EUROPEAN
COMMISSION
DG
Competition
CASE AT.40437 – Apple – App Store
Practices (music streaming)
(Only the English text is authentic)
ANTITRUST PROCEDURE
Council Regulation (EC) 1/2003
Article 7 Regulation (EC) 1/2003
Date: 04/03/2024
This is a provisional non-confidential version.
This text is made available for information purposes only. A summary of this decision will be
published in all EU languages in the Official Journal of the European Union.
Parts of this text have been edited to ensure that confidential information is not disclosed.
Those parts are replaced by a non-confidential summary in square brackets or are shown as
[…].
EN EN
EUROPEAN
COMMISSION
Brussels, 4.3.2024
C(2024) 1307 final
COMMISSION DECISION
of 4.3.2024
relating to a proceeding under Article 102 of the Treaty on the Functioning of the
European Union (the Treaty) and Article 54 of the EEA Agreement
(Case AT.40437 – Apple – App Store Practices (music streaming))
(Text with EEA relevance)
(
Onl
y
the En
g
lish text is authentic
)
EN 1 EN
TABLE OF CONTENTS
1. Introduction .................................................................................................................. 7
2. The undertaking ........................................................................................................... 8
3. The complainant ........................................................................................................... 9
3.1. Spotify .......................................................................................................................... 9
3.2. Spotify’s complaint .................................................................................................... 10
4. Procedure.................................................................................................................... 11
5. Apple’s allegations of procedural shortcomings ....................................................... 14
5.1. The Letter of Facts was an appropriate instrument and did not infringe Apple’s rights
of defence ................................................................................................................... 14
5.1.1. Apple’s arguments ..................................................................................................... 14
5.1.2. Assessment of Apple’s arguments ............................................................................. 15
5.1.2.1. The Letter of Facts was an appropriate instrument to communicate to Apple a
reduction of the objections and how the Commission intended to use the relevant
evidence in a potential decision ................................................................................. 15
5.1.2.2. The proposed change in the methodology of the fine did not warrant a supplementary
statement of objections ............................................................................................... 16
5.2. The Commission has taken appropriate investigatory steps and discharged the burden
of proof ...................................................................................................................... 16
5.2.1. Apple’s arguments ..................................................................................................... 16
5.2.2. Assessment of Apple’s arguments ............................................................................. 17
5.3. The Commission did not infringe Apple’s rights of defence in relation to minutes of
meetings ..................................................................................................................... 20
5.3.1. Apple’s arguments ..................................................................................................... 20
5.3.2. Principles .................................................................................................................... 20
5.3.3. Assessment of Apple’s arguments ............................................................................. 21
5.3.3.1. Meetings which do not constitute interviews pursuant to Article 19 Regulation (EC)
No 1/2003 ................................................................................................................... 21
5.3.3.2. Apple’s rights of defence have been preserved with respect to the meetings that may
constitute interviews pursuant to Article 19 Regulation (EC) No 1/2003 ................. 23
5.4. Conclusion.................................................................................................................. 27
6. The products concerned by the Decision .................................................................. 28
6.1. Smart mobile devices, operating systems and app stores .......................................... 28
6.2. Apple’s ecosystem and its business model with regard to its App Store ................... 34
6.2.1. Apple’s business model.............................................................................................. 34
6.2.2. Apple’s App Store ...................................................................................................... 37
6.2.3. Apple’s rules on the App Store .................................................................................. 38
EN 2 EN
6.2.4. Apple’s app and content distribution policy in the App Store ................................... 40
6.2.4.1. The obligation to use IAP .......................................................................................... 40
6.2.4.2. The reader and multiplatform rule ............................................................................. 44
6.2.5. Apple’s revenues in the App Store............................................................................. 45
6.3. The music streaming business .................................................................................... 48
6.3.1. Music streaming industry overview ........................................................................... 48
6.3.2. Apple Music ............................................................................................................... 51
7. The conduct subject of the Decision ......................................................................... 53
7.1. The current wording of the Anti-Steering Provisions ................................................ 53
7.2. Changes to the wording of the Anti-Steering Provisions over time ........................... 54
7.3. Interpretation and application of the Anti-Steering Provisions over time ................. 60
7.4. The Commission’s assessment of Apple’s arguments ............................................... 61
7.5. Impact of the Anti-Steering Provisions in the music streaming services market ...... 66
7.6. Summary of the scope and content of the Anti-Steering Provisions ......................... 71
8. Establishing the dominant position ............................................................................ 72
8.1. The relevant market .................................................................................................... 72
8.1.1. Principles .................................................................................................................... 72
8.1.2. Application to this case ............................................................................................. 74
8.1.3. Market for smart mobile devices ............................................................................... 74
8.1.3.1. The relevant product market ...................................................................................... 75
8.1.3.2. The geographic scope of the market .......................................................................... 77
8.1.3.3. Conclusion on the relevant market ............................................................................. 77
8.1.4. Market for the provision to developers of platforms for the distribution of music
streaming apps to iOS users ...................................................................................... 78
8.1.4.1. The relevant product market ...................................................................................... 78
8.1.4.2. The geographic scope of the market ......................................................................... 90
8.1.4.3. Conclusion on the relevant market ............................................................................. 91
8.1.5. Market for music streaming services ......................................................................... 91
8.1.5.1. The relevant product market ...................................................................................... 91
8.1.5.2. The geographic scope of the market .......................................................................... 95
8.1.5.3. Conclusion on the relevant market ............................................................................. 96
8.2. The dominant position of the addressee .................................................................... 96
8.2.1. Principles .................................................................................................................... 96
8.2.2. Application to this case ............................................................................................. 98
8.2.2.1. Market position and market shares of Apple ............................................................ 99
8.2.2.2. Barriers to entry and expansion .................................................................................. 99
EN 3 EN
8.2.2.3. Network effects ....................................................................................................... 100
8.2.2.4. Limited countervailing buyer power ....................................................................... 101
8.2.2.5. Constraints on Apple’s market power vis-à-vis music streaming service providers
from the consumer side of the App Store ................................................................. 102
8.2.3. Conclusion................................................................................................................ 154
9. The abuse ................................................................................................................. 154
9.1. Principles .................................................................................................................. 154
9.1.1. The relevant legal test .............................................................................................. 154
9.1.2. Assessment of Apple’s arguments ........................................................................... 156
9.2. Apple’s special responsibility under Article 102 of the Treaty ............................... 162
9.2.1. Introduction .............................................................................................................. 162
9.2.2. Apple’s monopoly on music streaming app distribution on iOS ............................. 162
9.2.3. Consumers predominantly use native apps on smart mobile devices to stream music
.................................................................................................................................. 163
9.2.4. Apple has full control in relation to apps for iOS devices ....................................... 163
9.2.5. Conclusion................................................................................................................ 163
9.3. Analysis of the unfair character of the Anti-Steering Provisions vis-à-vis iOS users of
music streaming services ......................................................................................... 164
9.3.1. Apple unilaterally imposes the Anti-Steering Provisions on music streaming service
providers ............................................................................... .................................... 164
9.3.2. The Anti-Steering Provisions are detrimental to the interests of iOS music streaming
users (consumers) ..................................................................................................... 165
9.3.2.1. Monetary harm to consumers ................................................................................... 168
9.3.2.2. Non-monetary harm to consumers ........................................................................... 184
9.3.3. The Anti-Steering Provisions are not necessary for the attainment of a legitimate
objective, and in any case they are disproportionate ................................................ 209
9.3.3.1. The Anti-Steering Provisions are not necessary to achieve a legitimate objective .. 209
9.3.3.2. The Anti-Steering Provisions are in any case disproportionate ............................... 215
9.3.4. The Anti-Steering conditions are not objectively justified ...................................... 216
9.4. Conclusion on the abusive behaviour ...................................................................... 217
10. Jurisdiction ............................................................................................................... 218
10.1. Principles .................................................................................................................. 218
10.2. Application to this case ............................................................................................ 218
11. Effect on trade between Member States ................................................................... 219
11.1. Principles .................................................................................................................. 219
11.2. Application to this case ............................................................................................ 220
12. Duration.................................................................................................................... 220
EN 4 EN
13. Addressees................................................................................................................ 221
13.1. Principles .................................................................................................................. 221
13.2. Application to this case ............................................................................................ 222
14. Single and continuous infringement ......................................................................... 222
14.1. Principles .................................................................................................................. 222
14.2. Application to this case ............................................................................................ 223
15. Remedies .................................................................................................................. 224
15.1. Principles .................................................................................................................. 224
15.2. Application to this case ............................................................................................ 225
15.2.1. Assessment of Apple’s arguments about the remedies ............................................ 226
15.2.2. Implementation of the remedies ............................................................................... 229
16. Periodic penalty payments ....................................................................................... 229
16.1. Principles .................................................................................................................. 229
16.2. Application to this case ............................................................................................ 229
17. Fines ......................................................................................................................... 230
17.1. Principles .................................................................................................................. 230
17.1.1. General methodology of the Guidelines on Fines .................................................... 231
17.1.2. Point 37 of the Guidelines on Fines ......................................................................... 232
17.2. Imposition of a fine .................................................................................................. 233
17.2.1. Intent and/or negligence ........................................................................................... 233
17.2.2. Joint and several liability ......................................................................................... 234
17.3. Amount of the fine ................................................................................................... 234
17.3.1. Application of the general methodology of the Guidelines on Fines ....................... 234
17.3.1.1. Determination of the basic amount of the fine ......................................................... 234
17.3.1.2. Conclusion on the basic amount .............................................................................. 237
17.3.1.3. Adjustments to the basic amount ............................................................................. 238
17.3.1.4. Mitigating factors ..................................................................................................... 240
17.3.1.5. Specific increase for deterrence ............................................................................... 240
17.3.1.6. Conclusion on the application of the general methodology ..................................... 240
17.3.2. Application of Point 37 of the Guidelines on Fines ................................................ 240
17.3.2.1. The particularities of the present case and the need to achieve deterrence justify a
departure from the general methodology set out in the Guidelines on Fines. ......... 240
17.3.2.2. Determination of the additional lump sum ............................................................... 242
17.3.2.3. Assessment of Apple’s arguments .......................................................................... 243
17.3.3. Application of Article 23(2) of Regulation (EC) No 1/2003 ................................... 249
17.3.4. Conclusion: final amount of the fine ........................................................................ 249
EN 5 EN
18. Conclusion................................................................................................................ 249
EN 6 EN
COMMISSION DECISION
of 4.3.2024
relating to a proceeding under Article 102 of the Treaty on the Functioning of the
European Union (the Treaty) and Article 54 of the EEA Agreement
(Case AT.40437 – Apple – App Store Practices (music streaming))
(Text with EEA relevance)
(Only the English text is authentic)
THE EUROPEAN COMMISSION,
Having regard to the Treaty on the Functioning of the European Union
1
,
Having regard to the Agreement on the European Economic Area,
Having regard to Council Regulation (EC) No 1/2003, of 16 December 2002 on the
implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty
2
,
and in particular Article 7, Article 23(2) and Article 24(1) thereof,
Having regard to the complaint lodged by Spotify AB on 11 March 2019, amended on 9 April
2019, alleging infringements of Article 102 of the Treaty and Article 54 of the EEA
Agreement by Apple Inc. and requesting the Commission to put an end to those
infringements,
Having regard to the Commission decision of 16 June 2020 to initiate proceedings in this
case,
Having given the undertaking concerned the opportunity to make known its views on the
objections raised by the Commission pursuant to Article 27(1) of Regulation (EC) No 1/2003
and Article 12 of Commission Regulation (EC) No 773/2004 of 7 April 2004 relating to the
conduct of proceedings by the Commission pursuant to Articles 81 and 82 of the Treaty
3
,
After consulting the Advisory Committee on Restrictive Practices and Dominant Positions,
Having regard to the final report of the hearing officer in this case,
Whereas:
1
OJ, C 115, 9.5.2008, p.47.
2
OJ L 1, 4.1.2003, p. 1. With effect from 1 December 2009, Articles 81 and 82 of the EC Treaty have
become Articles 101 and 102, respectively, of the Treaty on the Functioning of the European Union
(“the Treaty”). The two sets of provisions are, in substance, identical. For the purposes of this Decision,
references to Articles 101 and 102 of the Treaty should be understood as references to Articles 81 and
82, respectively, of the EC Treaty when where appropriate. The Treaty also introduced certain changes
in terminology, such as the replacement of “Community” by “Union” and “common market” by
“internal market”. Where the meaning remains unchanged, the terminology of the Treaty will be used
throughout this Decision.
3
OJ L 123, 27.4.2004, p. 18.
EN 7 EN
1. INTRODUCTION
(1) This Decision is addressed to Apple Inc. and Apple Distribution International
Limited. All the legal entities active within the corporate group of Apple Inc are
referred to in this Decision as “Apple”.
(2) This Decision concerns certain terms and conditions governing the use of Apple’s
App Store (“App Store”) by developers of software applications (“apps”) for music
streaming services on Apple’s smart mobile devices running on the operating
systems iOS and iPadOS
4
(namely, Apple’s smart mobile devices iPhone and iPad)
in the European Economic Area (“EEA”).
5
The Commission finds that Apple’s rules
laid down, in particular, in the various versions of the App Store Review Guidelines
applicable during the infringement period
6
(the “Guidelines”) and in the terms of the
Developer Program License Agreement
7
(the “License Agreement”) preventing
music streaming service providers from informing iOS users about alternative (and
often cheaper) subscription possibilities existing outside of those providers’ iOS
mobile app and from allowing iOS users to exercise an effective choice between
alternative subscription possibilities (the so-called “Anti-Steering Provisions”)
8
constitute a single and continuous infringement of Article 102 of the Treaty on the
Functioning of the European Union (“the Treaty”) and Article 54 of the Agreement
on the EEA (“EEA Agreement”).
(3) This Decision is structured as follows:
– Section 2 describes the undertaking concerned by this Decision;
– Section 3 provides an overview of the complainant in this case;
– Section 4 summarises the procedure relating to this case to date;
– Sections 5 addresses and rebuts Apple’s allegations of procedural
shortcomings;
– Section 6 provides a description of the products concerned by this Decision;
– Section 7 sets out the conduct subject to this Decision;
4
For the purposes of this Decision, “iOS” refers to smart mobile devices running on Apple’s mobile
operating systems iOS and iPadOS, hence iPhones and iPads, while “iOS users” refers to the users of
those devices.
5
Throughout this Decision, the EEA is understood to cover the 27 Member States of the European Union
(Austria, Belgium, Bulgaria, Croatia, Cyprus, Czechia, Denmark, Estonia, Finland, France, Germany,
Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal,
Romania, Slovakia, Slovenia, Spain and Sweden) and the United Kingdom (the “UK”), as well as
Iceland, Liechtenstein and Norway. Accordingly, any references made to the EEA in this Decision are
meant to also include the UK. Although the UK withdrew from the European Union as of
1 February 2020, according to Article 92 of the Agreement on the withdrawal of the United Kingdom of
Great Britain and Northern Ireland from the European Union and the European Atomic Energy
Community (OJ L 29, 31.1.2020, p. 7), the Commission continues to be competent to apply Union law
as regards the UK for administrative procedures which were initiated before the end of the transition
period.
6
Latest version of the App Store Review Guidelines applicable since 5 June 2023, provided by Apple in
response to the Commission’s request for information of 3 August 2023, IDs 3009 and 3011, as well as
previous versions applicable since 30 June 2015.
7
Latest version provided by Apple in response to the Commission’s request for information of 3 August
2023, ID 3015 (Apple Developer Program License Agreement); ID 3028 (Schedule 2), as well as
previous versions applicable since 30 June 2015.
8
Section 3.1.3 of the Guidelines, ID 3011.
EN 8 EN
– Section 8 describes the relevant product and geographic markets concerned by
this Decision, outlines general principles on dominance and concludes that
Apple holds a dominant position in the EEA on the market for the provision to
developers of platforms for the distribution of music streaming apps to iOS
users;
– Section 9 concludes that Apple has abused its dominant position in the EEA
market for the provision to developers of platforms for the distribution of
music streaming apps to iOS users since at least 2015. In particular, the abuse
consists in the imposition by Apple, through the Anti-Steering Provisions, of
unfair trading conditions within the meaning of Article 102(a) of the Treaty
upon music streaming service providers which are detrimental to the interests
of iOS users;
– Section 10 concludes that the Commission has jurisdiction to pursue this case;
– Section 11 concludes that Apple’s conduct has an effect on trade between
Member States;
– Section 12 concludes on the duration of the infringement;
– Section 13 sets out the addressees of this Decision;
– Section 14 finds that Apple’s conduct constitutes a single and continuous
infringement;
– Section 15 outlines the remedies imposed by this Decision;
– Section 16 describes the periodic penalty payments necessary to compel Apple
to bring effectively to an end the infringement of Article 102 of the Treaty;
– Section 17 sets out the methodology for calculating the fine and the amount of
the fine imposed; and
– Section 18 presents the Commission’s conclusion.
2. T
HE UNDERTAKING
(4) Apple is a multinational technology company headquartered in the United States of
America (“the US”). Apple designs, manufactures, and markets mobile
communication and media devices, personal computers and portable digital music
players as well as related software and digital services.
(5) The Apple group is composed of Apple and all companies controlled by Apple. The
Apple group encompasses companies incorporated in Ireland, namely Apple
Operations International Limited and Apple Distribution International Limited. The
latter company, which is one of the addressees of this Decision (see Section 13.2),
provides Apple’s App Store services (including Apple Music) to customers in the
EEA and is the company which developers appoint as a commissionaire for the
distribution of approved apps. In the past, other Apple entities were involved in the
provision of App Store related services.
9
9
From 1 January 2015 to 24 September 2016, iTunes Sàrl provided the App Store Services to customers
in the EEA. On 25 September 2016 iTunes Sàrl merged into Apple Distribution International in a cross-
border merger with Apple Distribution International as the surviving entity. Accordingly, Apple
Distribution International began to provide the services to EEA customers from the merger date and it
EN 9 EN
(6) Apple’s business model is based on a vertically integrated ecosystem centred around
its hardware devices, including iPhones and iPads, from which it generates the main
source of its revenue. Apple operates various services, including the App Store
which allows customers to discover and download apps. Apple also offers digital
content through subscription-based services, including Apple Music, which is a paid-
subscription based, on-demand music streaming service (for a more detail description
of Apple’s products business model, see Section 6.2).
(7) Apple is one of the highest valued companies worldwide. In June 2023, Apple
exceeded USD 3 000 000 000 in market value, making it the first company
worldwide to do so.
10
In Apple’s Financial Year (“FY”) 2023, which lasted from
25 September 2022 to 30 September 2023, Apple Inc.’s total worldwide consolidated
turnover amounted to EUR 359 674 000 000.
11
During Apple’s FY 2023, the App
Store commission fees paid by the main music streaming service providers active in
the EEA generated over EUR […].
12
3. T
HE COMPLAINANT
3.1. Spotify
(8) Spotify AB (“Spotify”) is a Swedish music streaming service provider, active in the
EEA and globally. It offers users the ability to search for or browse music according
to different criteria such as album, artist, genre, or record labels. Spotify users can
create, edit and share playlists, including on social media, and also make playlists
together with other users. Spotify’s listeners have the option to listen to content for
free with advertisements as well as to purchase a premium subscription to allow for
unlimited ad-free music streaming.
(9) Spotify was first launched in 2008 in Sweden and then in other European countries
and the U.S. by 2011. The music streaming service is available through Spotify's
website and can be used on various devices.
13
Spotify launched its iOS native mobile
app in September 2009 (see Section 6.3.2).
(10) As of the first quarter of 2023, Spotify had 210 million premium subscribers
worldwide, up from 182 million in the corresponding quarter of 2022.
14
In the first
quarter of 2023, it had over 500 million monthly active users worldwide (including
through its ad-supported tier).
15
In July 2023, Spotify reported that in the second
has continued to do so, exclusively, to the present. Apple Distribution International has subsequently
converted to an Irish limited liability company, effective on 6 February 2020, as a result of which its
name has changed to "Apple Distribution International Limited". Both iTunes Sàrl and Apple
Distribution International were at all times discussed above indirectly 100 %-owned subsidiaries of
Apple.
10
See https://www.wsj.com/articles/apple-becomes-first-u-s-company-to-reach-3-trillion-market-value-
11641235625, accessed on 13 January 2022, ID 2336;
https://www.forbes.com/sites/dereksaul/2023/06/30/apple-hits-3-trillion-market-value-and-could-soar-
another-800-billion/?sh=a968d7952b17, accessed on 10 October 2023, ID 3119.
11
Apple’s response to the Commission’s request for information of 1 December 2023, ID 3312.
12
Apple’s response to the request for information dated 1 December 2023, ID 3312 and Annex Q6, ID
3310.
13
Spotify’s Complaint, ID 1457, page 9, paragraph 25.
14
Statista, Spotify: number of premium subscribers worldwide 2023 | Statista, accessed on 10 October
2023, ID 3121. ID 3262, accessed on 14 December 2023, contains underlying data of Statista figures.
15
Statista, Spotify MAUs worldwide 2023 | Statista, accessed on 10 October 2023, ID 3120. ID 3289,
accessed on 14 December 2023, contains underlying data of Statista figures.
EN 10 EN
quarter of 2023 it had reached over 550 million monthly active users, out of which
220 million were premium subscribers worldwide,
16
representing almost 40 % of its
overall user base.
17
(11) In 2022, Spotify generated revenues of over EUR 11 700 000 000, up from
EUR 9 670 000 000 in the previous year. The majority of these revenues came from
Spotify’s premium subscribers.
18
Nevertheless, Spotify has been operating at a loss,
as also confirmed by recent figures: in 2022, Spotify had a net loss of
EUR 430 000 000;
19
for Q2 2023, it registered EUR 112 000 000 in adjusted
operating losses.
20
This is without prejudice of the existence of a few sporadic
profitable quarters. Indeed, since the beginning of 2017, Spotify reached a positive
net balance in only eight quarters in total, including in Q3 2023 where Spotify
generated EUR 62 000 000 net profit.
21
3.2. Spotify’s complaint
(12) In March 2019, the Commission received a formal complaint by Spotify against
Apple pursuant to Article 7(2) of Regulation (EC) No 1/2003 and an amended (final)
version on 9 April 2019 (“Spotify’s Complaint”). In this complaint, Spotify alleged
that Apple infringed Article 102 of the Treaty by (i) requiring developers that offer
paid digital content or subscriptions to such content, such as music streaming
subscriptions, in their iOS apps to make use of Apple’s in-app purchase mechanism
(“IAP”)
22
and pay a 30 % or 15 % commission fee to Apple, and (ii) preventing the
possibility for developers, such as music streaming service providers, from informing
iOS users about alternative (and often cheaper) subscription possibilities outside of
the app and allowing an effective choice.
(13) Spotify indicated that, between 2011 and 2014, it did not offer Premium
subscriptions in-app on iPhones or iPads and was therefore not using IAP. Spotify
signed up to IAP in June 2014 and started offering Premium subscriptions paid
through IAP. It increased the price of the Premium offer (for an individual
subscription) in its iOS app from EUR 9.99 (as available on its website and other
subscription channels) to EUR 12.99 to pass-on to users the commission fee charged
by Apple. However, in May 2016 – less than a year after Apple launched Apple
Music on 30 June 2015 at EUR 9.99 – Spotify decided to disable IAP and turned off
16
Spotify’s Q2 2023 update, available at
sec.gov/Archives/edgar/data/1639920/000114036123035965/brhc20056303_ex99-1.htm, accessed on
10 October 2023, ID 3149.
17
Spotify reports strong user growth as it is raising subscription price | TechCrunch, accessed on
10 October 2023, ID 3151.
18
See Spotify revenue 2013-2022 | Statista, accessed on 10 October 2023, ID 3150.
19
See https://www.statista.com/statistics/244990/spotifys-revenue-and-net-income/, accessed on
10 October 2023, ID 3152.
20
Spotify’s Q2 2023 update, available at
sec.gov/Archives/edgar/data/1639920/000114036123035965/brhc20056303_ex99-1.htm, accessed on
10 October 2023, ID 3149.
21
See https://www.statista.com/chart/26773/profitability-development-of-
spotify/#:~:text=Music%20streaming&text=At%20the%20end%20of%20September,62%20million%20
euros%20net%20profit, accessed on 25 October 2023, ID 3128 and
https://www.ft.com/content/dcb2e9ee-8baa-4442-b13d-5babbfee04e5, accessed on 25 October 2023, ID
3146.
22
In this Decision, Apple’s requirement vis-à-vis developers to use IAP is also referred to as “the IAP
obligation”. Through the use of IAP, Apple charges a 30
% commission fee to developers during the
first year of subscription and 15 % after the first year of uninterrupted subscription.
EN 11 EN
the ability to subscribe to its Premium offer in its iOS app, as it would otherwise
have been forced to continuously offer its premium subscription on its iOS app at a
higher price than outside the iOS environment (see Section 7.5).
(14) Spotify also alleged that Apple rejected without justification updates of its iOS app
and tightened the wording and interpretation of the Guidelines in such a manner as to
increasingly prevent it from advertising the existence of its Premium option within
and – to some extent – also outside the app, for instance through links to its website
(Spotify.com) or other “calls to action” addressed to its iOS users (for the current
wording of the Anti-Steering Provisions, see Section 7.1). As a result, Spotify
submitted having been effectively restricted from promoting subscription
possibilities available at a competitive price outside the iOS environment to iOS
users in its iOS app.
(15) Spotify claims that it makes substantial investments to increase the quality of its free
service as well as to target users of that service with promotional campaigns such as
reduced prices or free trials for the Premium offer that it communicates to the users
of its free tier by email, banners on its website, or pop-ups within the Spotify mobile
or desktop app.
4. P
ROCEDURE
(16) The Commission started to investigate Apple’s conduct in relation to the IAP
obligation and the Anti-Steering Provisions in July 2015.
23
(17) The Commission received Spotify’s Complaint on 9 April 2019. The Commission
transmitted Spotify’s Complaint to Apple, which provided comments. Subsequently,
the Commission organised a data room upon Apple’s request. Following the data
room, the Commission received observations from Spotify regarding further
comments to Spotify’s Complaint submitted by Apple.
(18) Between April 2019 and December 2020, the Commission sent a number of requests
of information under Article 18(2) and 18(3) of Regulation (EC) No 1/2003 to Apple
and, in 2019 and 2020, to Spotify as well as to a series of other music streaming
service providers active in the EEA, namely Amazon Music, Deezer, Google Play
Music, Napster (Rhapsody), SoundCloud, Qobuz, YouTube Music and Tidal. In
parallel, between October 2019 and March 2021, Apple submitted numerous papers
to the Commission.
(19) In February and July 2020, Spotify […] conducted surveys of users to analyse
consumer choice of smart mobile devices (and mobile OS) and […] ([…] “the
Spotify Survey” […]).
24
(20) On 16 June 2020, the Commission initiated proceedings vis-à-vis Apple in the
present case within the meaning of Article 2(1) of Commission Regulation
No 773/2004.
25
(21) On 30 June 2020, the Commission held a state of play meeting with Apple.
(22) On 12 February 2021, the Commission had a state of play call with Apple.
23
Commission’s request for information (2015/076377) of 31 July 2015, addressed to Spotify, ID 1486,
ID 1511 and ID 1512.
24
[…].
25
Decision n° C(2020) 4065 final adopted on 16 June 2020, ID 664.
EN 12 EN
(23) A Statement of Objections was issued in this case on 30 April 2021 (the “Statement
of Objections of 30 April 2021”). This statement of objections took issue with the
terms that govern the use of Apple’s App Store which: (i) require music streaming
app developers to exclusively and mandatorily use Apple’s IAP for the distribution
of paid content (i.e., music streaming service subscriptions) and which (ii) restrict the
developers’ ability to inform iOS users inside those providers’ iOS app and to a
certain extent also outside of that app, about alternative (cheaper) subscriptions
possibilities outside of the app and from allowing iOS users to exercise an effective
choice. The Statement of Objections of 30 April 2021 also preliminarily found that
the Anti-Steering Provisions constitute a standalone infringement of Article 102 of
the Treaty. Apple submitted its response to the Statement of Objections of
30 April 2021 on 17 September 2021. It did not request the opportunity to express its
views at an oral hearing pursuant to Article 12(1) of Regulation (EC) No 773/2004.
(24) The Statement of Objections of 30 April 2021 was subsequently replaced by a
revised statement of objections dated 28 February 2023 (the “Statement of
Objections of 28 February 2023”). The Statement of Objections of 28 February 2023
limited the scope of the objections raised in this case against Apple to Apple’s Anti-
Steering Provisions and presented the facts, the Commission’s preliminary objections
as well as the Commission’s legal analysis in a comprehensive manner. The cover
letter to the Statement of Objections of 28 February 2023, which was notified to
Apple on 1 March 2023, also addressed the comments in relation to the completeness
of the Commission’s case file previously raised by Apple. In addition, on
3 March 2023, the Commission sent Apple a corrigendum clarifying that some
modifications to the cover letter were necessary to reflect that the Statement of
Objections of 28 February 2023 did not supplement but rather replaced the Statement
of Objections of 30 April 2021.
26
(25) On 19 May 2023, Apple submitted its response to the Statement of Objections of
28 February 2023 and at the same time requested the opportunity to express its views
at an oral hearing pursuant to Article 12(1) of Regulation (EC) No 773/2004.
27
(26) The oral hearing took place on 30 June 2023 (hereinafter, the “oral hearing”).
28
Spotify and the European Consumer Organisation BEUC (“BEUC”) were admitted
to the oral hearing as complainant and interested third person, respectively, in
accordance with Article 6 of Decision 2011/695/EU.
29
(27) On 3 August 2023 the Commission sent a request for information to Apple,
30
to
which Apple replied on 4 and 28 September 2023.
31
26
The complainant Spotify as well as Google and BEUC – which, along with the Computer &
Communication Industry Association (‘CCIA’) were admitted as third interested parties within the
meaning of Article 5 of decision 2011/695/EU – submitted comments to the Statement of Objections of
28 February 2023, see documents entitled “BEUC comments as interested third person within the
meaning of Article 5 of decision 2011/695/EU on the Redacted Statement of Objections of 28.2.2023”
(hereinafter “BEUC’s comments to the Statement of Objections of 28 February 2023”), ID 2870;
“Google’s Observations on the EC’s Statement of Objections in Case AT.40437 – Apple App Store
Practices”, ID 2871; “Spotify’s observations on the Statement of Objections dated 28 February 2023,
ID 1972 and Addendum, ID 2869.
27
ID 2821.
28
Recording of the oral hearing in Case AT.40437, ID 3131.
29
Decision of the President of the European Commission of 13 October 2011 on the function and terms of
reference of the hearing officer in certain competition proceedings, OJ L 275, 20.10.2011, p. 29–37.
30
IDs 2987 and 2988.
EN 13 EN
(28) On 25 September 2023, the Commission sent a request for information to Spotify,
32
to which Spotify replied on 12 October 2023.
33
(29) On 1 December 2023, the Commission sent a request for information to Apple, to
which Apple replied on 20 December 2023.
34
(30) On 6 December 2023, the Commission sent Apple a letter of facts (the “Letter of
Facts”)
35
drawing Apple’s attention to additional evidence which had been added to
the case file after the adoption of the Statement of Objections of 28 February 2023 as
well as about updated evidence on which the Commission intended to rely for the
purposes of this Decision. The Letter of Facts set out that the Commission intended
to focus on the unfairness of Apple’s Anti-Steering Provisions vis-à-vis iOS users
and that it did not intend to further rely on its additional preliminary finding in the
Statement of Objections of 28 February 2023 that the Anti-Steering Provisions are
also unfair vis-à-vis music streaming service providers. In addition, the Letter of
Facts set out that the Commission intended to consider calculating the fine by (i)
relying only on the App Store commission fees that Apple obtains from music
streaming app developers under the general methodology of the Commission’s
Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of
Regulation (EC) No 1/2003 (“the Guidelines on Fines”)
36
and, in addition, (ii)
imposing a lump sum on the basis of point 37 of the Guidelines on Fines which
would ensure that the fine imposed is sufficiently deterrent.
(31) On 7 December 2023, the Commission granted Apple access to the file following the
Letter of Facts.
(32) On 13 December 2023, Apple sent a letter to the Commission alleging, among
others, incompleteness of the Commission’s file to which it had obtained access on
7 December 2023. The Commission replied by letter of 15 December 2023 and
granted Apple, on the same day, supplementary access to the file.
(33) On 15 December 2023, Apple addressed a letter to the Hearing Officer where it
expressed, among others, concerns regarding the allegedly inappropriate use of a
Letter of Facts, and where it requested the Hearing Officer to issue observations in
that respect as well as to extend the deadline to reply to the Letter of Facts until the
Commission had issued a supplementary Statement of Objections. In its reply by
letter of 21 December 2023, the Hearing Officer rejected Apple’s requests.
(34) On 12 January 2024, Apple submitted its response to the Letter of Facts of
6 December 2023 (“the Response to the Letter of Facts”) where Apple criticised that
the Commission adopted a letter of facts rather than a new statement of objections
and requested an oral hearing to further present its views. The Commission rejected
Apple’s request for an oral hearing by letter of 17 January 2024. In reaction, Apple
referred the matter to the Hearing Officer. In its letter of 30 January 2024, the
Hearing Officer rejected Apple’s request for an oral hearing.
31
IDs 3009 and 3042.
32
ID 3050.
33
ID 3058.
34
ID 3312.
35
ID 3230.
36
Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003
(Text with EEA relevance), OJ C 210, 1.9.2006, p. 2–5.
EN 14 EN
(35) On 25 January 2024, Apple announced changes to iOS, Safari and the App Store
rules in the European Union.
37
These announced changes are not in force on the day
of adoption of this Decision.
(36) On 6 February 2024, the Commission held a state of play meeting with Apple.
5. A
PPLE’S ALLEGATIONS OF PROCEDURAL SHORTCOMINGS
(37) In its Reponses to the Statement of Objections of 28 February 2023 and to the Letter
of Facts, Apple raised a number of alleged procedural shortcomings, in particular: (i)
that the Commission infringed Apple’s rights of defence by adopting a Letter of
Facts instead of a supplementary statement of objections; (ii) that the Commission
has not discharged its burden of proof by relying on outdated and incomplete
information and has not taken serious investigative steps to collect the evidence
required in support of its findings and (iii) that the investigation is vitiated by
procedural breaches as 29 minutes of meetings between the Commission and Spotify
and BEUC registered on the file are not sufficiently detailed and have not allowed
Apple to exercise its rights of defence properly.
(38) The Commission considers that these allegations are unfounded for the following
reasons.
5.1. The Letter of Facts was an appropriate instrument and did not infringe Apple’s
rights of defence
5.1.1. Apple’s arguments
(39) In the Response to the Letter of Facts, Apple argued that by adopting a letter of facts
instead of a new statement of objections the Commission infringed Apple’s rights of
defence.
38
(40) First, Apple argues that the use of a letter of facts was inappropriate because in its
view the Commission materially altered the allegations and body of evidence in the
Statement of Objections of 28 February 2023. Apple claims that considering its
conduct exclusively an exploitative abuse vis-à-vis consumers should be considered
as substantially supplementing the substance and scope of the objections in line with
the General Court’s judgment in Google Android.
39
(41) Second, Apple also considers that the use of a letter of facts was inappropriate
because the Commission changed the methodology for the calculation of the fine and
its magnitude. Apple argues that the change of methodology constitutes a departure
from the previous statements of objections and envisages a lump sum which could
result in an unprecedented large fine which could be higher than the fine proposed in
the Statement of Objections of 28 February 2023 under the standard methodology,
even if under such proposal Apple Music’s revenues would have been included.
40
37
“Apple announces changes to iOS, Safari, and the App Store in the European Union”, see:
https://www.apple.com/newsroom/2024/01/apple-announces-changes-to-ios-safari-and-the-app-store-
in-the-european-union/, accessed on 9 February 2024, ID 3367.
38
Apple’s Response to the Letter of Facts, ID 3330, paragraphs 27 to 42.
39
Apple’s Response to the Letter of Facts, ID 3330, paragraph 31, citing the judgement of 14 September
2022 in Case T-604/18 Google v Commission (Google Android judgement), EU:T:2022:541,
paragraphs 979 and 996.
40
Apple’s Response to the Letter of Facts, ID 3330, paragraph 41.
EN 15 EN
5.1.2. Assessment of Apple’s arguments
5.1.2.1. The Letter of Facts was an appropriate instrument to communicate to Apple a
reduction of the objections and how the Commission intended to use the relevant
evidence in a potential decision
(42) It is settled case law that adopting a supplementary statement of objections is only
required “if additional objections are issued or the intrinsic nature of the
infringement in question is altered”.
41
(43) The Letter of Facts informed Apple that the Commission did not intend to further
rely on its preliminary finding in the Statement of Objections of 28 February 2023
(Section 9.4) that the Anti-Steering Provisions give rise to the imposition of unfair
trading conditions to the detriment of developers of music streaming apps. In this
regard, in its Statement of Objections of 28 February 2023 the Commission set out its
preliminary conclusion that the Anti-Steering provisions at issue “give rise to the
imposition of unfair trading conditions to the detriment of iOS users, which in itself
is sufficient to qualify them as abusive under Article 102 (a) TFEU”. In addition, the
Commission reached the preliminary conclusion “that Apple’s Anti-Steering
Provisions also constitute unfair trading conditions which are detrimental to the
interests of competing music streaming service providers and that they are therefore
abusive under Article 102 (a) TFEU also on this ground”.
42
Therefore, the
Commission preliminarily concluded that the Anti-Steering provisions are
detrimental to the interests of consumers but additionally also to the interests of app
developers and thus constituted unfair trading conditions under Article 102 of the
Treaty vis-à-vis both groups separately.
43
The Commission did not infringe Apple’s
rights of defence by informing it in the Letter of Facts that the Commission was
dropping one of the two objections.
(44) The objection which was maintained concerning harm to consumers had been
explained and substantiated in detail in section 9.3 of the Statement of Objections of
28 February 2023. In particular, the Commission explained there that the unfair
trading conditions Apple imposes on developers of music streaming apps affect
consumers insofar as music streaming app developers are prevented from informing
iOS users about the options available to them and from allowing them to effectively
exercise an informed choice.
44
(45) The Statement of Objections of 28 February 2023 set out the two objections
comprehensively in different sections (Sections 9.3 and 9.4). Apple was therefore
well aware that both were seen to constitute separate objections for the purposes of
the Statement of Objections of 28 February 2023.
(46) Furthermore, the Letter of Facts set out, for each item of evidence, how it relates to
the harm to consumers and how the Commission intended to use it in a potential
decision and granted Apple the possibility of submitting written observations in this
regard.
41
Case T-682/14 Mylan Laboratories, EU:T:2018 :907, paragraph 316.
42
Statement of Objections of 28 February 2023, ID 2811, paragraph 738.
43
Statement of Objections of 28 February 2023, ID 2821, paragraph 621: “besides being detrimental to
iOS users ‘interest, are also detrimental to the interests of music streaming service providers”.
44
Statement of Objections of 28 February 2023, ID 2821, paragraphs 525 to 529.
EN 16 EN
(47) Consequently, the Commission considers that the Letter of Facts issued in this case
was an appropriate instrument as it did not materially alter the preliminary findings
set out in the Statement of Objections of 28 February 2023, but dropped the
additional objection concerning the unfairness of Anti-Steering provisions towards
music streaming app developers. Moreover, it allowed Apple to exercise its rights of
defence concerning the body of evidence the Commission intended to use in support
of the primary objection concerning the unfairness of Anti-Steering provisions
towards consumers.
5.1.2.2. The proposed change in the methodology of the fine did not warrant a supplementary
statement of objections
(48) It is settled case law that the Commission is required to set out in a statement of
objections the main factual and legal criteria on which it will base its calculation of
the amount of the potential fine, such as the gravity and the duration of the alleged
infringement.
45
However, a letter of facts is an appropriate instrument to inform the
investigated company of new elements or changes to the method for determining the
amount of the fine.
46
In this regard, the General Court clarified in Campine that an
increase of the fine on the basis of point 37 of the Guidelines on Fines in order to
take into account the particularities of the case and to achieve deterrence does not
constitute an element of fact and of law that the Commission is required to mention
in a statement of objections.
47
(49) The Commission informed Apple in the Statement of Objections of
28 February 2023 of its intention to impose a fine taking into account the gravity and
duration of the infringement and specified how it intended to calculate the potential
fine based on the facts of the case.
48
In addition, the Commission specifically
mentioned the need to ensure that fines have a sufficiently deterrent effect.
49
(50) In its Letter of Facts, the Commission informed Apple about the potential application
of point 37 of the Guidelines on Fines.
(51) In this way, Apple was made fully aware and given the opportunity to comment on
the method of determining the final amount of a potential fine.
5.2. The Commission has taken appropriate investigatory steps and discharged the
burden of proof
5.2.1. Apple’s arguments
(52) In its Responses to the Statement of Objections of 28 February 2023
50
and to the
Letter of Facts, Apple argued that the Commission failed to discharge its burden of
proof by relying on incomplete and inappropriate information.
(53) First, Apple considers that the Commission relies disproportionately and without
scrutiny on third-party sources such as market data from third-party reports, user
45
Case C-180/16 P Toshiba v Commission, EU:C:2017:520, paragraph 21 and Case T-15/02 BASF v
Commission, EU:T:2006:74, paragraph 48.
