten years, may have led many iOS users to pay significantly higher prices for music streaming subscriptions because of the high commission fee imposed by Apple on developers and passed on to consumers in the form of higher subscription prices for the same service on the Apple App Store.

... "

Apple makes no reference to its anti-competitive behaviour in its statement and instead tries to put the spotlight on Spotify, its European nature and music streaming.

I’m curious, does Spotify discount its service by the amount of Apple’s commission when a customer pays directly through Spotify’s website?  

tmay

The end result of this is that the EU is becoming even less competitive; more regulation in lieu of increased investment in innovation.

Perhaps that $2B will be used to mitigate some of the issues plaguing farmers, now rioting against both EU regulations, cost of operation, and competition from other countries where EU farmer inefficiencies are pronounced.

While that is going on, the EU is a dangerous crossroads with its auto manufacturing, as Chinese imports are poised to expand into the EU. 

tenthousandthings

IIRC, this (anti-steering) was the one part of the Epic case that they lost in California. So it’s hard to see how Apple thought this would fly in the EU. I think they know they can’t avoid a fine, they’re making these points in their appeal to establish the framework for their ultimate response, which is going to be something similar to what they’re doing with the DMA rules. 

pulseimages

I’ve always known about Spotify, I just hate their UI. 

ericthehalfbee

radarthekat said:

avon b7 said:

This is part of what the EU had to say:

"Today's decision 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 (‘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.

Apple's conduct, which lasted for almost ten years, may have led many iOS users to pay significantly higher prices for music streaming subscriptions because of the high commission fee imposed by Apple on developers and passed on to consumers in the form of higher subscription prices for the same service on the Apple App Store.

... "

Apple makes no reference to its anti-competitive behaviour in its statement and instead tries to put the spotlight on Spotify, its European nature and music streaming.

I’m curious, does Spotify discount its service by the amount of Apple’s commission when a customer pays directly through Spotify’s website?  

No. Apple pointed out that Spotify has always charged the same prices and never passed any savings on to consumers.

Spotify has 56% of the EU market. Next is YouTube and Amazon with Apple in 4th place at 11%.

So where’s the harm to Spotify? They’re the largest streamer in the world and completely dominate the EU. I’ve heard the idiotic argument that “Spotify could be even more successful if Apple didn’t put up roadblocks”. So…your argument is Spotify didn’t become an even bigger monopoly in music so Apple should pay up?

Same with consumers. Where’s the harm? Spotify hasn’t had in-App subscriptions since 2016. There was a brief period of overlap from 2015 to 2016 where Apple Music and Spotify competed unfairly, and if anything the fine should reflect that period of time only. And where does Vestager get off claiming this has been going on for 10 years when Apple Music has only been around 8 years?

Apple won the Irish tax case on appeal. This case will be easier to overturn as the EU can’t prove harm to…anyone.

gatorguy

ericthehalfbee said:

radarthekat said:

avon b7 said:

This is part of what the EU had to say:

"Today's decision 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 (‘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.

Apple's conduct, which lasted for almost ten years, may have led many iOS users to pay significantly higher prices for music streaming subscriptions because of the high commission fee imposed by Apple on developers and passed on to consumers in the form of higher subscription prices for the same service on the Apple App Store.

... "

Apple makes no reference to its anti-competitive behaviour in its statement and instead tries to put the spotlight on Spotify, its European nature and music streaming.

I’m curious, does Spotify discount its service by the amount of Apple’s commission when a customer pays directly through Spotify’s website?  

No. Apple pointed out that Spotify has always charged the same prices and never passed any savings on to consumers.

Spotify has 56% of the EU market. Next is YouTube and Amazon with Apple in 4th place at 11%.

So where’s the harm to Spotify? They’re the largest streamer in the world and completely dominate the EU. I’ve heard the idiotic argument that “Spotify could be even more successful if Apple didn’t put up roadblocks”. So…your argument is Spotify didn’t become an even bigger monopoly in music so Apple should pay up?

Same with consumers. Where’s the harm? Spotify hasn’t had in-App subscriptions since 2016. There was a brief period of overlap from 2015 to 2016 where Apple Music and Spotify competed unfairly, and if anything the fine should reflect that period of time only. And where does Vestager get off claiming this has been going on for 10 years when Apple Music has only been around 8 years?

Apple won the Irish tax case on appeal. This case will be easier to overturn as the EU can’t prove harm to…anyone.

Wasn't Spotify charging an extra $3 a month for Premium over the on-site price if subscribed via the App Store? Now, of course, you can't subscribe at all through the AppStore, only directly through Spotify. 

