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The E.U. fines Apple more than €1.8 billion over abusive App Store rules against music streaming providers

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The European Commission has fined Apple more than €1.8 billion for abusing its dominant market position in the distribution to iPhone and iPad users (hereafter: iOS users) of music streaming applications through the App Store. strong>.

In particular, the Commission found that Apple imposed restrictionsto app developers by preventing them from informing iOS users about alternative, cheaper subscription music services available outside of the app. This is illegal under EU antitrust rules.

The infringement

Appleis currently the only provider of an App Store, where developers can distribute their apps to iOS users throughout the European Economic Area (hereinafter: EEA). Apple controls every aspect of the iOS user experience and sets the terms and conditions that developers must meet in order to have a presence on the App Store and be able to reach iOS users within the EEA.

Commission investigation finds thatApple prohibits music streaming app developers from fully informing users ofiOS< /b> about alternative and cheaper subscription music services available outside the app and to provide instructionson how to register for such services. In particular, the relevant provisions prohibit app developers from:

  • Informing iOS users through their apps about the prices of subscription offers available online outside the application.
  • Notify iOS users through their applications of price differences between in-app subscriptions sold through Apple's in-app purchasing mechanism and those available elsewhere.
  • Include links in apps that direct iOS users to the app developer's website where alternative subscriptions can be purchased. It also prevents application developers from communicating with newly acquired users, e.g. via email to inform them of alternative pricing options after they create an account.

Today's decision concludes that Apple's provisions in question amount to unfair transaction terms, in violation of article 102 point a) of the Treaty on the Functioning of the European Union (hereinafter: TFEU). These provisions are neither necessary nor proportionate to protect Apple's commercial interests with respect to the App Store installed on Apple's smart mobile devices and adversely affect the interests ofiOS users by not being able to make informed and effective decisions about where and how to purchase music streaming subscriptions for their device.

Because of Apple's behavior, which has lasted nearly ten years, many iOS users may be paying significantly higher prices for music streaming subscriptionsbecause of the high commission Apple charged developers, which was passed on to consumers in the form of higher subscription prices for the same service in Apple's App Store. In addition, Apple's provisions in question resulted in non-monetary loss in the form of a degraded user experience: iOS users were either forced to perform complex searches to find relevant offers outside the app, or never signed up for any service because they could not find the right service. alone.

Fine

The fine was determined under the Commission's 2006 guidelines on fines (see press release and MEMO).

To determine the amount of fine, the Commission took into account the duration and seriousness of the infringement, as well as Apple's total turnover and market value. It also considered that Apple provided incorrect information in the administrative process.

In addition, the Commission decided to add to the basic amount of the fine an additional lump sum of €1.8 billion, so that the total fine imposed on Apple would be sufficiently deterrent. This lump-sum fine was necessary in this case because a significant part of the damage caused by the infringement consists of non-pecuniary damage, which cannot be properly taken into account under the revenue-based methodology set out in the guidelines of Commission of 2006 for the calculation of fines. In addition, the fine must be sufficient to deter Apple from repeating such or a similar violation; and to deter other companies of similar size and resources from committing the same or similar violation.

The Commission concluded that the total amount of the fine, amounting to more than €1.8 billion, is proportionate to Apple's worldwide revenues and necessary to achieve a deterrent effect.

The Commission also ordered Apple to repeal the provisions at issue and to refrain from repeating the infringement or from adopting practices with an equivalent object or effect in the future.

Action for damages

Any person or company affected by the anti-competitive behavior described in this case, can appeal to the courts of the Member States and request compensation. Both the case law of the Court of Justice of the European Union and Regulation 1/2003 confirm that, in cases before national courts, Commission decisions are binding evidence that the conduct took place and was illegal. Although the Commission fined the company in question, national courts may award damages that are not reduced by the Commission's fine.

The Antitrust Damages Directive makes it easier to compensate victims of anti-competitive practices. Here you can find more information about damages actions, and a practical guide on how to quantify damages for antitrust violations.

Declarations

For a decade,Apple has been abusing its dominant position in the music streaming application distribution market through itsApp Store. It did this by preventing developers from informing consumers about alternative, cheaper music services available outside of theAppleecosystem. Doing so is illegal under EU antitrust rules, and we have therefore today fined Apple over €1.8 billion.'' statement Margrethe Vesteyjer, Executive Vice President responsible for Competition Policy.

 

 

Source: 24h.com.cy

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