46
Case C-180/16 P Toshiba v Commission, EU:C:2017:520, paragraph 34 and Case T-240/17 Campine v
Commission, EU:T:2019:778, paragraphs 339 et seq.
47
Case T-240/17 Campine v Commission, EU:T:2019:778, paragraph 357.
48
Statement of Objections of 28 February 2023, ID 2821, paragraphs 770 to 775.
49
Statement of Objections of 28 February 2023, ID 2821, paragraphs 776.
50
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2821, Section D.
EN 17 EN
comments on discussion forums and economic analysis prepared by the
complainant.
51
(54) Second, Apple argues that the Commission relies on outdated data and information
which cannot support an ongoing infringement.
52
In particular, Apple contests the
use of Spotify’ 2018 experiments
53
(see recitals (743) et seq.) and […]
54
[…]
55
(see
recitals (617) et seq.).
(55) Third, Apple claims that the Commission’s investigation is incomplete, as it failed to
collect information from essential stakeholders and hence the Commission has not
discharged its burden of proof.
56
In particular, Apple complains that the Commission
did not carry out a consumer survey to seek input from consumers and failed to
investigate the impact of out-of-the app communication tools to inform consumers.
57
(56) Fourth, Apple argues that the Commission has failed to collect the information and
evidence it needs to support its conclusions, which it was obliged to do pursuant to
the General Court’s Intel judgement.
58
In particular, Apple claims that following its
request in March 2022 and during the Oral Hearing the Commission should have
requested the following information from music streaming service providers which
Apple could not have access to in any other way: (i) the number of emails that music
streaming service providers sent to iOS and Android users within six months after
having obtained their email addresses through the sign-up function within the iOS
and Android apps, and (ii) a description of any differences in the music streaming
service providers’ practices between iOS and Android with respect to sending out
promotional emails, as well as internal documents of music streaming service
providers that refer to differences in platform-specific practices, if any.
59
5.2.2. Assessment of Apple’s arguments
(57) The Commission disagrees with Apple’s views and considers that it has taken all
necessary investigative steps to collect the appropriate evidence in support of its
conclusions. In particular, the Commission notes the following.
(58) First, the Commission relies on various data sources, including market data analytics
providers such as Statista, StatCounter and MIDiA. There is no indication that these
sources are erroneous or do not give a correct picture of the market. In fact, these
sources are recognised and accepted within the industry.
(59) Second, there have been no significant market developments which call into question
the results of the 2018 Spotify experiments or […](see in this regard recitals (166) to
(182)), which therefore have remained valid and support the Commission’s findings
for the whole duration of the infringement. In this regard, Apple continues to be
51
Apple’s Response to the Letter of Facts, ID 3330, paragraph 50 and Apple’s Response to the Statement
of Objections of 28 February 2023, ID 2821, paragraph 60.
52
Apple’s Response to the Letter of Facts, ID 3330, paragraphs 55 and Apple’s Response to the Statement
of Objections of 28 February 2023, ID 2821, paragraphs 61 to 67.
53
Statement of Objections of 28 February 2023, ID 2821, paragraphs 679 et seq.
54
[…]
55
Letter of Facts, ID 3230, paragraphs 539 et seq.
56
Apple’s Response to the Letter of Facts, ID 3330, paragraphs 56 to 67.
57
Apple’s Response to the Letter of Facts, ID 3330, paragraphs 7, 64 and 231.
58
Apple’s Response to the Letter of Facts, ID 3330, paragraphs 68 to 72 and Apple’s Response to the
Statement of Objections of 28 February 2023, ID 2821 paragraphs 57 to 67.
59
Apple’s Response to the Letter of Facts, ID 3330, paragraph 70.
EN 18 EN
dominant in the market for the provision to developers of platforms for the
distribution of music streaming apps to iOS users (recital (520)) and to impose Anti-
Steering Provisions unilaterally (see recitals (228) to (231). Therefore, their results
are perfectly suited to support the finding of an infringement, which started on
30 June 2015 and is ongoing at the date of the adoption of this Decision. Moreover,
the Commission does not uncritically rely on these two pieces of evidence to reach
conclusions but has made an overall assessment of all the circumstances and
information available to show harm to consumers.
(60) Third, concerning Apple’s criticisms that the investigation is incomplete, the
Commission notes that according to settled case law the Commission “cannot be
required to carry out further investigations where it considers that the preliminary
investigation of the case has been sufficient” and that “the Commission is not
required to reply to all the arguments of the party concerned, to carry our further
investigations […] where it considers that the preliminary investigation of the case
has been sufficient”.
60
In this regard, the Commission maintains that its investigation
is complete and sufficient.
(61) The Commission notes that its finding that Apple’s Anti-Steering Provisions are
detrimental to consumers is based on a sound body of evidence gathered throughout
the investigation. In particular, the monetary and non-monetary harm inflicted on
consumers is based, among others, on internal documents from Apple and
information collected from Apple and music streaming service providers through
requests for information, including data on conversion channels, as well as on the
2018 Spotify experiments and […] (see Section 9.3.2.1 on “Monetary harm to
consumers” and Section 9.3.2.2 on “Non-monetary harm to consumers”). The
Commission considers that the evidence collected was sufficient to prove the
infringement and in particular the harm to consumers so that no further investigation
was necessary.
(62) In addition, it should be noted that the consumer association BEUC, which represents
forty-five independent consumer organisations from thirty-one countries, was
admitted as an interested third party in this case on 31 May 2021.
61
BEUC provided
observations to the two statements of objections issued by the Commission and
participated in the oral hearing. The Commission considers that BEUC’s views as a
recognised European consumer association are fully representative of consumers’
views in this case and further supported the findings that Apple’s Anti-Steering
Provisions are detrimental vis-à-vis consumers.
(63) With respect to Apple’s allegation that the Commission has not taken into account
the effect of out-of-the app communications in its assessment, the Commission notes
that it examines this issue extensively in recitals (205) to (207) and (700), concluding
that these tools constitute inferior ways of communicating with users not equivalent
to effective in-app price information at the time when the user is engaging with the
service.
62
(64) Fourth, as regards Apple’s claim that the Commission had an obligation to obtain
certain information from music streaming service providers which Apple could not
60
Case T-758/14 Infineon, EU:T:2016:737, paragraphs 73 and 110.
61
Letter of admission of BEUC as an interested third-party, ID 1748.
62
See also Statement of Objections of 28 February 2023, ID 2821, paragraphs 948, 675 and 692; Letter of
Facts, ID 3230, paragraph 54 and footnote 152.
EN 19 EN
have accessed in any other way (see recital (56)), the Commission notes that in the
(annulled) Intel judgment invoked by Apple, the General Court stated that, “[w]here
an undertaking which is the subject of an investigation has become aware of the
existence of an exculpatory document, but is unable to obtain it itself or is prevented
from submitting it to the Commission, whereas the Commission is able to obtain that
document and use it, the Commission may be obliged in certain circumstances to
obtain that document following an express request to that effect by the undertaking
concerned”.
63
The General Court emphasised that “such an obligation must be
limited to exceptional cases”
64
and noted that “[t]he mere fact that certain documents
may contain exculpatory evidence does not suffice to establish an obligation on the
Commission to obtain them at the request of a party concerned by the
investigation”.
65
The case law more generally clarifies that the Commission “has a
margin of discretion in deciding whether it should obtain the documents [requested
by an investigated undertaking]. The parties to a procedure have no unconditional
right to the Commission’s obtaining certain documents, since it is for the
Commission to decide how it conducts the investigation of a case.”
66
(65) In this case, Apple has not “become aware of the existence of an exculpatory
document” but asked the Commission to obtain documents and information since, so
it claims, in their absence it “would be missing a key piece of potentially exculpatory
evidence that would demonstrate the effectiveness of one of the key alternative
acquisition channels for [Music Streaming Service] providers”.
67
In such a situation,
the Commission was not obliged to request the documents and information in
question. In exercising its margin of discretion, the Commission considered that its
file was sufficiently complete and that obtaining the information according to
Apple’s request was not necessary in view of the various other pieces of evidence
cited in this Decision concerning the effectiveness of promotional emails as a way of
conversion to premium subscriptions.
(66) In addition, according to the Commission’s assessment of the evidence on the file,
the possibility to send emails and run promotional campaigns outside of the app
conducted by music streaming providers are not effective ways of communicating
with users and do not end nor call into question the infringement (see recitals (189)
to (201), (700) and (769)). Consequently, the Commission considers that, contrary to
Apple’s claim,
68
obtaining the information requested by Apple from music streaming
providers concerning the frequency of email communications within six months after
obtaining the user’s email address and about differences among practices in the
Android and iOS platforms would have unlikely lead to obtaining exculpatory
evidence.
63
Case T‑286/09 Intel, EU:T:2014:547, paragraph 372 (emphasis added).
64
Ibid., paragraph 375.
65
Ibid., paragraph 379.
66
Case T-758/14 Infineon, EU:T:2016:737, paragraph 73.
67
Apple’s Response to the Letter of Facts, ID 3320, paragraph 71.
68
Apple’s Response to the Letter of Facts, ID 3330, paragraph 71.
EN 20 EN
5.3. The Commission did not infringe Apple’s rights of defence in relation to
minutes of meetings
5.3.1. Apple’s arguments
(67) Apple argues that the Commission has failed to properly record information received
during meetings with third parties with respect to 29 minutes of meetings with
Spotify and BEUC contained in the case file.
69
According to its view, those minutes
are insufficiently detailed to reflect the content of the discussions between the case
team and the complainant or interested party.
70
In addition, Apple claims that, to
exercise its rights of defence, it needed access to the information discussed during
each of those 29 meetings.
71
Lastly, Apple argues that the Commission
communicated minutes and sought comments from Spotify with delay, which in
Apple’s views questions the accuracy of such minutes.
72
5.3.2. Principles
(68) Pursuant to the case law of the Court of Justice, the Commission has a duty to record
and add to the case file the content of interviews aimed at collecting information on
the subject matter of the investigation and therefore falling within the scope of
Article 19 of Regulation (EC) No 1/2003.
73
The case law clarified over time that the
Commission must provide an indication of the content of the discussions which took
place during the interview, in particular the nature of the information provided from
the subjects, but is free to record the statements made by the persons interviewed in
the form of its choosing.
74
(69) In Intermarché Casino Achats, the Court of Justice stressed that interviews
conducted under Article 19 of Regulation (EC) No 1/2003 are those “conducted for
the purpose of collecting information relating to the subject matter of an
investigation, which presupposes that an investigation is ongoing”.
75
Therefore,
meetings discussing purely procedural or technical matters and not conducted for the
purpose of collecting information relating to the subject matter of the investigation
do not fall within the scope of Article 19 of Regulation (EC) No 1/2003 and therefore
do not trigger an obligation to record minutes.
(70) The Court of Justice further clarified that, in order to find an infringement of the
rights of defence of the investigated undertaking for lack or incompleteness of
interview records, the investigated company would need to establish that: (i) it did
not have access to certain exculpatory evidence and (ii) it could have used that
evidence for its defence.
76
69
Annex 5 to Apple’s Response to the Letter of Facts, ID 3320.
70
Apple’s Response to the Letter of Facts, ID 3330, paragraph 77 and Section II of Annex 5 to Apple’s
Response to the Letter of Facts, ID 3320.
71
Apple’s Response to the Letter of Facts, ID 3330, paragraph 78 and Section III of Annex 5 to Apple’s
Response to the Letter of Facts, ID 3320.
72
Apple’s Response to the Letter of Facts, ID 3330, paragraph 79 and Section IV of Annex 5 to Apple’s
Response to the Letter of Facts, ID 3320.
73
Case C-413/14 P Intel v Commission, EU:C:2017 :632, paragraphs 89-93.
74
Case C-413/14 P Intel v Commission, EU:C:2017 :632, paragraphs 90 and 91; Case T-604/18 Alphabet
v Commission (Google Android), EU:T:2022:541, paragraph 912.
75
Case C-693/20 P Intermarché Casino Achats v Commission, EU:C:2023:172, paragraph 112. See also
Case T-604/18 Alphabet v Commission (Google Android), EU:T:2022:541, paragraph 911.
76
Case C-413/14 P Intel v Commission, EU:C:2017:632, paragraph 98.
EN 21 EN
(71) In particular, the General Court established that in assessing procedural errors in
relation to records of interviews with third parties under Article 19 of Regulation
(EC) No 1/2003, it is necessary to determine whether, in view of the factual and legal
circumstances specific to the case, the investigated undertaking “has adequately
demonstrated that it would have been better able to ensure its defence had those
errors not occurred”. The General Court concluded that if that is not demonstrated,
no infringement of rights of defence can be established.
77
(72) Moreover, in Google Android the General Court took favourably into consideration
that in the absence of records of interviews the Commission (i) “endeavoured to
reconstitute their content in order to enable Google to exercise its rights of defence”
(ii) “had not made use of any of the notes provided as inculpatory evidence” and (iii)
“it had provided Google with all potential exculpatory evidence provided at each of
those meetings that could be useful for Google’s defence”.
78
5.3.3. Assessment of Apple’s arguments
(73) The Commission maintains that Apple’s rights of defence have been preserved with
respect to the minutes in question, in line with the principles set out by the case law
of the Union Courts for the following reasons.
5.3.3.1. Meetings which do not constitute interviews pursuant to Article 19 Regulation (EC)
No 1/2003
(74) First, it should be noted that not all of the meetings Apple takes issue with were
interviews pursuant to Article 19 of Regulation (EC) No 1/2003, as these did not all
collect information relating to the subject-matter of the investigation and were not
conducted for that purpose. In those meetings, the Commission discussed purely
technical or procedural aspects with third parties.
(75) This concerns the following meetings, which did not collect information relating to
the subject-matter of the investigation but for which the Commission, in the spirit of
full transparency, provided Apple with agreed minutes
79
:
(1) The first of these minutes concerns a call between the case team and Spotify on
12 March 2019, the day following the submission of its complaint.
80
The
content of the discussions were practicalities and procedural aspects following
the submission of the complaint, such as public disclosure to the press and next
steps of the procedure.
81
(2) Two minutes
82
concern calls between the case team and Spotify’s economic
advisors about the organisation of a data room which took place in June 2019.
On 4 and 19 June 2019, the case team discussed technical issues concerning the
display and replicability of the code and data submitted by Spotify in the
software available in the data room.
83
These calls aimed at making data and
77
Case T-604/18 Alphabet v Commission (Google Android), EU:T:2022:541, paragraph 934.
78
Case T-604/18 Alphabet v Commission (Google Android), EU:T:2022:541, paragraphs 941 and 942.
79
Agreed minutes were signed by Spotify or BEUC under the following formulation at the end of each
minute “Spotify/BEUC confirms that this note fully reflects the content of the discussions as held during
the videocall”.
80
Minutes of the meeting of 12 March 2019 (ID 1416).
81
The non-confidential version of the complaint was shared with Apple on 28 March 2019 (ID 93).
82
Minutes of the meetings of 4 June 2019 (ID 1414) and 19 June 2019 (ID 1420).
83
In addition to the agreed minutes Apple had access to email exchanges between the case team and
Spotify´s economic advisors (ID 273) in which the case team explained the technical issue it had
EN 22 EN
code available in the data room to Apple, and not at collecting or discussing
relevant information.
(3) Following the data room in June 2019, the case team organized a meeting on
3 July 2019
84
with Spotify’s economic advisors in order to verify that the
redacted version of the data room report prepared by Apple’s economic
advisors during the data room did not contain any confidential data from
Spotify.
85
The purpose of the meeting was to double check whether the non-
confidential version of the data room report was correct, and not to collect any
information.
(4) On 15 July, 8 and 19 November 2019,
86
the case team held calls with Spotify
concerning the set-up, methodology and questions of a survey to evaluate lock-
in of iPhone users into iOS and whether the pricing of music streaming
services on apps could have an influence in a user’s decision to purchase a
smart mobile device. In the first call, the case team and Spotify discussed a first
proposal consisting of a survey directed by DG Competition and conducted by
a third-party vendor, an option which finally was not pursued. Spotify
expressed its concerns around such set-up in the call of 15 July, as it would
have required sharing personal Spotify user data with a third-party.
87
Following
exchanges about a potential survey with both Spotify and Apple, both
companies decided to conduct their own independent surveys with external
contractors under the Commission’s guidance to overcome data sharing
problems. To this end, the case team exchanged proposed written questions by
email with both Apple and Spotify and held several calls with the two
companies.
88
In this context, the calls held on 8 and 19 November 2019 with
Spotify discussed draft questions in preparation of the final Spotify survey,
which was finally launched on February 2020 and to which Apple had full
access.
89
Given the preparatory nature of these exchanges, and the fact that the
relevant evidence used to assess iOS user’s lock-in was the result of the
surveys, these three calls are not interviews in the sense of Article 19 of
Regulation (EC) No 1/2003 as no information was collected in these calls.
90
encounter (missing “do files” for Eview analysis) and Spotify´s economic advisors provided written
instructions following the call.
84
Minutes of the meeting of 3 July 2019 (ID 1427).
85
In addition to the agreed minutes, Apple had access to an email exchange (ID 283) in which the case
team explained the purpose of this meeting.
86
Minutes of the meetings of 15 July 2019 (ID 1415), 8 November 2019 (ID 1411) and 19 November
2019 (ID 1421).
87
In addition to the agreed minutes of the call on 15 July 2019, Apple had access to email exchanges
between the case team and Spotify (ID 308 and 309) concerning the possibility of conducting a survey
by a third-party vendor selected by DG Competition using Spotify’s user email data.
88
Apple had access to abundant email correspondence including draft questions between the case team
and Spotify between September and November 2019 (see IDs 374 375, 376, 380, 381, 382, 385, 408,
409, 419, 420). Moreover, Apple equally shared survey drafts (see for instance IDs 371, 372, 425, 442,
443, 489, 490, 521, 554, 555, 559, 601, 602, 620), so it had first-hand information about the
Commission’s views on the survey design.
[…]
89
Apple had access to the final version of the survey conducted by Spotify (ID 500) and to a Compass
Lexecon report presenting the survey’s methodology, questions and results (ID 900).
90
In the call on 19 November 2019 (ID 1421), Spotify briefly reported to the Commission on the
discussions it had with the United States Department of Justice, to which it raised similar concerns.
Insofar such discussions concern an investigation by a third-party competition authority, they are
EN 23 EN
(5) On 16 June 2020,
91
the Commission held a call with Spotify’s legal and
economic advisors concerning a data submission from Spotify in reply to a
request for information
92
and in preparation of an upcoming submission
93
, both
related to Spotify’s 2018 experiments. These submissions included the raw
data, logs and documentation underlaying the 2018 Spotify experiments which
would enable the Commission to replicate the economic analysis. Given the
large size of this data submission this call was organised to sort out logistics
(e.g., Spotify agreed to minimise the size of raw data and include all codes to
ensure replicability) concerning data sharing, but no substantive information
was disclosed or discussed in this meeting.
(6) On 7 May 2021,
94
following the adoption of the Statement of Objections of
30 April 2021, a call took place between the case team and BEUC at BEUC’s
request in order to discuss BEUC’s possible intervention in the case. The case
team gave BEUC a general overview of the consumer related aspects of the
case and the appropriate timing of such intervention. No information was
gathered by the Commission in this meeting.
(7) On 10 May 2021,
95
a meeting took place between Spotify and the Commission,
following the adoption of the Statement of Objections of 30 April 2021, but
before Spotify received a non-confidential version. The case team broadly
described the preliminary conclusions reached in its statement of objections,
which were known to Apple, and explained the next procedural steps, but did
not collect any information from Spotify in this call.
5.3.3.2. Apple’s rights of defence have been preserved with respect to the meetings that may
constitute interviews pursuant to Article 19 Regulation (EC) No 1/2003
(76) With respect to other meetings which may constitute interviews pursuant to Article
19 Regulation (EC) No 1/2003, the Commission notes that Apple’s rights of defence
have been respected.
96
(77) The Commission provided Apple with agreed minutes or internal notes or e-mails
reflecting the content of the discussions with respect to all the nineteen meetings
concerned.
(78) For most of those meetings, the Commission also provided Apple with evidence
corroborating their content. This included slide deck presentations used in meetings
by Spotify, email exchanges surrounding the meetings and submissions discussed in
the meetings or submitted as follow-up to the meetings. Read together, those
documents provide further details and context on the matters discussed in the
relevant meetings and are sufficiently detailed to allow Apple to understand the
discussions and information provided by Spotify.
outside of the scope of the investigation and did not entail collection of relevant evidence by the
Commission.
91
Minutes of the call of 16 June 2020 (ID 1430).
92
The data submission discussed concerned Spotify´s reply to question 35 of the request for information
2020/002646, dated 10 January 2020 (ID 1431).
93
With respect to the upcoming data submission, see email from Spotify’s economic advisors on 8 June
2020 explaining the issues encountered and proposing a call. Apple had access to this email (ID 656).
94
Minutes of the meeting of 7 May 2021 (ID 2843).
95
Minutes of the meeting of 10 May 2021 (ID 2535).
96
Not all of these meetings necessarily constitute interviews under Article 19. However, in the spirit of
transparency, the Commission has provided information to Apple as to the content of these meetings.
EN 24 EN
(79) Apple complains about the record of a number of meetings in which Spotify met
with the Commission to present its position on Apple’s alleged anticompetitive
conduct.
97
The Commission notes that for some of these meetings, Apple had access
to agreed minutes summarising the topics discussed at the meeting.
98
For others,
Apple had access to internal notes or e-mails drafted by Commission officials present
in the meetings summarising the discussions during the meeting.
99
In any event, for
all these meetings, Apple also had access to documents in the file that provide
sufficient detail and context to understand the content of the discussions in those
meetings and could exercise of its rights of defence thereupon. […],
100
[…],
101
[…],
102
[…].
103
[…].
(80) Apple also submits concerns about a number of agreed minutes which relate to short
calls or meetings in which Spotify updated the Commission on its business
relationship with Apple.
104
This concerns updates on alleged delays and blocking of
Spotify’s app updates by Apple and unexpected changes in Apple’s interpretation of
the App Review Guidelines. The minutes mostly relate to short calls in which
Spotify briefly updated the Commission on specific examples of Apple’s conduct,
which were sufficiently summarised in the agreed minutes provided in the file.
105
Only one of the meetings
106
concerned a longer exchange in which Spotify reiterated
its concerns on Apple’s alleged anticompetitive practices at the time, as explained in
footnote 101, and also mentioned specific examples in which Apple had been
allegedly delaying updates, blocking and even threatening to withdraw Spotify’s app
from the App Store. Spotify’s concerns were detailed in a written submission sent in
advance of the meeting, as well as in exchanges between Spotify and Apple
discussing the issue and a legal memorandum submitted by Spotify after the meeting,
to which Apple had access.
107
Moreover, most of these concerns and examples were
97
Minutes of the meetings of 4 July 2013 (ID 2452), 6 February 2015 (IDs 2456 and ID 2748), 16 March
2015 (ID 2451), 25 June 2015 (ID 1640), 10 December 2015 (ID 1564), 13 July 2016 (ID 1639), 25
July 2016 (ID 1562), 28 July 2016 (ID 1641), 18 September 2018 (ID 1419) and 15 November 2018
(ID 1638).
98
For the meetings of 25 June 2015 (ID 1640), 10 December 2015 (ID 1564), 13 July 2016 (ID 1639), 25
July 2016 (ID 1562), 28 July 2016 (ID 1641), 18 September 2018 (ID 1419) and 15 November 2018
(ID 1638).
99
For the meetings of 4 July 2013 (ID 2452), 6 February 2015 (IDs 2456 and ID 2748) and 16 March
2015 (ID 2451).
100
[…].
101
[…].
102
[…].
103
[…].
104
In particular, minutes of the meetings of 13 July 2016 (ID 1639), 6 January 2017 (1637), 16 October
2017 (ID 1561), 12 February 2018 (ID 1559), 30 September 2021 (ID 2541).
105
The call of 6 January 2017 (ID 1637) was a short call, in which Spotify informed the Commission on
Apple’s continued delays of the Spotify app updates, invoking new and different reasons to do so. The
call of 16 October 2017 (ID 1561) was again a short call in which a Spotify’s representative updated the
Commission on its relationship with Apple, including new instances in which Apple had delayed
updates of Spotify’s app and new changes in Apple’s terms for distribution in the App Store. The call of
12 February 2018 (ID 1559) was again a specific update from Spotify on a new blockage by Apple of a
Spotify update because it contained a reference to prices. The call of 30 September 2021 (ID 2541) was
again a catch up on Apple’s rejection of certain actions and updates. Spotify explained a specific recent
example in which Apple rejected Spotify’s latest marketing campaign.
106
Minutes of the meeting of 13 July 2016 (ID 1639).
107
See Spotify’s written submission of 29 June 2016 (ID 799), in which Spotify also urged the
Commission to consider ordering interim measures prohibiting Apple from removing Spotify’s app
EN 25 EN
again detailed in Spotify’s formal complaint, to which Apple had access.
108
Therefore, the agreed minutes of all these meetings, together with the other relevant
documents in the file, provided Apple with sufficient detail and context on Spotify’s
allegations.
(81) Regarding Apple’s objections concerning the record of the call of 16 July 2015,
109
the Commission notes that this was a spontaneous call from Spotify’s legal advisors
to inquire about next steps in the handling of their preliminary complaints. The
Commission took the opportunity to briefly inquire about an experiment that Spotify
was carrying out at the time regarding the use of IAP, before it disabled that option in
May 2016. The internal Commission e-mail reporting on this call includes an e-mail
from Spotify’s lawyers to the Commission explaining what they had discussed over
the call
110
and makes reference to previous exchanges with Spotify on this topic,
111
to
which Apple had access. Apple also had access to an e-mail exchange following this
call in which Spotify’s advisors further explained the conclusions drawn from the
experiments they had carried out in 2015.
112
Thus, the documents in the file provided
Apple with sufficient detail and context on the call of 16 July 2015 and, more
generally, about the experiments that Spotify was carrying out around that time,
which, in any event, were not used as inculpatory evidence during the investigation.
(82) Apple further complains about the minutes of the meetings of 7 December 2016 and
14 December 2016.
113
The purpose of these meetings was to discuss with Spotify
Apple’s informal proposal to change Rule 3.1.1. of the App Store Review
Guidelines. In the first meeting of 7 December 2016, the Commission explained the
proposal to Spotify and asked for feedback. Spotify claimed it would only be able to
give substantive feedback on the specific proposal after discussing the proposal
internally and only gave some preliminary and general views on what the App Store
from the App Store and cease to block app updates, and the letters exchanged between Spotify and
Apple, submitted by Spotify (IDs 844 and 838).
As explained in footnote 101, following the meeting of 13 July 2016 and prior to the meeting of 25 July
2016, Spotify submitted, among other documents, a legal memorandum summarising Spotify’s key
legal arguments (IDs 1452), including reference to examples in which Apple had been allegedly
delaying updates, blocking and even threatening to withdraw Spotify’s app from the App Store.
108
Spotify’s Complaint dated 11 March 2019, ID 1457, Section 3.3.
109
ID 2551.
110
See e-mail from Spotify’s legal counsel of 16 July 2015 in ID 1579 and screenshots attached to the
email concerning the experiment discussed over the call in IDs 1580, 1581, 1582 and 1583.
111
See e-mail from Spotify’s legal counsel of 13 July 2015 in ID 1595, explaining the experiment Spotify
had carried out concerning the use of IAP and its initial conclusions. According to Spotify, the data
obtained by Spotify between 16 June and 5 July showed the importance of IAP for obtaining
subscribers. The launch of this experiment had already been advanced in a previous meeting of 25 June
2015 (see ID 1640).
112
See e-mail from Spotify’s legal counsel of 14 September 2015 in ID 1576 and attachment in ID 1578.
As explained in the e-mail (ID 1576), Spotify run an experiment from 16 June 2015 to 12 July 2015
which tested the use and importance of IAP. Spotify was still using IAP at that time but disabled this
option in May 2016. According to Spotify, the experiment showed the importance of IAP for obtaining
subscribers and how users prefer in-app purchasing. Spotify also run an e-mail campaign in the UK and
the US on 16 June 2015 which, according to Spotify, showed that e-mails are not a viable alternative to
in-app communication.
These first experiments are different from the ones carried out by Spotify in 2018, which it submitted
together with its formal complaint (see ID 1459-2). The 2015 experiments were not used as inculpatory
evidence by the Commission.
113
See minutes of the meetings of 7 December 2016 in ID 1560 and 14 December 2016 in ID 1563.
EN 26 EN
Review Guidelines should allow.
114
Spotify submitted its written observations on the
proposal on 11 December 2016, to which Apple had access.
115
Spotify’s observations
were then discussed on 14 December 2016.
116
Evidence in the file also shows that
Apple was aware at the time of the discussions that the Commission was having with
Spotify concerning these proposed changes.
117
Therefore, Apple had access to
detailed information in the file about these discussions and could exercise its rights
of defence.
(83) Apple further complains about the minutes of the call between Spotify and the case
team of 24 March 2020.
118
This call was organized by the case team to seek two
clarifications following Spotify’s reply to a request for information.
119
First, the case
team inquired Spotify about the availability of certain data and code in the data
submission provided in reply to the request for information concerning the Spotify
experiments.
120
This concerned a purely technical data-related aspect which did not
involve the collection of relevant information. Second, the case team aimed at
clarifying some doubts concerning Spotify’s reply to its questions on acquisition
channels, associated costs and Spotify’s decision to switch off IAP.
121
Concerning
those points, the Commission included new follow up questions in its next request
for information dated 23 April 2020,
122
to which Spotify replied in detail including a
note annexed to its reply. Apple had access to Spotify’s reply,
123
in addition to an
email exchange between the case team and Spotify related to this meeting.
124
Therefore, Apple had access to detailed information concerning the allegations
brought forward in this meeting and could exercise its rights of defence.
(84) Lastly, Apple raised concerns on the minutes of a call between Spotify and the case
team on 28 October 2020.
125
This call was organised to allow Spotify to present its
views on an economic paper submitted by Apple. Besides the agreed minutes
provided, Apple had access to the 15-slide deck presentation used by Spotify’s
economic advisors in the call
126
as well as to a 39 pages submission entitled “CL
Response to CRA Submission”.
127
These documents, read together, provided Apple
114
This is reflected in the minutes of the meeting (ID 1560), but also in a follow up email of 9 December
2016 (ID 836).
115
See cover e-mail in ID 818 and Spotify’s submission of 11 December 2016 in ID 819.
116
See minutes of the meeting of 14 December 2016 in ID 1563.
Ahead of the call on 14 December 2016, Spotify submitted specific points for discussion (ID 829),
information on Deezer discussed during the meeting (IDs 788 to 791) and an e-mail exchange with
Apple concerning a disagreement on an e-mail campaign from Spotify which Apple considered violated
the App Store Review Guidelines (ID 808).
117
See e-mail from Apple to a Commission official on 31 October 2016 advancing the changes they
planned to do in the Guidelines and attaching a letter sent by Apple to Spotify on 28 October 2016 (ID
845 and 846) and an e-mail from Apple to a Commission official on 24 December 2016 explaining they
understood Spotify had objected their proposal and informing that Apple was assessing internally
Spotify's new request (ID 835).
118
Minutes of meeting on 24 March 2020 (ID 1422).
119
Spotify’s reply to request for information 2020/002646 dated 10 January 2020 (ID 1431).
120
See question 35 of request for information 2020/002646 dated 10 January 2020 (ID 1431).
121
See question 18 of request for information 2020/002646 dated 10 January 2020 (ID 1431).
122
Request for information 2020/050944 dated 23 April 2020 (ID 564).
123
Spotify’s reply to request for information 2020/050944 dated 23 April 2020 (ID 1434).
124
ID 527.
125
Minutes of meeting of 28 October 2020 (ID 1346).
126
ID 1349.
127
ID 881.
EN 27 EN
with sufficiently detailed information to understand Spotify’s arguments brought
forward in this call and enabled it to exercise its rights of defence.
(85) For the reasons explained above, the Commission concludes that the record of the
nineteen meetings with Spotify, together with the additional evidence available in the
file, allowed Apple to know the content of the discussions and the nature of the
information provided and show that the Commission did not withhold exculpatory
evidence that could have allowed Apple to better defend itself. The substantive issues
discussed during those meetings were presented by Spotify, in more detail, in
submissions or replies to questions to which Apple had access. Apple was therefore
aware of the content of the discussions in those meetings, as well as the views of
Spotify in the context of the investigation and those meetings in particular.
Moreover, none of the specific minutes of the meetings for which Apple raises
concerns were used as inculpatory evidence by the Commission.
128
In these
circumstances, having had access to the record of the meetings as well as contextual
information, Apple has not put forward sufficiently detailed arguments that could
explain how it might have been better able to ensure its defence in the present case,
had the alleged procedural errors regarding records of those nineteen meetings for
the purposes of Article 19(1) of Regulation No 1/2003 not occurred.
129
(86) In addition, Apple complains that it did not have access to correspondence between
the Commission and Spotify concerning minutes of meetings between
September 2018 and January 2021 and between May 2021 and June 2022.
(87) In this regard, the Commission notes that correspondence with the complainant and
third parties concerning draft minutes prepared by the Commission, to which the
undertaking interviewed may propose corrections pursuant to Article 3(3) of
Regulation (EC) 773/2004, and confidential of information contained therein is not
accessible information, according to the Commission’s Notice on access to file.
130
Only once the person or undertaking in question has agreed the minutes and provided
a non-confidential version, will such minutes be made accessible after deletion of
any business secrets or other confidential information. Therefore, draft minutes of
meetings with Spotify or third parties are confidential vis-à-vis Apple until the
relevant party agrees to the content of such minutes and does not validly claim
confidentiality with respect to its content. The exchanges concerning the
Commission’s internal drafts, the agreement of those minutes and the confidentiality
of certain information contained therein are therefore also not accessible and
confidential.
5.4. Conclusion
(88) In light of the above, the Commission concludes that the Letter of Facts issued in this
case was an appropriate instrument, that the Commission took all necessary
investigative steps to discharge the burden of proof and that the record of the
meetings provided are sufficiently detailed and have allowed Apple to exercise its
128
Case T-604/18 Alphabet v Commission (Google Android), EU:T:2022:541, paragraphs 941 to 943.
129
See, to that effect, case T-604/18 Alphabet v Commission (Google Android), EU:T:2022:541,
paragraphs 946, 950 and 953.
130
Point 17 of the Commission Notice on the rules for access to the Commission file in cases pursuant to
Articles 81 and 82 of the EC Treaty, Articles 53, 54 and 57 of the EEA Agreement and Council
Regulation (EC) No 139/2004, OJ C 325, 22.12.2005, p. 7–15.
EN 28 EN
rights of defence. Therefore, the Commission has not committed any procedural
breach in conducting its investigation.
6. T
HE PRODUCTS CONCERNED BY THE DECISION
6.1. Smart mobile devices, operating systems and app stores
(89) This Decision concerns the distribution of apps and of paid content to users through
mobile app stores, i.e., digital distribution platforms, constituted by online services
and related apps that are dedicated to enabling users to download, install and manage
a wide range of diverse apps from a single point in the interface of the smart mobile
device.
131
(90) Apps are types of software through which users can access World Wide Web
(“web”) content and services on their smart mobile devices. Apps can be
“standalone” and serve offline tasks (such as games or photography) or incorporate
some form of online service (such as geolocation, integration with social networks or
streamed content).
132
Apps are optimised for the characteristics of smart mobile
devices, as compared with PCs, such as reduced text input, limited screen size or
convenience of touch-based interfaces.
133
Apps can principally be divided into native
and non-native ones.
134
Native apps are apps written in a specific programming
language of a given device – typically Swift or Objective-C in the case of Apple’s
devices.
135
They cannot be used on multiple smart mobile operating systems, but
need to be re-written for each smart mobile operating system in the respective
programming language. Native apps can have access to the functionalities of the
smart mobile operating system, like GPS and camera. They are typically also faster
than non-native apps, because of their better compatibility with the hardware of a
given smart mobile operating system. Non-native (web-based) apps can be used in
different smart mobile operating system without the need to develop an app for each
smart mobile operating system. An example of a non-native app is a progressive web
app, which is a mobile version of a website that can be accessed via the browser and
is optimised for the use on smart mobile devices. The app’s icon can be stored on the
iPhone so that the underlying website can be consulted directly by a user.
(91) An app store is a digital distribution platform where free and paid apps can be
offered and downloaded on devices (e.g., smart mobile devices).
136
App stores
intermediate transactions between companies offering apps (subsequently called
“developers”
137
) and (smart mobile) device users downloading and using those
131
Commission decision of 18 July 2018 in Case AT.40099 – Google Android, paragraph 86.
132
Commission decision of 18 July 2018 in Case AT.40099 – Google Android, paragraph 84.
133
Commission decision of 18 July 2018 in Case AT.40099 – Google Android, paragraph 84.
134
Commission decision of 18 July 2018 in Case AT.40099 – Google Android, paragraph 85.
135
See https://developer.apple.com/swift/, ID 1105 and https://www.upwork.com/resources/swift-vs-
objective-c-a-look-at-ios-programming-languages, both accessed on 13 January 2021, ID 1106.
136
For the purpose of this Decision, the Commission focuses on app stores integrated on smart mobile
devices, given that the conduct at issue concerns the distribution of music streaming apps on iOS.
137
Not all parties offering apps on the App Store will necessarily be developers as many may outsource the
development of apps to third parties. Nonetheless, and in line with industry practice, this Decision
refers to companies offering apps in the App Store as “developers”.
EN
29
EN
apps
138
. App stores therefore have two distinct, but interlinked user groups,
developers and users of (smart mobile) devices, as Figure 1 illustrates.
139
Figure 1 – Basic model of an app store platform
(92) App stores typically take the form of an online portal, where users can browse
through different app categories or look for a particular app or developer, view
information about each app and download the ones of their interest. App stores are
generally available to users for free. Users only pay to download certain apps or
acquire paid content within apps (“in-app purchases”).
140
The app selected by the
user is offered as an automatic download, after which the app installs on the user’s
mobile device. App stores are often pre-installed on smart mobile devices.
(93) Smart mobile devices can be broadly divided between smartphones and tablets
141
. In
particular, the smartphone has become increasingly important to buy and access
services online.
142
The value and usefulness of smart mobile devices lies to a great
extent in the ability to download a wide variety of apps offered by different
developers, since most online services and IoT devices are accessed and controlled
through apps.
(94) Smart mobile devices rely on operating systems (“OSs”), which are software systems
that control their basic functions. OSs are designed to support the functioning of
smart mobile devices and the corresponding apps are hereinafter referred to as “smart
mobile OSs”. Smart mobile OSs typically provide a graphical user interface (“GUI”),
APIs
143
, and other ancillary functions. These are required for the operation of a smart
mobile device and enable new combinations of functions to offer richer usability and
innovations.
144
Apps written for a given smart mobile operating system will typically
138
Commission decision of 18 July 2018 in Case AT.40099 – Google Android, paragraph 86 defines app
stores as “digital distribution platforms, constituted by online services and related apps that are
dedicated to enabling users to download, install and manage a wide range of diverse apps from a single
point in the interface of the smartphone”.
139
In multi-sided platforms such as app store platforms the activity and scale of one user group can
influence competition, welfare and scale of one or more of the other user groups on the platform in
various ways.
140
Commission decision of 18 July 2018 in Case AT.40099 – Google Android, paragraph 88.
141
Commission decision of 13 February 2012 in Case M.6381 – Google/Motorola Mobility, footnote 13.
142
ACM “Market study into mobile app stores”, accessed on 12 November 2020, ID 886, page 15.
143
Application Programming Interfaces or APIs allow software programmes to communicate with and
exchange data between each other and with the hardware on which they are installed.
144
Commission decision of 18 July 2018 in Case AT.40099 – Google Android, paragraph 80.
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30
EN
run on a smart mobile device using the same OS.
145
Smart mobile OSs are developed
by vertically integrated original equipment manufacturers (“OEMs”) such as Apple
for captive use on their own smart mobile devices (“non-licensable smart mobile
OSs”), or by providers such as Google (with Android), which license their smart
mobile operating system to OEMs (“licensable smart mobile OSs”). As shown in
Figure 2, Google’s Android and Apple’s iOS are the two main mobile operating
systems for smartphones worldwide, with nearly 100 % of smartphones running on
one of them. In August 2023, Android had a 70.76 % market share in terms of
operating systems in active smartphones worldwide and iOS had a 28.53 % market
share.
146
With regard to tablets, in August 2023 Android run 45.11 % of devices and
iPadOS 54.68 %, as shown in Figure 3.
Figure 2 – Evolution of mobile operating systems’ market share worldwide from
2015 to August 2023
147
145
Ibid., paragraph 81.
146
See https://gs.statcounter.com/os-market-share/mobile/worldwide/#monthly-201501-202308, accessed
on 14 December 2023, IDs 3282 and 3286. StatCounter market shares are based on data on website
views by different devices. For more information on StatCounter’s methodology see
https://gs.statcounter.com/faq#methodology, accessed on 6 April 2022, ID 2316.
147
Ibid.
EN
33
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only approved app store and the only gateway for developers to reach iOS users. In
addition, Apple’s mobile devices come with certain Apple apps pre-installed.
157
Only
Apple’s own apps can be pre-installed on the iPhone or the iPad, and some of them
cannot be removed. Figure 5 provides an overview of Apple’s app ecosystem.
