FX.co ★ EU Fines Apple Over EUR 1.8 Bln For Abusive App Store Rules

The European Commission has levied a fine of over 1.8 billion euros on Apple Inc., alleging that the tech giant abused its market dominance by imposing restrictive policies on its App Store. They claim these restrictions inhibit the distribution of music streaming apps to iPhone and iPad users.

Due to this news, Apple shares dropped around 1.3 percent to $177.37 in early Nasdaq trading.

The Commission's investigation states that Apple has hindered app developers from informing users about more affordable, alternative music subscription services outside of the app. This, according to EU antitrust rules, is deemed illegal.

Apple is currently the only provider of an App Store where developers in the European Economic Area (EEA) can distribute their apps to iOS users. Apple dictates the user experience for iOS users, setting the terms and conditions that developers must adhere to be available on the App Store and reach iOS users in the region.

The investigation found that Apple also prohibits developers from offering instructions to iOS users about how to subscribe to competing services. Apple's policies prevent developers from informing users about the cost of subscription offers available off the app or the price differences between app-based subscriptions sold through Apple and those available elsewhere.

Furthermore, the tech giant's policies disallow app developers from including links in their apps that direct iOS users to the developers' websites for alternative subscription purchases. Developers are also prohibited from reaching out to newly acquired users about alternative pricing options.

The Commission suggests that Apple's conduct over the last decade likely resulted in many iOS users paying inflated prices for music streaming subscriptions since Apple imposes a high commission fee on developers. This pricing model led to consumers paying higher subscription prices for the same services on the App Store.

Along with financial concerns, the Commission highlighted non-monetary harm stemming from a degraded user experience.

Apple's restrictions, according to the Commission, violate Article 102(a) of the Treaty on the Functioning of the European Union (TFEU), which regards these constraints as unfair trading conditions.

The Commission stated that Apple's restrictions are not necessary or proportionate to the protection of its commercial interests related to the App Store on their mobile devices. It concludes that these prohibitive policies adversely affect the interests of iOS users by inhibiting their ability to make informed and effective decisions when purchasing music streaming subscriptions.