Apple gets a hefty fine for App Store's abusive 'anti-steering' provisions

The upcoming Digital Markets Act (DMA) in the European Union is all set to shake up the world of big tech, especially for companies like Apple that pride in their walled ecosystems. Companies must comply with the DMA by March 6, 2024, and preparations are already underway. However, merely days before DMA-related changes come into play, the European Commission fined Apple over €1.8 billion (~$1.95 billion) for not letting apps like Spotify inform users about cheaper subscription services available outside of iOS apps.

The European Commission announced that it has fined Apple over €1.8 billion (~$1.95 billion) for abusing its dominant position in the market. More specifically, Apple applied restrictions on app developers that prevented them from informing iOS users about alternative and cheaper music subscription services available outside of the app. These are known as “anti-steering provisions,” and they are illegal under EU antitrust rules, even before the Digital Markets Act comes into the picture.

It’s no secret that Apple tightly controls the iOS experience. The DMA will introduce sideloading on iOS, but until now, sideloading is not possible. iPhone users can only experience their device when using the Apple App Store, so developers have to abide by the terms that Apple puts forth if they intend to distribute their apps through the App Store. Some of these provisions restrict app developers from acts like:

• Informing iOS users within the app about prices of subscription offers available on the internet outside the app (i.e., outside of Apple’s controlled ecosystem).
• Informing iOS users within the app about the price difference when subscribing through Apple’s in-app purchase mechanism against other alternatives.
• Including links in their apps that steer users to the developer’s website to buy alternative subscriptions.
  • App developers also could not contact new users by email to inform them about alternative pricing options after they set up an account.

The European Commission notes that these anti-steering provisions amount to unfair trading conditions under EU law and are neither necessary nor proportionate for protecting Apple’s commercial interests. They also negatively affect the interest of iOS users as they cannot make an informed decision. Apple’s conduct is said to have lasted for almost ten years. Apple thus got fined for such a large amount in proportion to its global revenues to achieve deterrence.

This European Commission result dates back to one of Spotify’s older antitrust complaints against Apple, complaining of the 30% App Store commission and these anti-steering rules. Since then, Apple has made some concessions, like allowing developers to advertise payment methods through email and link to their own sites in special cases like “reader apps” (which Spotify could avail of).

In response, Apple said it would appeal the European Commission’s decision. The company also said harsh words about Spotify, focusing primarily on how it pays Apple “nothing” despite being downloaded, re-downloaded, or updated more than 119 billion times on Apple devices and how it wants more. Apple even says that this decision is an effort by the Commission “to enforce the DMA before the DMA becomes law.”

How Apple’s appeal will work out remains to be seen. The DMA is also just a few days away from enforcement, and many developers, including Spotify, have been critical of Apple’s measures to become compliant. It’s clear that this isn’t the last we’re hearing about these rules and fines.