Figure 5 – Apple’s mobile app ecosystem
(98) Differently from Apple, Google licenses its Android mobile operating systems to
Original Equipment Manufacturers (OEMs) such as Samsung, LG or Huawei and
also shares the source code of Android allowing anyone to build their own versions
(so-called Android Forks). Google’s app store “Play Store” (or “Google Play”) is the
primary app pre-installed on any smartphone running on Android. Unlike Apple, in
principle Google does not prohibit alternative app stores on Android. However, in
practice, no alternative app store has achieved any meaningful market share
158
and in
90-100 % of the cases users download their apps via the Play Store, which comes
preinstalled with Android operating systems.
159
(99) While free apps account for the vast majority of apps on both platforms, the share of
paid apps in the App Store (5.24 %) is higher than in the Google Play Store (around
3 %), as shown in Figure 6.
157
For a comprehensive list of apps preinstalled on iPhones, including the App Store and Apple Music, see
https://support.apple.com/en-us/HT208094, ID 1023. Some of these apps can be removed, while other
ones cannot, see https://support.apple.com/en-us/HT204221, both accessed on 11 December 2020, ID
1118.
158
Commission decision of 18 July 2018 in Case AT.40099 – Google Android, paragraph 598: “No
downloadable app store has achieved any meaningful market share. Aptoide, which claims to be the
largest “independent” app store outside China, has only achieved a market share of 0-5 % in the
period 2011-2016”.
159
Commission decision of 18 July 2018 in Case AT.40099 – Google Android, paragraph 597.
EN
34
EN
Figure 6 – Distribution of free and paid apps in the App Store and Google Play
Store as of July 2023
160
6.2. Apple’s ecosystem and its business model with regard to its App Store
6.2.1. Apple’s business model
(100) Apple has a vertically integrated and largely closed ecosystem around its mobile
devices comprising different layers of hardware, software and digital services. For
iPhone and iPads, Apple only allows its proprietary operating system iOS
161
and the
App Store. It also includes many of its own apps as defaults on iPhones and iPads.
The tech industry often refers to Apple’s ecosystem of devices and software as a
“walled garden” in which Apple has a tight control over many aspects of the user
experience.
162
(101) Apple was, according to Forbes, the most valuable technology brand worldwide in
2022,
163
and counted with an estimated market capitalisation of USD 3 000 000 000
160
See https://www.statista.com/statistics/263797/number-of-applications-for-mobile-phones/, accessed on
10 October 2023, ID 3156.
161
Which includes for the purposes of this Decision iPadOS, see footnote 4.
162
See for instance “Apple’s ‘walled garden’ walls will get even higher with iOS 13, iPadOS 14 and
MacOS Big Sur” (2 July 2020): https://www.cnet.com/news/apple-walled-garden-walls-will-get-even-
higher-with-ios-14-ipados-14-macos-big-sur/, accessed on 11 December 2020, ID 1015; and “Apple
expands its walled garden with shift to integrated Mac chips” (23 June 2020):
https://www.ft.com/content/93fa4fae-7cac-41cb-af07-059138575488, accessed on 10 December 2020,
ID 1041.
163
https://www.forbes.com/sites/jonathanponciano/2022/05/12/the-worlds-largest-technology-companies-
in-2022-apple-still-dominates-as-brutal-market-selloff-wipes-trillions-in-market-
value/?sh=7a2c5f134488, accessed on 14 December 2023, IDs 3273 and 3277.
EN
35
EN
in June 2023.
164
Apple’s global revenues have increased significantly between 2004
and 2022 as shown in Figure 7.
Figure 7 - Apple’s revenue worldwide from 2004 to 2022 (in billion US dollars)
Statista
165
(102) Apple’s sales of hardware devices represent most of Apple’s income, which stems
mainly from the iPhone sales. According to Apple, its business model is built around
the sale of devices, distinctive in design and style, and the digital ecosystem it has
integrated with those devices.
166
Apple’s revenue share from hardware is declining in
favour of a stable growth of its service offering, including among other services, the
App Store, Apple Music, Apple Books, Apple TV+ and Apple Pay.
167
164
See https://www.forbes.com/sites/dereksaul/2023/06/30/apple-hits-3-trillion-market-value-and-could-
soar-another-800-billion/?sh=a968d7952b17, accessed on 10 October 2023, ID 3119.
165
See https://www.statista.com/statistics/265125/total-net-sales-of-apple-since-2004/, accessed on
10 October 2023, ID 3160. ID 3284, accessed on 14 December 2023 contains underlaying data of
Statista figures.
166
Apple’s comments on Spotify’s Complaint, ID 330, paragraph 40.
167
Statista reported in May 2023 that “Apple’s services segment has grown into a beast of its won in recent
years. In the first three months of 2023, it generated almost $ 21 billion in revenue, making it larger
than many Fortune 500 companies, including household names such as Nike, Boeing, Coca-Cola or
McDonald’s”, see https://www.statista.com/chart/29237/apple-services-sales-compared-to-fortune-500-
companies/, accessed on 10 October 2023, ID 3136. Statista further reported on Tim Cook’s statements:
“we are pleased to report an all-time record in Services and a March quarter record for iPhone despite
the challenging macroeconomic environment”, see https://www.statista.com/chart/29925/apples-share-
of-the-global-smartphone-market/, accessed on 10 October 2023, ID 3137.
EN
36
EN
Figure 8 – Revenue of Apple by operating segment from the first quarter of
2012 to Q3 2023 (in billion US dollars)
168
(103) Apple is the company that makes most revenues from smartphone sales.
169
In the
first quarter of 2023, iPhone shipments amounted to 55.2 million, only overcome by
Samsung.
170
Since its introduction in 2007, Apple’s iPhone sales have consistently
increased, generating more than USD 200 billion only in 2022.
171
The iPhone is the
most successful Apple product to date and represented around 65 % of the
company’s total revenue in the first quarter of 2023.
172
(104) Apple is able to charge higher prices for its high-end and consumer oriented mobile
devices with an integrated ecosystem controlled by Apple and addressed to a public
with a higher willingness to pay for high-end devices and related services.
173
Apple
has also made privacy and security within its ecosystem one of its unique selling
points.
174
168
See https://www.statista.com/statistics/382136/quarterly-segments-revenue-of-apple/, accessed on
10 October 2023, ID 3161. ID 3276, accessed on 14 December 2023, contains underlaying data of
Statista figures.
169
See https://www.statista.com/statistics/1097358/leading-mobile-phone-brands-worldwide-by-shipment-
sales-profit/, accessed on 29 April 2022, ID 2320. According to this source in the year 2019 Apple was
the leading brand in profits from the sale of smartphones with 38.35 million US dollars in profits,
followed by a broad margin by Samsung which made 18.94 million US dollars in profits from
smartphone sales.
170
See https://www.statista.com/statistics/271490/quarterly-global-smartphone-shipments-by-vendor/,
accessed on 10 October 2023, ID 3147. ID 3255, accessed on 14 December 2023, contains underlying
data of Statista figures.
171
See https://www.businessofapps.com/data/apple-statistics/, accessed on 10 October 2023, ID 3162.
172
See https://www.statista.com/statistics/382136/quarterly-segments-revenue-of-apple/, accessed on
10 October 2023, ID 3161.
173
Apple’s comments on Spotify’s Complaint, paragraph 40, ID 330.
174
See in this respect paragraphs 40, 43 and 56 of Apple’s comments on Spotify’s Complaint, ID 330.
EN 37 EN
6.2.2. Apple’s App Store
(105) Apple first launched the iPhone in January 2007 supporting only Apple’s own native
apps. In February 2008, Apple made the iOS Software Development Kit (SDK)
available to developers, allowing them to create native apps to run on the iPhone.
Apple launched the App Store in July 2008 with 500 apps available, which
significantly expanded the functionalities of the iPhone as firstly introduced in 2007,
increasing its attractiveness.
(106) Google opened its own app store Google Play a few months later, in October 2008.
The introduction of app stores gave rise to an entirely new product space for
smartphones, which have a far greater functionality than normal mobile phones due
to their ability to run mobile apps.
175
(107) App stores benefit from direct and indirect network effects in that the more
developers they attract, the more will be willing to join and the more appealing they
will become for users. From the developer’s perspective, however, there are costs
involved in the creation of apps and in making these apps available on different
platforms.
176
Consequently, app store operators at first aimed at attracting successful
apps to their platforms, aware of the added value that a variety of apps would bring
to their ecosystems.
(108) According to Apple the App Store is “the world’s safest and most vibrant app
marketplace, with over half a billion people visiting each week” across 175 countries
and regions. Currently, there are around 1.8 million apps worldwide available for
downloading on the App Store.
177
(109) The growth of the App Store made the iPhone more attractive. The more utility,
functionalities and capabilities a user could get through its iPhone, the more
compelling it became to purchase one. In 2009, Apple launched a campaign “There’s
an app for that” which precisely underlined the added value that third-party apps
brought to the iPhone.
178
The value kept growing as more developers joined the
ecosystem and offered new use cases to iPhone’ users. […].
179
(110) To find apps within the App Store, consumers can use the search function offered in
the App Store or choose a specific category (“Today”, “Games”, “Apps”, “Arcade”)
within the App Store. Consumers can also find apps via the search function on their
mobile browser. In addition, a link to the app can often be found on the developer’s
website.
(111) Evidence shows that large developers typically bring their own audience to their iOS
apps typing the name of the service provider they are looking for. For example,
175
See https://joint-research-centre.ec.europa.eu/system/files/2017-06/jrc106299.pdf, ID 1076, page 15.
176
See https://ec.europa.eu/jrc/sites/jrcsh/files/jrc106299.pdf, ID 1076, page 17: “Apps for different app
stores have to be written using specific code libraries (Swift or Objective-C for iOS/Java for Android)
using app store-specific Software Development Kits. Targeting multiple app stores involves significant
effort in re-writing or modifying the apps so that they can be included in the corresponding app store.
There is an additional cost involved in keeping up with the different OS updates. Moreover, once
available in one app store, the app’s reviews and related information cannot be easily ported from one
app store to the other”.
177
See https://www.apple.com/app-store/, accessed on 16 November 2023, ID 3201.
178
“There’s an app for that” commercial in 2009 https://www.youtube.com/watch?v=szrsfeyLzyg
(YouTube commercial – available online on 14 January 2021).
179
[…]
EN 38 EN
Match Group found that the majority of new users from the App Store organically
searched for its apps (e.g., by typing “Tinder”) while Apple contributed only 6 % of
discovery.
180
In such cases, curation by Apple has little or no effect in-app discovery.
Apple itself acknowledges that in general “65 – 70 % of searches are for specific
apps rather than searches for general topics such as music or travel.
181
6.2.3. Apple’s rules on the App Store
(112) The App Store is the only channel for distribution of native apps to iPhone and iPad
users.
182
If a developer wishes to reach iOS users it has to enter into the License
Agreement and pay a general annual fee of USD 99
183
for participating in the Apple
Developer Program, gain access to the iOS development software tool kit (iOS SDK)
to create compatible native apps and being able to upload them. Developers need to
abide by the terms and conditions determined by Apple and set through the License
Agreement and the Guidelines, under risk of removal from the App Store.
184
Conversely, Apple’s own apps are not subject to these terms and conditions; some of
them are pre-installed on Apple’s devices and cannot be removed.
(113) The License Agreement is a contract of adhesion, pre-defined by Apple and non-
negotiable. The Guidelines are, according to Apple a “living document” that has
been unilaterally updated by Apple many times.
185
[…].
186
[…].
187
[…].
188
(114) Adherence to the License Agreement and the Guidelines do not entitle a developer to
have its app(s) distributed through the App Store. Instead, Apple retains full
discretion to approve or reject apps. In particular, pursuant to Section 6.9 of the
License Agreement with developers, Apple and the developer agree that "Apple may,
in its sole discretion […] reject Your Application for distribution for any reason,
180
Epic Games, Inc, v. Apple Inc., Rule 52 Order after Trial on the Merits, Case No. 4:20-cv-05640-YGR,
10 September 2021, page 119, https://cand.uscourts.gov/wp-content/uploads/cases-of-interest/epic-
games-v-apple/Epic-v.-Apple-20-cv-05640-YGR-Dkt-812-Order.pdf, accessed on 2 May 2022,
ID 2378.
181
Apple’s response to question 1 of Annex 1(a) of the Commission’s request for information (decision
C(2019)7904 final), ID 449-1.
Apple’s response to question 1 of Annex 1(a) of the Commission’s request for information (decision
C(2019)7904 final), ID 449-1.
182
The use of alternative “app stores” for iOS devices such as Cydia requires “jailbreaking” the iOS device
which requires hacking skills, see also paragraph 297. Such app stores are therefore only available to a
small group of technically educated consumers. They do not present an alternative for developers to
reach ordinary iOS users.
183
Since 2018, non-profit organisations, accredited educational institutions and government entities may
apply for a waiver from the USD 99 fee provided that they will distribute only free apps on the
App Store and are based in certain eligible countries (in the EU the waiver possibility applies in France,
Germany and Italy), see https://developer.apple.com/support/membership-fee-waiver/, accessed on
15 December 2020, ID 1040.
184
The applicable versions of these documents can be accessed via the following link:
https://developer.apple.com/support/terms/. See License Agreement, ID 3015; Schedules 2 and 3 to the
License Agreement, ID 3028; Exhibits to Schedules 2 and 3 to the License Agreement, ID 3013; and
the Guidelines, ID 3011.
185
See Apple’s comments on Spotify’s Complaint, ID 330, paragraph 52.
186
[…]
187
[…]
188
Interview to Phillip Shoemaker on 12 January 2021 in the context of the Epic Games, Inc. v. Apple,
Inc., Case No. 4:20-cv-05640-YGR,
https://app.box.com/s/6b9wmjvr582c95uzma1136exumk6p989/file/806840116174, accessed on
6 May 2022, ID 2293.
EN 39 EN
even if Your Application meets the Documentation and Program Requirements."
189
On the basis of the License Agreement, Apple has full control over which apps can
be distributed on the App Store and under which conditions.
(115) Apple scrutinises compliance with its Guidelines through its app review process and
determines whether to approve or reject every third-party app or update application
submitted. The review process covers issues concerning performance, content,
monetisation, advertising, security and privacy, although developers have little
insight into the actual review process.
190
According to Apple, it reviews on average
100 000 submissions each week including both new apps and app updates. The app
approval process involves a team of app reviewers – the App Store Review Team –
that review each app and update in order to assess whether they are appropriate for
the App Store, use proper APIs and whether they are in compliance with Apple’s
Guidelines.
191
According to Apple, the majority of these reviews take place in less
than 24 hours, […].
192
[…].
193
[…].
194
(116) According to Apple, […] % of apps or updates submitted to Apple are rejected, but
many of those are subsequently approved after minor changes. When an app
submission is rejected by the App Store Review Team, the developer is informed via
App Store Connect
195
about the reasons for the rejection and how to resolve the
issue. According to Apple, developers who disagree with a decision can appeal to the
App Review Board, to get the decision overturned. A senior executive team, the so-
called Executive Review Board (“ERB”) also regularly review apps that are
escalated when they raise complex or new issues that may set a precedent that affects
policies on the App Store.
196
[…].
197
[…].
198
(117) Despite these processes and review mechanisms, some developers complain that
their apps or app updates are refused for reasons that are unclear, unreasonable, or
even without explanation. Others complain that the process can sometimes take
weeks and that correspondence on the reasons for refusal with Apple’s App Store
Review Team takes very long time.
199
In this respect, Apple maintains that the app
review process with human intervention is necessary for protecting its system, ensure
an adequate level of protection of the device and avoid fraudulent or pirated apps.
189
See License agreement, ID 3015.
190
ACM “Market study into mobile app stores”, ID 886, page 76.
191
[…]
192
See Apple’s comments on Spotify’s Complaint, ID 330, paragraph 54.
193
[…]
194
See https://www.apple.com/app-store/, accessed on 16 November 2023, ID 3201. Epic Games, Inc, v.
Apple Inc., Rule 52 Order after Trial on the Merits, Case No. 4:20-cv-05640-YGR, 10 September 2021,
Page 103, https://cand.uscourts.gov/wp-content/uploads/cases-of-interest/epic-games-v-apple/Epic-v.-
Apple-20-cv-05640-YGR-Dkt-812-Order.pdf, accessed on 2 May 2022, ID 2378.
195
App Store Connect is a system created by Apple which allows developers to upload, submit and
manage apps. Apple typically communicates with developers about their apps through this system.
Previously, the system was called iTunes Connect.
196
Apple’s response to question 10 of the Commission’s request for information (2019/050361), ID 268-1.
197
[…]
198
Ibid.
199
See https://medium.com/@krave/apple-s-app-store-review-process-is-hurting-users-but-we-re-not-
allowed-to-talk-about-it-55d791451b, accessed on 11 December 2020, ID 1055; and ACM “Market
study into mobile app stores”, ID 886, page 77.
EN 40 EN
However, specialised press reported that scams still make it through the human
review process.
200
6.2.4. Apple’s app and content distribution policy in the App Store
6.2.4.1. The obligation to use IAP
(118) Section 3.1.1 of the Guidelines requires developers to use Apple’s in-app purchase
system IAP to “unlock features or functionality” within their app.
201
Developers who
sell their apps or offer in-app purchase of digital goods or services are subject to a
separate agreement called “Schedule 2”
202
, which requires developers to use IAP for
the distribution of paid content, appoint Apple Distribution International Limited as
their commissionaire
203
for the distribution of apps and pay a commission fee to
Apple, calculated as a percentage of the price paid by end users. The obligation to
sign a separate agreement is set out in Section 7.2 of the License Agreement.
204
Developers which distribute free content within their app abide to “Schedule 1”
which does not include an obligation to pay a commission fee to Apple.
205
(119) Apple introduced IAP as the compulsory payment mechanism for in-app purchases
in June 2009. When it introduced the possibility of purchasing recurrent
subscriptions in iOS apps as of February 2011, Apple equally mandated the use of
IAP.
206
Since 2009, and for subscriptions since 2011, Apple requires developers that
want to sell paid digital content, including subscriptions to such content such as
music streaming subscriptions, within their apps to make use of IAP. Because of this
requirement, no other payment mechanisms are available on iOS for in-app
purchases related to digital content.
(120) The obligation to use IAP for the sale of subscriptions is set out in Section 3.11 of
Schedule 2 to the Licence Agreement:
207
200
See for instance https://www.theverge.com/2021/4/21/22385859/apple-app-store-scams-fraud-review-
enforcement-top-grossing-kosta-eleftheriou, accessed on 5 May 2022, ID 2386.
201
See Guidelines, ID 3011.
202
See License Agreement, ID 3015: “Distribution of free (no charge) Applications (including those that
use the In-App Purchase API for the delivery of free content) via the App Store or Custom App
Distribution will be subject to the distribution terms contained in Schedule 1 to this Agreement. If You
would like to distribute Applications for which You will charge a fee or would like to use the In-App
Purchase API for the delivery of fee-based content, You must enter into a separate agreement with
Apple (“Schedule 2”).” See Schedule 2 to the License Agreement, ID 3028.
203
Exhibit A to Schedule 1 in the License Agreement, ID 3015 defines “commissionaire” as “an agent who
purports to act on their own behalf and concludes agreements in his own name but acts on behalf of
other persons, as generally recognized in many Civil Law legal systems.” While developers that offer
“free” apps equally appoint Apple as their commissionaire under “Schedule 1”, Apple does not charge
developers anything for the distribution of such apps.
204
See Section 7.2 of the License Agreement, ID 3015, that provides the following: “Schedule 2 and
Schedule 3 for Fee-Based Licensed Applications; Receipts: If Your Application qualifies as a Licensed
Application and You intend to charge end-users a fee of any kind for Your Licensed Application or
within Your Licensed Application through the use of the In-App Purchase API, You must enter into a
separate agreement (Schedule 2) with Apple and/or an Apple Subsidiary before any such commercial
distribution of Your Licensed Application may take place via the App Store or before any such
commercial delivery of additional content, functionality or services for which You charge end-users a
fee may be authorized through the use of the In-App Purchase API in Your Licensed Application. […].”.
205
Apple’s Response to the Statement of Objections of 30 April 2021, ID 2165, paragraph 87.
206
See Apple’s comments on Spotify’s complaint, paragraphs 62 and 64, ID 201.
207
Schedule 2 to the License Agreement, ID 3028.
EN 41 EN
“Subscription services purchased within Licensed Applications must use In-App
Purchase. […]”
(121) The obligation to make use of IAP for in-app purchases is set out in Section 3.1.1
(first bullet point) of the Guidelines,
208
which has the following wording:
“In-App Purchase: If you want to unlock features or functionality within your app,
(by way of example: subscriptions, in-game currencies, game levels, access to
premium content, or unlocking a full version), you must use in-app purchase […].
(122) This rule applies among other things to subscriptions to digital content (such as
music streaming subscriptions), one-off purchases of digital content (such as a
movie) as well as to the purchase of additional features in an online game.
(123) Apple monitors and enforces this mandatory use of IAP and rejects or removes apps
that offer within their apps alternative payment solutions in contradiction with – or
setting aside – the IAP obligation.
209
(124) The obligation to use IAP for in-app purchases comes with an obligation to pay a
non-negotiated 30 % commission fee to Apple on each in-app sale involving digital
content during the first year (reduced to 15 % after one year of subscription). The
requirement for developers to pay a 30 % commission fee on all earnings via the app
is set out in Section 3.4 of Schedule 2 to the License agreement,
210
which has the
following wording:
“a) For sales of Licensed Applications to End-Users Apple shall be entitled to a
commission equal to thirty percent (30 %) of all prices payable by each End-User.
Solely for auto-renewing subscription purchases made by customers who have
accrued greater than one year of paid subscription service within a Subscription
Group (as defined below) and notwithstanding any Retention Grace Periods or
Renewal Extension Periods, Apple shall be entitled to a commission equal to
fifteen percent (15 %) of all prices payable by each End-User for each subsequent
renewal[…]”.
(125) According to Section 1.1 of Schedule 2
211
“licensed application” includes the
following digital services and products that are sold within the application:
“c) For the purposes of this Schedule 2, the term “Licensed Application” shall
include any content, functionality, extensions, stickers, or services offered in the
software application.”
(126) Apple has charged a 30 % commission fee since the introduction of IAP for the
distribution of digital content. The decision to set the commission at that level was
without regard to or analysis of the costs to run the App Store. In the context of the
litigation before the United States Northern District Court of California in the case
Epic Games, Inc. v. Apple, Inc., Eddy Cue, a senior Apple executive who made the
pricing decision with Mr. Jobs recognised that “there wasn’t really any kind of App
208
Guidelines, ID 3011.
209
See “Market study into mobile app Stores” of 11 April 2019 of the Netherlands Authority for
Consumers & Markets, ID 886, page 95 and rejections of the Spotify app described in Spotify’s
complaint, pages 18 et seq., ID 1457 or rejection of updates of the Deezer iOS app in ID 1303. See also
CCB news “Apple removes Fortnite developer Epic from App Store”, 28 August 2020
https://www.bbc.com/news/world-us-canada-53955183, accessed on 17 December 2020, ID 1067.
210
Schedule 2 and 3, ID 3028.
211
Schedule 2 and 3, ID 3028.
EN 42 EN
Store” at the time, so Apple looked at distribution prices of hard goods and software
instead.
212
The economics of and the impact on the downstream markets were not
taken into account when setting the level of the fee. […].
213
(127) In 2016, the commission fee was lowered to 15 % for uninterrupted subscriptions
that go beyond 1 year in length of time as of the second year of subscription.
214
According to evidence in the Commission’s file, […].
215
(128) The fee is collected by Apple through IAP.
216
Apple automatically collects the
amounts transferred by the user for the nominal purchase price of a given app, or in-
app content, deducts its 30 % (or 15 %) commission fee and passes on the remaining
amount to the developer concerned.
(129) On 18 November 2020, Apple announced a new program for smaller businesses:
developers that earn up to USD 1 000 000 in revenues through IAP in the previous
calendar year would be subject to a reduced IAP commission fee of 15 %.
217
Apple
launched this new program on 1 January 2021. The commission rate of 30 % remains
in place for all apps exceeding USD 1 000 000 in developers’ earnings (amount
calculated after deduction of the commission fee). Based on the information in the
Commission’s file on the Apple’s billings figures for 2020, 2021 and 2022, […],
qualified for the reduced commission fee of 15 % under the new program.
218
(130) […]
219
[…].
220
An example of the application of this […] was displayed in
August 2020, when Meta launched a new service for businesses, creators, educators
and media publishers to earn money from online events on Facebook. While Meta
initially decided to waive the fees that Meta itself would charge to event organisers
for paid online events in its iOS app until 31 December 2020 in view of the Covid-19
pandemic (and later extended to August 2021), […]. Meta therefore adapted its app
to offer in-app purchases through IAP under Apple’s standard terms (requiring the
payment of the commission fee to Apple) and re-submitted the app for approval.
However, in this version of the app, Meta informed users that 30 % of the fee for the
online event would go to Apple (“Apple takes 30 % of this purchase” Learn more).
[…].
221
This […] reduces transparency for iOS users on the prices set for app
212
Epic Games, Inc. v. Apple, Inc., Rule 52 Order after Trial on the Merits, Case No. 4:20-cv-05640-YGR,
10 September 2021, page 36, https://cand.uscourts.gov/wp-content/uploads/cases-of-interest/epic-
games-v-apple/Epic-v.-Apple-20-cv-05640-YGR-Dkt-812-Order.pdf, accessed on 2 May 2022
ID 2378.
213
[…]
214
https://www.mobiloud.com/help/knowledge-base/what-are-apple-and-googles-fees-and-revenue-share-
percentage-on-in-app-purchases-and-subscriptions/, accessed on 15 December 2020, ID 1080.
215
[…]
216
Section 3.1.1 of the Guidelines, ID 2589.
217
See https://www.apple.com/newsroom/2020/11/apple-announces-app-store-small-business-program/,
accessed on 29 April 2022, ID 2334; and ID 1077 (accessed on 11 December 2020).
218
See Annex 14 to Apple’s response to the Commission’s request for information (2020/146914) with
IAP revenues for the year 2020, ID 1193-41; Annex 4 (revised) to Apple’s response to Commission’s
request for information (2022/019122) for the year 2021, ID 2274 and Annex Q5 to Apple’s response to
the Commission’s request for information of 3 August 2023, ID 2998 for the year 2022.
219
Or 15 % after one year of subscription.
220
[…]
221
See https://about.fb.com/news/2020/08/paid-online-events/, accessed on 16 December 2020, ID 1089;
and Katie Paul, Stephen Nellis, “Exclusive: Facebook says Apple rejected its attempt to tell users about
App Store fees”, Reuters, 28 August 2020, available at https://www.reuters.com/article/us-
facebookapple-exclusive-idUSKBN25O042, accessed on 17 December 2020, ID 1037.
EN 43 EN
distribution and in-app purchases on the iOS platform and makes it more difficult for
them to understand that these prices may have been influenced to a significant degree
by fees charged by the app store operator Apple to developers.
(131) IAP also enables Apple to collect certain data. In order to collect payments, Apple
requires consumers to fill out payment details and personal information, including
credit card information, name, email address and zip code. In the case of payments
for third-party apps via IAP, Apple controls the billing relationship with the
respective customer and becomes the “merchant of record” for those transactions
whereas developers are cut off from payment-related information on and
communication with their customers.
222
(132) The obligation to use IAP for in-app purchases does not apply to the majority of apps
that are distributed through the App Store, since Section 3.1.3 (e) of the Guidelines
223
stipulates the use of alternative payment mechanisms to IAP for sales of physical
good and services that are consumed outside the app, such as purchases of goods on
an Amazon website, an Uber ride, an AirBnB booking of a hotel room or the use of
Deliveroo for food or groceries delivery.
224
Sales of similar “physical” goods or
services to be consumed outside the app in iOS apps are therefore not covered by the
IAP obligation and are also not subject to any commission fee. Purchases of such
goods and services within the app can instead only be done through third-party
providers of alternative payment solutions (e.g., credit cards, PayPal) or through
Apple Pay.
225
(133) Certain providers of digital content that offer video content on Apple TV and agree
to support Apple TV features may either be dispensed from the IAP obligation or
benefit from a reduced IAP commission fee of 15 % by joining Apple’s Video
Partner Program.
226
That program allows third-party premium video apps to integrate
with certain services and features on Apple TV and tvOS, in an effort to increase the
availability of premium video content through Apple TV.
227
[…].
228
[…]”.
229
222
Spotify’s response to question 33 of the Commission’s request for information (2020/002646), ID
1431-2.
223
See Section 3.1.3 (e) of the Guidelines, ID 3011, Goods and Services Outside of the App: “If your app
enables people to purchase physical goods or services that will be consumed outside of the app, you
must use purchase methods other than in-app purchase to collect those payments, such as Apple Pay or
traditional credit card entry.”
224
See Apple’s response to question 22 of the Commission’s request for information (2019/050361), IDs
268 and 269.
225
Consumers can use Apple Pay to purchase physical goods (e.g., groceries, clothing or appliances) or
services (e.g., memberships, reservations, tickets, donations), in brick-and-mortar stores as well as in
digital stores. Sellers can use Apple Pay in their app when the purchasable item falls in these categories.
IAP can only be used for digital goods products and services. The IAP is linked to a user’s Apple ID,
which is not the case for Apple Pay. For Apple Pay, Apple charges a EUR 0.25 quarterly fee to the card
issuing bank, as well as a percentage fee for each transaction (depending on the use of either a debit or
credit card in either a physical or digital store).
226
The program is currently available in the following EEA countries: Austria, Belgium, Denmark, France,
Germany, the Netherlands, Norway, Portugal, Spain and Sweden, See Apple’s response to question 1 of
the Commission’s request for information (2020/084167), ID 764.
227
[…].
228
See Apple’s response to question 31 of the Commission’s request for information (2019/050361), IDs
268 and 269.
229
See Apple’s response to question 1 of the Commission’s request for information (2020/084167), ID
764.
EN 44 EN
6.2.4.2. The reader and multiplatform rule
(134) The IAP obligation (and also the requirement to pay the commission fee) do not
apply to certain digital content that was “previously purchased” outside the iOS app
and which is subsequently consumed within the iOS app. Already before February
2011 – when Apple formally introduced the so-called “reader rule” in the Guidelines
– providers of music streaming apps were allowed to provide access to content
(including subscriptions) to users of their iOS app that had previously been
purchased outside of the iOS app.
230
This policy was mentioned in the Guidelines in
February 2011 in the form of the so-called “reader rule” and – since 2018 – the so-
called “multiplatform rule”.
These rules explicitly allow iOS users to access content
that they previously purchased outside the app, such as a subscription to a music
streaming service, within the iOS app.
(135) In this regard, Section 3.1.3 of the Guidelines
231
describes different situations and
types of apps in which purchase methods other than IAP are allowed, including the
so-called “reader” and "“multiplatform” rules:
“Other Purchase Methods: The following apps may use purchase methods other than
in-app purchase. […]
(a) “Reader” Apps: Apps may allow a user to access previously purchased
content or content subscriptions (specifically: magazines, newspapers,
books, audio, music, and video). Reader apps may offer account creation
for free tiers, and account management functionality for existing
customers. Reader app developers may apply for the External Link
Account Entitlement to provide an informational link in their app to a
web site the developer owns or maintains responsibility for in order to
create or manage an account […].
(b) Multiplatform Services: Apps that operate across multiple platforms may
allow users to access content, subscriptions, or features they have
acquired in your app on other platforms or your web site, including
consumable items in multiplatform games, provided those items are also
available as in-app purchases within the app.”
(136) The reader rule is also mentioned in Section 3.11 of Schedule 2 to the Licence
Agreement
232
:
“Subscription services purchased within Licensed Applications must use In-App
Purchase.
In addition to using the In-App Purchase API, a Licensed Application may read or
play content (magazines, newspapers, books, audio, music, video) that is offered
outside of the Licensed Application (such as, by way of example, through Your
website) provided that You do not link to or market external offers for such
content within the Licensed Application.[…]”.
(137) According to Apple, the reader rule essentially allows apps to provide access to
content purchased outside the app without selling this content also in-app.
233
Apple
230
[…]
231
Guidelines, ID 3011.
232
Schedule 2 to the License Agreement, ID 3028.
233
Apple’s response to question 23 of the Commission’s request for information (2020/146914), ID 1194.
EN 45 EN
explains that the possibility to access music streaming subscriptions acquired outside
of the app is also available to developers that offer in-app purchases of subscriptions
through IAP. This latter possibility is covered by the so-called “multiplatform rule”
which is currently present in Section 3.1.3 (b) of the Guidelines.
234
(138) Music streaming service providers therefore have a choice to either provide iOS
users access to content purchased outside the app without offering any option of
purchasing content in-app at all or with the possibility to purchase content in-app
(which – in the latter case – requires the use of IAP and the payment of the 30 / 15 %
commission fee by the developer to Apple). Spotify’s app falls – since 2016 when
IAP was disabled – under the reader rule. Conversely, the multiplatform rule applies
to the apps operated by other music streaming service providers such as Deezer,
YouTube Music or SoundCloud all of which offer in-app subscriptions through IAP
while at the same time allowing users that have subscribed elsewhere to access
subscriptions purchased elsewhere through their iOS app.
(139) Prior to June 2018, when the multiplatform rule was included in the Guidelines
235
,
the ability of music streaming service providers that do sell in-app subscriptions
through IAP to provide access to content within their iOS apps that was purchased
elsewhere derived from the “reader rule” and only after that date from the
“multiplatform rule”.
(140) Apple’s former CEO Steve Jobs explained the reader rule in 2011 as follows: “our
philosophy is simple- when Apple brings a new subscriber to the app, Apple earns a
30 % share; when the publisher brings an existing or new subscriber to the app, the
publisher keeps 100 % and Apple earns nothing”.
236
6.2.5. Apple’s revenues in the App Store
(141) Apple does not disclose the total amount of revenue it makes from its App Store per
year. It does, however, disclose the billings and sales concluded through the App
Store. According to Apple, for the year 2022, USD 104 billion were billed through
the App Store corresponding to sales of digital goods and services (including apps
for music and video streaming, fitness, education, e-books and audiobooks, games,
news and magazines, and dating services, among others), up from USD 86 billion in
2020.
237
From those billings, Apple retained USD […] from commission fees
234
Guidelines, ID 3011.
235
See Guidelines of 4 June 2018, ID 1193-60.
236
See Apple’s announcement made on 15 February 2011,
https://www.apple.com/newsroom/2011/02/15Apple-Launches-Subscriptions-on-the-App-Store/,
accessed on 15 December 2020, ID 1062. In that announcement, Apple explained the reader rule in the
following way: “Publishers who use Apple’s subscription service in their app can also leverage other
methods for acquiring digital subscribers outside of the app. For example, publishers can sell digital
subscriptions on their web sites, or can choose to provide free access to existing subscribers. Since
Apple is not involved in these transactions, there is no revenue sharing or exchange of customer
information with Apple. Publishers must provide their own authentication process inside the app for
subscribers that have signed up outside of the app. However, Apple does require that if a publisher
chooses to sell a digital subscription separately outside of the app, that same subscription offer must be
made available, at the same price or less, to customers who wish to subscribe from within the app. In
addition, publishers may no longer provide links in their apps (to a web site, for example) which
allow the customer to purchase content or subscriptions outside of the app.”
237
Reports from ANALYSIS GROUP “A Global Perspective on the Apple App Store Ecosystem”,
June 2021 https://www.apple.com/newsroom/pdfs/apple-app-store-study-2020.pdf, accessed on
29 April 2022, ID 2338; and “The Continued Growth and Resilience of Apple’s App Store Ecosystem”,
EN 46 EN
worldwide in year 2020. Such revenues increased up to USD […] worldwide and
USD […] in the EEA for the year 2022.
238
(142) Figure 9 includes the billings and sales that Apple generated from App Purchases, In-
App Purchases and recurring and non-recurring In-App Subscriptions in the EEA
from 2010 to 2022 (in USD). The dark blue line shows the revenues Apple obtained
from recurring IAP subscriptions.
May 2023 https://www.apple.com/newsroom/pdfs/the-continued-growth-and-resilience-of-apples-app-
store-ecosystem.pdf, accessed on 10 October 2023, ID 3145.
238
Annex Q12 to Apple’ response to the Commission’s request for information of 3 August 2023, ID
3001.
EN 47 EN
Figure 9 – […]
239
[…]
(143) Figure 10 reflects the EEA revenues obtained by Apple from the commission fees it
charges to the main music streaming service providers selling paid content and
subscriptions through their iOS app from 2010 to 2022 (in USD).
Figure 10 – […]
240
[…]
(144) In this context, Apple also offers Apple Search Ads against payment to developers, a
tool which Apple claims is an “efficient and easy way to help people discover your
app at the top of App Store search results”, driving app discovery and engaging users
at the time they are searching for an app.
241
Apple offers two options “Apple Search
Ads Basic” and “Apple Search Ads Advanced”. Through Search Ads Basic Apple
obtains a Cost Per Installation (CPI) but the developer sets a monthly budget (up to
USD 10 000 per app, per month), while the advanced option uses a Cost Per Tap
(CPT) model based on an auction system for appearing on top of the App Store
search results when a user enters a keyword, and under which developers pay only
when a user taps on their app
242
. The Apple Search Ads service is another way in
which Apple monetises the App Store. It was introduced in late 2016 and gained
popularity quickly. In the EEA alone, where it was introduced later in 2018, Apple’s
Search Ads generated revenues of USD […] in 2022, up from USD […] in 2021 and
USD […] in 2020.
243
239
Commission calculations in ID 3217 based on data provided in Apple’s responses (in EUR) to question
2 of the Commission’s request for information (2019/050361), ID 268-1 and ID 268-3, question 13 of
the Commission’s request for information (2020/146914), IDs 1194 and 1193-79; question 3 of the
Commission’s request for information (2022/019122), IDs 2270 and 2273; and question 4 of the
Commission’s request for information of 3 August 2023, ID 2997. For the purposes of comparability of
different years, figures for the UK have also been taken into account for the years 2020, 2021 and 2022,
although the UK withdrew from the European Union as of 1 February 2020.
240
Commission calculations in ID 3217 based on data from Apple’s response to question 3 of the
Commission’s request for information (2019/050361), IDs 268-1 and 268-4, question 14 of the
Commission’s request for information (2020/146914), IDs 1194 and 1193-41; question 4 of the
Commission’s request for information (2022/019122), IDs 2270 and 2273 and question 5 of the
Commission’s request for information of 3 August 2023, ID 2998. Please note that IAP revenues from
music streaming service providers are based on data provided by Apple which includes a number of
additional non-EEA music apps and their revenues for 2019 to 2022. For the purposes of comparability
of different years, figures for the UK have also been taken into account for the years 2020, 2021 and
2022, although the UK withdrew from the European Union as of 1 February 2020.
241
See https://searchads.apple.com/, accessed on 17 December 2020, ID 1011.
242
For this CPT model, developers present bids for the maximum amount of money they are willing to pay
per tap. The more developers there are and the more aggressive their bidding is, the higher the cost per
tap will be See https://searchads.apple.com/best-practices/bidding, accessed on 2 February 2023, ID
2606.
243
Annex Q6 of Apple’s response to the Commission’s request for information of 3 August 2023, ID 2999.
EN 48 EN
6.3. The music streaming business
6.3.1. Music streaming industry overview
(145) Industry data confirm the growing trend of music streaming services which enable
users to access music catalogues of millions of songs, albums and playlists which
they can enjoy until their subscription is terminated.
244
(146) The music streaming market has been growing continuously over the past 15 years.
In 2022, global music streaming revenue amounted to USD 17.5 billion, representing
67 % of global recorded music revenue.
245
(147) At the end of June 2022, the global base of music streaming subscribers reached over
610 million, up from 520 million one year earlier. Globally, Spotify was the market
leader with 30.5 %, down from 31 % in Q2 2021, 33 % in Q2 2020 and 34 % in Q2
2019. Apple Music was second with 13.7 %, followed by Tencent and Amazon
Music (with 13.4 % and 13.3 % respectively) and YouTube Music with 8.9 %.
246
(148) The main music streaming service providers in the EEA are Amazon Music (both
Unlimited and Prime), Apple Music, Deezer, Spotify, YouTube Music; other minor
players include Napster (Rhapsody), Qobuz, SoundCloud and Tidal.
(149) The following tables based on data by MIDiA provided by Apple show the evolution
of market shares of music streaming service providers in Europe based, respectively,
on the number of annual average subscribers and subscription revenues:
244
Digital streaming can be complemented with additional features and the listener’s experience enriched
by personalised recommendations and curated playlists. See
https://www.competitionpolicyinternational.com/long-tail-or-bottleneck-whats-next-for-spotify/,
ID 1385, accessed on 4 March 2021.
245
IFPI 2023 report (data for 2022). Accessible at: https://ifpi-website-cms.s3.eu-west-
2.amazonaws.com/GMR 2023 State of the Industry ee2ea600e2.pdf, accessed on 10 October 2023,
ID 3134.
246
See https://www.midiaresearch.com/blog/music-subscriber-market-shares-
2022#:~:text=Subscribers%3A%20There%20were%20616.2%20million,at%20the%20slowing%20glob
al%20economy, accessed on 10 October 2023, ID 3135.
