Written by: Haim Ravia and Dotan Hammer
Apple has been hit with a fine of more than €1.8 billion, by the European Commission, for abusing its dominant market position by regulating the distribution of music streaming apps to iPhone and iPad users (“iOS users”) through its App Store. The EU Commission alleges that this practice deprived European consumers of the freedom to choose where, how, and at what prices they purchase music streaming subscriptions.
The Commission’s investigation revealed that Apple restricts music streaming app developers from fully informing iOS users about alternative and more affordable music subscription services available outside of the app, including how to subscribe to these offers. Specifically, the anti-steering provisions prevent app developers from:
- Informing iOS users within apps about external subscription prices and how they differ from in-app purchases.
- Including links in their apps that direct to alternative offers on the developers’ websites.
- Contacting new users via email to inform them about alternative pricing options.
In response, Apple stated that app developers engage in fair competition within its App Store and expressed its intention to file an appeal against the fine.
Meanwhile, a massive anti-trust lawsuit was filed by the U.S. Department of Justice and the attorney generals of 16 states in the U.S., in federal court in New Jersey. The lawsuit alleges that Apple has become an illegal monopoly in the smartphone market, limiting innovation in the field and squeezing money from developers, businesses, and consumers.
The governments allege that Apple violates federal antitrust law, unlawfully exercises its power, and causes its customers to continue purchasing its products. It does this, among other things, through the following actions: disrupting cloud streaming services, blocking new applications, restricting access to digital wallets, reducing the usability of third-party smartwatch interfaces, and reducing the quality of services that various applications offer through Apple products.
The lawsuit also alleges that Apple imposes contractual restrictions on developers, preventing them from offering their products in the market for different platforms. According to the complaint, Apple’s anti-competitive actions in the iPhone world affect other industries such as financial services, fitness services, gaming, entertainment, social media platforms, news channels, the automotive industry, and more.
The lawsuit seeks orders enjoining Apple from engaging in these anti-competitive practices and recovery of costs and attorney fees.
Click here to read the European Commission’s press release regarding the fine imposed on Apple.
Click here to read the U.S. Government’s complaint against Apple.
