Apple has been hit with a fine of \u20ac1.84 billion (about $2 billion) by European Union antitrust regulators over its App Store rules, and has been told it cannot stop music services from advertising cheaper subscription deals outside of Apple\u2019s store. News of today\u2019s fine was earlier reported by the Financial Times<\/em><\/a>, and comes ahead of Apple\u2019s huge shakeup of the iPhone\u2019s app distribution rules due to the EU\u2019s Digital Markets Act.<\/p>\n<\/div>\n In a press release on Monday<\/a>, the EU Commission said its investigation found that \u201cApple bans music streaming app developers from fully informing iOS users about alternative and cheaper music subscription services available outside of the app,\u201d in addition to preventing app providers from sharing instructions on how to subscribe to such offers.<\/p>\n<\/div>\n \u201cFor a decade, Apple abused its dominant position in the market for the distribution of music streaming apps through the App Store,\u201d said Margrethe Vestager, Executive Vice-President in charge of competition policy. \u201cThey 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 \u20ac1.8 billion.\u201d<\/p>\n<\/div>\n The Commission said it took into account the \u201cduration and gravity of the infringement\u201d when setting the fine, as well as Apple\u2019s total turnover and market capitalization, while also factoring in \u201cincorrect information\u201d submitted by Apple during the administrative procedure.<\/p>\n<\/div>\n Apple has since issued a scathing response<\/a> to the ruling, saying the Commission failed to \u201cuncover any credible evidence\u201d of consumer harm or anti-competitive behavior. The company also says that Spotify wants to \u201crewrite the rules of the App Store\u201d to gain competitive advantages, while paying nothing to Apple, despite Apple claiming the App Store was crucial to Spotify\u2019s current market domination. Apple says it will appeal the decision.<\/p>\n<\/div>\n The EU\u2019s investigation dates back to 2020<\/a> and was announced after Spotify filed an antitrust complaint<\/a> over Apple\u2019s so-called \u201cApple Tax.\u201d As well as complaining about the 30 percent commission, Spotify took issue with App Store rules that it said restricted communications with its customers and limited its ability to market and promote deals.<\/p>\n<\/div>\n Over time, the commission\u2019s investigation has homed in on App Store rules that prevent developers from telling their users about alternatives to Apple\u2019s own payment options. In February 2023<\/a>, the commission said its \u201cpreliminary view\u201d was that Apple\u2019s \u201canti-steering obligations\u201d represent \u201cunfair trading conditions\u201d and argued that its App Store policies were \u201cneither necessary nor proportionate,\u201d could result in users paying more, and limited consumer choice.<\/p>\n<\/div>\n Apple has already made some concessions. In 2021, it said that developers could advertise payment methods outside of the iOS app<\/a> via communications such as email. Then, in early 2022, it started allowing developers to link out to their own sites from within the iOS apps themselves<\/a>. But this second change only applied to so-called \u201creader apps\u201d for services like Netflix, Kindle, or Spotify that are designed primarily to provide access to digital content, and developers needed to request an \u201centitlement\u201d before they could add an external link. Bloomberg<\/em>, which earlier reported<\/a> on the EU\u2019s antitrust fine, said Spotify criticized Apple\u2019s rule changes as being \u201cjust for show.\u201d<\/p>\n<\/div>\n The EU\u2019s fine comes as Apple is preparing to overhaul its app distribution rules in the EU<\/a> in order to comply with the Digital Markets Act (DMA) from March 7th, for the first time allowing third-party app marketplaces on the iPhone. But app developers have been critical of Apple\u2019s approach, which includes charging a commission of up to 17 percent for developers who use their own payment method or link out to their own website, plus an annual \u20ac0.50 fee per app install after the first million. Spotify said<\/a> the changes are \u201can unworkable alternative that will stifle [developers\u2019] businesses immediately.\u201d <\/p>\n<\/div>\n On March 1st, Spotify also published an open letter<\/a> backed by 33 other companies and associations that spotlighted concerns with Apple\u2019s DMA compliance. In the letter, Spotify claimed that the EU\u2019s response to the proposal will \u201cserve as a litmus test of the DMA and whether it can deliver for Europe\u2019s citizens and economy.\u201d<\/p>\n<\/div>\n Meanwhile, US courts have also ruled that Apple has to allow developers to link out to other payment methods<\/a> as a result of a legal challenge from Fortnite<\/em> developer Epic Games<\/a>. But when Apple did start allowing developers to link out<\/a>, it maintained that it would still take a cut of up to 27 percent from any digital purchases \u2014 a small reduction over its typical 30 percent rate. Apple\u2019s critics called out the changes<\/a>, with Spotify saying they showed that Apple \u201cwill stop at nothing to protect the profits they exact on the backs of developers and consumers under their app store monopoly.\u201d<\/p>\n<\/div>\n Alongside its investigation into Apple\u2019s App Store policies, the European Commission has also been looking at<\/a> Apple\u2019s policy of restricting the iPhone\u2019s tap-top-pay NFC (near-field communication) to its own wallet and payment services. As a result of the investigation, Apple has offered to let third-party mobile wallet and payment providers use the iPhone\u2019s NFC<\/a> feature for payments. <\/p>\n<\/div>\n