EN
50
EN
Figure 11 – Revenues in the Music Streaming Market in Europe 2017-2027
250
(151) Music streaming service providers operating in the EEA offer their music streaming
services primarily through dedicated apps both on Apple’s App Store and on the
Google Play Store. Services such as Spotify, YouTube and Deezer operate based on
a Freemium
251
model, i.e., with a free, ad-supported tier and a premium,
subscription-based tier which offers additional functionalities such as unlimited plays
of songs, higher quality sound and a larger music library in return of payment of a
monthly fee. Therefore, for these services conversion of free users into paid
subscribers is very important. In 2018, Spotify’s CFO explained that it takes on
average 12 months of a user subscribing to the premium service for the company to
recuperate the cost of having them as a free user.
252
Converting users from the free
tier to the paid tier is therefore crucial for these providers
253
who consider their free,
ad-supported service as critical to attract Premium customers and to convert users to
the Premium tier.
(152) Other services such as Apple Music are subscription-only without a free tier.
Amazon has a subscription model for Amazon Music and also provides access to
music catalogues through Amazon Prime as part of the overall subscription service.
(153) While the ad-supported free tier is an important funnel to convert users to the paid
service, approximately 90 % of revenues are generated via paid subscriptions,
compared to 10 % generated via the ad-supported free-tier.
254
250
Ibid.
251
“Freemium” is a business model in which a company offers basic or limited features to users at no cost
and then charges a premium for supplemental or advanced features.
252
See https://finance.yahoo.com/news/spotify-takes-12-months-break-202400547.html, accessed on
9 May 2022, ID 2399.
253
The free service has been considered as a “marketing and acquisition expense” by Spotify – see
https://finance.yahoo.com/news/spotify-takes-12-months-break-202400547.html, accessed on
9 May 2022, ID 2399.
254
See https://www.businesswire.com/news/home/20220427005371/en/, accessed on 11 May 2022,
ID 2414.
EN 51 EN
6.3.2. Apple Music
(154) Apple Music is Apple’s paid-subscription based, on-demand music streaming service
that offers users curated playlists, radio-like functionality and an off-line mode. The
Apple Music app also allows access to the user’s music library, including iTunes
music downloads from multiple Apple devices and music imported from other
sources such as CDs.
(155) Based on the previous acquisition and integration of Beats Music,
255
Apple Music
officially launched on 30 June 2015
256
at a monthly subscription price of
USD/EUR 9.99.
257
In October 2022, Apple introduced its first price increase since
the launch of Apple Music in 2015 across the US, UK and Europe, following
increased costs of content licensing.
258
In the EEA, the subscription price increased
by EUR 1 for individual monthly accounts, by EUR 2 for Family monthly accounts,
by EUR 0.5 for Student monthly accounts and by EUR 10 for individual annual
accounts.
259
These price increases were applied irrespective of the channel through
which the subscription would be concluded.
260
(156) Apple Music is preinstalled on Apple’s smart mobile devices. It does not offer free-
tier but paid-only subscription possibilities, often accompanied by a short free trial
period. For example, at launch Apple offered users a full-service trial period of three
months at no cost as well as a number of pricing advantages, including in most EU
countries, such as discounted prices for students and an attractive family plan for
multiple users within the same family.
261
[…],
262
Apple Music became the music
streaming service provider allowing in-app subscriptions on iOS at a price lower than
its competitors (also Google Play Music was launched at USD 7.99/month but then
increased to USD 9.99/month).
263
(157) In November 2015, Apple launched the Apple Music app on Android.
264
Apple
Music app offered a web-based checkout for that version, through which many Apple
Music subscriptions were concluded until recently (e.g., […] % in 2021 and 2022 –
255
In 2014, Apple acquired Beats which had started a music streaming business in the US via a software
application called Beats Music which allowed subscribers to stream music on their mobile devices or
computers for a monthly or yearly fixed fee. […].
256
See https://www.apple.com/newsroom/2015/06/08Introducing-Apple-Music-All-The-Ways-You-Love-
Music-All-in-One-Place-/, accessed on 15 December 2020, ID 1127.
257
Apple Music also became available on Android and Windows later that year.
258
Futuresource consulting, “Global Music Industry Market Outlook”, June 2023, submitted by Apple on
7 September 2023, ID 3043.
259
Apple’s response to question 8 of the Commission’s request for information of 3 August 2023, ID 2987.
260
See https://www.theverge.com/2022/10/24/23420902/apple-tv-plus-music-price-increase, accessed on
5 December 2022, ID 2599 and https://www.apple.com/de/apple-music/, accessed on 5 December 2022,
ID 2598.
261
Apple’s response to the Commission’s request for information (2016/075943) - C(2016) 5210, IDs 10-
17. The family plan requires iCloud Family Sharing - another Apple service. At the end of the trial
period, “the membership will automatically renew and payment method will be charged on a monthly
basis until auto-renewal is turned off in account settings” – see
https://www.apple.com/newsroom/2015/06/08Introducing-Apple-Music-All-The-Ways-You-Love-
Music-All-in-One-Place-/, accessed on 15 December 2020, ID 1127.
262
[…]
263
See https://9to5mac.com/2015/02/04/apple-beats-cheaper-android-ios/, accessed on 15 December 2020,
ID 1069.
264
ID 17-2547. See also https://www.theverge.com/2015/11/10/9705434/apple-music-android-launch,
accessed on 15 December 2020, ID 1022.
EN 52 EN
see Table 11). Apple Music currently uses Google Play Store’s standard in-app
payment functionality (Google Play Billing) for direct sign-ups in its Android app.
265
(158) Shortly after its launch, Apple Music allowed in-app subscriptions on Apple smart
mobile devices at a price lower than that charged by competing music streaming
service providers.
266
Apple Music is neither obliged to pay a commission fee nor
restricted in its ability to communicate to its users about purchasing mechanisms and
available offers outside of the app, as other third-party music streaming apps subject
to the Apple’s Guidelines.
(159) Since its launch, the number of Apple Music’s subscribers has increased rapidly: in
August 2016, Apple Music had 17 million paid users
267
with a catalogue of music of
initially over 30 million songs. At the end of 2020, Apple Music had over 72 million
subscribers and its catalogue accounted for over 40 million songs.
268
In 2022, Apple
Music reached a total of 94.5 million subscribers globally.
269
At the end of October
2022, its catalogue was estimated to include over 100 million tracks and 30 000
playlists.
270
(160) The data submitted by Apple for the period from June 2015 to June 2023 confirms
the steady increase in the number of Apple Music subscribers in the EEA as shown
in Figure 12.
265
Apple’s Response to the Statement of Objections 28 February 2023, paragraph 301, ID 2800.
266
See https://9to5mac.com/2015/02/04/apple-beats-cheaper-android-ios/, accessed on 15 December 2020,
ID 1069.
267
Apple’s response to the Commission’s request for information (2016/075943) - C(2016) 5210, IDs 10-
17.
268
See https://www.apple.com/befr/apple-music/, accessed on 15 December 2020, ID 1020.
269
Futuresource consulting, “Global Music Industry Market Outlook”, June 2023, submitted by Apple on
7 September 2023, ID 3043.
270
See https://www.apple.com/befr/apple-music/, accessed on 25 October 2022, ID 2579.
EN 53 EN
Figure 12 – […]
271
[…]
7. T
HE CONDUCT SUBJECT OF THE DECISION
(161) This Decision takes issue with Apple’s Anti-Steering Provisions as explained in the
present Section.
(162) Apple’s Anti-Steering Provisions are enshrined in the Guidelines and to a more
limited extent in the License Agreement. Apple has changed the wording of the
provisions in the Guidelines multiple times since 2009, including during the course
of the present proceedings. The Anti-Steering Provisions have to be analysed in the
context of Apple’s obligation imposed on developers to use Apple’s own purchasing
method IAP for in-app sales of digital content or services through which Apple
collects a 30 / 15 % commission fee for in-app sales of digital content and services as
well as the reader rule and the multiplatform rule (See Section 6.2.3).
7.1. The current wording of the Anti-Steering Provisions
(163) The most recent version of Section 3.1.1. of the Guidelines applicable since 5 June
2023 provides for the following:
“3.1.1 In-App Purchase: If you want to unlock features or functionality within
your app, (by way of example: subscriptions, in-game currencies, game levels,
access to premium content, or unlocking a full version), you must use in-app
purchase. […]. Apps and their metadata may not include buttons, external links,
or other calls to action that direct customers to purchasing mechanisms other
than in-app purchase, except as set forth in 3.1.3 (a).”
272
(164) Section 3.1.3 of the Guidelines specifies the Anti-Steering Provisions with respect to
apps for which purchase methods other than in-app purchase are in principle allowed
for content to be consumed in the app (e.g., apps subject to the reader / multiplatform
rules).
271
Commission calculations in ID 3217 based on data provided in Apple’s response to questions 2 and 3 of
the Commission’s request for information (2016/075943), IDs 10 and 11, question 1 of the
Commission’s request for information (2019/050361), IDs 268-1 and 268-2 and Apple’s response to
question 13 of the Commission’s request for information (2022/019122), IDs 2270 and 2278 as well as
Apple’s response to question 7 of the Commission’s request for information of 3 August 2023, ID 3000.
272
Guidelines, ID 3011. In January 2024, following the US Supreme Court´s Order on 16 January 2023
declining to hear on the case Epic Games, Inc. v. Apple Inc which confirmed the judgment of the US
Court of Appeals for the Ninth Circuit of 24 April 2023, Apple introduced in its App Store Guidelines
applicable to the US storefront the “Storekit External Purchase Link Entitlement” under Section 3.1.1
(a) “Link to Other Purchase Methods”. Pursuant to this entitlement, to which developers need to apply,
developers may include a link to the developer´s website that informs users of other ways to purchase
digital goods or services. This new rule reads as follows: 3.1.1(a) Link to Other Purchase
Methods: Developers may apply for an entitlement to provide a link in their app to a website the
developer owns or maintains responsibility for in order to purchase such items. Learn more about
the entitlement. In accordance with the entitlement agreement, the link may inform users about where
and how to purchase those in-app purchase items, and the fact that such items may be available for a
comparatively lower price. The entitlement is limited to use only in the iOS or iPadOS App Store on the
United States storefront. In all other storefronts, apps and their metadata may not include buttons,
external links, or other calls to action that direct customers to purchasing mechanisms other than in-
app purchase. If your app engages in misleading marketing practices, scams, or fraud in relation to the
entitlement, your app will be removed from the App Store and you may be removed from the Apple
Developer Program”.
EN 54 EN
“3.1.3 Other Purchase Methods: The following apps may use purchase methods
other than in-app purchase. Apps in this section cannot within the app, encourage
users to use a purchasing method other than in-app purchase, except as set forth
in 3.1.3 (a). Developers can send communications outside of the app to their user
base about purchasing methods other than in-app purchase”
273
(165) The Anti-Steering Provisions are contained not only in the Guidelines, but also in
Section 3.11 of Schedule 2 to the Licence Agreement
274
:
“Subscription services purchased within Licensed Applications must use In-App
Purchase.
In addition to using the In-App Purchase API, a Licensed Application may read or
play content (magazines, newspapers, books, audio, music, video) that is offered
outside of the Licensed Application (such as, by way of example, through Your
website) provided that You do not link to or market external offers for such
content within the Licensed Application.[…]”
7.2. Changes to the wording of the Anti-Steering Provisions over time
(166) The Anti-Steering Provisions in the Guidelines have since their adoption been
subject to multiple modifications by Apple over the years.
(167) Between June 2009 and February 2011, Apple did not (yet) offer the possibility to
developers to offer recurrent subscriptions to their services in their iOS apps. While
before February 2011 Apple did not allow developers to “provide, unlock or enable”
functionality inside the app through distribution mechanisms other than the App
Store (i.e., to sell digital content or services within their apps using mechanisms
other than IAP),
275
developers could already during this period offer “free apps”
which allowed access to subscriptions which were sold on the website of the
developer and developers were not limited in mentioning their website in their
app.
276
(168) In February 2011, Apple introduced the possibility for developers to sell
subscriptions directly in their apps and made the use of IAP mandatory for such
subscriptions. At the same time, Apple introduced the Anti-Steering Provisions
273
Guidelines, ID 3011.
274
Schedule 2 to the License Agreement, ID 3028.
275
“Without Apple’s prior written approval or as permitted under Section 3.3.17, an Application may not
provide, unlock or enable additional features or functionality through distribution mechanisms other
than the App Store.” See Sections 3.3.3 and 3.3.17 of Annex 19.40, submitted by Apple in response to
the Commission’s request for information (2020/146914), ID 1193-3.
276
See Spotify’s response to question 3 of the Commission’s request for information (2020/147746),
ID 1447: “We refer to the period between the launch of the Spotify app for the iPhone in 2009
and February 2011, when Apple first introduced IAP for subscriptions (and, with it, the IAP Obligation
for subscription apps offering digital content). During that time, the functionalities of the Spotify app
for iOS were focused on music streaming, i.e., enabling users to discover and play music on demand,
create playlists and cache music for listening when offline (which presented a competitive threat to
Apple’s iTunes). At the time, the Spotify iOS app was free to download, but could only be used by
Spotify Premium subscribers, i.e., only users with Premium account credentials were allowed to log in
to the app. As users of the Spotify iOS app were already Spotify Premium users, there was no need to
advertise Premium subscriptions in-app. At the same time, there was no prohibition on Spotify sending
promotional emails to users who were using the Spotify iOS app or against including a link to
spotify.com inside the app.” See also the in-app screenshot in ID 1154 “Get help at Spotify.com”. See
also further references in footnote 230 with respect to the ability of developers to provide their users
with access to digital content purchased outside the app prior to February 2011.
EN 55 EN
subject to this Decision in the Guidelines which removed the ability of developers
that decide to offer paid subscriptions in their iOS app through IAP to provide links
in their apps to their website where such paid subscriptions are also made available.
277
(169) The IAP obligation and the Anti-Steering Provisions had the following wording in
the Guidelines dating February 2011:
278
“11.12 Apps offering subscriptions must do so using IAP, Apple will share the
same 70/30 revenue split with developers for these purchases, as set forth in the
Developer Program License Agreement.
11.13: Apps can read or play approved content (magazines, newspapers, audio,
music, video) that is sold outside of the app, for which Apple will not receive any
portion of the revenues, provided that the same content is also offered in the app
using IAP at the same price or less than it is offered outside the app. This applies
to both purchased content and subscriptions.”
“11.14: Apps that link to external mechanisms for purchasing content to be used
in the app, such as a “buy" button that goes to a web site to purchase a digital
book, will be rejected”.
(170) In June 2011
279
, the Anti-Steering Provisions in the Guidelines were changed to the
following wording:
“11.12 Apps offering subscriptions must do so using IAP, Apple will share the
same 70/30 revenue split with developers for these purchases, as set forth in the
Developer Program License Agreement.
11.13 Apps that link to external mechanisms for purchases or subscriptions to be
used in the app, such as a "buy" button that goes to a web site to purchase a
digital book, will be rejected.
11.14 Apps can read or play approved content (specifically magazines,
newspapers, books, audio, music, and video) that is subscribed to or purchased
outside of the app, as long as there is no button or external link in the app to
purchase the approved content. Apple will not receive any portion of the revenues
for approved content that is subscribed to or purchased outside of the app”.
277
See Apple’s press release: https://www.apple.com/newsroom/2011/02/15Apple-Launches-
Subscriptions-on-the-App-Store/, accessed on 15 December 2020, ID 1062, stating inter alia:
“Publishers who use Apple’s subscription service in their app can also leverage other methods for
acquiring digital subscribers outside of the app. For example, publishers can sell digital subscriptions
on their web sites, or can choose to provide free access to existing subscribers. Since Apple is not
involved in these transactions, there is no revenue sharing or exchange of customer information with
Apple. Publishers must provide their own authentication process inside the app for subscribers that
have signed up outside of the app. However, Apple does require that if a publisher chooses to sell a
digital subscription separately outside of the app, that same subscription offer must be made available,
at the same price or less, to customers who wish to subscribe from within the app. In addition,
publishers may no longer provide links in their apps (to a web site, for example) which allow the
customer to purchase content or subscriptions outside of the app.”
278
Annex 19.3 to Apple’s response to the Commission’s request for information (2020/146914), ID 1193-
42. […].
279
Annex 19.4 to Apple’s response to the Commission’s request for information (2020/146914), ID 1193-
33. […].
EN 56 EN
(171) On 13 June 2016
280
, the wording of the Anti-Steering Provisions was modified again.
In addition to the previous prohibition for apps to contain buttons and external links
to other purchase mechanisms than IAP, the wording of the prohibition in Section
3.1.1 was changed to include “other calls to action that direct customers” to such
purchase mechanisms. In addition, the wording of the Anti-Steering Provisions for
reader apps was modified to provide that reader apps must not “direct users to a
purchasing mechanism other than IAP”, rather than not using “buttons and external
links” to purchase possibilities outside the app. The revised wording of Section 3.1.1
and 3.1.3. of the Guidelines as of that date was the following:
“3.1.1 In-App Purchase: If you want to unlock features or functionality within
your app (by way of example: subscriptions, in-game currencies, game levels,
access to premium content, or unlocking a full version), you must use in-app
purchase. Apps may not include buttons, external links, or other calls to action
that direct customers to purchasing mechanisms other than IAP.
3.1.3 Content-based "Reader" apps: Apps may allow a user to access previously
purchased content or subscriptions (specifically: magazines, newspapers, books,
audio, music, video, access to professional databases, ViOP, cloud storage, and
approved devices such as educational apps that manage student grades and
schedules), provided the app does not direct users to a purchasing mechanism
other than IAP”.
(172) In June 2017
281
, Apple introduced further changes to the wording of the Anti-
Steering Provisions to prohibit developers of reader apps from directly or indirectly
targeting iOS users to use a purchasing method other than IAP as well as from
designing “general communications about other purchasing methods” that
“discourage use of IAP”. The revised wording of Section 3.1.3. of the Guidelines as
of that date was the following:
3.1.3 “Reader” Apps: Apps may allow a user to access previously purchased
content or content subscriptions (specifically: magazines, newspapers, books,
audio, music, video, access to professional databases, VoIP, cloud storage, and
approved services such as educational apps that manage student grades and
schedules), as well as consumable items in multiplatform games, provided that
you agree not to directly or indirectly target iOS users to use a purchasing
method other than IAP, and your general communications about other purchasing
methods are not designed to discourage use of IAP”.
(173) In June 2018
282
, Apple again modified the Guidelines by including in the prohibition
the use of alternative mechanisms to unlock content or functionality such as licence
keys, augmented reality markers or QR codes:
“3.1.1 In-App Purchase:
If you want to unlock features or functionality within your app, (by way of
example: subscriptions, in-game currencies, game levels, access to premium
280
Annex 19.20 to Apple’s response to the Commission’s request for information (2020/146914), ID 1193-
96. […]. See also https://developer.apple.com/news/?id=06132016c, accessed on 6 May 2022, ID 2391.
281
Annex 19.24 to Apple’s response to the Commission’s request for information (2020/146914), ID 1193-
8. […].
282
Annex 19.29 to Apple’s response to the Commission’s request for information (2020/146914), ID 1193-
60. […].
EN 57 EN
content, or unlocking a full version), you must use in-app purchase. Apps may not
use their own mechanisms to unlock content or functionality, such as license keys,
augmented reality markers, QR codes, etc. Apps and their metadata may not
include buttons, external links, or other calls to action that direct customers to
purchasing mechanisms other than in-app purchase”.
(174) The newly introduced rule for “multiplatform” services mirrors the anti-steering
language of those for “reader” apps.
“3.1.3(b) Multiplatform Services: Apps that operate across multiple platforms
may allow users to access content, subscriptions, or features they have acquired
elsewhere, including consumable items in multiplatform games, provided those
items are also available as in-app purchases within the app. You must not directly
or indirectly target iOS users to use a purchasing method other than in-app
purchase, and your general communications about other purchasing methods
must not discourage use of in-app purchase”.
(175) In September 2020, Apple again updated the Guidelines. With respect to “reader”
apps, the Guidelines provided explicitly the possibility to offer account creation for
free tiers
283
. According to information from Apple, […].
284
Further language was
introduced explicitely stating that out of the app communication to iOS users violates
the Guidelines when it encourages iOS users to use other purchasing methods than
IAP through communications sent to points of contact obtained from account
registration within the app.
“3.1.3(a): […] Reader apps may offer account creation for free tiers, and account
management functionality for existing customers.”
“3.1.3 Other Purchase Methods: The following apps may use purchase methods
other than in-app purchase. Apps in this Section cannot, either within the app or
through communications sent to points of contact obtained from account
registration within the app (like email or text), encourage users to use a
purchasing method other than in-app purchase.”
(176) On 7 June 2021,
285
after the Commission had sent the Statement of Objections of
30 April 2021 to Apple, Apple revised the Anti-Steering Provisions again:
“3.1.3 Other Purchase Methods: The following apps may use purchase methods
other than in-app purchase. Apps in this Section cannot, either within the app or
through communications sent to points of contact obtained from account
registration within the app (like email or text), encourage users to use a
purchasing method other than in-app purchase. Developers cannot use
information obtained within the app to target individual users outside of the app
to use purchasing methods other than in-app purchase (such as sending an
individual user an email about other purchasing methods after that individual
signs up for an account within the app). Developers can send communications
283
In the context of music streaming services, the free tier refers to the music streaming service offered by
providers such as Spotify or Deezer for free with limited in-app features and frequent interruptions with
ads. If consumers want to get additional features and enhance their experience, they have to convert to
the paid/premium service. Apple Music does not offer a free tier of its service. Annex 19.35 to Apple’s
response to the Commission’s request for information (2020/146914), ID 1193-47.
284
See Apple’s response to question 42 of the Commission’s request for information (2019/050361),
ID 268-1.
285
Annex 26 to Apple’s response to the Commission’s request for information (2022/004722), ID 2233-11.
EN 58 EN
outside of the app to their user base about purchasing methods other than in-app
purchase”.
(177) Another change to the Anti-Steering Provisions occurred on 22 October 2021 after
Apple had submitted its Response to the Statement of Objections of 30 April 2021.
On that date, Apple removed the prohibition of out of the app communication that
follows an initial sign-up by a user within the app. Apple deleted the following
sentence from Article 3.1.3. “Developers cannot use information obtained within the
app to target individual users outside of the app to use purchasing methods other
than in-app purchase (such as sending an individual user an email about other
purchasing methods after that individual signs up for an account within the app)”.
(178) The deletion of the above sentence was triggered by a settlement in the US
announced by Apple on 26 August 2021 following a class-action suit from US
developers. In its response to a subsequent request for information,
286
Apple
indicated that the change would allow developers to communicate with individual
users about payment methods outside of the iOS app through e-mails, but only as
long as there is no “call to action” within the app itself in the sense of Section 3.1.3
of the Guidelines (in other words, whenever Apple considers that the iOS app itself
contains any “call to action” to use alternative purchasing mechanisms outside the
app, within the meaning of Section 3.1.1 of the Guidelines). Otherwise, the app is not
in compliance with the App Store Review Guidelines and will be rejected by Apple.
[…].
287
It is noteworthy that this interpretation is inconsistent with Apple’s initial
view of what the settlement would entail in its Response to the Statement of
Objections of 30 April 2021 […]
288
[…].
(179) On 30 March 2022, Apple introduced in Section 3.1.3 (a) of the Guidelines the
possibility for “reader” apps (including music streaming apps which do not offer in-
app subscriptions) to request an “entitlement” from Apple allowing for an inclusion
of an informational link to their website for account creation and management
purposes (so-called “External Link Account Entitlement program”).
289
Following this
modification Section 3.1.3. (a) reads as follows:
“3.1.3(a) “Reader” Apps: Apps may allow a user to access previously purchased
content or content subscriptions (specifically: magazines, newspapers, books,
audio, music, and video). Reader apps may offer account creation for free tiers,
and account management functionality for existing customers. Reader app
developers may apply for the External Link Account Entitlement to provide an
informational link in their app to a web site the developer owns or maintains
responsibility for in order to create or manage an account. Learn more about the
External Link Account Entitlement”
290
.
286
See response by Apple to question 24 of the Commission’s request for information (2022/004722), ID
2232.
287
See response by Apple to question 24 of the Commission’s request for information (2022/004722), ID
2232.
288
Apple’s Response to the Statement of Objections of 30 April 2021, ID 2165, paragraph 109.
289
Section 3.1.3 (a) of the Guidelines, https://developer.apple.com/news/?id=grjqafts, accessed on
28 April 2022, ID 2314; and https://developer.apple.com/support/reader-apps/, accessed on
28 April 2022, ID 2337. Articles 3.1.1 and 3.1.3 were also slightly updated to make a reference to the
External Link Account Entitlement program exception, i.e., “except as set forth in 3.1.3(a)”.
290
See Guidelines applicable as of 30 March 2022, accessed on 28 April 2022, ID 2312.
EN 59 EN
(180) Developers that wish to introduce such a link must submit a request to Apple and are
not allowed to offer in-app subscriptions through IAP in their app at the same time.
Music streaming service providers that have so far offered subscriptions through IAP
(like Deezer, SoundCloud or YouTubeMusic) could therefore only request such an
entitlement if they were to disable in-app subscriptions through IAP altogether.
Moreover, any link provided in a reader app must open a new window in the default
browser and may not open a web view
291
. The link may not include, or be used with,
language that includes the price of items available on the website (acceptable
language includes “go to example.com to create or manage your account”). In
addition, when iOS users click the link, they receive a security message which warns
them that they are leaving the app.
292
It can only be displayed once per app page and
must display the same message in each instance.
293
In essence, the possibility offered
by Apple is limited to introducing a link for the purposes of account creation and
management for apps that operate already as a reader app. Apart from this
possibility, the Anti-Steering Provisions remain fully applicable.
(181) Spotify – as the remaining music streaming service provider soley operating as a
“reader app” – sought to make use of the External Link Account Entitlement
program in 2022. While Apple initially accepted Spotify as a participant to the
program, Apple started rejecting Spotify’s app update because the term “free”
294
appeared on the same page of the Spotify iOS app as the link allowed under the
program.
295
According to Spotify, Apple claimed that the term “free” is prohibited
under the Anti-Steering Provisions because it mentions the “price of items available
on the website”.
296
According to Spotify, the term “free” in its app was previously
not objected by Apple and the term has featured prominently in Spotify’s iOS app for
more than three years.
297
According to Apple, however, the rule concerning the use
of the word “free” is a longstanding rule that has been in place since before the
introduction of the External Link Account Entitlement program.
298
In any event, in
light of the importance of being able to use the term “free” in its iOS app, Spotify
stopped participating in the External Link Account Entitlement program.
299
291
A web view loads and displays rich web content, such as embedded HTML and websites, directly
within an app, see https://developer.apple.com/design/human-interface-guidelines/ios/views/web-
views/, accessed on 2 June 2022, ID 2425.
292
See Apple’s Response to the Letter of Facts, ID 3330, paragraph 151 and Figure 9. See also statements
by Spotify’s representative at the oral hearing (recording of the oral hearing in Case AT.40437, as of
06:12:00, ID 3131) and Spotify’s presentation at the oral hearing, page 10, ID 2930, which reproduces
the security warning on the Netflix iOS app reading as follows: “You’re about to leave the app and go
to an external website. You will no longer be transacting with Apple (…)”.
293
See https://developer.apple.com/support/reader-apps/, accessed on 28 April 2022, ID 2337.
294
In the app, Spotify used the following language “3 months of Premium for free”.
295
See Apple’s Response to the Letter of Facts, ID 3330, paragraph 157. According to Spotify, Apple has
gone even further, prohibiting use of the link in the Spotify account settings in the iOS app, as long as
the word “Free” remains anywhere in the app. See also page 11 of Spotify’s presentation made at the
oral hearing, ID 2930.
296
See Spotify letter of 11 November 2022, page 2, ID 2583.
297
This information corresponds to the information provided by Apple in its Response to the Statement of
Objections of 30 April 2021, ID 2165, where in Figure 8, Apple presents the in-app notice that users
received from Spotify after registering on Spotify which states “1 mois de Spotify Premium gratuit”
(English translation: “1 month of Spotify Premium for free”).
298
See Apple’s Response to the Letter of Facts, ID 3330, paragraph 157.
299
See Spotify letter of 11 November 2022, page 4, ID 2583. See also statements by Spotify’s
representative at the oral hearing (recording of the oral hearing in Case AT.40437, as of 06:12:00, ID
EN 60 EN
(182) To the Commission’s knowledge, none of the other main
300
music streaming service
providers has attempted to make use of this new possibility. In its Response to the
Statement of Objections of 28 February 2023, Apple claimed that more than […]
apps are participating in the External Link Account Entitlement program, and
including music-related and streaming apps.
301
In its Response to the Letter of Facts,
Apple claims that more than […] reader apps providing audio and video services
participated in the External Link Account Entitlement program.
302
However, to the
Commission’s knowledge, none of the main music streaming service providers
currently make use of this possibility.
303
Therefore, the Commission’s conclusions
remain unchanged concerning the limited or rather absent impact of the External
Link Account Entitlement program for music streaming service providers.
(183) On 25 January 2024, Apple announced that, in March 2024, it will modify some of
its App Store rules with regards to iPhone’s iOS in view to comply with Regulation
(EU) 2022/1925.
304
In particular, Apple will make changes to its fee structure and
will allow developers to steer users outside the app, with some limitations.
305
At the
time of adoption of this Decision, these new rules are not yet in force. For that
reason, they are not covered by the Commission's assessment in this Decision.
7.3. Interpretation and application of the Anti-Steering Provisions over time
(184) The Anti-Steering Provisions as applied and interpreted by Apple prevent music
streaming service providers from informing iOS users through their iOS app about
the ability to purchase music streaming subscriptions outside of their iOS app and
use these subscriptions in their iOS apps (as explicitly allowed under the reader rule
and the multiplatform rule) as well as from effectively exercising their choice in that
respect. More specifically, based on Apple’s interpretation and implementation of its
Guidelines, the Anti-Steering Provisions prohibit developers from offering buy
buttons or other direct links within their iOS apps to subscription possibilities outside
of those apps. The Anti-Steering Provisions also prohibit developers from informing
users within the apps about the prices of subscription offers outside of the app; about
price differences between subscriptions through IAP and those available elsewhere;
and about the developer’s website on which subscriptions can be bought. They also
3131): “Apple had allowed to use the word “free” in connection with our app for years, but once we
decided to participate in the program, Apple suddenly not only barred us from mentioning the word
“free” on the same page as the link, they went even further, stopping us from using the program as long
as the word “free” remained anywhere on our app”, and Spotify’s presentation at the oral hearing, page
11, ID 2930, which includes screenshots of language rejected by Apple in Spotify’s iOS app when
combined with the External Link Account Entitlement program.
300
See recital (148).
301
Apple refers to several “music-related and streaming apps”: Mixcloud, Soundstripe and NOW (see
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 62 and 90),
as well as Netflix and Perlego (see Apple’s Response to the Letter of Facts, ID 3330, paragraphs 152 et
seq.). Although some of these apps are “music-related”, Soundstripe (https://www.soundstripe.com/,
accessed on 10 October 2023, ID 3170) is oriented to music creators that offer the option of managing
copyright, and Mixcloud (https://www.mixcloud.com/, accessed on 10 October 2023, ID 3153) is also
oriented to offering options for music creators (mainly DJs) to manage their copyright and stream their
music. None of the apps cited by Apple are pure music streaming services as investigated in this case.
302
Apple’s Response to the Letter of Facts, ID 3330, paragraphs 146 and 150.
303
Apple’s Response to the Letter of Facts, ID 3330, paragraphs 146 and 150.
304
Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on
contestable and fair markets in the digital sector and amending Directives (EU) 2019/1937 and (EU)
2020/1828 (Digital Markets Act), OJ L 265, 12.10.2022, p. 1–66.
305
See footnote 37.
EN 61 EN
prevent developers from providing any explanations or instructions to their users
about how to subscribe to their offer outside of the iOS app environment.
306
Based on
Apple’s interpretation and implementation, the Anti-Steering Provisions also limit to
some extent the possibility of developers to send outside e-mails to iOS users
following an in-app activity of that user. Developers cannot – for example – allow
iOS users to request in their app additional information about subscription
possibilities directly from the developer, for example by requesting to receive
information (such as via an e-mail) from the developer with specific information,
offers or promotions or any instructions on where and how to subscribe outside the
iOS app, because this would be considered by Apple as a “call to action” within the
meaning of Section 3.1.1. of the Guidelines.
307
(185) Conversely, developers can – based on Apple’s interpretation and implementation of
the Guidelines – inform iOS users within their iOS app in a general manner about the
different services and subscription plans they offer.
308
Developers can also mention
that their services cannot be purchased in the app (provided they do not indicate
where and how such services can be purchased and at what price).
309
Apple has
interpreted its own Guidelines, including the Anti-Steering Provisions, flexibly and
beyond the wording of the respective provisions of the Guidelines. Changes to the
interpretation of the Guidelines by Apple were often not communicated to the
developer community at large through the Guidelines making it difficult for
developers to understand the scope of the rules.
310
[…].
311
(186) Whenever a music streaming service provider includes certain links or other
information (in its iOS app) which Apple deems incompatible with the Anti-Steering
Provisions, Apple will reject the app update of the respective developer, thereby
forcing the developer to remove the relevant links or information.
7.4. The Commission’s assessment of Apple’s arguments
(187) Apple argues in its Response to the Statement of Objections of 28 February 2023 that
its rules for app developers have not become stricter over time.
312
In Apple’s view,
[…].
According to Apple, the basic principle, however, remained the same as the one
introduced long before Apple Music’s market entry – i.e., that developers should pay
Apple the commission fee when using the App Store to monetise their digital
services and should not circumvent this obligation. Apple argues that developers
have numerous ways of communicating with iOS users and promote their
306
Response by Apple to question 25 of the Commission’s request for information (2022/004722), ID
2232.
307
Limitations on the possibility of sending outside e-mails following an in-app activity by a user have –
based on the evidence in the file - only been introduced in June 2016. As of 7 June 2021, Apple only
objects to app functionality that triggers outside e-mails, when the mechanism could be construed as a
“call to action” within the app (which could for example be an “E-Mail me” button). For further
explanations see recital (189) et seq.
308
Response by Apple to question 25 of the Commission’s request for information (2022/004722), ID
2232.
309
Apple’s Response to the Statement of Objections of 30 April 2021, ID 2165, paragraph 99. See also, the
example of SoundCloud’s in-app advertisement of its student subscription provided by Apple in its
Response to the Letter of Facts, Annex 8, ID 3323, Figure 16.
310
For example, […]; see Apple’s response to question 42 of the Commission’s request for information
(2019/050361), ID 268-1.
311
[…].
312
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 95 and 98.
EN 62 EN
subscriptions, such as through conventional and digital marketing activities in-app
and outside of the app, including wide-spread e-mail marketing campaigns to iOS
users, as it objects to such communications only to the extent that they are triggered
by an in-app activity of the user.
313
In addition, Apple claims that the effect of the
Anti-Steering Provisions is limited because of the reader and multiplatform rules.
According to Apple, these rules limit the scope of Apple’s commission model and
Anti-Steering Provisions, as they allow iOS users to consume music streaming
subscriptions purchased outside the App Store without developers paying any
commission to Apple.
314
Apple further claims that consumers are “not clueless”
about their ability to transact directly with music streaming developers outside the
app, as they can do online search on their devices or make use of price comparisons
or consumer reports to get a clear picture about subscription prices differences in-app
and outside of the app.
315
Lastly, Apple stresses that its External Link Account
Entitlement program helps developers of reader apps, which can include an in-app
link to their website under the conditions explained above.
316
(188) The Commission considers that this is not fully accurate for the following reasons.
(189) First, as explained in the following recitals, with respect to the permissibility of
outside communication (i.e., e-mails or texts) and Apple’s claim that it has not
changed the wording and interpretation of its rules, the evidence in the file shows
that Apple had initially not objected to certain forms of e-mail communication by
music streaming service providers even if triggered by an action of a user within the
app. It was only later (after the launch of Apple Music in June 2015 and Spotify’s
decision to disable IAP in May 2016), that Apple started to consider e-mail
communication by Spotify that was triggered by an action in the app to be in
contradiction with the Guidelines and modified the wording of the Guidelines
accordingly.
317
(190) […]
318
[…].
(191) In 2014, when Apple monitored closely Spotify’s IAP launch, it noticed that Spotify
was sending “out of the app communications” to its users in the Spotify iOS app in
the form of emails.
319
[…]
320
[…].
(192) […]
321
[…].
313
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 77 and
Annex 5 of such response (ID 2805) and Apple’s Response to the Letter of Facts, ID 3330, paragraphs
126 et seq. and Annex 8 of such response, ID 3323.
314
Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 113, 115, 116 and
117.
315
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 257 and
258 and Annex 4 of such response (ID 2804).
316
See recital (179).
317
It was only after the adoption of the Statement of Objections of 30 April 2021 that Apple started
relaxing the Anti-Steering Provisions in its Guidelines to take a more permissible approach to out of the
app communication triggered by an engagement in the app (provided however that there is no “call to
action” within the app), see paragraphs 217 and 222.
318
See ID 449-3, page 184/207.
319
[…].
320
[…].
321
[…].
EN 63 EN
(193) Apple’s position that e-mails outside of the app are not objectionable under the
Guidelines changed later on. This is supported by the evidence in the following
recitals.
(194) In May 2016, after Spotify had disabled IAP, Spotify launched one of its large
seasonal promotions across all platforms (including on its website) which gave users
the opportunity to purchase three months of Spotify’s Premium service for
EUR 0.99.
322
In its iOS app, Spotify included an “Email Me” button, which, when
clicked, would prompt Spotify to send an email to the user informing them about the
promotion.
323
[…].
324
[…]
325
[…].
(195) On 13 June 2016,
326
while Spotify was still trying to get its app approved, Apple
changed the wording of the Guidelines to prohibit also “other calls to action that
direct customers to purchasing mechanisms other than IAP” and required that reader
apps should “not direct users to a purchasing mechanism other than IAP”
327
(emphasis added).
(196) At another promotional campaign in July 2016, Spotify offered users of its free-tier
the opportunity to enjoy the features of the Premium service for a period of 7 days
for free. The sign up to this trial period did not involve a transaction and users were
not asked for their payment credentials. However, following the sign up to this trial
and during the trial period, Spotify sent emails to users providing information about
the Premium offer and the option to purchase a subscription. Apple again considered
such “out of the app communication” as a violation of its Guidelines despite having
previously allowed it.
328
(197) […]
329
(198) On 8 June 2017, Apple further modified the wording of the Anti-Steering Provisions
with respect to “reader apps”, such as those of music streaming services, and
required developers to agree “not to directly or indirectly target iOS users to use a
purchasing method other than IAP, and your general communications about other
purchasing methods are not designed to discourage use of IAP”
330
(emphasis added).
(199) In September 2020, Apple then added explicitly to the Anti-Steering Provisions for
reader apps in Section 3.1.3. of the Guidelines that “communications sent to points of
contact obtained from account registration within the app (like email or text)” that
“encourage users to use a purchasing method other than in-app purchase” are
prohibited.
(200) The changes in the Anti-Steering Provisions contained in the Guidelines in 2016,
2017 and 2020 clearly show that Apple did not only clarify the wording but tightened
the scope of these rules with the purpose of limiting the possibility of music
322
Spotify’s Complaint, paragraphs 27 and 68, ID 1457.
323
Spotify’s Complaint, paragraph 68, ID 1457.
324
[…].
325
[…].
326
Annex 19.20 to Apple’s response to the Commission’s request for information (2020/146914), ID 1193-
96. See also https://developer.apple.com/news/?id=06132016c, accessed on 6 May 2022, ID 2391.
327
Rule 11.13 was at the same time renumbered in the Guidelines as rule 3.1.1.
328
[…]
329
See Deezer’s response to the Commission’s request for information (2019/048643), ID 1303.
330
[…].
EN 64 EN
streaming service providers to communicate with users also outside of the app, which
was not envisaged in the original wording from 2011.
(201) It was only after the adoption of the Statement of Objections of 30 April 2021 that
Apple started relaxing the Anti-Steering Provisions to take a slightly more
permissible approach to out of the app communication in its Guidelines and that it
also introduced the possibility to request an entitlement to introduce an informational
link in reader apps for the purposes of creating or managing accounts.
(202) Second, the evidence in the file contradicts the allegation that Apple only ever
objected to out-of-the-app communication in the form of e-mails to the extent that
such communication was specifically targeted at individual iOS users in a way that
shows that it was effectively the result of an in-app activity of the user.
(203) […].
331
[…].
332
(204) […].
333
[…].
334
(205) Moreover, the provisions limiting the ability of developers to send e-mails to users
that Apple integrated into its Guidelines in Section 3.1.3 and communicated to its
developers in 2017 and 2020
335
did not contain any limitation based on whether
certain communication is triggered by an in-app activity of the user or immediately
follows it or not. Conversely, the Guidelines in force between September 2020 and
22 October 2021 contained explicit language prohibiting out of app communications
to points of contact obtained from account registration in order to encourage those
users to use a purchasing method other than IAP, irrespective of whether such e-mail
communication was triggered by an in-app activity or not. According to Apple, prior
to September 2020 Apple’s policy prohibited to use “the App Store to collect
information, and then use this contact information to email or send a text message to
a specific person, encouraging them to cancel an IAP subscription, and re-subscribe
on the developer’s web site or other property.”
