European Commission fined Apple approximately €1.8 billion for abusing its dominant position in the market for the distribution of music streaming applications to iPhone and iPad users ('iOS users') through the App Store. In particular, the Commission found that Apple's "anti-steering provisions" prevented app developers from informing iOS users about alternative and more economic music subscription services available outside the Apple ecosystem.
Currently, Apple is the sole provider of the App Store, which distributes apps to iOS users in the European Economic Area ('EEA'). As such, Apple fully controls the iOS user experience and sets the terms and conditions that developers must comply with in order to participate in the App Store and reach iOS users in the EEA. The Commission found that Apple imposed various anti-steering provisions on music streaming app developers, preventing iOS users from accessing alternative and more affordable subscription services. According to the Commission's assessment: (i) prohibiting in-app notifications about the prices of out-of-app subscription offers available on the internet, (ii) prohibiting in-app notifications to iOS users about price differences between in-app subscriptions sold through Apple's in-app purchase mechanism and out-of-app subscriptions, and (iii) prohibiting the inclusion of in-app links directing iOS users to the app developer's website where alternative subscriptions can be purchased, and prohibiting emails to new subscribers about alternative pricing options.
These restrictive provisions were considered not to be essential and proportionate to the protection of Apple's commercial interests in relation to the App Store, and to adversely affect the ability of iOS users of streaming music subscription services to make informed and effective decisions regarding their subscription process. Indeed, Apple's nearly decade-long practice of charging high commission fees to developers has resulted in consumers paying higher prices for music streaming subscriptions. Moreover, these provisions resulted in other non-monetary negative user experiences for some users, such as the burden of searching for alternative out-of-app offers or the inability to obtain any subscription service for users who did not make such searches. In assessing the administrative fine against Apple, the Commission took into account that Apple had provided misleading information, as well as the fact that the infringing conduct caused non-monetary harm, and imposed a lump sum fine in addition to the basic fine for deterrence purposes. Finally, in addition to the administrative fine, Apple was obliged to remove the anti-steering provisions imposed on developers.
(European Commission – 04.03.2024)
NAZALI TAX & LEGAL