Apple fined €1.8bn for breaking music streaming rules

Apple has been fined €1.8 billion (£1.54 billion) by European regulators for squeezing competition from its music streaming rivals.

The fine, the third biggest ever issued by the European Commission, represents a big victory for Spotify in its long-running dispute with Apple over rules within its App Store that banned it from promoting offers about the prices of subscriptions within its app.

This led, the European Commission said, to “unfair trading conditions”, which meant that iPhone users may have had to pay “significantly higher prices for music streaming subscriptions” over the past decade.

The commission said that such a severe fine was intended to act as a deterrent. It also reflected the serious nature of the breach and Apple’s submission of incorrect information during the investigation. Apple plans to appeal against the decision.

Apple said the fine followed a “failure to uncover any credible evidence of consumer harm, and ignores the realities of a market that is thriving, competitive, and growing fast”.

Margrethe Vestager, the commission’s executive vice-president who is responsible for competition regulation, said: “For a decade Apple abused its dominant position in the market for the distribution of music streaming apps through the App Store. 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.”

If it ends up being paid, the fine will be a surprise boost for British and European taxpayers. It will go into the bloc’s coffers and will reduce the contribution that member states pay in for the following year. As the investigation started before Brexit, the UK will receive a share.

It is another significant blow to Apple which has had to overhaul the way in which it structures its App Store after the introduction of new European technology legislation. Under the Digital Markets Act, it now must offer alternative ways for customers to download and pay for apps, which it argued threatens the security of users.

Apple claims that Spotify, the market leader, and others get a good deal from its services because they enjoy access to all its tools and technology and because customers can stream music on its other devices, such as Siri and CarPlay.

An Apple spokesman said: “Spotify pays Apple nothing for the services that have helped them to build, update and share their app with Apple users in 160 countries spanning the globe. Fundamentally, their complaint is about trying to get limitless access to all of Apple’s tools without paying anything for the value Apple provides.

“The Spotify app has been downloaded, redownloaded or updated more than 119 billion times on Apple devices.”

Spotify said: “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.

“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.”

The commission started investigating Apple in 2019, following a complaint from Spotify.

Alex Haffner, competition partner at UK law firm Fladgate, said the fine and EC statements showed the determination of the competition authorities in Europe to regulate big tech strongly and effectively.

He said: “They were careful not only to emphasise the significant consumer harm which the Commission believes was caused by Apple’s abusive behaviour over a long period, but also to emphasise the very clear message from the competition commissioner of the need for a strong deterrent to companies in the same position as Apple that any such behaviour will be dealt with accordingly.”

Apple’s shares fell by 2.5 per cent, or $4.56, to close at $175.10 after the ruling.