336
Third, with respect to Apple’s
claim that music streaming service providers communicate with users through
general marketing activities, including via in-app advertising, it should be noted that
Apple does not allow music streaming developers to include information about
outside of the app prices of music-streaming subscriptions and on how to subscribe
outside of the app in in-app advertising campaigns. This prohibition extends to in-
app premium pop-ups and premium tabs, as well as in-streaming and pop-up
advertisements, which appear to the user while engaging with the service.
337
In view
331
See ID 819.
332
[…].
333
[…].
334
Apple’s Response to the Statement of Objections of 28 February 2023, Annex 5, ID 2879, Figure 4 on
page 6, and Apple’s Response to the Letter of Facts, Annex 8; ID 3323, Figure 1 and paragraph 10.
335
2017: “[...] provided that you agree not to directly or indirectly target iOS users to use a purchasing
method other than IAP, and your general communications about other purchasing methods are not
designed to discourage use of IAP.”
2020: “3.1.3 Other Purchase Methods: The following apps may use purchase methods other than in-
app purchase. Apps in this Section cannot, either within the app or through communications sent to
points of contact obtained from account registration within the app (like email or text), encourage users
to use a purchasing method other than in-app purchase.”
336
See response by Apple to question 21 c. to the Commission’s request for information (2022/004722),
ID 2232.
337
Apple’s response to the Statement of Objections of 28 February 2023, ID 2800, Figures 3 and 4, and
Annex 5 of Apple’s Response, ID 2805, Figure 3, include screenshots of Spotify’s premium tab.
EN 65 EN
of the importance of price in order to convert to a premium subscription,
338
in-app
advertising such as in-app premium pop-ups and tabs do not constitute an effective
way of communicating with iOS users with such limitations in place.
(206) Moreover, general marketing activities outside of the app, both conventional and
digital, including partnerships or social media platforms, but also e-mail campaigns,
are a suboptimal and less efficient option to attract and convert free subscribers into
premium on iOS, as in-app advertising absent the Anti-Steering Provisions is
considered one of the most effective means of communication with iOS users, given
that the user gets price information at a convenient time when the user is engaged
with the service and most likely to consider an upgrade.
339
Outside of the app
marketing strategies (i.e., offline communications, such as billboards and print
advertisements, and other online communications, such as search or even e-mails) do
often not provide the information when and where it is actually relevant for the user.
[…].
340
(207) Fourth, regarding Apple’s claim that iOS users can get and compare prices outside of
the app through desktop research on various devices and price comparisons available
on consumer reports, Apple’s argument presupposes that iOS users would take extra
steps and research outside of the app on how to subscribe through alternative
subscription channels, or browse through obscure price comparison websites or
blogpost.
341
On the contrary, evidence in the file supports the fact that apps are the
Figures 5, 7, 8 and 11 of Annex 5 of Apple’s Response (ID 2805) include examples of Spotify’s in-app
premium pop-ups displayed to users within the first 33 days of a free subscription. These examples
were also reiterated in Apple’s Response to the Letter of Facts, ID 3330, Figures 7 and 8, and Annex 8
of such response, ID 3323, Figures 2, 4, 6, 7, 10 and 12. The price of such premium service or how to
subscribe to them is not indicated in any pop-up nor premium tab. The examples provided by Apple of
premium tabs and pop-ups of other music streaming service providers (notably, SoundCloud, Deezer
and Amazon Music) either do not include information on prices or how to subscribe to these services
(Figure 8 of Apple’s Response to the Letter of Facts, ID 3330), or only contain information of the price
and subscription possibility through IAP, but not about subscription possibilities outside of the app
(Figures 13 to 16 and Figure 20 of Annex 5 to Apple’s Response to the Letter of Facts, ID 3320). The
examples of in-streaming advertisement provided in of Apple’s Response to the Letter of Facts, ID
3330, paragraphs 27 and 28, also do not contain information on prices.
338
See Section 9.3.2.1.1 […] Deezer’s Amazon’s, Napster’s and SoundCloud’s responses to question 9 of
the Commission’s request for information (2019/048643) also confirmed this findings, IDs 1377, 1336,
1345 and 1369. […].
339
See Spotify’s response to Commission’s request for information (2020/050944), entitled “Apple’s anti-
competitive restrictions raise Spotify’s costs”, paragraphs 16 and 26, ID 1434-3. As Spotify explains:
“[confidential quote].” In the same vein, see statements from Spotify’s representative at the oral hearing
(recording of the oral hearing in Case AT.40437, at 05:46:30, ID 3131). See also statements from
BEUC’s representative at the oral hearing (recording of the oral hearing in Case AT.40437, as of
06:22:15, ID 3131): “Apple argues that consumers can find pricing info elsewhere, for example by
searching on the web, from emails or from other marketing activities of music streaming services
providers. But none of this equivalent to clear price information at the moment it is most relevant,
meaning when users are engaging with a MS provider in the app via their iOS devices and considering
subscribing to a paid MS service or changing its existing subscriptions. This is because Email and
marketing activities might come at times when they are of limited use and therefore not provide
information at the right moment.”
340
See Table 8 – “Spotify – Proportion of users by conversion channel”.
341
See statements from BEUC’s representative at the oral hearing (recording of the oral hearing in Case
AT.40437, as of 06:22:15, ID 3131) “A reality is that reliable information on the internet is not always
easy to find for consumers (…) Although Apple states that there is a large number of price comparison
websites allowing customers to identify any price difference from [Music Streaming Service]
EN 66 EN
primary means for consumer engagement with music streaming services;
342
In
addition, according to evidence in the file the price information available on
consumer surveys is generally only accessible under payment, and other online
information is not often reliable or too overwhelming.
343
(208) Fifth, with respect to Apple’s claim that the Anti-Steering Provisions should not be
looked at in isolation but put into context and in relation to the reader and multi-
platform rules, the Commission notes that the Anti-Steering Provisions actually
largely offset the benefits that iOS users could draw from the reader and
multiplatform rules. In the Commission’s view, Apple contradicts itself by arguing
that the reader and multiplatform rules limit the effect of its conduct while defending
the legitimacy of the Anti-Steering Provisions, which in fact hide the possibility of
making use of the reader and multi-platform rules.
(209) Sixth, the External Link Account Entitlement program introduced in in March 2022
constitutes a limited change to Apple’s Anti-Steering Provisions. The possibility to
include a link to the developer’s website comes with significant limitations in order
to participate in the program, as only reader apps are eligible, and applications to
participate in the program shall be approved by Apple. More importantly, as
explained in recitals (181)-(182), language accompanying the link cannot include
information about price and the link can only redirect users to “account creation and
management” and not to a purchasing web view or information on prices.
344
In fact,
to the Commission’s knowledge, no music streaming service provider has benefited
so far from this program.
(210) In light of this, the Commission considers that the limitations for music streaming
service providers which are set out in recitals (184)-(186) have been, in essence, in
place throughout the period of infringement as outlined in Section 11
. […].
345
While
Apple has relaxed the Anti-Steering Provisions with respect to such outside
communication through the change of the Guidelines on 7 June 2021, […]
346
[…].
347
7.5. Impact of the Anti-Steering Provisions in the music streaming services market
(211) Spotify launched its iOS native mobile app in September 2009. Initially, between the
launch of the Spotify app for the iPhone in 2009 and the introduction of IAP in
February 2011, the Spotify app was free to download, but could only be used by
Spotify Premium subscribers, i.e., only users with Premium account credentials were
allowed to log in the app (therefore, there was no need for Spotify to advertise
Premium features in-app as its iOS users were already Spotify Premium users).
348
In
subscriptions through IAP, I wonder how many consumers will find the too obscure price comparison
websites, blogposts or articles that Apples points to in its reply”.
342
See in this respect Section 9.3.2.2.1.1.
343
See statements from BEUC’s representative at the oral hearing (recording of the oral hearing in Case
AT.40437, as of 06:22:15, ID 3131), explaining that the sources Apple cites in Annex 4 of its response
are not reliable, even if those were presumably the best example Apple could find of online price
comparisons for MS services and that “BEUC’s member publications are generally behind paywalls”.
BEUC’s representative also pointed at the risk of information overload online.
344
See recital (179).
345
See recitals (189) et seq.
346
[…].
347
See Apple’s Response to the Statement of Objections of 28 February 2023, Annex 5, ID 2879, Figure 4
on page 6.
348
See Spotify’s response to question 3 of the Commission’s request for information (2020/147746),
ID 1447.
EN 67 EN
February 2011, when Apple introduced the possibility of offering subscriptions to
digital content in the app through IAP and the Anti-Steering Provisions, Spotify
initially decided not to offer in-app subscriptions through IAP because of the 30 %
commission fee, which would have either forced Spotify to charge a higher price for
subscriptions in the iOS app or to take “a 30 % hit on its already constrained
margins”.
349
Therefore, users of Spotify’s iOS app could at the time only access
Premium features if they had purchased a Premium subscription outside of the app,
e.g., on the Spotify website. The ability of users to consume content purchased
outside the app was as of February 2011 specifically mentioned in the reader rule.
350
(212) […].
351
[…]
352
[…].
353
(213) In view of the Anti-Steering Provisions and the inability to inform its users about
alternative subscription possibilities through its iOS app, Spotify decided to offer in-
app subscriptions through IAP as of 30 June 2014 and to increase the price for its
Premium service for in-app subscriptions in order to cover for its additional costs
stemming from the commission fee.
354
Spotify observed that if it had “absorbed the
30 % surcharge, the remaining revenue would not have been sufficient to cover its
other costs”, namely VAT and royalty payments to record companies and music
publishers which altogether indicatively amounted to around 70 % (or EUR 7) of the
pre-IAP price.
355
(214) Spotify thus increased the regular Premium monthly subscription price for in-app
subscriptions through IAP on iOS (while not changing prices on other channels) in
the various EEA countries,
356
typically from EUR 9.99 to 12.99 (corresponding to a
pass-through rate of 90 % to 95 % of the IAP commission, depending on the
applicable VAT rate in each country).
357
(215) One year later in June 2015, Apple launched its competing music streaming service,
Apple Music, at a monthly subscription price of EUR 9.99.
358
Unlike other music
349
Spotify’s Complaint, paragraph 57, ID 1457.
350
In 2011, the reader rule was set out in Section 11.14 of the Guidelines and had the following wording:
“Apps can read or play approved content (specifically magazines, newspapers, books, audio, music,
and video) that is subscribed to or purchased outside of the app, as long as there is no button or
external link in the app to purchase the approved content. Apple will not receive any portion of the
revenues for approved content that is subscribed to or purchased outside of the app”.
351
See Spotify’s response to question 30 of the Commission’s request for information (2020/002646),
ID 1431-2 […].
352
Exhibit A.3.1 to Spotify’s Complaint, ID 245-27.
353
[…].
354
Spotify’s Complaint, paragraphs 29, 59 and 60 and 61, ID 1457. Spotify observed that if it had
“absorbed the 30 % surcharge, the remaining revenue would not have been sufficient to cover its other
costs”, namely VAT and royalty payments to record companies and music publishers which altogether
indicatively amounted to around 70 % of the pre-IAP price (or EUR 7).
355
Spotify’s Complaint, paragraphs 29 and 61, ID 1457.
356
In particular, the price of Spotify premium subscription increased from EUR 9.99 to EUR 12.99 in
Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands and Spain.
357
The IAP commission is 30 % of revenue net of VAT. VAT rates range from 17 % (Luxembourg) to
24 % (Finland, Iceland) among the countries named above. For Luxembourg, revenue net of VAT is
EUR 12.99/1.17 = EUR 11.10, of which Spotify pays 30 % = EUR 3.33 as commission to Apple. Of
this commission, Spotify passed on EUR 12.99 – 9.99 = EUR 3.00 to consumers, amounting to 90 % of
the total IAP commission of EUR 3.33. Performing the same calculations for a VAT rate of 24 % (the
upper bound) yields a pass-through rate of 95 %. For all VAT rates between 17 % and 24 %, the pass-
through rate therefore ranges from 90 % to 95 %.
358
Apple Music also became available on Android and Windows later that year.
EN 68 EN
streaming apps, Apple Music is pre-installed on all iPhones and iPads and is neither
subject to the Guidelines nor to any of the restrictions contained therein. Spotify
could not match Apple's price and thus was forced to maintain the price of the
Spotify Premium subscription in its iOS app at EUR 12.99.
(216)
Less than a year after the launch of Apple Music, in May 2016, Spotify decided to
disable IAP and turn off the in-app subscription possibility on iOS for a combination
of reasons. According to Spotify, this step was taken because the unavoidable
increase of its consumer price to EUR 12.99 rendered Spotify uncompetitive vis-à-
vis Apple Music and because IAP acted as a barrier between Spotify and its
subscribers, allowing Apple to take over part of the customer relationship from
Spotify and providing Apple with certain insights it may use for its own competing
service.
359
(217)
While iOS users can therefore still download the Spotify app via the App Store and
use the free/basic version, they can – since May 2016 – no longer subscribe in-app to
the paid Premium offer of Spotify’s music streaming services.
(218)
Currently, new Spotify paid users will therefore need to activate and pay for their
Premium subscription outside of the app, in particular via Spotify’s web site and then
log into the iOS app with their Premium account.
360
However, based on the Anti-
Steering Provisions, Spotify is prevented from informing users – within its iOS app
and to certain extent also outside of the app- about the possibility to subscribe to the
Premium music streaming service on its website or from mentioning the price of
premium subscriptions. Until 22 October 2021, Apple’s Anti-Steering Provisions
also prohibited Spotify from informing users that have created their account in the
iOS through e-mails about such subscription possibilities. As of that day, Spotify
could be authorised to send e-mails to iOS users that have created their account in the
Spotify iOS app, but only to the extent that such e-mails are not triggered by an in-
app activity of the respective user […].
361
Users of Spotify Premium that subscribed
to the Premium service via IAP during the period when Spotify had adopted IAP for
in-app subscriptions were able to continue to use the Premium subscription subjected
to the higher subscription price of EUR 12.99 per month.
362
The Anti-Steering
Provisions prevented Spotify from informing these legacy subscribers in the app
about the possibility of obtaining a cheaper subscription directly on Spotify’s
website. In July 2023, Spotify announced that those premium users who subscribed
through IAP between June 2014 and May 2016 would be automatically moved to a
free account after the end of the last billing period. If those legacy subscribers wished
to keep their premium subscriptions, they would not be able to use IAP anymore and
359
Spotify’s response to question 26 of the Commission’s request for information (2020/002646), ID
1431-2.
360
Spotify has indicated that users can also purchase the Premium subscription through Spotify’s partners
(such as mobile network operators and hardware providers) or via Spotify gift cards available at
retailers, see Spotify’s response to question 17 of the Commission’s request for information
(2020/002646), ID 1431-2.
361
See recital (178).
362
The number of Spotify subscribers that are still subject to this higher price has decreased over time and
constituted less than […] subscribers in May 2019; see Apple’s comments on Spotify’s initial
complaint, paragraph 5, ID 330.
EN 69 EN
would be required to subscribe through alternative purchasing mechanisms,
including credit cards and PayPal, to start the new subscription.
363
(219) Most other providers of music streaming services decided to offer in-app
subscriptions through Apple’s IAP mechanism, with the exception of Google Play
Music which is meanwhile no longer available.
364
The Commission notes that similar
to Spotify during the period when it signed up to IAP, other music streaming service
providers that use IAP also increased their subscription fees on iOS compared to the
price they charge in other channels.
365
This is the case for Deezer
366
, SoundCloud
367
,
Napster
368
, YouTube Music
369
and Tidal
370
. All these music streaming service
providers raised their subscription prices through IAP (typically from EUR 9.99 to
EUR 12.99 for individual subscriptions). Amazon Music, charged a price through
IAP of EUR 10.99 for its basic premium service.
371
(220) In view of the low margins in the music streaming business, these providers had to
pass-on the 30 % commission fee to their iOS customers – rather than absorbing that
fee. As a result, their subscription charges on iOS are higher than the ones they
charge on their websites. Apple was fully aware of the difficulties of music
streaming service providers to offer subscriptions in their iOS app at the same price
level as for susbscriptions out of the app. […].
372
[…].
373
(221) Due to inflation and the increase of music licensing costs,
374
the majority of major
music streaming service providers raised their prices in 2022 and/or 2023 in various
EEA countries. Only SoundCloud maintains the EUR 9.99 website price and EUR
12.99 for in-app subscriptions through IAP.
375
363
See https://variety.com/2023/digital/news/spotify-cuts-off-apple-in-app-purchase-app-store-
1235662082/, accessed on 10 October 2023, ID 3194.
364
Other music streaming service providers implemented IAP at the following dates: Deezer: July 2013;
Napster: April 2013; YouTube Music: November 2015; Amazon Music: January 2018, SoundCloud:
March 2016; Qobuz: June 2017. See Apple’s response to question 5 of the Commission’s request for
information (2019/050361), ID 268-1.
365
See Amazon’s response to question 4 of the Commission’s request for information (2019/048673), ID
1336; SoundCloud’s response to question 4 of the Commission’s request for
information (2019/048728), ID 1369; Deezer’s response to question 4 of the Commission’s request for
information (2019/048643), ID 1377; Napster’s response to question 28 of the Commission’s request
for information (2019/048724), ID 1345, YouTube Music’s response to question 4 of the Commission’s
request for information (2019/048689), ID 1356. In addition, the price of “Tidal Premium” in the iOS
app is EUR 12.99, ID 1294.
366
Deezer’s response to question 23 of the Commission’s request for information (2019/048643), ID 1377.
367
SoundCloud’s response to question 22 of the Commission’s request for information (2019/048728), ID
1369.
368
Napster’s response to question 28 of the Commission’s request for information (2019/048724), ID
1345.
369
YouTube Music’s response to question 4 of the Commission’s request for information (2019/048689),
ID 1356.
370
Screenshots from Tidal App and mobile browser on 12 February 2021, ID 1294.
371
Amazon’s response to question 4 of the Commission’s request for information (2019/048673), ID 1336.
372
[…].
373
Annex 8 to Apple’s response to question 11 of the Commission’s request for information
(2019/050361), Slide 25, ID 268-291.
374
See https://www.ft.com/content/16a97b9a-ee96-4ec0-a14f-7b0c7200af81, accessed on 10 October
2023, ID 3130; and https://midiaresearch.com/blog/the-cost-of-music-streaming-just-went-up-here-is-
what-must-come-next, accessed on 10 October 2023, ID 3148.
375
See https://checkout.soundcloud.com/go?ref=t1033, ID 3169, accessed on 10 October 2023.
EN 70 EN
(222) The core price increase on music streaming service provider’s basic paid
subscriptions on their websites has been generally 1 EUR, i.e., from EUR 9.99 to
EUR 10.99. This trend has also been followed by Apple Music, which increased the
price of paid subscriptions both in-app and outside of its app from EUR 9.99 to EUR
10.99 in October 2022.
376
Deezer, however, has increased its price by 2 EUR
between 2022 and 2023.
(223) Following these general price increases, prices on the IAP channel for paid music
streaming subscriptions were adjusted to pass-on the 30 % commission fee, or at
least a substantial part of it. As a result, music streaming services prices remain
higher in the IAP channel, with iOS users paying from 1 to 3 EUR more for paid
subscriptions in-app.
(224) The price increases referred above in the IAP channel and outside of the iOS app
(e.g., on the music streaming service providers’ websites) in various EEA countries
are the following:
– The current IAP price of Deezer’s premium subscription is EUR
13.99,
377
while outside of the iOS app it amounts to EUR 10.99 as of
early 2022.
378
Deezer implemented a new price increase in September
2023 affecting some territories including France, Spain, Italy and The
Netherlands, where a paid subscription now costs EUR 11.99 on
Deezer’s website.
379
– The current IAP price of YouTube Music is EUR 12.99 and EUR 15.99
for Premium subscription.
380
On the website, the respective prices of
these subscriptions amount to EUR 9.99 and EUR 11.99 respectively.
381
– The current IAP price of Napster premium subscription is EUR 13.99,
382
while on its website subscriptions can be bought at EUR 10.99 after its
price increase.
383
– The current IAP price of Tidal is EUR 13.99,
384
while on its website the
price amounts to EUR 10.99 since July 2023.
385
– The current IAP price of Amazon Music Unlimited is EUR 11.99,
386
while price on Amazon’s website amounts to EUR 10.99 (for non-Prime
customers) since January 2023.
387
376
Apple’s response to question 8 of the Commission’s request for information of 3 August 2023, ID 2987.
377
See https://apps.apple.com/be/app/deezer-music-podcast-player/id292738169, accessed on 10 October
2023, ID 3164.
378
See https://www.ft.com/content/16a97b9a-ee96-4ec0-a14f-7b0c7200af81, accessed on 10 October
2023, ID 3130.
379
See https://www.deezer-investors.com/newsroom/, accessed on 10 October 2023, ID 3205.
380
See https://apps.apple.com/be/app/youtube-music/id1017492454, accessed on 10 October 2023, ID
3167.
381
See https://www.youtube.com/musicpremium, accessed on 5 December 2023, ID 3215.
382
See https://www.youtube.com/premium, accessed on 5 December 2023, ID 3216.
383
See https://www.napster.com/fr/plans/, accessed on 10 October 2023, ID 3175.
384
See https://apps.apple.com/be/app/tidal-music-hifi-ad-free/id913943275, accessed on 10 October 2023,
ID 3171.
385
See https://www.techradar.com/streaming/tidal-joins-the-music-streaming-price-hike-party-and-spotify-
could-be-next, accessed on 14 December 2023, ID 3278.
386
See https://apps.apple.com/fr/app/amazon-music-songs-podcasts/id510855668, accessed on 10 October
2023, ID 3172.
EN 71 EN
(225) Currently, Deezer’s premium iOS users which decide to subscribe through IAP pay
each month EUR 2 more for their subscription compared with the price for
subscriptions on Deezer’s website. Tidal and Napster’s iOS users pay EUR 3 more
on IAP compared with the price for subscriptions on those providers’ website.
Amazon Music’s iOS users and Youtube Music paid subscribers pay EUR 1
compared with the price for subscriptions on those providers’ website, while
Youtube Music premium subscribers pay EUR 3 compared with the price for
subscriptions on this provider’s website.
(226) Spotify, who disabled IAP in May 2016, also increased prices of premium individual
subscriptions in July 2023 from EUR 9.99 to EUR 10.99.
388
(227) Because of the Anti-Steering Provisions, music streaming service providers are
prevented from informing within the app both the users of their free/basic service as
well as those users which are subscribing through IAP at an elevated subscription
price about the ability to subscribe at a cheaper price outside the iOS app or from
offering in the apps external links to their website, including in the form of a web-
based checkout to facilitate transactions directly from the music streaming service
provider at a lower price.
7.6. Summary of the scope and content of the Anti-Steering Provisions
(228) Apple’s Anti-Steering Provisions as interpreted by Apple
– prohibit buy buttons or direct links
389
by music streaming service
providers within their iOS app to purchasing possibilities outside of the
app (such as on their website);
– prohibit such developers from informing iOS users within their iOS apps
about the prices of subscription offers outside of that app, the price
differences between in-app subscriptions (through IAP) and those
available elsewhere, the existence of specific purchase possibilities
outside the app (including the mentioning of the developer’s website as a
location where subscriptions can be bought) as well as from providing
any explanations or instructions on how to purchase a subscription to the
premium service outside of the app environment;
390
and they
– limit the possibility of developers to send outside e-mails to iOS users
following an in-app activity of that user. For example, developers cannot
allow iOS users to actively request in their app additional information
about outside subscription possibilities directly from the developer, for
example by requesting an e-mail with specific information, offers or
promotions or any instructions on where and how to subscribe outside the
iOS app. In addition, music streaming service providers are prevented
387
See https://www.theverge.com/2023/1/20/23563686/amazon-music-unlimited-price-increase-uk-usa,
accessed on 10 October 2023, ID 3182.
388
See https://newsroom.spotify.com/2023-07-24/adjusting-our-spotify-premium-prices/, accessed on
10 October 2023, ID 3180.
389
With the exception of links under the External Link Account Entitlement program based on an
entitlement granted by Apple under the new rule 3.1.3 (a) which is conditional on the developer
complying with the conditions as set out by Apple and which cannot encourage users to purchase digital
content or services outside the iOS app, ID 3011 – see recital (179).
390
Response by Apple to question 25 of the Commission’s request for information (2022/004722), ID
2232.
EN 72 EN
from sending outside promotional emails to newly acquired iOS users in
the 10 days following account creation.
– limit effective in-app advertising campaings by music streaming service
providers, which cannot mention in such in-app ads the price and the way
to subscribe outside of the app to premium services.
(229) As the Anti-Steering-Provisions prohibit buy buttons or links to alternative
purchasing mechanisms other than IAP, they particularly prohibit web-based
checkout solutions that redirect the user to the website of the music streaming service
provider as an alternative to the in-app payment mechanism of the platform provider.
Such web-based checkout mechanisms are a particularly suitable alternative for
recurring payments such as those required for music streaming subscriptions which
require the user to provide its payment credentials only once at the beginning of the
subscription.
(230) In the absence of such web-based checkouts, music streaming service providers have
no choice but to either offer their music streaming subscriptions in-app through
Apple’s IAP at an elevated price or offer an app that contains no information on
where and how and at what conditions subscriptions to music streaming services can
be bought. Apple consistently rejects apps or app updates submitted to the App Store
which do not comply with the Anti-Steering Provisions as set out in the Guidelines.
Music streaming service providers have therefore no choice but to abide by the Anti-
Steering Provisions in case they want to continue offering their apps to users with
iOS devices.
391
(231) The above limitations contained in the Anti-Steering Provisions on the ability of
developers to inform users about alternative purchasing options and allow them to
effectively choose among the options available to them have been in place since at
least 30 June 2015. As explained in recitals (189) et seq., based on the evidence in
the file, Apple had initially not objected to certain forms of e-mail communication by
music streaming service providers and only started objecting such emails by music
streaming service providers in June 2016. Since 7 June 2021, Apple only objects to
such e-mails to the extent that they follow a “call to action” within the developer’s
iOS app (in other words, whenever Apple considers that the iOS app itself contains
any “call to action” to use alternative purchasing mechanisms outside the app, within
the meaning of Section 3.1.1 of the Guidelines.
8. E
STABLISHING THE DOMINANT POSITION
8.1. The relevant market
8.1.1. Principles
(232) In the context of the application of Article 102 of the Treaty, the definition of the
relevant product and geographic market is useful in assessing whether the
undertaking concerned has a dominant position and whether this enables it to prevent
effective competition from being maintained on the relevant market by giving it the
391
Rejections of the Spotify app described in Spotify’s complaint, pages 18 et seq., ID 1457 or rejection of
updates of the Deezer iOS app in ID 1303. See also CCB news “Apple removes Fortnite developer Epic
from App Store”, 28 August 2020, https://www.bbc.com/news/world-us-canada-53955183, accessed on
17 December 2020, ID 1067.
EN 73 EN
power to behave to an appreciable extent independently of its competitors, its
customers and, ultimately, consumers.
(233) The concept of the relevant market implies that there can be effective competition
between the products or services which form part of it and this presupposes that there
is a sufficient degree of interchangeability between all the products or services
forming part of the same market in so far as a specific use of such products or
services is concerned.
(234) An examination to that end cannot be limited solely to the objective characteristics of
the relevant products and services, but the competitive conditions and the structure of
supply and demand on the market must also be taken into consideration.
(235) The identification of relevant product markets by the Commission derives from the
existence of competitive constraints. Undertakings are subject to three main sources
of competitive constraints: demand-side substitution, supply-side substitution and
potential competition. From an economic point of view, for the definition of the
relevant market, demand-side substitution constitutes the most immediate and
effective disciplinary force on the suppliers of a given product.
(236) The distinctness of products or services for the purposes of defining the relevant
market has to be assessed by reference to customer demand. Factors to be taken into
account include the nature and technical features of the products or services
concerned; the facts observed on the market; the history of the development of the
products or services concerned; and also, the undertaking’s commercial practice. The
fact that there are on the market independent companies offering a product or service
constitutes “serious evidence” of the existence of a separate market for that product
or service.
(237) Supply-side substitution may also be taken into account when defining markets in
those situations in which its effects are equivalent to those of demand-side
substitution in terms of effectiveness and immediacy. There is supply-side
substitution when suppliers are able to switch production to the relevant products or
services and market them in the short term without incurring significant additional
costs or risks in response to small and permanent changes in relative prices. When
these conditions are met, the additional production that is put on the market is
expected to have a disciplinary effect on the competitive behaviour of the companies
involved.
(238) Supply-side substitution is, however, not taken into account at the stage of defining
the relevant market when it would entail each time the need to adjust significantly
existing tangible and intangible assets, additional investments, strategic decisions or
time delays.
(239) The relevant geographic market comprises an area in which the undertakings
concerned are involved in the supply and demand of the relevant products or
services, in which area the conditions of competition are similar or sufficiently
homogeneous and which can be distinguished from neighbouring areas in which the
prevailing conditions of competition are appreciably different.
(240) The definition of the geographic market does not require the conditions of
competition between traders or providers of services to be perfectly homogeneous. It
is sufficient that they are similar or sufficiently homogeneous and, accordingly, only
those areas in which the conditions of competition are “heterogeneous” may not be
considered to constitute a uniform market.
EN 74 EN
8.1.2. Application to this case
(241) The Commission concludes that the product markets that are relevant for the purpose
of this Decision are:
– The market for smart mobile devices (in which Apple competes against OEMs
offering smart mobile devices to end consumers);
– The market for the provision to developers of platforms for the distribution of
music streaming apps to iOS users (i.e., the developer facing side of the two-
sided App Store platform);
– The market for the provision of music streaming services.
(242) In reaching this conclusion, the Commission has assessed the scope of the relevant
product markets from both the demand and supply side perspective.
(243) The market for the provision to developers of platforms for the distribution of music
streaming apps to iOS users concerns the developer facing side of Apple’s App Store
platform, where Apple provides developers with a service that allows them to
distribute their apps to users of iOS devices. This market is a different market from
the consumer facing side of the platform in which Apple provides users of iOS
devices with the ability to download and purchase apps. The consumer-facing side of
the App Store is only relevant to the extent it poses potential constraints on the
market power of Apple vis-à-vis developers of music streaming apps. In theory, the
consumer side of the platform could discipline Apple’s market power over the
provider of music streaming services in the market for the provision to developers of
platforms for the distribution of music streaming apps to iOS users. Such potential
constraints are therefore analysed in Section 8.2.2.5.
8.1.3. Market for smart mobile devices
(244) This Decision concerns certain restrictions imposed by Apple on developers of music
streaming apps, which run on Apple’s smart mobile devices.
(245) Thus, the definition of the relevant product market at the device level is relevant to
the extent that there may be a link between competition at the device level and at the
app distribution level. The closer the link between these two markets is and the more
intensive competition is at the device level, the more likely it is that it may have a
disciplinary effect on activities at the app distribution level.
(246) Smart mobile devices are mobile devices with advanced internet browsing,
multimedia and app capabilities. Smart mobile devices are available in a variety of
designs, and with a range of different features and hardware components. There are,
broadly speaking, two types of smart mobile devices: smartphones and tablets.
392
(247) Smartphones are wireless telephones with advanced internet browsing and app
capabilities. Smartphones incorporate hardware and software features that enable
them to fulfil many of the functions traditionally associated with state of the art
computing.
393
There is no industry standard definition of a smartphone, but rather a
spectrum of functionalities.
394
Smartphones vary in terms of size, weight, durability,
392
Commission decision of 13 February 2012 in Case M.6381 – Google/Motorola Mobility, footnote 13.
393
Commission decision of 26 June 2014 in Case M.7202 – Lenovo/Motorola Mobility, paragraph 14.
394
Commission decision of 18 July 2018 in Case AT.40099 – Google Android, footnote 25: “For example,
in addition to mobile voice and text message communication, the latest smartphones include advanced
hardware (e.g. touch-screen interfaces, flash storage, GPS navigation, WI-FI) and software (rich web
EN 75 EN
screen size, audio quality, camera size/zoom, web speed, computer processing
power, memory, ease-of-use, optical quality, casing quality/design, and additional
multimedia offerings.
395
(248) Tablets are mobile devices in the spectrum between a smartphone and a personal
computer (“PC”). Tablets are generally operated using a touch screen. Tablets are
based on similar hardware to advanced touchscreen-based smartphones and provide a
rich multimedia experience along with many of the functions of a PC.
396
The
distinction between smartphones and tablets is not necessarily clear-cut.
397
(249) Smart mobile devices run on an operating system that controls the basic functions of
the devices and enable users to make use of the device and run software on it. Apple
and other producers of smart mobile devices (original equipment manufacturers or
“OEMs”), such as Samsung, Xiaomi or Huawei, pre-install smart mobile operating
system on their smart mobile devices before selling them on to consumers. The main
smart mobile OSs are Apple’s iOS
398
and Google’s “Android” OS. Other smart
mobile OSs have gradually disappeared (like Blackberry, Microsoft Windows phone
or Symbian)
399
or no longer play any relevant role, as their combined share is less
than 1 % (like Linux).
400
While Android is licensed by Google to OEMs such as
Samsung, Xiaomi or OPPO, iOS has been developed by Apple for captive use in its
own devices and is therefore not available to any third-party OEM.
401
8.1.3.1. The relevant product market
(250) In the past, the Commission has on several occasions looked into the product market
definition for smart mobile devices. In these decisions, the Commission considered
that basic and feature phones
402
do not belong to the same product market as smart
mobile devices whereas it was left open whether smart mobile phones and tablets
belong to the same product market.
403
browsers, full-featured e-mail accounts, a sophisticated user interface etc.), and a range of other
functions (including music and video streaming; downloading; playback; video calling; cameras and
camcorders; GPS; radio receiver; personal digital assistant functions; USB, Bluetooth etc.).”
395
Commission decision of 26 June 2014 in Case M.7202 – Lenovo/Motorola Mobility, paragraph 14.
396
Commission decision of 26 June 2014 in Case M.7202 – Lenovo/Motorola Mobility, paragraph 15.
397
See Commission decision of 18 July 2018 in Case AT.40099 – Google Android, paragraph 77.
398
As explained in footnote 4, this includes for the purposes of this Decision iPadOS which was introduced
in 2019 as a derivation of iOS for Apple’s iPads.
399
Blackberry stopped supporting mobile devices using its operating system as of 4 January 2022 (see
https://www.blackberry.com/us/en/support/devices/end-of-life, accessed on 29 April 2022, ID 2344).
Windows ended support to its last mobile operating system (Windows 10 Mobile) on
10 December 2019 (see https://support.microsoft.com/en-us/windows/windows-10-mobile-end-of-
support-faq-8c2dd1cf-a571-00f0-0881-bb83926d05c5, accessed on 29 April 2022, ID 2345). Nokia
announced in 2011 that it would stop using Symbian as its mobile operating system in favour of
Windows Phone (see https://www.zdnet.com/article/android-before-android-the-long-strange-history-
of-symbian-and-why-it-matters-for-nokias-future/, accessed on 29 April 2022, ID 2346).
400
See https://gs.statcounter.com/os-market-share/mobile-tablet/worldwide/#monthly-201501-202201,
accessed on 24 January 2022, ID 2309.
401
See Commission decision of 18 July 2018 in Case AT.40099 – Google Android, paragraph 83.
402
Basic phone is a category of mobile phone only capable of voice calling and text messaging. Feature
phone is a category of mobile phones that adds minimal smartphone features to those of a basic phone,
such as rudimental web browsing capabilities.
403
In particular Commission decision of 13 February 2012 in Case M.6381 – Google/Motorola Mobility
and Commission decision of 4 December 2013 in Case M.7047 – Microsoft/Nokia.
EN 76 EN
8.1.3.1.1. Demand side substitution
(251) In Case M.7047 – Microsoft/Nokia, the Commission took the view that basic and
feature phones, on the one hand, and smart mobile devices, on the other hand, belong
to separate product markets.
404
In the course of the investigation of that case, market
participants had indicated that they do not consider these products as substitutable
from a demand-side perspective, because, among other reasons, when compared to
smart mobile devices, basic and feature phones have less advanced hardware
components and connectivity services, and offer a limited choice of downloadable
applications. Similarly, in Case AT.40099 – Google Android, the Commission found
that from a technical perspective, feature phones and smart mobile devices use
different, incompatible operating systems. Basic and feature phone OSs cannot be
installed on smart mobile devices because of their reduced functionalities. For
instance, feature phones do not allow the installation of applications, which is a
defining characteristic of smartphones.
405
(252) With respect to a potential differentiation between smart mobile phones and tablets,
the Commission left open whether there is a single market for smart mobile devices
or whether there are separate markets for smartphones and tablets.
406
From a
demand-side perspective they may not be fully interchangeable as smartphones offer
certain functionalities such as the ability to make phone calls that are not available
for tablets, while tablets may be used more for other purposes such as watching
videos. On the other hand, smartphones and tablets typically run on the same mobile
operating system providing a lot of similar functionalities, despite some differences
in use cases.
407
As the same apps, including a variety of pre-installed apps, are
typically available for both smartphones and tablets, a lot of the potential use cases
for the two types of devices are the same.
(253) In Case M.7047 – Microsoft/Nokia the Commission considered that apps for tablets
are comparable in terms of features, functionality and price with those for
smartphones and most apps are developed for both types of devices, while some of
them are customised or configured differently because of the size of the device
(smartphone or tablet). According to the decision, app developers create apps, which
are designed to operate both on smartphones and tablets in case they run the same
OS.
(254) Music streaming service providers have indicated that they typically develop the
same app for iPhones as for iPads (with only minor differences in functionalities
between the apps) and that the apps for both devices are reviewed as one by the App
Store Review Team.
408
The relevant rules for third-party developers which are
subject to the investigation are the same for iPhones and iPads.
409
None of the music
streaming service providers which provided information during the investigation
indicated a need to differentiate between smartphones and tablets. Neither did Apple
in its Response to the Statement of Objections of 28 February 2023 or its Response
to the Letter of Facts.
404
Commission decision of 4 December 2013 in Case M.7047 – Microsoft/Nokia, paragraphs 15 and 18.
405
Commission decision of 18 July 2018 in Case AT.40099 – Google Android, paragraph 228.
406
Commission decision of 4 December 2013 in Case M.7047 – Microsoft/Nokia, paragraph 16.
407
Commission decision of 18 July 2018 in Case AT.40099 – Google Android, paragraph 232.
408
Spotify’s response to question 1 of the Commission’s request for information (2020/147746), ID 1447.
409
Apple’s response to question 1 of the Commission’s request for information (2020/146914), ID 1194.
EN 77 EN
8.1.3.1.2. Supply side substitution
(255) From a supply side perspective, basic and feature phones have also been considered
to belong to different product markets in the past. In Case AT.40099 – Google
Android, the Commission considered that the differences in functionalities between
these types of devices means that the development of a smart mobile operating
system requires significant time and resources, regardless of whether the developer
had already developed a basic or a feature phone OS.
410
(256) Smartphones and tablets, however, were in past decisions considered by many
market players as comparable to one another in terms of technical characteristics
(OS, hardware requirements) and for certain functionalities (web browsing, email
access, watching videos, games, maps, etc.).
411
In Case AT.40099 – Google Android,
which looked at the market from the perspective of OEMs, the Commission found
that all main operating system developers either used the same operating system to
power smartphones and tablets, or easily adjusted a smartphone operating system to
allow it to run on a tablet.
412
(257) These considerations are still valid. Apple’s App Store provides access to both users
of iPhones and users of iPads and these devices were for a long time running on the
same mobile operating system (iOS)
413
and only recently a slightly modified
operating system was introduced for the iPad (iPadOS).
414
8.1.3.2. The geographic scope of the market
(258) In previous decisions, the Commission considered that the relevant geographic
market for smart mobile devices was at least EEA-wide, if not worldwide, in
scope.
415
The investigation in the present case did not provide any indication that
would justify deviating from this analysis.
416
8.1.3.3. Conclusion on the relevant market
(259) The Commission therefore takes the view that for the purposes of this Decision,
which concerns potential market power vis-à-vis app developers, there is no need to
consider separate product markets for different types of smart mobile devices (i.e.,
smartphones and tablets) and that the relevant geographic market is at least EEA-
wide.
410
Commission decision of 18 July 2018 in Case AT.40099 – Google Android, paragraph 229.
411
Commission decision of 4 December 2013 in Case M.7047 – Microsoft/Nokia, paragraphs 16 and 19.
412
Commission decision of 18 July 2018 in Case AT.40099 – Google Android, paragraph 233.
413
Indeed, in Commission decision of 18 July 2018 in Case AT.40099 – Google Android, Apple had
confirmed that “Apple had developed and implemented a single operating system for both its iPhone
and its iPad products. There are no significant differences from Apple’s perspective.” Commission
decision of 18 July 2018 in Case AT.40099 – Google Android, paragraph 233.
414
The iPadOS was first announced at Apple’s 2019 Worldwide Developer Conference (WWDC) as a
derivation from iOS. Already prior to such announcement, iPhones and iPads were running on two
separate versions of iOS. The iPad version of iOS was optimised taking into account the use of Apple
Pencil, the bigger screen size, the more frequent use of keyboards, etc. As those differences were
growing in significance, the iPad version of iOS was rebranded as iPadOS as of 2019. See Apple’s
response to question 1, letter e) of the Commission’s request for information (2020/146914), ID 1194.