BTW, the tax case is not over. In fact it's likely it will be retried, with several Judicial errors affecting the appeal ruling. You've forgotten that AppleInsider had an article about it back in November. 

mike1

The US should really should be targeting European companies that do significant business in the US and start finding (or making up) reasons to issue significant fines and other penalties. Every time the EU targets an American-based company, the US should do the same. Time to start putting some retaliatory pressure on the EU.

danox

teejay2012 said:

The EU does not generate enough profit for Apple to be happy about a $2B fine. That is going to hurt. Why for all this, when Apple was responding to DMA and making accommodations for their anti steering practices?... Because Margrethe Vestager is still very angry from losing the Irish tax case, which was over ruled on appeal as it did not provide proof of wrong doing. I think on appeal the same could happen here, as the EU commission is not the same as EU courts which adhere to the law and not vendetta driven. Apple could have allowed more information to music customers of course, but Spotify and Daniel Ek are nasty pieces in this. US tech companies have every right to become paranoid about future business in the EU, as clearly they are being targeted, to the advantage of EU companies. The corruption is obvious imo, but I suppose that is what businesses are all about. In the future, I doubt Apple will leave the EU, but certainly the products and services in the EU will differ, and likely will be more expensive.

What will happen over time is a fork in the road in time, outside the EU and inside will become very different and difference won't be beneficial to the EU tech wise.

Apple flying engineers in or taking phone calls to help Spotify will be over, I didn't realize Apple helped behind the scenes so much for free.

https://www.apple.com/newsroom/2024/03/the-app-store-spotify-and-europes-thriving-digital-music-market/ The small developers certainly didn't get that red carpet treatment. 

9secondkox2

The EU blaming Apple for not allowing ither stores to advertise in apple’s store… yeah, that’s such a horrible thing. I totally see target items with stickers telling customers to go to wal mart instead for cheaper… not. 

This is criminal. The eu is basically inventing ways for apple to get in trouble these days. Perhaps they view apple as their own piggy bank. 

Time to leave the eu. Enough is enough. 

9secondkox2

avon b7 said:

AppleZulu said:

avon b7 said:

This is part of what the EU had to say:

"Today's decision 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 (‘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.

Apple's conduct, which lasted for almost ten years, may have led many iOS users to pay significantly higher prices for music streaming subscriptions because of the high commission fee imposed by Apple on developers and passed on to consumers in the form of higher subscription prices for the same service on the Apple App Store.

... "

Apple makes no reference to its anti-competitive behaviour in its statement and instead tries to put the spotlight on Spotify, its European nature and music streaming.

That’s because it’s absurd for the company that holds more than half the market to accuse another company that has a much smaller market share of “anti-competitive behavior” in that market. It becomes doubly absurd when you consider that much of that market wouldn’t even exist without the mobile platform created by Apple and then copied by its competitors. 

When Spotify launched in 2006, streaming music was limited primarily to stationary, plugged-in computers. There were mp3 players and iPods that made downloaded music portable, but Apple had to invent the iPhone, push phone companies into broadband, and then introduce the App Store for Spotify to become relevant. Samsung, Google and others followed, expanding Spotify’s opportunities for riding the broadband mobile platform wave. 

Spotify then used that platform to disrupt the purchased digital music market, and Apple supplanted iTunes with Apple Music in response. 

As with Epic, Spotify just wants a free ride. That’s what this is all about. 

Honestly, when you add to this the fact that Spotify also notoriously pays artists significantly less for their content than Apple, they come off as pretty parasitic, when you think about it. 

Marketshare has little to do with anti-competitive behaviour or the fines. 

One of my old clients (plastics industry) received and invite to a meeting of the main industry players (worldwide players) in the field. I think the meeting took place in Germany. 

Once there it quickly became clear that the agenda was an attempt at price fixing. My client quickly pulled out, not wanting anything to do with it. 

The company proposing all this was from the US. 

That same company (probably seeing the risks) reported the meeting to the EU and my client got a multi million euro fine - just for being there. 

The US company escaped a fine as it was the whistleblower. Isn't that ironic!? 

The fine stood. However the client did not hold a dominant (or even near dominant position in the industry). 

Which part of anti-steering within the context of a multi billion dollar app store business was not anti-competitive? 




So… by your logic, the eu perpetrated something really unfair and bad. So it should keep happening? Especially to an American company? 

Bro. You’ve been at that line for a while. Time to go home and rest.