415
Commission decision of 4 December 2013 in Case M.7047 – Microsoft/Nokia, paragraph 72;
Commission decision of 13 February 2012 in Case M.6381 – Google/Motorola Mobility, paragraphs 43
to 47; and Commission decision of 2 July 2008 in Case M.4942 – Nokia/Navteq, paragraph 140.
416
Apple operates the same mobile OSs (iOS and since 2019 iPadOS) throughout the EEA and music
streaming service providers did not indicate a reason to differentiate in this respect between different
contracting parties to the EEA agreement.
EN 78 EN
8.1.4. Market for the provision to developers of platforms for the distribution of music
streaming apps to iOS users
(260) The Commission considers that the relevant product market is the market for the
provision to developers of platforms for the distribution of music streaming apps to
iOS users.
8.1.4.1. The relevant product market
8.1.4.1.1. The Commission’s position
(261) App distribution platforms or “app stores” such as Apple’s App Store for iOS
devices are digital distribution platforms that serve as gateways for developers that
wish to distribute their apps to users of the smart mobile device. Similarly, through
app stores, users are enabled to download, install and manage a wide range of diverse
apps from typically a single point in the interface of the smartphone.
417
App stores
are two-sided platforms that intermediate transactions between two distinct groups of
users: (i) developers that use the app store as a platform to distribute their apps to
consumers and (ii) consumers that search for apps in order to download them,
potentially against the payment of a price, on their smart mobile devices. The app
store provides the infrastructure that facilitates transactions between the two user
groups. It exhibits indirect network effects as developers benefit from an increase in
the number of consumers and consumers benefit the more developers distribute their
apps in the respective app store. The providers of app stores determine the criteria for
accepting apps to the app stores, which include the conditions under which
developers can sell digital content or services within their apps, as well as all aspects
of the operation of the app stores, including the ranking of apps, the app review
process and the advertising services provided to app developers.
(262) In Case AT.40099 – Google Android, the Commission concluded that other apps do
not belong to the same product market as app stores, that app stores for the Android
mobile operating system constitute a separate relevant product market and that app
stores for non-licensable smart mobile operating systems (such as iOS) do not belong
to the same product market as app stores for Android devices.
418
That Commission
decision looked at the market from the perspective of OEMs of smart mobile devices
which need to license smart mobile operating system for their devices. It did not
focus in its analysis of the market on the perspective of developers that want to
distribute apps to users of smart mobile devices.
(263) The Commission considers that the relevant product market in this case is the market
in which Apple offers developers of music streaming apps a platform for the
distribution of their apps to iOS users, i.e., the developer facing side of the App
Store.
(264) The consumer facing side of the App Store is another separate, although interlinked,
market. The services offered, the prices to be paid and the terms and conditions differ
considerably between the two sides of the platform.
417
Commission decision of 18 July 2018 in Case AT.40099 – Google Android, paragraph 86.
418
Commission decision of 18 July 2018 in Case AT.40099 – Google Android, paragraph 268 et seq. This
definition has been confirmed by the General Court in Case T-604/18 Google Android, EU:T:2022:541,
see e.g., paragraphs 161 and 222.
EN 79 EN
(265) Developers that wish to distribute their apps through the App Store must enrol in the
Apple Developer Program and pay an annual fee of USD 99
419
. They must agree to
Apple’s standard, non-negotiable License Agreement and the Guidelines. The
License Agreement sets out the terms under which Apple grants developers a limited
license to use the Apple software and services to develop and test their applications
and use specific Apple software (e.g., its Software Development Kits or SDKs).
Apps meeting Apple’s documentation and program requirements (as set out under
the License Agreement) may be submitted to Apple to be reviewed and for beta-
testing.
(266) The License agreement also contains details regarding the use of Apple’s Application
Programming interfaces (APIs), including the so-called In-app Purchase API.
420
It
specifies that all use of Apple’s “In-App Purchase API” must be in accordance with
the License Agreement.
421
Section 3.3.3 provides: “Without Apple’s prior written
approval or as permitted under Section 3.3.25 (In-App Purchase API), an
Application may not provide, unlock or enable additional features or functionality
through distribution mechanisms other than the App Store, Custom App Distribution
or TestFlight.” Schedule 2 to the License Agreement contains additional rules, which
apply to apps offering paid digital content or functionality. According to these rules,
the In-App Purchase API may only be used to enable end-users to access or receive
content, functionality, or services made available for use within an app (e.g., digital
books, additional game levels, access to a turn-by-turn map service). It may not be
used to offer goods or services to be used outside of the app.
(267) App developers must submit to Apple for review and approval all content,
functionality, or services that app developers plan to provide through the use of the
In-App Purchase API and they are prevented from using Apple’s in-app purchase
system to enable an end-user to set up a pre-paid account to be used for subsequent
purchases of content, functionality, or services, or otherwise create balances or
credits that end-users can redeem or use to make purchases at a later time.
(268) The Guidelines define detailed conditions that apps must meet to be eligible for
inclusion in the App Store. Distribution of free apps (with free content) is subject to
the standard License Agreement only, whereas apps which are offered for a fee or
which offer fee-based content (through the use of the In-App Purchase API) are
additionally subject to a separate agreement with Apple called Schedule 2.
422
Schedule 2 requires developers to appoint Apple Distribution International Limited
as a commissionaire for the distribution of apps (and digital content sold within those
apps), the sale
423
of which entitles Apple to a commission of 30 % of the price paid
by end users (in the case of auto-renewing subscriptions this fee is reduced to 15 %
after one year of paid subscription).
424
(269) Consumers that use Apple’s App Store are covered by different contracts, notably the
Apple Media Services Terms and Conditions as well as Apple’s end user license
419
Unless Apple waives the fee for the developer in question.
420
According to the License Agreement, this means the documented API, which enables additional
content, functionality or services to be delivered or made available for use within an application with or
without an additional fee, see License Agreement, ID 3015.
421
Section 3.3.25 of the License Agreement, ID 3015.
422
Schedule 2 to the License Agreement, ID 3028.
423
Technically, the end user obtains a license to use the respective app.
424
Sections 1.1 and 3.4 (a) of Schedule 2 to the License Agreement, ID 3028.
EN 80 EN
agreement (EULA).
425
According to Section 4.1 of Schedule 2 to the License
Agreement, Apple does not obtain any ownership in the apps and consumers
typically obtain end user licenses directly from the developers unless the developer
decides not to furnish its own end user license agreement (see Section 4.2 of
Schedule 2).
(270) There are thus two different user groups on the two sides of the platform - developers
and end users - to which different services at different prices are provided based on
different contractual relationships with Apple. A developer cannot use the service
offered by Apple under its end user agreements and an end user cannot use the
services of Apple under the License Agreement.
(271) Moreover, demand considerations on the two sides of the App Store differ. Whereas
end users typically use either an Android or an Apple smart mobile device, with a
corresponding app store pre-installed and therefore single-home, developers that
wish to offer their apps to the users of the two relevant smart mobile OS, which
together represent close to 100 % of active smart mobile device users, need to multi-
home, and offer their apps on both iOS and Android.
426
While a consumer can in
principle – and subject to monetary and non-monetary switching costs – consider
switching away to a smart mobile device with a different app store,
427
delisting an
app from the App Store is not a credible option for a developer of a music streaming
app as it would mean losing access to more than […]
428
users of smartphones and
more than […]
429
users of tablets in the EEA.
(272) The Commission therefore concludes that the two sides of the platform constitute
separate markets where the developer facing side is distinct from the consumer
facing side. The prices and conditions Apple applies, the competitive constraints and
the substitution patterns differ between these two sides of the App Store. The
425
Apple’s response to question 14 of the Commission’s request for information (2019/050361), ID 268-1.
This contract applies to all media products accessed through Apple’s services and is thus not limited to
the App Store. The Terms and Conditions vary slightly by country based on local law and can be found
at https://www.apple.com/legal/internet-services/itunes/, accessed on 11 December 2020, ID 1061. For
the EULA see https://www.apple.com/legal/internet-services/itunes/dev/stdeula/, accessed on
12 January 2022, ID 2209.
426
See further in Section 8.1.4.1.3 on the substitutability of iOS and Android from the perspective of music
streaming app providers as well as for example the “Mobile ecosystems market study final report” of
the Competition and Markets Authority (CMA), pages 121 et seq., ID 2431, accessed on 14 June 2022.
While in general app developers, and in particular large and successful app developers, strive to be
present on both smart mobile ecosystems, there are differences in the range and prices of apps on
Android and iOS. In particular, there is a share of apps that is available in one smart mobile operating
system only. This can be seen in the number of total apps available in the Google Play Store (which
offers more than 3 million apps) and the App Store (which offers more than 2 million apps), ID2415,
accessed on 10 December 2021. Also, certain Apple proprietary apps such as the Safari browser or
FaceTime are not available on Android. See also https://www.pcmag.com/news/the-best-ios-only-apps,
accessed on 29 April 2022, ID 2343, listing 14 third-party iOS apps not available on Android. Finally,
app prices and in-app purchase conditions may differ for the same app on iOS and Android.
427
On the difficulties of switching by consumers, see Section 8.2.2.5.2.1.
428
The figure is based on forecasted figures provided by Apple for the installed iOS smartphone base in
the EEA in 2022, ID 2992. It excludes the installed base for the UK which is estimated to be more than
26 million users as well as Republic of Cyprus, Iceland, Liechtenstein, and Malta for which Apple
claimed to have no data.
429
Figure based on forecasted figures provided by Apple for the installed iOS tablet base in the EEA in
2022 (excluding not only UK with an installed base of more than […] users, but also Bulgaria, Croatia,
Republic of Cyprus, Estonia, Iceland, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Romania,
Slovakia, Slovenia, for which Apple claimed to have no data), ID 2993.
EN 81 EN
question whether developers have viable alternatives to the App Store requires a
different analysis than the question whether consumers have alternatives.
(273) This case concerns the Anti-Steering Provisions that Apple applies vis-à-vis
developers, which offer their music streaming apps to iOS users. It is precisely on
this side of the two-sided platform where Apple holds significant market power. The
Commission therefore analysed demand and supply side substitutability from the
perspective of developers of music streaming apps. Potential constraints from the
consumer facing side of the platform on Apple’s market power vis-à-vis developers
have been taken into account in Section 8.2.2.5.
(274) Moreover, as this Decision concerns the conditions for the distribution of music
streaming apps, it focuses on a subset of apps available for iOS devices. At present,
there are 1.8 million apps available worldwide for download in the App Store.
430
Apple can and does apply different App Store conditions to different categories of
apps. For example, Apple does not charge any fee beyond the Apple Developer
Program fee of USD 99 to developers of apps that finance themselves through
advertising, such as Facebook, or which relate to the sale of goods or services that
are consumed outside of the app, such as eBay or Deliveroo, whereas it charges a
30 % / 15 % commission fee for all apps that sell digital content or services to be
consumed within the app. As this Decision analyses Apple’s practices related to the
distribution of music streaming apps, the analysis of the relevant market is conducted
from the perspective of developers of music streaming apps, although the underlying
considerations may not necessarily differ depending on the type of apps, given that
the App Store is the only conduit through which native apps can be distributed to iOS
users and that all developers that wish to sell native apps to iOS users have do so
through Apple’s App Store.
8.1.4.1.2. Assessment of Apple’s arguments
(275) In its Responses to the Statement of Objections of 28 February 2023 and to the Letter
of Facts, Apple submits that the Commission wrongly focuses on app distribution
and fails to identify the relevant market for assessing Apple’s conduct. According to
Apple, the relevant market would be the market for the sale of music streaming
subscription, which would include the purchases of subscriptions not only via IAP
but also outside of the apps.
431
(276) The Commission disagrees with this view and considers that the relevant market in
this case is the market for the provision to developers of platforms for the
distribution of music streaming apps to iOS users.
(277) In its Responses to the Statement of Objections of 28 February 2023 and to the Letter
of Facts, Apple has not addressed the issue of substitutability of other channels from
a music streaming service provider perspective. As explained in Section 8.1.4.1.3,
there is a separate demand of music streaming service providers to distribute their
apps on the App Store from that of selling music streaming subscriptions. Music
streaming service providers need to offer a native app to users irrespective of where
430
See https://www.apple.com/app-store/, accessed on 16 November 2023, ID 3201.
431
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 124 to 129,
and Apple’s Response to the Letter of Facts, ID 3330, paragraphs 173 to 178. Apple had brought
similar arguments its Response to the Statement of Objections of 30 April 2021, ID 2165, which it still
considers applicable (see Apple’s Response to the Statement of Objections of 28 February 2023, ID
2800, footnote 160).
EN 82 EN
those users have purchased the subscription and irrespective of whether they offer
premium subscriptions in their app or not, as smart mobile devices constitute by far
the most important means of consumption of music streaming services. Moreover, as
explained below, music streaming service providers must also distribute their app on
each of the two main operating systems for smart mobile devices and there are no
alternative channels to Apple’s App Store to distribute their music streaming apps to
iOS users. Therefore, alternative channels for the sale of subscriptions cannot
substitute the distribution of native apps to iOS users from the music streaming
service providers’ perspective.
8.1.4.1.3. Demand side substitution
(278) The market investigation showed that it is not commercially viable for providers of
music streaming services to offer their services without having a native app which
users can download and install on their smart mobile devices.
(279) While consumers can stream music on a number of different devices ranging from
desktops to certain hardware such as smart speakers, smart watches, smart TVs, cars,
etc., smart mobile devices and in particular smartphones constitute by far the most
important device for the consumption of streamed music. Spotify estimated that the
percentage of its global monthly active users (“MAUs”) accessing its music
streaming services with at least one stream on the corresponding platform was as
follows: [80-90] % via mobile; [10-20] % via desktop; [10-20] % via tablet; [0-10] %
via speakers and [0-10] % via other channels.
432
SoundCloud explains: “Users of
smart mobile devices account for approximately 85 % of our logged-in users”
433
and
88 % of total listening activity of SoundCloud users measured across all territories in
which it is active took place in native apps for iOS and Android.
434
94 % of the
activity of the users of Napster’s music streaming service is related to its mobile app,
whereas only 6 % of activity takes place through other channels such as smart
speakers, Smart TVs or PCs.
435
For Apple Music, in 2022 […] of music streaming
activity took place via smart mobile devices compared to […] in desktop products
and […] in other channels (including voice assistants, connected TVs, cars,
connected sound systems wearables and other devices).
436
The only provider of
music streaming services for whom smart mobile devices were not the most
important channel of music consumption (but still a very important channel) was
Amazon, as the majority of consumption of its music streaming offer takes place via
other channels than mobile or desktop, which can be explained by the popularity of
Amazon’s proprietary products such as its Echo smart speakers and Fire TV.
437
(280) Music streaming consumption on smart mobile devices takes place almost entirely in
native apps. The mobile browser or browser-based streaming solutions such as web-
based apps do not play any relevant role for the consumption of music streaming on
432
[…].
433
SoundCloud’s response to question 6 of the Commission’s request for information (2019/048728), ID
1369.
434
SoundCloud’s response to question 7 of the Commission’s request for information (2019/048728), ID
1369.
435
Napster’s response to question 7 of the Commission’s request for information (2019/048724), ID 1345.
436
Apple’s response to question 11 of the Commission’s request for information of 3 August 2023,
ID 3007.
437
Amazon’s response to question 7 of the Commission’s request for information (2019/048673), ID 1336.
EN 83 EN
mobile devices. Web-based apps
438
are programs that communicate with the user via
http (hypertext transfer protocol) without accessing the mobile OS. HTTP is the
protocol typically used by webservers and browsers to communicate. Web-based
apps are accessible through the browser like a regular webpage, but typically offer
more opportunities for interaction with the device’s functionalities and a better
mobile experience than an ordinary website.
439
They are typically only usable with
an active internet connection. For a number of technical reasons web-based apps are
inferior to native apps. They have fewer options for unique functions (e.g., cannot
access the hardware of a device such as a camera), are not saved on the device and in
the case of iOS cannot be accessed offline.
440
Web-based apps are also lacking a
central distribution point where consumers could find apps and access them.
441
(281) The Commission’s investigation showed that web-based apps or other browser-based
solutions are not an alternative for providers of music streaming services that could
replace a native app. Native apps are considered to be faster and more responsive
than web-based apps, allowing also offline audio streaming functionalities which are
typically a key feature of premium (paid) music streaming services.
442
(282) For Apple Music which offers browser-based streaming of its service on iOS devices
since 2019, only less than […] of users in the EEA have elected to make use of this
possibility.
443
(283) Information provided by Spotify showed that its browser-based mobile web player
which was introduced in 2018 only plays a minimal role [0-10] % for the
consumption of music on smart mobile devices whereas the large majority takes
place in Spotify’s native smartphone app [80-90] %.
444
(284) As Amazon explains, “web-based app have a number of limitations including that
they are slower, less interactive and less intuitive than native apps at this time. For
example, it would not be possible today for customers to download music for offline
use from a web-based app.”
445
Accordingly, Amazon does not offer its music
streaming services via a mobile browser due to the poor functionality.
446
(285) Deezer who is one of the music streaming service providers which offers a web-
based app in addition to its native app explains that “the volume of our web-based
mobile app users is negligible compared to the app one in EEA. Usage is
438
More advanced web-based apps which offer some additional functionalities compared to traditional web
apps are also referred to as “Progressive web apps”.
439
See ACM “Market study into mobile app stores”, accessed on 12 November 2020, ID 886, page 43/109.
440
See ACM “Market study into mobile app stores”, accessed on 12 November 2020, ID 886, page 42-
43/109.
441
See ACM “Market study into mobile app stores”, accessed on 12 November 2020, ID 886, page 42-
43/109.
442
See Spotify’s response to question 11 of the Commission’s request for information (2020/002646),
ID 1431-2; SoundCloud’s response to question 8 of the Commission’s request for
information (2020/029332), ID 1370; Napster’s response to question 19 of the Commission’s request
for information (2019/048724), ID 1345.
443
See response by Apple to question 28 of the Commission’s request for information (2022/004722), ID
2232.
444
Spotify response to question 2 of Commission's request for information of 25 September 2023, ID 3097,
for the 30-day period until 31 December 2022.
445
See Amazon’s response to question 19 of the Commission’s request for information (2019/048673),
ID 1336.
446
Amazon’s response to question 19 of the Commission’s request for information (2019/048673), ID
1336.
EN 84 EN
concentrated on the App Store. According to us, a distribution of a web-based app is
not an alternative.”
447
Between 2015 and 2018 consistently more than 99 % of
Deezer’s subscribers (free and premium) using streaming services via mobile devices
(incl. tablet) did so via the (native) mobile app and less than 1 % via the mobile
browser.
448
(286) Napster does not offer a browser-based streaming solution and all mobile streaming
takes place through native apps.
449
Napster explains in its response that “Users are
accustomed to using apps to access subscription services. We would be at an
impossible competitive disadvantage if we did not offer an iOS app. Over 90 % of
use of the Napster service is through apps. If we stopped offering the iOS app, a web-
browser solution would not be an adequate substitute. If Napster did not offer an iOS
app, it would also impact our ability to seek and maintain distribution partnerships
with Telco operators (e.g. SFR and Telefonica), and to win new business for our
services division.”
450
(287) SoundCloud indicated that it does not offer a logged-in browser-based solution for
listening to its services on mobile devices
451
, so that all mobile consumption by its
subscribers is through the native app.
(288) Web-based apps are typically also inferior to native apps beyond the specific
segment of music streaming apps because of their more limited functionalities.
Indeed, Apple itself does not consider an app offering functionality similar to that of
a webpage as worthy of getting accepted to the App Store; see 4.2 of the Guidelines:
“Your app should include features, content, and UI that elevate it beyond a
repackaged website. If your app is not particularly useful, unique, or “app-like”, it
doesn’t belong on the App Store”.
(289) Providers of music streaming services cannot use alternative channels to Apple’s
App Store to distribute their music streaming apps to iOS users.
(290) Apple’s App Store is the only app store on iOS devices. Apple does not allow native
apps to be downloaded for iOS devices via alternative app stores than the App Store
which music streaming service providers could turn to in order to distribute their
apps to iOS users. According to Section 3.2.2. of the Guidelines, it is prohibited to
create “an interface for displaying third-party apps, extensions, or plug-ins similar to
the App Store or as a general-interest collection”.
452
(291) Apps which have been developed for Google’s Android mobile operating system do
not work on iOS devices, as they have been developed for use on Android with the
ability to use device-specific hardware and software.
453
447
Deezer’s response to question 6 and 19 of the Commission’s request for information (2019/048643), ID
1377.
448
Deezer’s response to question 6 and 19 of the Commission’s request for information (2019/048643), ID
1377.
449
Napster’s response to question 6 of the Commission’s request for information (2019/048724), ID 1345.
450
Napster’s response to question 19 of the Commission’s request for information (2019/048724), ID
1345.
451
SoundCloud’s response to question 6 of the Commission’s request for information (2019/048728), ID
1369.
452
See Section 3.2.2. of the current Guidelines in ID 3011. See also ACM “Market study into mobile app
stores”, accessed on 12 November 2020, ID 886, page 21/109.
453
See https://www.macworld.co.uk/how-to/android-apps-iphone-3671745/, accessed on 3 February 2021,
ID 1226.
EN 85 EN
(292) Sideloading of apps is not a viable alternative for iOS users to the App Store.
Sideloading refers to the practice of downloading software on a smart mobile device
without using the official distribution channel. For iOS devices, it requires
“jailbreaking” the mobile operating system which is only possible for somebody
with sophisticated hacking skills.
454
Apple strongly advises against it and considers it
a violation of the iOS end-user software license agreement and denies service for an
iPhone or iPad that has installed any unauthorised software by way of jailbreaking.
455
Sideloading is therefore not an option for developers to distribute their apps at a
meaningful scale to iOS users.
(293) Also, pre-installation is not a viable alternative for developers to reach iOS users, as
Apple restricts pre-installation to its own apps and does not pre-install third-party
apps.
(294) The Commission also preliminarily considers that the distribution of apps via app
stores on other smart mobile OS, in particular on the Google Play Store as the major
app store available for Android, is not a substitute from the perspective of developers
of music streaming apps and therefore does not form part of the relevant product
market.
(295) As smart mobile device users tend to use only one single device and the use of
multiple smart mobile devices running on different smart mobile operating system to
access music streaming services by end-users is rare, music streaming service
providers have no choice but to multi-home and offer their apps on both relevant
mobile OS, i.e., iOS and Android. These findings are confirmed by the following
evidence.
(296) First, […].
456
[…].
(297) Second, Amazon provided internal data showing that only [≤10 %] of the users of its
music services tend to use both an iOS and Android device to access the service
within a month. The vast majority of users ([70-80 %]) use a single operating system
to access the service.
457
Amazon added that “Not being present in the Apple App
Store would limit the options Amazon has to serve customers and potential customers
who only use iOS…Not having an iOS app would make Amazon less competitive as
some customers would not accept a service without one.”
458
This shows that the large
majority of Amazon’s users do not use both iOS and Android based devices. In the
same vein, Napster indicated that in the EEA, 86 % of their users access the Napster
service on a single device, while only 14 % of its users used two or more devices.
459
454
Lorenzo Franceschi-Bicchierai and Brian Merchant, “The Life, Death, and Legacy of iPhone
Jailbreaking”, Vice, 28 June 2017, available at https://www.vice.com/en_us/article/8xa4ka/iphone-
jailbreak-life-death-legacy, accessed on 15 January 2021, ID 1128.
455
See https://support.apple.com/en-us/HT201954, accessed on 16 December 2020, ID 1079.
456
[…].
457
Amazon’s response to question 15 of the Commission’s request for information (2019/048673), ID
1336.
458
Amazon’s response to question 11 of the Commission’s request for information (2019/048673), ID
1336.
459
Napster’s response to question 5 of the Commission’s request for information (2020/029321), ID 1344
and to question 15 of the Commission’s request for information (2019/048724), ID 1345.
EN 86 EN
(298) Third, the most popular apps (except the majority of Apple’s proprietary apps) are
typically available on both Android and iOS.
460
Since smart mobile device users
single-home, developers need to multi-home on both smart mobile OS. They cannot
simply delist apps on the App Store (or the Google Play Store) to divert business to
the other because this would lead to the loss of access to the entire user group of the
smart mobile OS. It also means that they would not stop offering an app on one of
the two main smart mobile operating system (iOS and Android) simply because it
becomes relatively less successful.
(299) Fourth, the CMA found in its Mobile ecosystems market study final report of June
2022 that users generally do not have both an iOS and an Android device and for the
UK, “80 % of users appear to only use one smartphone and evidence suggests that
even when users are purchasing an additional smartphone rather than replacing
their existing one, it is normally one using the same operating system” and that
ownership across smart mobile operating system when considering smartphones and
tablet appears to be still very low.
461
(300) As only few customers multi-home at the smart mobile operating system level, and
as the App Store is the only available app store for iOS devices, it has become the
access point to iOS users. App stores available for Android devices cannot be
considered as alternative means of accessing the same market.
462
Whilst the two
main app store operators may compete to some extent with one another for
consumers at the level of smart mobile devices, developers must be present in both
app stores or be limited to a subsection of the market. The App Store therefore
allows – from a developers perspective – access to an entirely different customer
group than the Google Play Store. Any switch of a developer to an alternative smart
mobile operating system would involve losing access to iOS users.
(301) It is noteworthy that despite having faced an additional 30 % costs (during the first
year of subscription) for in-app subscriptions distributed to iOS users compared to
Play Store users on Android devices (which for a long time tolerated web-based
checkout mechanism), none of the music streaming service providers in the EEA
decided to limit the availability of their music streaming apps to Android users
only.
463
This shows in itself that developers of music streaming apps could not react
460
See in particular “Mobile ecosystems market study final report” of the Competition and Markets
Authority (CMA), accessed on 14 June 2022, ID 2431, page 121: “we have estimated that 85% of the
top 5,000 apps on the App Store also list on the Play Store and vice-versa” and “Apple told us that
popular and successful app developers almost universally choose to multi-home, that is, make their
apps available on both Android and Apple devices”. See also Commission decision of 18 July 2018 in
Case AT.40099 – Google Android, paragraph 303 according to which “app developer generally multi-
home between the Play Store and the App Store and do not need to switch away from Google Android”
and paragraph 555.
461
See with further evidence “Mobile ecosystems market study final report” of the Competition and
Markets Authority (CMA), accessed on 14 June 2022, ID 2431, page 41.
462
As the Netherlands Authority for Consumers & Markets puts it in the ACM “Market study into mobile
app stores”, accessed on 12 November 2020, ID 886, page 52/109: “Multi-homing is important for most
app providers, because the app provider can reach over 99 % of all smartphone users when their app is
submitted in both the Play Store and the App Store. If they offer their app only for a single app-
ecosystem, they miss out on a very important part of their potential audience. In fact, they miss out on a
whole market since Android users are different from iOS users, they could be viewed as separate
markets.”
463
Only Spotify and Google Play Music decided to disable in-app purchase via IAP and to rely on the
possibility of iOS users to subscribe elsewhere than in the iOS app. This shows that at most, developers
can decide to disable in–app subscriptions, for example if they have a strong brand name or if they have
EN 87 EN
to significant price differences simply by switching app distribution to Android
devices.
(302) The investigation carried out in the present case has indicated that it is not an option
for music streaming service providers – all of which offer native apps for both iOS
devices as well as for Android devices – to delist their apps from the App Store and
offer an app for Android devices only as it is of primary commercial importance for
them to be present on both iOS and Android OS.
464
As Napster puts it: “Yes, the
Napster service is necessarily available on both the iOS and Android platforms.
Availability on both platforms is an absolute requirement for the service, because all
other services are available on both platforms. Our users are split 40/60 in favour of
Android, but we could risk losing at least the 40 % of customers if we could not offer
the iOS app.”
465
Deezer explains: “Deezer streaming services are mostly used via an
app for mobile device. Therefore, we must allow our users to access the services via
an app for mobile device regardless of the type of OS run by their mobile device. The
mobile market being significantly shared between iOS and Android, we have no
choice but to offer music streaming apps on both iOS and Android. Both iOS and
Android are the main gateways to access to the consumers.”
466
In the same vein,
Qobuz explains: “We offer our service on both iOS and Android. Given the
dominance of these 2 systems, it is not possible not to be present on either iOS
neither Android.”
467
(303) Spotify explains the necessity for a provider of music streaming services to multi-
home on both mobile OSs in the following way: “the primary mode of audio
streaming consumption is through mobile devices (both Android and iOS).
Maximising access to users on their mobile devices is therefore critical for
audio/music streaming providers. In addition, for the reasons listed below, it is vital
for music streaming services to be present on both iOS and Android in order to gain
scale. In Spotify’s experience, iOS and Android users are distinct groups of users
who can only be reached on the iOS and the Android platform respectively, for the
following reasons:
(a) First, as Spotify has noted previously, users typically use a single mobile
platform (single homing).
(b) Second, users show a significant degree of loyalty towards their existing smart
mobile OS. In Case AT.40099 – Google Android, the Commission cited
privileged access to customers through their own platform, but they cannot avoid having an app for iOS
devices.
464
See Spotify’s response to questions 14 and 15 of the Commission’s request for information
(2020/002646), ID 1431-2; SoundCloud’s response to question 11 of the Commission’s request for
information (2019/048728), ID 1369; Napster’s response to question 11 of the Commission’s request
for information (2019/048724), ID 1345; Deezer’s response to question 11 of the Commission’s request
for information (2019/048643), ID 1377; Amazon’s response to question 11 of the Commission’s
request for information (2019/048673), ID 1336; Google’s responses (for Google Play Music and
YouTube Music to question 11 of the Commission’s request for information (2019/048734) and request
for information (2019/048689), IDs 1357 and 1356; Qobuz’s response to question 11 of the
Commission’s request for information (2019/110473), ID 497.
For Tidal, who has not provided information to the Commission in the course of the investigation, see
https://offer.tidal.com/download?lang=de, accessed on 16 December 2020, ID 1030.
465
Napster’s response to question 11 of the Commission’s request for information (2019/048724), ID
1345.
466
Deezer’s response to question 11 of the Commission’s request for information (2019/048643), ID 1377.
467
Qobuz’s response to question 11 the Commission’s request for information (2019/110473), ID 497.
EN 88 EN
research estimating that in 2015, 82 % of Google Android smartphone users
purchasing a new smartphone decided to purchase a Google Android device.
The equivalent figure for iOS users was 78 %.
(c) Finally, iOS users and Android users exhibit different spending behaviour, with
the average iOS user spending more on apps than the average Android user.”
468
(304) All providers of music streaming services have therefore developed apps for both
iOS and Android and offer their apps on both OS. Apple and Google have captured
such a large proportion and volume of smart mobile device users that access to both
smart mobile operating system is a necessity for music streaming app providers.
Offering their app on Android only would significantly reduce their customer reach
as access to iOS users would be cut off. In the EU, this would not only mean that
access to more than 30 % of European smartphone users and more than 50 % of
tablet users would be lost.
469
It would also frustrate iOS users which have acquired a
music streaming subscription outside the iOS app and which expect to be able to
consume music on the smart mobile device of their choice. Not offering an iOS app
would also significantly impact the revenues of music streaming app providers in
view of the fact that iOS users tend to spend much more money for apps (and for
paid functionalities within the apps) than Android users, as can be seen from Figure
13.
470
468
Spotify’s response to question 15 of the Commission’s request for information (2020/002646), ID
1431-2.
469
See Section 8.2.2.5.2.1.
470
See also Matt Asay, “Why developers focus on ‘loser’ iOS over ‘winner’ Android”, Inforworld,
1 March 2018, available at https://www.infoworld.com/article/3257933/why-developers-focus-on-loser-
ios-over-winner-android.html, explaining that the average mobile app makes four times more revenue
on iOS than Android and the App Store generates twice as much revenue for developers, despite having
half as many downloads as the Google Play Store, accessed on 16 December 2020, ID 1094.
EN
89
EN
Figure 13 – Consumer spending on mobile apps in Europe from 2019 to 2022
471
(305) From the perspective of developers of music streaming apps, offering an Android
app is therefore not a substitute for offering an iOS app.
(306) Other mobile operating system are equally not a substitute to iOS. The commercial
relevance of these smart mobile operating system is limited as they only provide
access to an insignificant group of customers. These alternative smart mobile
operating system are gradually disappearing (like Blackberry, Microsoft Windows
phone or Symbian)
472
or no longer have any meaningful relevance for providers of
music streaming services as they represent less than 1 % of smart mobile operating
system in the EEA.
473
(307) Lastly, while music streaming service providers are allowed to grant their users
access through their iOS app to content previously purchased outside that app,
474
this
471
See Statista ‘Consumer spending on mobile apps in Europe from 2019 to 2022, by app store (in billion
U.S. dollars’, https://www.statista.com/statistics/1284273/mobile-app-annual-consumer-spending-
europe-by-platform/, accessed on 13 September 2023, ID 3179.
472
Blackberry stopped supporting mobile devices using its operating system as of 4 January 2022 (see
https://www.blackberry.com/us/en/support/devices/end-of-life, accessed on 29 April 2022, ID 2344.
Windows ended support to its last mobile operating system (Windows 10 Mobile) on
10 December 2019 (see https://support.microsoft.com/en-us/windows/windows-10-mobile-end-of-
support-faq-8c2dd1cf-a571-00f0-0881-bb83926d05c5, accessed on 29 April 2022, ID 2345). Nokia
announced in 2011 that it would stop using Symbian as its mobile operating system in favour of
Windows Phone (see https://www.zdnet.com/article/android-before-android-the-long-strange-history-
of-symbian-and-why-it-matters-for-nokias-future/, accessed on 29 April 2022, ID 2346).
473
See Section 8.2.2.5.2.1.
474
This ability existed already before 2011 and has since then been “codified” by Apple in the Guidelines
through the “reader rule” and, since 2018, the “multiplatform rule”.
EN 90 EN
possibility does not provide a substitute for developers of music streaming services
to use Apple’s App Store for the distribution of their apps to iOS users, as developers
need to offer an app to a user irrespective of where that user has purchased a
subscription to its paid music streaming service. The operation of the App Store as
the sole distribution platform for native apps for iOS devices provides Apple with
full control over the terms of access between consumers and developers of such
native apps. In order for Apple to accept their apps to the App Store, music streaming
service providers have to abide by all the rules that Apple imposes on developers in
the License Agreement and the Guidelines, including with respect to the conditions
of sales of digital content or services within their apps.
(308) The Commission therefore concludes that there are no other alternatives to Apple’s
App Store available that could serve as substitutes for music streaming service
providers to the distribution of native apps via Apple’s App Store. Distributing apps
via the Google Play Store or other app stores to Android users is not a viable
alternative for developers of music streaming apps as they would forego access to an
important separate customer group (the iOS users) which typically spends more
money on apps and in-app purchases than Android users.
8.1.4.1.4. Supply side substitution
(309) There are no alternative suppliers of app distribution platforms that could provide a
similar distribution platform to developers like the App Store in the short term and
without incurring significant costs. Apple has a tight control over its ecosystem and
prevents any other company from offering an alternative iOS-compatible app store.
Section 3.2.2. (i) of the Guidelines (entitled “Unacceptable”) prohibits: “Creating an
interface for displaying third-party apps, extensions, or plug- ins similar to the App
Store or as a general-interest collection.”
475
It is therefore fully in Apple’s discretion
to allow competition by alternative suppliers of app distribution platforms or services
to iOS users. The relevant product market can therefore not be broadened based on
supply side considerations.
8.1.4.2. The geographic scope of the market
(310) The Commission considers that the market vis-à-vis developers for the provision of
distribution platforms for music streaming apps to iOS users is EEA-wide. Apple’s
license agreements with developers as well as the Guidelines which explicitly
prohibit alternative app stores for iOS devices are the same throughout the EEA. The
market investigation indicated that the conditions set by Apple for access to the App
Store for music streaming app providers do not differ in a meaningful way between
Member States. Apple’s market position as the sole provider of an app store
available for developers that wish to distribute their apps to iOS users is the same
throughout the EEA. While developers can choose to offer their apps in multiple App
Store “storefronts” and thus in multiple countries, evidence in the file indicates that
Apple does typically not review apps or app updates on a country-by-country basis.
Rather it frequently requests that developers confirm that the apps submitted for
review look and behave identically in all languages and across all devices.
475
Any third-party app acting as an app store for native apps for iOS devices will be rejected by Apple on
this basis, see 3.2.2. of the current Guidelines in ID 3011.
EN 91 EN
8.1.4.3. Conclusion on the relevant market
(311) The Commission concludes that the relevant product market is the market for the
provision to developers of platforms for the distribution of music streaming apps to
iOS users (i.e., the developer facing side of the two-sided App Store platform) and
that from a geographic perspective that market is EEA-wide.
8.1.5. Market for music streaming services
8.1.5.1. The relevant product market
(312) Music can either be distributed via the sale of a tangible medium embodying the
sound recording (such as a physical CD or a vinyl record) or digitally online. Within
the latter category, the two main modes of digital music distribution are download
(which typically constitute “à la carte” purchases) and the provision of streaming
services. Music download services involve the purchase and storage of a digital copy
of the sound recording on an electronic device,
476
while streaming services involve
the delivery of small data packets over the internet with playback commencing as
soon as this streaming has started.
477
(313) In its previous decisional practice, the Commission has – in the context of merger
cases – multiple times dealt with music distribution in general, and with digital music
distribution in particular. In the past it considered physical sales of music to be in a
separate market compared to digital sales of music.
478
With respect to a potential
segmentation of digital music distribution services into separate product markets for
downloading services and music streaming services, the Commission has in past
cases left the ultimate market definition open, while pointing to some evidence that
boundaries between downloading and streaming services were becoming blurred.
479
That said, in Apple/Shazam, the market investigation results indicated that some
music streaming service providers would not consider themselves to be in a position
to start offering digital music downloading services in the short term or without
incurring significant investments.
480
8.1.5.1.1. Demand side substitution
(314) The Commission’s investigation confirmed that music streaming services are from a
demand-side perspective only to a very limited extent substitutable with physical
distribution of music. Compared to physical distribution, music streaming services
have much less capacity constraints and can also offer access to less popular/known
artists.
481
Consumers can therefore use music streaming services to get access to
songs which they will not find in most physical retail shops due to manufacturing
and storage capacity constraints. Subscribers to music streaming services frequently
access the services via their mobile devices, which indicates that access on demand
476
Commission decision of 21 September 2012 in Case M.6458 – Universal Music Group/EMI Music,
paragraph 58; Commission decision of 25 July 2014 in Case M.7290 – Apple/Beats, paragraph 17.
477
Commission decision of 21 September 2012 in Case No COMP/M.6458 – Universal Music Group/EMI
Music, paragraph 59; Commission decision of 25 July 2014 in Case M.7290 – Apple/Beats, paragraph
17.
478
See Commission decision of 3 October 2007 in Case M.3333 – Sony/BMG, paragraph 27.
479
See Commission decision of 25 July 2014 in Case M.7290 – Apple/Beats, paragraph 18; Commission
decision of 6 September 2018 in Case M.8788 – Apple/Shazam, paragraph 94.
480
Commission decision of 6 September 2018 in Case M.8788 – Apple/Shazam, paragraph 95.
481
See Deezer’s response to question 16 of the Commission’s request for information(2020/029315), ID
1379.
EN 92 EN
and portability of music are important features for them, both of which are not
available to the same extent for physically distributed music.
482
The difference of
digital distribution of music to physical distribution is much more pronounced for
music streaming services where users do not obtain “ownership” of individual
albums or songs, but “access” to a large music catalogue. The user experience and
the value proposition for consumers is therefore fundamentally different.
483
A music
streaming subscription provides instant access to a catalogue of millions of songs
without a need to pay for each recording, but at the end of the subscription terms, the
customer does not “own” anything. Conversely, physical distribution provides
ownership of the music and an indefinite possibility to listen to a song or album,
once purchased, besides the possibility to make private copies (within the limits
allowed by the law). In this respect, the underlying economics of an end user are very
different between physical distribution on the one hand and music streaming on the
other hand.
(315) The Commission’s investigation has shown that the majority of providers of music
streaming services
484
consider physical distribution to be different from a consumer
perspective in terms of price and in terms of offering from music streaming services.
(316) With respect to the question whether music downloading services and music
streaming services are substitutable from a demand side perspective, it is correct that
most providers of music streaming services offer a download/offline listening
functionality which allows subscribers to listen to downloaded songs or to songs
included in playlists while also being offline. However, such options are only
accessible for the term of duration of a valid subscription, and they do not require
any additional payment per track downloaded (album or single). They are therefore
an additional feature of a music streaming subscription to enhance the user
experience and allow offline consumption. The value proposition to consumers and
the user experience is very different between downloading and streaming. As Deezer
puts it: “the user experience is completely different. By paying a time limited
subscription, users of streaming services have access in one click, anytime,
anywhere, to a massive catalogue. There is no need to pay for each recording, but at
the end of the subscription term, customers do not own anything. With respect to
music download services, music files are owned by consumers and can be
used/listened indefinitely without any additional payment. […] we believe that it is
not appropriate to compare a one-time definitive purchase with a monthly
subscription, since the offerings are extremely different. Music download services
482
SoundCloud’s response to question 23 of the Commission’s request for information (2020/029332), ID
1370.
483
Deezer’s response to question 16 of the Commission’s request for information (2020/029315), ID 1379.
484
SoundCloud’s response to questions 23 and 24 of the Commission’s request for information
(2020/029332), ID 1370; Deezer’s response to questions 16 and 17 of the Commission’s request for
information (2020/029315), ID 1379; Qobuz’s response to question 10 of the Commission’s request for
information (2020/029326), ID 594; Napster’s response to question 23 of the Commission’s request for
information (2020/029321), ID 1344. Only Amazon, which has started as a physical distributor of
music before offering music downloads in 2008 and music streaming in Europe in 2015, and Google
argue that physical and digital forms of distribution (including both downloads and music streaming
services) do not differ significantly as the intended use and the audio quality is comparable across the
different formats, see Amazon’s response to questions 11 and 12 of the Commission’s request for
information (2020/029308), ID 1342; Alphabet’s response to question 12 of the Commission’s request
for information (2020/034718), ID 1358.
EN 93 EN
are much more comparable to physical distribution of music.”
485
While theoretically
the price of an album of e.g., 10 songs may therefore be comparable to a monthly
subscription fee of EUR 10, the value proposition and the underlying economics for
end consumers differ significantly as one is an access-based business model relying
on subscription payments (or ad-based monetisation) while the other is an
ownership-based business model relying on the payment of a one-time purchase
price.
486
(317) Qobuz explains that: “There is a relation since they offer the possibility to buy/listen
to the same content, but streaming is attractive to end users who want to listen to a
massive catalogue of titles when download offers them the possibility to own their
favourite content while they can listen to it permanently. It is part of the new trend of
consumption, subscription to services versus full ownership.”
487
(318) Napster does not consider music streaming and music download “comparable in
terms of price” and considers that consumers typically do not switch from “music
streaming services to purchasing downloads, especially since most streaming
services allow the user to download tracks for offline playback”.
488
This observation
is in line with a long-term trend in the music distribution industry towards music
streaming services and away from ownership-based models, including from
downloads.
489
(319) The market investigation supported such a long-term trend in the music distribution
industry towards music streaming services and away from ownership based models
of physical distribution and – more recently – also away from music downloading
services.
490
[…]
491
8.1.5.1.2. Supply side substitution
(320) From a supply side perspective, the market investigation has shown that the
distribution of sound recordings on physical media such as CDs or vinyl records,
music downloading services and music streaming services are very different
businesses.
(321) Music streaming services can typically not be provided by physical distributors or
providers of music downloading services in the short term without incurring
significant costs and risks. Deezer explains that: “Physical distribution of music is a
completely different business, which would need to be built from scratch.
Transforming Deezer into an on-line distributor of records would require to change
a large part of Deezer's staff which is not adapted to physical distribution and has
not the required skills. We would need to negotiate distribution agreements with all
485
Deezer’s response to questions 21 and 22 of the Commission’s request for information (2020/029315),
ID 1379.
486
SoundCloud’s response to question 28 of the Commission’s request for information (2020/029332), ID
1370.
487
Qobuz’s response to question 16 of the Commission’s request for information (2020/029326), ID 594.
488
Napster’s response to question 28 and 29 of the Commission’s request for information (2020/029321),
ID 1344.
489
See Commission decision of 6 September 2018 in Case M.8788 – Apple/Shazam, paragraph 27 et seq.
490
See Section 5.1 and SoundCloud’s response to question 25 of the Commission’s request for information
(2020/029332), ID 1370; Deezer’s response to question 23 of the Commission’s request for information
(2020/029315), ID 1379; Qobuz’s response to question 16 of the Commission’s request for
information (2020/029326), ID 594.
491
ID 1613.
EN 94 EN
physical distributors (which are not the same than the digital distributors). We would
need to build a brand new supply chain and warehouses in some regions over the
world.”
492
Napster explains that switching from music streaming services to offering
physical distribution would “involve additional time, money and resources. It would
require a platform to list the physical products, a network to connect sellers and/or
distributors to consumers, and a massive shipment team and physical location to
deliver and store the product. It would also involve negotiating new license
agreements with all of the labels and rightsholders.”
493
(322) Music streaming services also differ from a supply side perspective to a considerable
extent from services offering downloads of digital music. Deezer explains that: “We
believe that a music download service is much more simple to launch and manage
than a music streaming service which is offered with multiple features. […]
Switching from a music download to a music streaming service would require
substantial changes and technical developments. On the technical side, it is much
more complicated than a download service due to the multiple features offered as a
standard to users (compatibility/integration within third party devices, algorithmic
recommendation, offline listening, lyrics display, social media sharing, etc).
Distribution agreements would need to be negotiated with all content providers and
with all relevant publishers and author societies in all countries where the music
streaming service is available. All of this would require the hiring of many
developers, licensing/legal managers. Moreover, a music streaming service offering
a free tier would require an ad sales team or at least a deal with an advertising sales
agency. For those reasons, it would be very difficult to switch from a music
download to a music streaming service in a short period of time, without incurring
significant costs.”
494
SoundCloud explains that music streaming and music
downloading services “differ in terms of the underlying technology and also the
technical requirements of the required equipment, e.g. storage, connectivity and file
format, as well as the licenses that the service would need to have in place with
copyright holders.”
495
Napster confirms that there are considerable differences
between the supply of a music streaming service and the supply of a download
service as follows: “switching would involve more time, money and resources. We
would need to negotiate new license agreements with hundreds of record labels and
publishers and build out a new portion of our app to sell downloads, as well as build
a new supply chain to ingest the downloads.”
496
(323) While some providers of music downloading services such as Apple and Amazon
with considerable financial resources have succeeded in entering music streaming
services and establishing their own service, such a step constituted either a
492
Deezer’s response to question 19 of the Commission’s request for information (2020/029315), ID 1379;
see also SoundCloud’s response to question 26 of the Commission’s request for
information (2020/029332), ID 1370; “Switching our core operations to physical music is not at all a
strategic option we would entertain. It would not be an acceptable offer for our user base nor does this
match to our company’s internal capabilities.”
493
Napster’s response to question 25 of the Commission’s request for information (2020/029321), ID
1344.
494
Deezer’s response to questions 24 and 25 of the Commission’s request for information (2020/029315),
ID 1379.
495
SoundCloud’s response to question 28 of the Commission’s request for information (2020/029332), ID
1370.
496
Napster’s response to question 30 of the Commission’s request for information (2020/029321), ID
1344.
EN 95 EN
fundamental change to their business model (in the case of Apple) or was a
significant investment into their own ecosystem (in the case of Amazon). Apple,
which was
497
the market leader for music downloading services, decided to acquire
Beats Music, an existing streaming service provider, for an estimated purchase price
of more than USD 400 000 000
498
, in order to facilitate its entry into the music
streaming market. Amazon entered the music streaming market in Europe in 2015
with Prime Music in order to increase the attractiveness of its Prime program as part
of the services made available to the Prime program. Amazon’s catalogue for its
Prime Music offering is more limited (approximately 2 million tracks). Only at the
end of 2016, Amazon launched the stand-alone subscription service AMU.
499
8.1.5.2. The geographic scope of the market
(324) The Commission has in its decisional practice left open whether the geographic
market for digital music distribution services should be considered as national or
EEA-wide.
500
While it observed indications that retail markets for digital recorded
music were national in scope, it also considered that the geographic market could
become larger than national in the future.
501
(325) Competitive conditions continue to differ to some extent across the EEA and
different subscription prices are offered for different Member States. Local music
tastes continue to differ to some extent across the EEA and it remains important for a
music streaming service provider to offer local music which represents a significant
share of the music streamed.
502
(326) However, the market investigation provided several indications that speak for the
geographic scope of the market for music streaming services to be EEA wide. The
same international music streaming service providers are competing across the EEA
with little differences in the services and features offered in a given country.
503
Licensing deals are often concluded on a global basis rather than on a country-by-
497
See for example Credit Suisse Equity research report on Apple Inc. of 24 June 2014, estimating a
worldwide market share of Apple for downloads of 75 %, ID 1632. See also https://perma.cc/C52D-
Y7LD, accessed on 11 December 2020, ID 1120. See also SoundCloud’s response to question 27 of the
Commission’s request for information (2020/029332), ID 1370.
498
See https://www.apple.com/newsroom/2014/05/28Apple-to-Acquire-Beats-Music-Beats-Electronics/,
accessed on 31 March 2021, ID 1474.
499
See Amazon’s response to question 1 of the Commission’s request for information (2019/048673), ID
1336.
500
Commission decision of 21 September 2012 in Case M.6458 – Universal Music Group/EMI Music,
paragraph 235; most recently Commission decision of 6 September 2018 in Case M.8788 –
Apple/Shazam, paragraph 104 et seq.
501
Commission decision of 21 September 2012 in Case M.6458 – Universal Music Group/EMI Music,
paragraph 234; Commission decision of 3 October 2007 in Case M.3333 – Sony/BMG, paragraph 38.
502
Deezer’s response to question 29 of the Commission’s request for information (2020/029315), ID 1379;
SoundCloud’s response to question 35 of the Commission’s request for information (2020/029332), ID
1370.
503
Deezer’s response to question 27 of the Commission’s request for information (2020/029315), ID 1379.
Alphabet’s response to question 24 of the Commission’s request for information (2020/034718),
ID 1358.
EN 96 EN
country basis.
504
Moreover, the majority of the catalogue of the major music
streaming service providers appears to be the same across the EEA.
505
(327) In view of these findings, the Commission considers that for the purposes of this
Decision the geographic scope of the market for music streaming services should be
considered as EEA-wide.
8.1.5.3. Conclusion on the relevant market
(328) The Commission’s market investigation showed that the provision of music
streaming services differs to a significant extent from physical distribution of music
and to some extent from music downloading services both from a demand-side
perspective as well as a supply-side perspective. For the purposes of this Decision,
the Commission therefore examined the unfairness of the Anti-Steering Provisions
vis-à-vis users of music streaming services and will exclude from this analysis
physical sales of music and music downloading services. Moreover, the Commission
considers the market for music streaming services to be EEA-wide, despite some
differences in prices and music tastes across the EEA. Apple has not contested this
market definition in its Response to the Statement of Objections of 28 February 2023
or its Response to the Letter of Facts.
8.2. The dominant position of the addressee
8.2.1. Principles
(329) The dominant position referred to in Article 102 of the Treaty relates to a position of
economic strength enjoyed by an undertaking which enables it to prevent effective
competition being maintained on the relevant market by affording it the power to
behave to an appreciable extent independently of its competitors, its customers and
ultimately of its consumers.
506
(330) A finding of dominance does not require that an undertaking has eliminated all
opportunity for competition in the market.
507
A finding of dominance is also not
precluded by the existence of competition on a particular market, provided that an
undertaking is able to act without having to take account of such competition in its
market strategy and without, for that reason, suffering detrimental effects from such
behaviour.
508
(331) The existence of a dominant position derives in general from a combination of
several factors which, taken separately, are not necessarily determinative.
509
One
important factor is the existence of very large market shares, which are in
themselves, save in exceptional circumstances, evidence of the existence of a
504
Alphabet’s response to question 24 of the Commission’s request for information (2020/034718),
ID 1358.
505
Alphabet’s response to question 25 of the Commission’s request for information (2020/034718),
ID 1358; Deezer’s response to question 29 of the Commission’s request for information (2020/029315),
ID 1379.
506
Case 27/76 United Brands v Commission, EU:C:1978:22, paragraph 65; Case 85/76 Hoffmann-La
Roche v Commission, EU:C:1979:36, paragraph 38; and Case T-201/04 Microsoft v Commission,
EU:T:2007:289, paragraph 229.
507
Case 27/76 United Brands v Commission, EU:C:1978:22, paragraph 113.
508
Case 85/76 Hoffmann-La Roche v Commission, EU:C:1979:36, paragraph 70; and Case T-340/03
France Télécom SA v Commission, EU: T:2007:22, paragraph 101.
509
Case 27/76 United Brands v Commission, EU:C:1978:22, paragraph 66.
EN 97 EN
dominant position.
510
That is the case where a company has a market share of 50 %
or above.
511
Likewise, a share of between 70 % and 80 % is, in itself, a clear
indication of the existence of a dominant position in a relevant market.
512
An
undertaking which holds a very large market share for some time, without smaller
competitors being able to meet rapidly the demand from those who would like to
break away from that undertaking, is by virtue of that share in a position of strength
which makes it an unavoidable trading partner and which, already because of this,
secures for it, at the very least during relatively long periods, that freedom of action
which is the special feature of a dominant position.
513
(332) While in recent and fast-growing sectors characterised by short innovation cycles,
large market shares may sometimes turn out to be ephemeral and not necessarily
indicative of a dominant position,
514
the fact that an undertaking may enjoy high
market shares in a fast-growing market cannot preclude application of the
competition rules, in particular Article 102 of the Treaty, especially if a fast-growing
market does not show signs of marked instability during the period at issue and, on
the contrary, a rather stable hierarchy is established.
515
(333) The fact that a service is offered free of charge is also a relevant factor to take into
account in assessing dominance. Another relevant factor is whether there are
technical or economic constraints that might prevent users from switching
providers.
516
(334) Other important factors when assessing dominance are the existence of
countervailing buyer power and barriers to entry or expansion, preventing either
potential competitors from having access to the market or actual ones from
expanding their activities on the market.
517
Such barriers may result from a number
of factors, including exceptionally large capital investments that competitors would
have to match, network externalities that would entail additional cost for attracting
new customers, economies of scale from which newcomers to the market cannot
derive any immediate benefit and the actual costs of entry incurred in penetrating the
market.
518
Switching costs are therefore only one possible type of barrier to entry and
expansion.
510
Case 85/76 Hoffmann-La Roche v Commission, EU:C:1979:36, paragraph 41; and Case T-65/98 Van
den Bergh Foods v Commission, EU:T:2003:281, paragraph 154.
511
Case C-62/86 Akzo v Commission, EU:C:1991:286, paragraph 60; Case T-340/03 France Télécom SA v
Commission, EU:T:2007:22, paragraph 100; and Case T-336/07 Telefónica SA v Commission,
EU: T:2012:172, paragraph 150.
512
Case T-30/89 Hilti v Commission, EU:T:1991:70, paragraph 92; Joined Cases T-191/98, T-212/98 to T-
214/98 Atlantic Container Line and Others v Commission, EU:T:2003:245, paragraph 907; Case T-
66/01 Imperial Chemical Industries v Commission, EU: T:2010:255, paragraph 257; and Case T-336/07
Telefónica SA v Commission, EU:T:2012:172, paragraph 150.
513
Case 85/76 Hoffmann-La Roche v Commission, EU:C:1979:36, paragraph 41; Case T-139/98 AAMS v
Commission, EU: T:2001:272, paragraph 51; Case T-65/98 Van den Bergh Foods v Commission,
EU:T:2003:281, paragraph 154; and Case T-336/07 Telefónica SA v Commission, EU: T:2012:172,
paragraph 149.
514
Case T-79/12 Cisco Systems, Inc. and Messagenet SpA v Commission, EU: T:2013:635, paragraph 69.
515
Case T-340/03 France Telecom SA v Commission, EU: T:2007:22, paragraphs 107-108.
516
Case T-79/12 Cisco Systems, Inc. and Messagenet SpA v Commission, EU: T:2013:635, paragraph 73.
517
Case 27/76 United Brands v Commission, EU:C:1978:22, paragraph 122; and Case 85/76 Hoffmann-La
Roche v Commission, EU: C:1979:36, paragraph 48.
518
Case 27/76 United Brands v Commission, EU:C:1978:22, paragraphs 91 and 122.
EN 98 EN
(335) In the context of a multi-sided platform, with two different, although interlinked user
groups, constraints on the market power of the platform operator vis-a-vis one side
can also come from the user group on the other-side of the platform.
(336) In the context of markets where users need to separately obtain complementary
components to make use of a particular service (e.g., a smart mobile device and an
app), it may be relevant to analyse how consumers take the decisions to obtain those
components. The framework developed for the analysis of aftermarkets includes
several elements that may be useful to analyse the relationship between these
components, even if the markets at hand show some differences to traditional
aftermarkets.
(337) Aftermarkets are markets for the supply of products or services needed for or in
connection with what is typically a relatively long-lasting product or service that has
already been acquired. This latter product or service is referred to as the “primary
product” (and hence its market is called “primary market”). The complementary
products and services used in connection with the primary product are referred to as
“secondary products” (and their market is called “secondary market” or
“aftermarket”). With respect to aftermarkets, effective competition on the primary
market may discipline the market power of the producer of the primary product on
the secondary market. A number of criteria have been developed for assessing the
link between primary and secondary markets which were applied by the Commission
in its EFIM decision
519
and subsequently confirmed by the Court in the EFIM-
judgment.
520
In order to come to the conclusion that primary and secondary markets
are interdependent and competition on the primary market disciplines the market
power on the secondary market (and excludes dominance in the secondary market),
four conditions need to be cumulatively met:
521
– i. Customers can make an informed choice, including lifecycle-pricing,
between the various manufacturers in the primary market;
– ii. Customers are likely to make such an informed choice accordingly;
– iii. In case of an apparent policy of exploitation
522
being pursued in the
aftermarket, a sufficient number of customers would adapt their
purchasing behaviour at the level of the primary market;
– iv. Customer’s adaptation of their purchasing behaviour would take place
within a reasonable time.
8.2.2. Application to this case
(338) The Commission concludes that Apple holds a dominant position in the EEA on the
market for the provision to developers of platforms for the distribution of music
519
Commission’s decision of 20 May 2009 rejecting the complaint in Case C-3/39.391 – EFIM.
520
Case T-296/09 European Federation of Ink and Ink Cartridge Manufacturers (EFIM) v Commission,
EU:T:2011:693, paragraphs 60, 90 and 91, confirmed in Case C-56/12, EU:C:2013:575, paragraphs 12
and 36 et seq.
521
Ibid.
522
There is no English translation of the judgment in Case T-296/09. The German version of the judgment
refers to “im Falle überhöhter Preise auf den Sekundärmärkten”, while the French version refers to “en
cas de prix excessifs sur les marchés secondaires”. The term “apparent policy of exploitation” was used
in the Commission’s decision of 22 September 1995 rejecting the complaint in Case No IV/34.330 –
Pelikan/Kyocera as well as in the original English text of the Commission’s decision of 20 May 2009
rejecting the complaint in Case C-3/39.391 – EFIM, paragraph 16.
EN 99 EN
streaming apps to iOS users since at least 2015. This analysis is based on the market
position and the market shares of Apple in this market, the extremely high barriers to
entry and expansion that Apple created for the distribution of native music streaming
apps to iOS users, significant (indirect) network effects of app distribution platforms
and the lack of countervailing buyer power.
(339) Moreover, this dominant position vis-à-vis developers of music streaming apps is
neither constrained by the consumer side of the App Store, including by a
disciplinary effect from competition in the market for smart mobile devices, nor by
alternative mechanisms to subscribe to music streaming services outside the iOS app.
8.2.2.1. Market position and market shares of Apple
(340) Apple is the only provider of a distribution platform for native apps to iOS users.
Therefore, since the launch of the App Store in 2008 and until today Apple enjoys a
stable 100 % market share on the market for the provision to developers of platforms
for the distribution of music streaming apps to iOS users at the EEA level. This in
itself provides a strong indication of the existence of a dominant position.
8.2.2.2. Barriers to entry and expansion
(341) Section 3.2.2. of the Guidelines prohibits other companies to create third-party app
stores.
523
As Apple does not allow for alternative app stores on iOS devices that
would allow the purchase and the download of native apps, it was and continues to
be impossible for third parties to enter the market and challenge Apple’s market
position, unless Apple allows such competition by changing its rules and allowing
for the distribution of native apps by alternative app stores or through “sideloading”
of apps from the websites of developers.
(342) All apps distributed to iOS users are subject to the Guidelines and Apple’s individual
approval. Apple has thus created and maintained insurmountable barriers to entry for
third-party app stores for iOS devices or for the distribution of native apps to iOS
users by developers (e.g., through their websites).
(343) Apple has no incentive to allow alternative distribution methods of native apps that
are not fully controlled by Apple and that would remove the “exclusive” position
Apple holds as an intermediary between developers and consumers with respect to
the distribution of native apps to iOS users and digital content or services within
those apps.
524
Therefore, unless forced through litigation or regulation,
525
Apple is
unlikely to voluntarily allow third-party app stores or sideloading on iOS devices.
523
Section 3.2.2. (i) of the Guidelines explicitly prohibits: “Creating an interface for displaying third-party
apps, extensions, or plug- ins similar to the App Store or as a general-interest collection.” in ID 3011.
Therefore, any third-party app acting as an app store for native apps for iOS devices will be rejected by
Apple on this basis.
524
In the past, Apple’s CEO Tim Cook indicated that Apple had no plans to open iOS to alternative app
stores in the future, see Investigation of competition in digital markets, Committee on the Judiciary,
U.S. House of Representatives, 2020, page 96. See
https://judiciary.house.gov/uploadedfiles/competition in digital markets.pdf, accessed on 8 October
2020, ID 1140.
525
Apple will have to comply by 7 March 2024 with Article 6(4) of Regulation (EU) 2022/1925 of the
European Parliament and of the Council of 14 September 2022 on contestable and fair markets in the
digital sector and amending Directives (EU) 2019/1937 and (EU) 2020/1828 (Digital Markets Act), OJ
L 265, 12.10.2022, p. 1–66.
EN 100 EN
8.2.2.3. Network effects
(344) With indirect network effects, the value of the service for users on one side of the
platform (developers) increases with the number of users on the other side of the
platform (i.e., consumers). Even if a third-party were to offer an alternative app store
for iOS users, which is currently not possible based on Apple’s policies, it would
face the difficulty of attracting simultaneously sufficient users on both sides of the
platform to trigger the indirect network effects which the App Store already profits
from. In order to attract a large number of iOS users, a competing offer would likely
have to offer an attractive range of apps and could not limit its offer to a limited
number of music streaming apps. In comparison, the App Store, as the only way to
distribute native apps to iOS users, currently offers 1.8 million apps.
526
In 2021,
consumers downloaded worldwide 33 billion apps from the App Store, compared to
30 billion in 2018.
527
Between 25 000 and 40 000 apps have been added monthly on
average between 2020 and 2023.
528
Based on information from Apple, it billed in
2022 over USD […] through the App Store of which it retained USD […].
529
Indeed,
the failure of other smart mobile operating system like Symbian or Windows Phone
can in part be explained by their inability to sufficiently trigger indirect network
effects and simultaneously gain a critical mass of users, i.e., developers and smart
mobile device users.
530
(345) Therefore, any hypothetical new entrant for an app store on iOS devices that could
serve as an alternative distribution platform to music streaming service providers
would – even if its market entry were allowed by Apple and if access to necessary
APIs and functionalities of iOS devices were granted – have to succeed in
simultaneously attracting significant amounts of developers as well as consumers to
the platform. Unless Apple approves it, such a new entrant would not be able to pre-
install its App Store offer on iOS devices.
531
These indirect network effects therefore
protect and entrench Apple’s market position.
526
See https://www.apple.com/app-store/, accessed on 16 November 2023, ID 3201. Not all apps are
available to every iOS user. The app developer determines in which App Store “storefront” an app is
displayed and can thus limit the availability of the app in certain countries, for example because it
targets only specific regions or the app does not comply with certain local regulations.
527
See Statista ‘Mobile app downloads worldwide from 2021 to 2026, by store’,
https://www.statista.com/statistics/1010716/apple-app-store-google-play-app-downloads-forecast/,
accessed on 13 September 2023, ID 3177.
528
See Statista dossier “App stores”, page 20, accessed on 13 September 2023, ID 3178. IDs 3256, 3262,
3263, 3266, 3267, 3271, 3272, 3280, 3287, 3288, accessed on 14 December 2023, contains underlying
data of Statista figures.
529
See Annex Q12 to Apple’s response to the Commission’s request for information of 3 August 2023, ID
3001.
530
See ACM “Market study into mobile app stores”, accessed on 12 November 2020, ID 886, page 34:
“Opening up the platform to third-party developers by offering SDKs so third parties could develop
apps for Android and iOS thus was a very effective way for Google and Apple to activate indirect
network effects, and make their products and services more valuable. So Symbian, Windows and the
supporting phone manufacturers were not able to activate and benefit from indirect network effects the
way Apple and Google did, because they were not able to lower entry barriers enough for third-party
developers.” On the existence of network effects in smart mobile OSs and the barriers to entry resulting
from them, see also Commission decision of 18 July 2018 in Case AT.40099 – Google Android,
paragraph 469.
531
Apple currently does not pre-install any third-party app on its smart mobile devices. See “Mobile
ecosystems market study final report” of the Competition and Markets Authority (CMA), page 198,
accessed on 14 June 2022, ID 2431.
EN 101 EN
8.2.2.4. Limited countervailing buyer power
(346) Because of the lack of alternatives for the distribution of native apps to iOS users,
Apple enjoys extensive market power vis-à-vis developers that wish to offer their
apps to iOS users.
(347) Apple decides unilaterally the rules, which govern access to the App Store by more
than 800 000 developers worldwide and any changes to those rules are in Apple’s
sole discretion.
(348) Apple’s License Agreement with developers provides it with the possibility to
disable or limit access to its services at any time without notice and in its sole
discretion:
532
“Apple reserves the right to change, suspend, deprecate, deny, limit, or disable
access to the Apple Services
533
, or any part thereof, at any time without notice
(including but not limited to revoking entitlements or changing any APIs in the
Apple Software
534
that enable access to the Services or not providing You with an
entitlement). In no event will Apple be liable for the removal of or disabling of
access to any of the foregoing. Apple may also impose limits and restrictions on
the use of or access to the Apple Services, may remove the Apple Services for
indefinite time periods, may revoke Your access to the Apple Services, or may
cancel the Apple Services (or any part thereof) at any time without notice or
liability to You and in its sole discretion.”
(349) Section 3.2. indicates that Apple has full discretion when granting or refusing an app
for its devices:
“(g) Applications for iOS, iPadOS, tvOS, visionOS and watchOS developed using
the Apple Software may be distributed only if selected by Apple (in its sole
discretion) for distribution via the AppStore, for beta distribution through
TestFlight, or through Ad Hoc distribution as contemplated in this Agreement.
[…]”
(350) Section 6.9 confirms full discretion of Apple to refuse any app, even if it complies
with the required documentation:
“6.9 Selection by Apple for Distribution
You understand and agree that if You submit Your Application to Apple for
distribution via the App Store, Custom App Distribution, or TestFlight, Apple
may, in its sole discretion:
(a) determine that Your Application does not meet all or any part of the
Documentation or Program Requirements then in effect;
532
Section 2.8 of the License Agreement, ID 3015.
533
Defined in the following way in the License Agreement: “Apple Services” or “Services” means the
developer services that Apple may provide or make available through the Apple Software or as part of
the Program for use with Your Covered Products or development, including any Updates thereto (if
any) that may be provided to You by Apple under the Program.”
534
Defined in the following way in the License Agreement: “Apple Software” means Apple SDKs, iOS,
watchOS, tvOS, iPadOS, visionOS and/or macOS, the Provisioning Profiles, FPS SDK, FPS
Deployment Package, and any other software that Apple provides to You under the Program, including
any Updates thereto (if any) that may be provided to You by Apple under the Program.”
EN 102 EN
(b) reject Your Application for distribution for any reason, even if Your
Application meets the Documentation and Program Requirements; […]”
(351) Adherence to the License Agreement and payment of the associated fee do therefore
not entitle a developer to distribute its app through the App Store as Apple retains
full discretion to approve or reject apps or to cease distribution at a later point in
time.
(352) Apple can and does change the Guidelines which determine access to the App Store
frequently. Phillip Shoemaker, who was responsible within Apple throughout the
first years after the launch of the App Store for the App Store review process has
indicated that […].”
535
Indeed, the Guidelines’ preamble labels the Guidelines as a
“living document” and that new apps presenting new questions may trigger a review
of the Guidelines and new rules at any point in time.
(353) Developers in general, and music streaming service providers in particular, typically
only offer a limited number of apps, which decreases the negotiation power any
individual app may have vis-à-vis Apple.
(354) […].
536
(355) In particular, developers of music streaming apps have a weak negotiation position
vis-à-vis Apple, given the importance of smart mobile devices for the consumption
of streamed music.
537
[…].
538
So, even if some or all of them were to leave the iOS
platform (or threaten to do so) in an attempt to create negotiation power, this would
unlikely allow them to receive more preferential terms. In such a case, Apple Music
would stand ready to subscribe those users that can no longer find alternative apps in
the App Store.
539
In the absence of a credible alternative to the App Store to which
they could switch, even popular apps such as Spotify’s app have little choice but to
accept the terms that Apple dictates with respect to app distribution to iOS devices.
(356) Therefore, developers of apps, and in particular those of music streaming apps, lack
countervailing buyer power and are left either with the choice of complying with
Apple’s rules or losing access to iOS users.
8.2.2.5. Constraints on Apple’s market power vis-à-vis music streaming service providers
from the consumer side of the App Store
(357) Although the relevant product market for the purposes of this Decision is the market
for the provision to developers of platforms for the distribution of music streaming
apps to iOS users, the Commission assessed the consumer side of the two-sided App
Store as this side may – despite being separate from the developer side – constrain
the market power of Apple vis-à-vis developers of music streaming app on the
developer side of the platform.
(358) Constraint from the consumer side of the App Store on Apple’s market power vis-à-
vis music streaming service providers could result from the reaction of consumers to
a perceived “degradation” of developers’ apps or services on iOS.
Music streaming
service providers could pass-on increased fees for app or in-app content distribution
535
See ID 435 and transcript of podcast of 28 May 2019 in ID 637.
536
[…].
537
See recitals (278) et seq.
538
[…]. See also paragraph 118 of Spotify’s Complaint, ID 1457.
539
See paragraph 118 of Spotify’s Complaint, ID 1457.
EN 103 EN
to consumers or remove the ability of consumers to subscribe to certain services
within the app as a reaction to deteriorating conditions for app distribution on iOS
devices.
540
Such changes to the attractiveness of music streaming apps on iOS
devices could – at least in theory – render the App Store less attractive in the eyes of
consumers and lead to negative reactions by consumers. Since Apple generates
profits both from the sale of devices as well as from app developers, losing a large
number of device buyers in reaction to a degradation of rival iOS apps may result in
lost profits from device sales. If such a reaction by consumers was likely and
substantial, the risk of a pass-on of deteriorating conditions by developers to
consumers could in theory constrain Apple’s market power vis-à-vis music streaming
service providers.
(359) Constraints from the consumer side could manifest themselves either in a negative
consumer reaction at the level of app distribution or at the level of their smart mobile
device purchases. If end users had alternative means to access apps, they might
switch to those apps instead of the ones affected by the distribution conditions set by
Apple (see Section 8.2.2.5.1). In a similar vein, the level of device purchases matters
as a possible constraint on Apple’s market power in the market for the provision to
developers of platforms for the distribution of music streaming apps to iOS users,
because users that are aware of deteriorating conditions for app distribution might
decide to refrain from purchasing an iOS device, and/or seek devices that are
unaffected by changes to the access conditions set by Apple, such as Android
smartphones (see Section 8.2.2.5.2).
8.2.2.5.1. Constraints from the consumer side resulting from alternative app distribution
channels on iOS devices
(360) iOS users are not in a position to react to deteriorating conditions for app distribution
on iOS devices, and in particular for music streaming app distribution, by switching
to alternative app channels for downloading and installing apps on their iOS devices.
Apple strictly excludes any such possibility. Apple neither allows the distribution of
native apps via alternative app stores
541
nor through the form of sideloading of apps
from the websites of developers. Jailbreaking the mobile operating system – forcing
it open to allow installing apps outside the App Store – requires sophisticated
hacking skills and constitutes a violation of the iOS end-user software license
agreement.
542
Furthermore, such jailbreaking cannot be a helpful remedy for
consumers also because music streaming service providers do not offer versions of
their app that could be loaded on a device even if forced open, as they distribute their
iOS apps only via the App Store. Consumers have therefore no ability to switch to
alternative distribution channels for native apps on iOS devices.
8.2.2.5.2. Constraints from the consumer side resulting from competition on the market
for smart mobile devices
(361) Deteriorated conditions for developers and their pass through to consumers could
also have an impact on the sale of smart mobile devices by Apple. If higher prices for
540
The investigation has shown that the de-listing of music streaming apps from the App Store is not
possible for music streaming service providers who must have their app on the App Store to reach iOS
users. See recital (271).
541
Item 3.2.2. (i) of the Guidelines prohibits: “Creating an interface for displaying third-party apps,
extensions, or plug-ins similar to the App Store or as a general-interest collection”, see current version
of the Guidelines, ID 3011.
542
See recital (292).
EN 104 EN
apps or in-app content or reduced subscription functionalities for music streaming
apps would negatively affect Apple’s device sales to consumers, then Apple’s market
power vis-à-vis developers in the market for the provision to developers of platforms
for the distribution of music streaming apps to iOS users could be disciplined
because of the potential negative impact on the sale of smart mobile devices.
(362) Such a disciplinary effect would not only require that there is effective competition
in the market for smart mobile devices, but also that there is a sufficiently strong link
between the market for smart mobile devices and app distribution. From the
perspective of consumers, the distribution of apps via the App Store has some
resemblance to an aftermarket. The App Store is pre-installed when a consumer buys
an iOS device, whereas individual downloads, app purchases and in-app purchases
on the App Store only take place at a later stage. The “secondary service” of app
distribution takes place in connection with the use of the primary product “smart
mobile devices” (in this case iOS devices) which are long lasting products and
typically have already been acquired by consumers in the past.
(363) However, there are also some differences between app distribution and traditional
aftermarket cases. Notably, smart mobile devices can also be used without music
streaming apps and without any third-party applications downloaded from the App
Store. Moreover, most music streaming apps are typically offered for free and
consumers only pay for in-app purchases which typically relate to subscriptions for
the premium service. There are also alternative ways of listening to streamed music
outside of the mobile devices, consumers can purchase subscriptions elsewhere and
use these subscriptions within their apps, something that Apple has never prohibited.
(364) The Commission preliminarily concludes that competition on the market for smart
mobile devices does not discipline Apple’s market power vis-à-vis consumers and
ultimately developers with respect to the provision of a distribution platform for
music streaming apps to iOS users. As will be explained in the following Sections,
this preliminary conclusion is based on (i) the limited competition Apple faces in the
market for smart mobile devices, in particular in the high-end segment, where it
equally has a considerable degree of market power and (ii) the lack of a sufficiently
strong link between the market for smart mobile devices and the conditions that
Apple sets for music streaming app distribution through the App Store.
8.2.2.5.2.1. The level of competition in the market for smart mobile devices
8.2.2.5.2.1.1. The Commission’s position
(365) The Commission considers that competition in the smart mobile device market is not
fully effective and Apple holds market power, in particular in the premium segment
of the market. As will be explained in this Section, Apple has been able to
differentiate itself in this market from other providers and faces limited price
competition. The strong brand loyalty of iOS users and their lock-in in the
ecosystem, reinforced by a number of monetary and non-monetary switching costs
between iOS and Android devices further reduces the competitive pressure Apple
faces in this market.
(366)
Google’s Android and Apple’s iOS have emerged throughout the last decade as the
two main mobile operating system in Europe, with estimated market shares in terms
of active smart mobile devices of 65 % and 34 % respectively in 2022, as can be seen
EN 105 EN
from Figure 14.
543
In particular, iOS had a share in Europe of approximately 33 % of
mobile operating system for smartphones compared to 66 % for Android,
544
and of
48 % of mobile operating system for tablets, compared to 52 % for Android.
545
543
See https://gs.statcounter.com/os-market-share/mobile-tablet/europe/#yearly-2015-2022, accessed on 14
December 2023, IDs 3253 and 3257. StatCounter market shares are based on data on website views by
different devices. For more information on StatCounter’s methodology see
https://gs.statcounter.com/faq#methodology, accessed on 6 April 2022, ID 2316.
544
See https://gs.statcounter.com/os-market-share/mobile/europe/#yearly-2015-2022, accessed on
14 December 2023, IDs 3258 and 3259. StatCounter defines a mobile device as a pocket-sized
computing device. Tablets are not included. […]. Calculations of the Commission in ID 3217 based on
information provided by Apple in Annexes Q1.1 and Q1.2 to the Commission’s request for information
of 3 August 2023, IDs 2992 and 2993. Note that the figures of installed base for smartphones for 2022
are forecasted. […]; see calculations of the Commission in ID 3217 based on Annex to Apple’s
response to the Commission’s request for information of 3 August 2023, ID 2994.
545
Which has since 2019 been re-labelled iPadOS for Apple’s iPad tablets. See
https://gs.statcounter.com/os-market-share/tablet/europe/#yearly-2015-2022, accessed on 14 December,
IDs 3260 and 3261.
EN
106
EN
Figure 14 – Evolution of mobile operating systems’ market share in Europe
from 2015 to 2022
546
(367) Apple is one of the main smart mobile device vendors in Europe. For the period
2015-2022, Apple smart mobile devices accounted for […] % of the revenue share
and […] % of units sold in the EEA.
547
(368) With respect to tablets, Apple was the most successful OEM in Europe in 2022 with
a share of 48.1 % in terms of active devices, followed by Samsung (32.8 %), Huawei
(5.7 %) and Amazon (4.1 %), all of which are based on Android.
548
Apple’s
leadership is also confirmed by its market shares both in terms of units sold ([…] %)
and value of sales ([…] %) in 2022,
549
as shown in Figures 15 and 16.
546
See https://gs.statcounter.com/os-market-share/mobile/europe/#yearly-2015-2022, accessed on
14 December, ID 3259.
547
Commission calculations in ID 3217 based on data from IDC and Canalys provided by Apple in Annex
10 (revised) to its response to the Commission’s request for information (2022/004722), ID 2302, and
Annexes Q13.1 and Q13.2 to its response to the Commission’s request for information of 3 August
2023, IDs 3002 and 3003. For the purposes of comparability of different years and with figures
obtained from StatCounter for Europe, the calculations include figures for the EEA and for the UK,
although the latter withdrew from the European Union as of 1 February 2020. […],
https://www.statista.com/statistics/773772/mobile-device-revenue-share-by-vendor-worldwide/,
accessed on 15 January 2021, ID 1135; https://www.statista.com/statistics/773371/mobile-device-
revenue-by-vendor-worldwide/, accessed on 15 January 2021, ID 1139;
https://www.counterpointresearch.com/apples-revenue-super-cycle/, accessed on 15 December 2020,
ID 1013.
548
See https://gs.statcounter.com/vendor-market-share/tablet/europe/#yearly-2015-2022, accessed on
27 November 2023, ID 3207. StatCounter market shares are based on data on website views by
different devices. For more information on StatCounter’s methodology see
https://gs.statcounter.com/faq#methodology, accessed on 6 April 2022, ID 2316.
549
Commission calculations in ID 3217 based on data from IDC provided by Apple in Annex 10 (revised)
to its response to the Commission’s request for information (2022/004722), ID 2302 and data from
Canalys provided in Annex Q13.2 to Apple’s response to the Commission’s request for information of
3 August 2023, ID 3003. For the purposes of comparability of different years and with figures obtained
EN 107 EN
Figure 15 – […]
550
[…]
from StatCounter for Europe, the calculations include figures for the EEA and for the UK, although the
latter withdrew from the European Union as of 1 February 2020.
550
Commission calculations in ID 3217 based on data from IDC provided by Apple in Annex 10 (revised)
to its response to the Commission’s request for information (2022/004722), ID 2302 and data from
Canalys provided in Annex Q13.2 to Apple’s response to the Commission’s request for information of
3 August 2023, ID 3003. For the purposes of comparability of different years and with figures obtained
from StatCounter for Europe, the calculations include figures for the EEA and for the UK, although the
latter withdrew from the European Union as of 1 February 2020.
EN 108 EN
Figure 16 – […]
551
[…]
(369) With respect to smartphones, Apple was the most successful OEM in Europe in
terms of active devices, with a 33.3 % share in 2022, followed by Samsung with a
31.6 % share
552
This leadership is also confirmed by their market shares in terms of
volume and value of sales. In particular, Apple and Samsung had a market share in
2022 of […] % and […] % respectively in terms of unit sold, and […] % and […] %
in terms of value of those sales,
553
as shown in Figures 17 and 18.
551
Ibid.
552
See https://gs.statcounter.com/vendor-market-share/mobile/europe/#yearly-2015-2022, accessed on
27 November 2023, ID 3206. StatCounter market shares are based on data on website views by
different devices. For more information on StatCounter’s methodology see
https://gs.statcounter.com/faq#methodology, accessed on 6 April 2022, ID 2316.
553
Commission calculations in ID 3217 based on data from IDC provided by Apple in Annex 10 (revised)
to its response to the Commission’s request for information (2022/004722), ID 2302 and in Q13.1 to its
response to the Commission’s request for information of 3 August 2023, ID 3002. For the purposes of
comparability of different years and with figures obtained from StatCounter for Europe, the calculations
include figures for the EEA and for the UK, although the latter withdrew from the European Union as
of 1 February 2020.
EN 109 EN
Figure 17 – […]
554
[…]
554
Commission calculations in ID 3217 based on data from IDC provided by Apple in Annex 10 (revised)
to its response to the Commission’s request for information (2022/004722), ID 2302 and in Q13.1 to its
response to the Commission’s request for information of 3 August 2023, ID 3002. For the purposes of
comparability of different years and with figures obtained from StatCounter for Europe, the calculations
include figures for the EEA and for the UK, although the latter withdrew from the European Union as
of 1 February 2020.
EN 110 EN
Figure 18 – […]
555
[…]
(370) As shown above, Apple’s value shares for both tablets and smartphones exceed its
share on unit sales. Apple’s smart mobile devices market (covering both smart
phones and tablets) share in terms of units sold in 2021 in the EEA was estimated to
be around [30-40] %, with Samsung closely following with [30-40] %. However, in
terms of the value of those sales, Apple had a [50-60] % market share, compared to
Samsung with a [20-30] %.
556
This is because the price of Apple devices is typically
above average, as Apple positions its smart mobile devices in the high-end segment
as premium products. While in 2021 the worldwide average selling price of an
Android smartphone was USD 261,
557
the average iPhone price was USD 977.
558
In
the period 2015-2022, the average selling price of Samsung smartphones in the EEA
– the vendor second to Apple in terms of market share – fluctuated between
USD 386 and 450, with the average selling price having steadily decreased from
USD 450 in 2018 to USD 387 in 2022.
559
In the period 2015-2022, the iPhone’s
average selling price in the EEA grew from USD 728 in 2015 to USD 1,003 in
2022.
560
Similarly for tablets, while the average selling price in the EEA of Samsung
tablet grew from USD 265 in 2015 to 351 in 2022, the average selling price of the
iPad grew from USD 508 in 2015 to 585 in 2021, but dropped to around USD 503 in
2022.
561
(371) […].
562
[…].
563
According to public estimates, in the period 2007-2020, Apple’s
markups on material costs per device were high, estimated between 124% to
555
Ibid.
556
Commission calculations in ID 2607 based on data from IDC provided by Apple in Annex 10 (revised)
to its response to the Commission’s request for information (2022/004722), ID 2302. For the purposes
of comparability of different years, figures for the UK have also been taken into account for the years
2020 and 2021, although the UK withdrew from the European Union as of 1 February 2020.
557
See https://www.statista.com/statistics/951537/worldwide-average-selling-price-android-smartphones/,
accessed on 9 March 2022, ID 2350.
558
Commission calculations in ID 2607 based on data from IDC provided by Apple in Annex 10 (revised)
to its response to the Commission’s request for information (2022/004722), ID 2302. On differences of
average selling prices between iOS and Android smartphones, see also Commission decision of 18 July
2018 in Case AT.40099 – Google Android, paragraph 502 et seq.
559
For the years 2020 to 2021, see Commission calculations in ID 2607 based on data from IDC provided
by Apple in Annex 10 (revised) to its response to the Commission’s request for
information (2022/004722), ID 2302. For the year 2022, see Commission calculations in ID 3217 based
on data from IDC provided by Apple in Annex Q13.1 to its response to the Commission’s request for
information of 3 August 2023, ID 3002. For the purposes of comparability of different years, figures for
the UK have also been taken into account for the years 2020 to 2022, although the UK withdrew from
the European Union as of 1 February 2020.
560
Ibid.
561
For the years 2020 to 2021, see Commission calculations in ID 2607 based on data from IDC provided
by Apple in Annex 10 (revised) to its response to the Commission’s request for
information (2022/004722), ID 2302. For the year 2022, see Commission calculations in ID 3217 based
on data from IDC provided by Apple in Annex Q13.2 to its response to the Commission’s request for
information 3 August 2023, ID 3003. For the purposes of comparability of different years, figures for
the UK have also been taken into account for the years 2020 to 2022, although the UK withdrew from
the European Union as of 1 February 2020.
562
See https://www.statista.com/statistics/253649/iphone-revenue-as-share-of-apples-total-revenue/,
accessed on 14 December 2023, ID 3254. ID 3264, accessed on 14 December 2023, contains
underlaying data of Statista figures.
EN 111 EN
260 %.
564
In 2016, on some iPhone models such as the iPhone SE and iPhone 6S
Plus (both 16 GB), Apple’s retail price was estimated to amount to more than 250-
300 % of device material and manufacturing costs.
565
[…].
566
(372) Even among smartphones in the highest price segment, Apple’s device margins
appear high, both in isolation and compared to rivals. The estimated gross margin for
Apple’s iPhone 13 Pro Max (256 GB) and the iPhone 13 (512 GB), amounts to
63 %.
567
The particularly high 63 %, device margin indicates a generally weak
competition among high-end devices. Apple’s 63 % margin on latest models is also
higher than the estimated margins of Huawei’s Mate40E (49 %), Google’s Pixel 5
(55 %) or Samsung’s Galaxy Z Fold3 (61 %).
568
Figure 19 – […]
569
[…]
563
Calculations of the Commission in ID 3217 based on information of Apple provided in Annexes 5.1 and
5.2 to its response to request for information (2020/146914), and 12.1 and 12.2 (revised) to its response
to request for information (2022/004722), IDs 2297 and 2299, as well as Apple’s response to the
Commission’s request for information 3 August 2023, Annexes Q3.1 and Q3.2., IDs 3002 and 3003.
For the purposes of comparability of different years, figures for the UK have also been taken into
account for the years 2020 and 2021, although the UK withdrew from the European Union as of
1 February 2020. Calculated as (Sales-Standard costs)/Sales.
564
See https://www.bankmycell.com/blog/how-much-do-iphones-cost-to-make, accessed on 14 December
2023, ID 3285. Markups calculated as (Retail price-Material costs)/Material costs. These translate into
per device margins better comparable to those in Figures 19 and 20 calculated as (Retail price-Material
costs)/Retail price of 56-72 %.
565
See https://www.statista.com/chart/4622/iphone-costs-and-retail-prices/, accessed on 15 January 2021,
ID 1133.
566
There is no considerable decline in Apple’s iPad margins over time (Figure 20).
567
Gross margins are calculated as (price-cost)/price based on data from Table “Comparison with other
smartphones” at https://vdata.nikkei.com/en/newsgraphics/iphone-teardown/, accessed on
9 March 2022, IDs 2388 and 2395.
568
The Samsung Galaxy Z Fold3 device stands out with its price of USD 1,800 compared to Apple’s
prices of USD 1,190 (iPhone 13 Promax 256Gb) and USD 1,099 (iPhone 13 512Gb).
569
Calculations of the Commission in ID 3217 based on information of Apple provided in Annexes 5.1 and
5.2 to its response to request for information (2020/146914), and 12.1 and 12.2 (revised) to its response
to request for information(2022/004722), IDs 2297 and 2299, as well as Apple’s response to the request
for information dated 4 September 2023, Annexes Q3.1 and Q3.2., IDs 3002 and 3003. For the
purposes of comparability of different years, figures for the UK have also been taken into account for
the years 2020 and 2021, although the UK withdrew from the European Union as of 1 February 2020.
Calculated as (Sales-Standard costs)/Sales.
EN 112 EN
Figure 20 – […]
570
[…]
(373) […].
571
[…].
572
[…].
573
[…].
574
[…].
575
Figure 21 – […]
576
[…]
(374) Analysts reported in 2020 that “four out of five best selling models in the premium
segment were from Apple,” and that Apple is leading the premium segment in all
regions, with a global share of 57 %.
577
In 2022, Apple accounted for 75 % of the
global premium smartphone market sales share (devices of +USD 600) compared to
71 % in the previous year.
578
[…]
579
(375) However, Apple’s devices do not only lead sales in the premium segment. In 2022,
Apple captured eight out of the ten top smartphones in 2022 sold worldwide, with the
iPhone 13 being the best-selling smartphone overall. The remaining two spots were
taken by Samsung’s models.
580
Figure 22 – Global Top 10 Best-selling Smartphones Unit Sales Share and
Monthly rankings, 2022
581
570
Ibid.
571
Annex Q14 of Apple’s response to the Commission’s request for information of 3 August 2023, ID
3004.
572
Figures reported by Apple in Annex Q11 (revised) to its response to request for information
(2022/0019122), ID 2277. The figures provided by Apple show the average selling price per device in
2020 and 2021 for the EEA and the UK separately.
573
See Statista, “An iPhone for (Almost) Every Wallet”, accessed on 4 March 2021, ID 1382.
574
Annex Q14 of Apple’s response to the Commission’s request for information of 3 August 2023, ID
3004. According to Statista figures (see https://www.statista.com/statistics/951537/worldwide-average-
selling-price-android-smartphones/, accessed on 21 September 2023, ID 3168), the average selling price
of Android smartphones worldwide was USD 265 in 2021 and USD 286 in 2023.
575
The iPhone SE 2
nd
Gen was sold at an average price of USD 407,65 in the EEA and USD 371,61
worldwide.
576
Commission calculations in ID 3217 based on data provided by Apple in its response to question 2 of
the Commission’s request for information (2020/146914), ID 1194, Annex Q2, ID 1193-57 and Annex
Q11 (revised) to its response to request for information (2022/0019122), ID 2277 and Annex Q14 in its
response to the Commission’s request for information of 3 August 2023, ID 3004. The figures provided
by Apple show the average selling price per device in 2020 to2022 for the EEA and the UK separately.
Thus, the average selling prices for those years do not include the UK prices, while years 2009 to 2019
do. However, the average selling prices in the UK and in the EEA are roughly similar. The impact in the
comparability of the average selling prices from 2009 to 2022 is not of great significance.
577
See https://www.counterpointresearch.com/apple-captured-59-premium-smartphone-segment/, accessed
on 11 February 2021, ID 1288.
578
See https://www.counterpointresearch.com/insights/premium-market-captures-half-global-smartphone-
revenue-2022-first-time/, accessed on 26 October 2023, ID 3166.
579
[…]
580
See https://www.counterpointresearch.com/insights/top-smartphones-global-2022/, accessed on
20 September 2023, ID 3163.
581
Ibid.
EN 113 EN
(376) In addition, Apple alone accounts for a large share of worldwide smartphone profits,
which provides another indication that Apple may face only limited competition
from other smartphone vendors. As can be seen from Figure 23, between the first
quarter of 2022 and the first quarter of 2023, Apple’s global mobile handset
operating profit share stayed around and above 80 %.
582
In Q1 2023 Apple’s share
outperformed Samsung’s share by a 72 %
583
In the same period, Apple was the
biggest revenue generator in the smartphone business, capturing nearly half of the
global total revenue, despite having shipped around 20 % of the global handset
shipments.
584
No other rival smartphone seller achieved a nearly comparable share of
industry operating profits. This shows that Apple is to some extent able to avoid
price competition from Android-based smartphone makers, sustain high device
prices and margins, while those vendors compete closer on prices and achieve
significantly lower margins and profits.
582
See https://www.counterpointresearch.com/insights/global-smartphone-market-declines-14-yoy-q1-
2023-apple-records-highest-ever-q1-share/, accessed on 21 September 2023, ID 3184. See also
https://www.bloomberg.com/news/articles/2023-02-03/iphone-grabs-record-smartphone-profit-share-
of-85-for-apple#xj4y7vzkg, accessed on 22 September 2023, ID 3185.
583
See https://www.counterpointresearch.com/insights/global-smartphone-market-declines-14-yoy-q1-
2023-apple-records-highest-ever-q1-share/, accessed on 21 September 2023, ID 3184.
584
Ibid.
EN 114 EN
Figure 23 – Major Handset Vendor’s Shipments, Revenue and Operating Profit
Shares from Q1 2022 to Q1 2023
585
(377) The evidence cited above shows that Apple has positioned its models in the high-end
price range, moving away from potential competition from most Android-based
rivals, which offer devices in a wider price range including an extensive budget
offering, and try to attract more cost-conscious consumers.
586
(378) This is also consistent with the findings in the consumer surveys carried out by
Spotify […] for the purposes of the investigation, which suggest that Apple’s smart
mobile device users are less price sensitive, more brand-loyal and put more weight
on factors associated with ease of use and connectivity than Android users.
According to […] surveys, 57 % of Android users claimed to have considered the
price of the device in their purchase decision. However, only a small minority of
585
Ibid.
586
See recital (370) (on average selling price of iPhones in 2022 vs average selling price of Android
phones. See also https://www.nytimes.com/wirecutter/reviews/best-budget-android-phone/, accessed on
21 September 2023, ID 3195.
EN 115 EN
Apple users ([…] 17 % according to the Spotify Survey) mentioned the price of the
mobile device as a factor influencing their device choice.
Figure 24 – […].
587
[…]
587
[…].
EN
116
EN
Figure 25 – Spotify survey question 7: What factors were important when you
chose/purchased your current device? Responses by OS.
588
(379) This limited price competition between iOS and Android devices has also been
confirmed by the UK Competition and Markets Authority (“CMA”), which
emphasised in its report that Apple’s iOS devices dominate sales of high-priced
devices, while devices using Android dominate the sales of low-priced devices.
589
(380) In sum, the evidence shows Apple has a strong market position in the smart mobile
device market, which is even stronger in the premium segment where it holds
considerable market power.
(381) Apple’s position is further reinforced by a lock-in of consumers due to strong brand
loyalty and switching costs.
(382) The switching rates of Apple’s customers remain very limited. The consumer
surveys conducted by Spotify […], show that iOS users exhibit a high degree of
brand loyalty and are “locked-in” to a considerable degree. According to the survey
conducted by Spotify, 83 % of iOS users indicated that their previous device was of
588
The results of the Spotify survey are summarised in Compass Lexecon’s document of 22 March 2020
entitled “Is Apple’s dominance in the market for developers’ access to iOS constrained by competition
for iPhone sales?”, ID 900. Figure 25 is based on Commission calculations in ID 1584 based on data in
Table 3, page 36 et seq. of ID 900. The questionnaire is in ID 500.
589
CMA “Mobile ecosystems market study final report”, accessed on 14 June 2022, ID 2431, paragraph
3.47, 3.79 and 7.62.
EN
117
EN
the same brand as the current one.
590
[…].
591
[…]. This is a remarkably low share,
considering that Android smartphones are used by more than […] as many
consumers in the EEA than Apple smartphones (see recital (366)). These figures
indicate that Apple users are particularly loyal to their device brand and are unlikely
to switch to a non-Apple device.
(383) These results are confirmed by industry surveys on brand loyalty of users of smart
mobile devices, which often indicate even higher loyalty rates amongst users of
Apple’s smart mobile devices, in particular the iPhone. Research conducted by
Morgan Stanley found in 2017 that 92 % of iPhone users who plan to upgrade their
phone in the next year are likely to repurchase an iPhone.
592
Figure 26 – Retention Rates: Apple vs. Samsung
(384) Similarly, another study by CIRP
593
found the iOS loyalty rate to be above 80 %
between September 2015 and December 2017.
594
590
See Table 3, page 39, Q.13, ID 900.
591
[…].
592
See https://markets.businessinsider.com/news/stocks/apple-stock-price-morgan-stanley-note-2017-5-
1002022779-1002022779, accessed on 16 December 2020, ID 1043 and
https://www.businessinsider.com/apple-iphone-more-loyal-android-chart-2017-5?r=US&IR=T,
accessed on 16 December 2020, ID 1095, referring to research conducted by Morgan Stanley in (2017)
“Retention Rate on the Rise as Supercycle Approaches”.
593
Consumer Intelligence Research Partners (CIRP) provides research data and insights about various
companies and markets, including Apple. See https://www.cirpllc.com/.
594
See https://www.cirpllc.com/blog/2018/3/21/mobile-operating-system-loyalty-high-and-steady,
accessed on 16 December 2020, ID 1046.
EN 118 EN
Figure 27 – Customer Retention - CIRP
(385) In comments on the study, a CIRP partner explained that: “Loyalty is also as high as
we’ve ever seen, really from 85-90 % at any given point. With only two mobile
operating systems at this point, it appears users now pick one, learn it, invest in-apps
and storage, and stick with it. Now, Apple and Google need to figure out how to sell
products and services to these loyal customer bases.”
595
[…].
596
(386) A more recent CIRP study in the US market reported very strong brand loyalty
among iPhone users, as for more than 90 % of customers purchasing a new iPhone,
their previous smartphone was also an iPhone.
597
595
See ID 1630.
596
[…].
597
See https://9to5mac.com/2021/10/28/iphone-loyalty-rate-data-switchers/, accessed on 5 April 2022,
ID 2347.
EN 119 EN
Figure 28 – Mobile phone brand loyalty in the United States from 2019 to
2021
598
(387) Moreover, a survey conducted by the CMA in April 2022 for the UK found that 8 %
of users who purchased an iPhone as their current smartphone had switched from an
Android smartphone and only 5 % of users who purchased an Android smartphone as
their current smartphone switched from an iOS smartphone.
599
(388) The evidence gathered by the Commission shows that users face various monetary
and non-monetary switching costs between Apple’s smart mobile devices and
Android devices.
(389) On the one hand, monetary switching costs include the investment required, not only
in purchasing a mobile device, but also different accessories linked to it that need to
be changed in case of switching.
600
Certain complementary devices, such as the
Apple Watch for the iPhone or Apple’s HomePod, may no longer be compatible
when switching to another ecosystem. Users would lose the investment made on this
device (which can be equivalent or even higher than the cost of certain smart mobile
devices)
601
and may need to repurchase a compatible device. As explained above,
users might also need to repurchase certain apps or content in case of switching
devices and OS, such as e-books or audiobooks.
602
Moreover, users may have
598
See footnote 597.
599
CMA “Mobile ecosystems market study final report”, paragraph 3.43, accessed on 14 June 2022, ID
2431.
600
In the US Epic judgment, the judge recognised that “It is further apparent that one may need to
repurchase phone accessories” (Epic Games, Inc, v. Apple Inc., Rule 52 Order after Trial on the Merits,
Case No. 4:20-cv-05640-YGR, 10 September 2021, page 50), https://cand.uscourts.gov/wp-
content/uploads/cases-of-interest/epic-games-v-apple/Epic-v.-Apple-20-cv-05640-YGR-Dkt-812-
Order.pdf, accessed on 2 May 2022, ID 2378.
601
For instance, the starting price of an Apple Watch is EUR 279 for the cheapest Apple Watch SE and
EUR 899 for the newest Apple Watch Ultra 2 (see https://www.apple.com/befr/watch/, accessed on
5 October 2023, ID 3196).
602
These have been recognised as relevant switching costs when switching devices with different Oss in
case T-604/18 Google Android, EU:T:2022:541, paragraph 203, where the General Court considered
that “even if users spent little on apps compared to the cost of a mobile device, it must be noted that
there would nevertheless be an additional cost for users wishing to switch to another OS”. The Court
EN 120 EN
purchased their smartphone on a plan with their telecom providers, subject to a fixed
term of contract, linked to early termination fees and any outstanding phone
repayments.
(390) On the other hand, there are a number of non-monetary switching costs involved as
people have invested in becoming used to a certain mobile operating system and its
functions. Users that intend to switch to a device running on a different mobile
operating system have to acquire technical knowledge and invest time and effort to at
least transfer part of the content to the new device.
603
Paid apps and content may
have to be re-purchased again, and even if this is not the case, they will have to be re-
downloaded and re-installed. Similarly importantly, user have become familiar with
the iOS user interface and its features.
604
Switching to an alternative mobile
operating system such as Android would require them to invest time to get familiar
with a new user interface, new functionalities and change their routines.
605
After
years of using a device with a certain operating system, users have downloaded and
purchased apps for their smart mobile device, obtained cloud storage services,
introduced contact details and become familiarised with the user interface of the
device, among other factors.
(391) Regarding the transfer of data and apps that can be transferred between devices,
although this process may have improved, it is still not completely seamless, and
consumers are concerned about this.
606
(392) First, regarding the transfer of apps and in-app content, even if many apps can be
downloaded for free on both Android and iOS devices, certain apps and in-app
content may not be easily transferred in case of switching to a devices running on a
further noted that, “[h]owever small that additional cost was, it could not be avoided and it did
constitute a barrier to users switching”.
603
See Commission decision of 18 July 2018 in Case AT.40099 – Google Android, paragraph 524.
604
See ACM “Market study into mobile app stores”, accessed on 12 November 2020, ID 886, page 55:
“Learning costs also play their part in switching behaviour. This means that consumers need to get
accustomed to and grow familiar with other interfaces.”
See also iPhone vs. Android – Cell Phone Brand Loyalty Survey 2019 by sellcell of 19 August 2019
finding: “21 % of iPhone users might be tempted to switch if they weren’t too tied into the Apple
Ecosystem or it wasn’t so much hassle changing operating system from iOS to Android”;
https://www.sellcell.com/blog/iphone-vs-android-cell-phone-brand-loyalty-survey-2019/, accessed on
16 December 2020 ID 1027. See also Commission decision of 18 July 2018 in Case AT.40099 –
Google Android, paragraphs 522 et seq.
605
This has been acknowledged in Case T-604/18 Google Android, EU:T:2022:541, paragraph 204, where
the Court endorsed the Commission’s claim that “switching requires users to familiarise themselves
with a new interface, making it necessarily more complex and uncertain”). Similarly, the United States
Northern District Court of California noted in the Epic judgment that “The Court can agree that it takes
time to find and reinstall apps or find substitute apps; to learn a new operating system; and to
reconfigure app settings” (Epic Games, Inc, v. Apple Inc., Rule 52 Order after Trial on the Merits, Case
No. 4:20-cv-05640-YGR, 10 September 2021, page 50), https://cand.uscourts.gov/wp-
content/uploads/cases-of-interest/epic-games-v-apple/Epic-v.-Apple-20-cv-05640-YGR-Dkt-812-
Order.pdf, accessed on 2 May 2022, ID 2378.
Learning costs have also been identified as a relevant perceived barrier to switching by the CMA (CMA
“Mobile ecosystems market study final report”, accessed on 14 June 2022, ID 2431, paragraphs3.89-
3.90 and 3.93-3.96.
606
See for instance, the CMA “Mobile ecosystems market study final report”, accessed on 14 June 2022,
ID 2431, paragraphs 3.90, 3.94, 3.99-3.102. According to the CMA’s consumer survey, a significant
number of users are concerned that it may be difficult or impossible to transfer data and apps to a new
device. See also Annex 32 to the observations by BEUC on the Statement of Objections of 30 April
2021, ID 2015.
EN 121 EN
different operating system and may need to be purchased again.
607
In particular, for
in-app subscriptions made through IAP, users that no longer want to be billed by
Apple need to repurchase or re-subscribe with respect to all subscriptions made
through IAP after switching to a non-iOS device. Moreover, Apple appears to
prevent developers from requiring users to link their developer accounts to their
Apple ID.
608
In case users choose not to do that, they will not be able to subsequently
use their (IAP) subscription on other non-iOS devices, including Android devices.
This is also the case for music streaming subscriptions purchased through IAP. In
this case, users need to cancel their existing subscriptions on iOS before switching
and then re-subscribing to the service on the new non-iOS device or via the website
of the provider.
(393) Second, regarding transfer of data, although this process may have improved with the
availability of apps that help users switch and transfer data from one operating
system to the other,
609
the process is still not seamless. As pointed out in the CMA
final report on mobile ecosystems, while some users may feel confident with the
switching process, others may not and may feel this process does not transfer all their
data reliably. This may in itself discourage switching or increase the time and effort
required for it, as reflected in consumer surveys.
610
(394) Moreover, even once switching is completed, the synchronisation of certain data and
devices may no longer be possible. Users may have more than one Apple device
synchronised together with their smartphone or with Apple services not available on
Android. For instance, automatic synchronisations and access through different
devices to iCloud would no longer be possible when switching to Android.
611
(395) In addition, some of these features and services are non-portable between devices
with different operating systems. Users of Apple’s smart mobile devices may in
particular have other Apple devices and use different Apple services and features
which are not compatible with an Android device, thereby increasing the switching
barriers from iOS to Android.
612
Most of Apple’s proprietary apps, services and
607
According to the CMA “Mobile ecosystems market study final report”, accessed on 14 June 2022,
ID 2431, paragraphs 3.99-3.102, the extent to which data can be transferred may vary, with more
limitations and perceived barriers to transferring data for switching from iOS to Android. According to
the CMA’s consumer survey, a significant number of users are concerned that it may be difficult or
impossible to transfer data and apps to a new device.
See also Annex 32 to the observations by BEUC on the Statement of Objections of 30 April 2021, ID
2025, on apps that facilitate the transfer of data and content to a new device: “Schwieriger wird es beim
Systemwechsel: dem Sprung von Android zu iOS oder umgekehrt. Zwar gelingt allen Apps der Transfer
von Fotos und Videos. Auch Kontakte, SMS und Musik finden meist den Weg aufs neue Handy. Bezahl-
Apps aber gehen verloren, der Nutzer muss sie auf dem Neugerät nochmals kaufen. Wer vom iPhone
auf ein Huawei- oder Sony-Modell umzieht, muss selbst Gratis-Apps manuell herunterladen – das
kostet viel Zeit.“
608
CMA “Mobile ecosystems market study interim report”, accessed on 12 January 2022, ID 2208,
paragraph 3.117.
609
Apple’s Response to the Statement of Objections of 28 February 2023, Annex 7, ID 2807, paragraph
29.
610
CMA “Mobile ecosystems market study final report”, accessed on 14 June 2022, ID 2431, paragraphs
3.90, 3.94 and 3.101-3.102.
611
Although iCloud is accessible from Android through the browser, there is no iCloud app for Android
and automatic backup of data and synchronisation with other Apple devices through iCloud is not
possible.
612
See ACM “Market study into mobile app stores”, accessed on 12 November 2020, ID 886, page 55; and
the CMA “Mobile ecosystems market study final report”, accessed on 14 June 2022, ID 2431,
EN 122 EN
features (such as, inter alia, iMessages, Safari, Apple Pay, Apple Books, Apple
Podcasts, Facetime or AirDrop) are not available on Android devices, and
compatibility between Android devices and other Apple devices may not be possible
(e.g., the Apple Watch) or restricted for certain features (e.g., AirPods). This might
lead to certain monetary switching costs (see recital (389)), but also non-monetary
switching costs in terms of the loss of convenience and ease of use of the devices.
The survey results from […] the Spotify survey (see Figures 24 and 25) confirm that
iOS users care in particular about the ease of use of their devices (59 % in the Spotify
survey […]), the ability to connect to other devices (30 % in the Spotify survey […])
and to transfer contact details (28 % in the Spotify survey […]) and other
information from their old device to their new one. Many of them simply want to
stay with an Apple device (36 % in the Spotify survey […]). There are indications
that it may be harder and more expensive to switch from iOS to Android than the
other way around.
613
Consumers are incentivised to commit to the entire platform-
ecosystem rather than maintaining free choice in mixing complements from different
ecosystems.
614
In particular, iOS users who in addition purchase other Apple devices
can benefit from continuity features - universal control, auto unlock, handoff,
AirDrop or universal clipboard-, as well as Apple first-party apps and services.
615
This tight integration of Apple ecosystem makes it harder and more expensive to
switch from iOS to Android, than from Android to iOS.
616
(396) […]
617
[…].
618
(397) A Credit Suisse equity invest report on Apple Inc. of June 2014 also argued that:
“whether it is the customer lock-in and essential headache of leaving iOS ecosystem
paragraphs 3.108 to 3.117. According to a recent study by CIRP in the US, almost 50 % of iPhone
buyers own an Apple Watch and more than 60 % also own an iPad. A significant percentage of iPhone
users also own other Apple devices, such as a Mac Computer (almost 40 %), AirPods (about 20 %),
Apple TV (over 30 %) or a Home Pod (about 10 %). See: https://9to5mac.com/2021/08/25/cirp-iphone-
draws-buyers-to-ipad-and-apple-watch-but-not-apple-tv-or-homepod/, accessed on 5 April 2022,
ID 2366. The consumer survey carried out by the CMA found that 52 % of iOS ‘Non Considers’ (users
that do not switch/consider switching when purchasing a new device) and 44 % of iOS “Marginal
Users” (users that thought about switching when purchasing a new smartphone, but ultimately did not)
stated, as a reason for not switching, ‘because I have other devices linked to my phone/operating system
(iOS)’, and this was actually the most frequently quoted reason for not switching (see paragraph 3.112
of the CMA “Mobile ecosystems market study final report”, ID 2431, cited above).
613
In the ACM “Market study into mobile app stores” the Netherlands Authority for Consumers &
Markets concluded: “It is harder and more expensive to switch from iOS to Android than the other way
around. The higher cost of switching from iOS may be due to the fact that iPhone users may have other
devices from Apple, which are incompatible with other brands, that Apple offers a tool for transferring
data from Android to iOS (but not the other way around), and because of the tight integration of the
Apple ecosystem. […], accessed on 12 November 2020, ID 886, page 55.
The CMA has also indicated that the barriers to switching, especially the perceived ones by users, are
higher among iOS users than Android ones. See, CMA “Mobile ecosystems market study final report”,
paragraphs 3.90 to 3.121, accessed on 14 June 2022, ID 2431.
614
ACM “Market study into mobile app Stores”, accessed on 12 November 2020, ID 886, page 36.
615
See https://www.apple.com/macos/continuity/, accessed on 2 May 2022, ID 2360.
616
ACM “Market study into mobile app Stores”, accessed on 12 November 2020, ID 886, page 55; and
CMA “Mobile ecosystems market study final report”, paragraphs 3.90 to 3.121, accessed on
14 June 2022, ID 2431.
617
[…].
618
[…].
EN 123 EN
or the loyalty, the output is the same, meaning that once an individual or family is
part of the Apple ecosystem, they will very rarely leave it.”
619
[…]
620
(398) It is also important to note that only very few users are first time buyers of smart
mobile devices and are thus unaffected by any lock-in or loyalty to a specific mobile
ecosystem. […]
621
The vast majority of users have already an existing smartphone or
tablet when they decide to purchase a new one.
622
For these users, barriers to
switching and consumers loyalty to their existing mobile ecosystem play a significant
role in their smart device purchase decision and, thus, in the conditions of
competition between OEMs of smart mobile devices.
(399) Thus, as described above, although there is some competition in the market for smart
mobile devices, Apple has a significant market position and holds market power,
especially in the premium segment. The evidence shows that Apple has been able to
differentiate itself in that market. It has been able to sustain high margins and faces
only limited price competition. The low switching levels described above, due to the
strong brand loyalty and lock-in of users, reinforced by monetary and non-monetary
switching costs, further suggest that competitive constraints on Apple from rival
suppliers of mobile devices are limited and that competition in the market for smart
mobile devices is not fully effective.
8.2.2.5.2.1.2. Assessment of Apple’s arguments
(400) Apple claims it is constrained by significant device-level competition, as reflected by
its modest volume market share in the EU.
623
However, as shown in recitals (366) to
(370), Apple has significant market shares in the market of smart mobile devices in
the EEA, both in terms of volume ([…] %) and value ([…] %). Apple’s value shares
for both tablets and smartphones actually exceed its share on unit sales, which also
shows Apple’s leading positions in the high-end segment of smart mobile devices.
(401) In any event, Apple’s competitive constraints in that market have to be analysed in
light of several factors, as analysed in this Section. In adition to its market position in
terms of market shares, other factors such as price competition, Apple's high profit
margins, Apple's share of worldwide profits, survey evidence and reports from other
authorities, as well as the lock in of consumers due to strong brand loyalty and
switching costs are relevant elements that inform this analysis. As shown above, the
analysis of all these elements leads the Commission to conclude that Apple faces
limited competitive constraints from rival suppliers of smart mobile devices and that
Apple has a significant market position and holds market power in the market for
smart mobile devices, especially in the premium segment.
(402) With regards to the comparison of average prices of smart mobile devices, Apple
argues that this comparison is not informative for assessing competitive constraints.
According to Apple, the price gap in average selling prices is driven by the fact that
Apple has historically focused on higher end devices, while OEMs selling devices
running on Android typically offer broader range of devices. The comparison of
average selling prices ignores that there are significant differences between Android
619
ID 1632.
620
ID 1616.
621
[…].
622
This has also been confirmed by the CMA “Mobile ecosystems market study final report”, paragraph
3.37, accessed on 14 June 2022, ID 2431.
623
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 164.
EN 124 EN
devices in terms of price and quality. Android OEMs also offer high end devices that
are comparable to Apple devices and constrain Apple.
624
According to Apple, rising
smartphone prices are not unique to Apple
625
and there is no evidence that Apple has
been increasingly moving away from competition.
626
Apple further claims that the
Commission ignores the role of quality in competition, which is reflected in
continuous improvements in device performance and innovation.
627
(403) First, the Commission does acknowledge that OEMs selling Android-based devices
offer devices in a wider price range, including an extensive budget offering (see
recitals (370) to (377)). Nevertheless, the comparison of average prices of Apple and
Android smart mobile devices does indicate that Apple is able to differentiate itself
from other vendors and that it faces limited price competition from these OEMs. This
is also supported by the high margins and high operating profits it has been able to
sustain, as explained in recitals (371) to (376). Apple accounts for a large share of
worldwide smartphone operating profits (consistently above 80 % between the first
quarter of 2022 and the first quarter of 2023),
628
which no other rival smartphone
seller has managed to achieve. All of this shows that Apple is to some extent able to
avoid price competition from other OEMs and sustain high device prices and
margins, while those vendors compete closer on prices and achieve significantly
lower margins and profits.
(404) In any event, the Commission has also compared Apple’s position among high end
devices. As shown in recital (372), even among smartphones in the highest price
segment, Apple’s device margins appear high, both in isolation and compared to
rivals. The evidence shows that Apple has positioned its models in the high-end price
range and leads this segment of the market, with a global sales share of 75 % in
2022.
629
Although Apple offers a range of phones where the top-of-the-line most
expensive models co-exist with older models at a reduced price, even the cheapest
model offered by Apple in 2022 (the iPhone SE 2
nd
Gen), was sold at a higher price
than the average selling price of Android smartphones (see recital (373)). Apple also
captured eight out of the ten top smartphones sold worldwide in 2022.
630
(405) These findings are also consistent with those of the consumer surveys carried out by
Spotify […] for the purposes of the investigation, which suggest that Apple’s smart
624
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 165, and
Annex 7, ID 2807, paragraphs 8 and 9 and Figure 1. See also Apple's Response to the Letter of Facts,
Annex 10, ID 3325, paragraphs 9 to 11.
625
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 165, and
Annex 7, ID 2807, paragraphs 19 to 20. See also Apple's Response to the Letter of Facts, Annex 10, ID
3325, paragraphs 22 to 23.
626
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 165, and
Annex 7, ID 2807, paragraphs18 to 28. See also Apple's Response to the Letter of Facts, Annex 10, ID
3325, paragraph 21.
627
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 165, and
Annex 7, ID 2807, paragraphs 6 to 17. See also Apple's Response to the Letter of Facts, Annex 10, ID
3325, paragraphs 14 to 20.
628
See https://www.counterpointresearch.com/insights/global-smartphone-market-declines-14-yoy-q1-
2023-apple-records-highest-ever-q1-share/, accessed on 21 September 2023, ID 3184.
629
See https://www.counterpointresearch.com/insights/premium-market-captures-half-global-smartphone-
revenue-2022-first-time/, accessed on 20 September 2023, ID 3166.
630
See https://www.counterpointresearch.com/insights/top-smartphones-global-2022/, accessed on
20 September 2023, ID 3163.
EN 125 EN
mobile device users are less price sensitive, more brand-loyal and put more weight
on factors associated with ease of use and connectivity than Android users.
(406) Regarding the Commission’s findings on switching cost, Apple argues that the
Commission has failed to substantiate or quantify switching costs in this case.
631
Apple argues that the Commission’s findings are inconsistent with consumer survey
evidence
632
and market data. According to Apple, survey evidence and market data
suggest that consumers do not consider switching costs to be important.
633
According
to Apple, there are no real barriers to switching arising from data and apps portability
and this is hardly a relevant switching cost for most consumers.
634
Apple also argues
that learning costs and investment into accessories are not relevant switching
costs.
635
(407) The evidence gathered by the Commission suggests otherwise. Contrary to Apple’s
claims, consumers are indeed concerned about the transfer of data and apps across
devices. This is in fact confirmed by consumer survey data and other public sources,
including consumer associations.
636
The evidence in the file shows that although
certain data and apps may be transferred from a device running on one smart mobile
operating system to another and the transfer of data and interoperability may have
improved over time, this process is still not completely seamless, as claimed by
Apple. As explained in recitals (391) to (393), certain apps or the content offered in
the app may not be easily transferred across devices in case of switching operating
system and may need to be purchased again. Even if some apps and data may be
transferred, others cannot be easily transferred or are even not available in case of
switching to a different smart mobile operating system, as detailed in recital (395).
Although, as Apple claims, Apple’s first-party apps may be a sign of competitive
differentiation and some consumers may find workarounds for these apps when
switching;
637
however this does not alter the fact that they also create switching costs
and lock in for users.
(408) In any event, data and apps portability, learning costs and investment into accessories
are only some of the various elements creating switching costs and reinforcing the
lock-in of consumers, as detailed in recitals (388) to (395).
(409) Finally, Apple also argues that its strong brand loyalty and low switching between its
devices and those running on Android is due to high customer satisfaction rather than
631
Apple’s Response to the Statement of Objections of 28 February 2023, Annex 7, ID 2807, paragraph
29. See also Apple's Response to the Letter of Facts, Annex 10, ID 3325, paragraph 31.
632
Apple’s Response to the Statement of Objections of 28 February 2023, Annex 7.1, ID 2808. See also
Apple's Response to the Letter of Facts, Annex 10, ID 3325, paragraph 31.
633
Apple’s Response to the Statement of Objections of 28 February 2023, Annex 7, ID 2807, paragraph
28. See also Apple's Response to the Letter of Facts, Annex 10, ID 3325, paragraph 31.
634
Apple’s Response to the Statement of Objections of 28 February 2023, Annex 7, ID 2807, paragraph
29-36. See also Apple's Response to the Letter of Facts, Annex 10, ID 3325, paragraphs 32 to 39.
635
Apple’s Response to the Statement of Objections of 28 February 2023, Annex 7, ID 2807, paragraphs
37 to 41. See also Apple's Response to the Letter of Facts, Annex 10, ID 3325, paragraphs 40 to 44.
636
See for instance, the CMA “Mobile ecosystems market study final report”, accessed on 14 June 2022,
ID 2431, paragraphs 3.90, 3.94, 3.99-3.102. According to the CMA’s consumer survey, a significant
number of users are concerned that it may be difficult or impossible to transfer data and apps to a new
device.
See also Annex 32 to the observations by BEUC on the Statement of Objections of 30 April 2021, ID
2025.
637
Apple’s Response to the Statement of Objections of 28 February 2023, Annex 7, ID 2807, paragraphs
42 and 43. See also Apple's Response to the Letter of Facts, Annex 10, ID 3325, paragraphs 45 and 46.
EN 126 EN
lock-in and that it makes a decisive difference whether consumers do not switch
because they are satisfied or because they are locked in.
638
(410) The Commission acknowledges that consumer satisfaction may indeed be one of the
factors for Apple’s strong brand loyalty. However, even if Apple device users may
be satisfied by certain Apple features, services or apps, that does not preclude that
these features, services or apps also lock users in the Apple ecosystem.
639
Evidence
shows that factors such as familiarity with the user interface and switching costs
reinforce the level of brand loyalty.
640
(411) In any event, regardless of whether brand loyalty is due to customer satisfaction or
lock in, iOS users typically stick to the ecosystem and are unlikely to switch away
from it.
641
In the consumer surveys conducted by Spotify […], the five most
important factors influencing device choice amongst users of iOS devices were “ease
of use” (considered as an important factor by 59 % respondents in the Spotify survey
[…]), “brand of mobile device” (52 % in the Spotify survey […]), “wanted/preferred
to stick to same Apple device” (35 % in the Spotify survey […]), and “ease to
connect with other devices” (33 %).
642
Other consumer surveys have confirmed that
the brand of a device is one of the key parameters for users’ decision-making and one
on which Apple users tend to put more emphasis than Android users.
643
(412) App developers, OEMs and mobile network operators had also pointed out in Case
AT.40099 – Google Android that consumers were highly loyal to both iOS and
Android.
644
They confirmed that once a consumer gets used to an ecosystem it is
unlikely they would switch to another one.
645
The costs of switching to an alternative
mobile operating system were cited as the main reason for this loyalty, rather than
mere consumer satisfaction.
646
638
Apple’s Response to the Statement of Objections of 28 February 2023, Annex 7, ID 2807, paragraphs
44 to 49, Annex 7.1, ID 2808, pages 25 to 32, and Annex 7.2, ID 2809. See also Apple's Response to
the Letter of Facts, Annex 10, ID 3325, paragraphs 47 to 53.
639
[…] In Case T-604/18 Google Android, EU:T:2022:541, paragraph 185, the Court considered with
respect to the Android smart mobile operating system that “Ensuring users’ satisfaction was also a way
of strengthening their loyalty to Android.”
640
See, in particular, recitals (381) and (386) and the evidence referenced.
641
A Credit Suisse equity investment report on Apple Inc. of June 2014 also argued that: “whether it is the
customer lock-in and essential headache of leaving iOS ecosystem or the loyalty, the output is the same,
meaning that once an individual or family is part of the Apple ecosystem, they will very rarely leave it.”
(ID 1616). Similarly, the General Court concluded in Case T-604/18 Google Android, EU:T:2022:541,
paragraph 186, that the fact that a high percentage of users of Android devices remained loyal when
making a new purchase indicated that, “at the very least, the high degree of user loyalty towards
Android made it unlikely, on the face of it that users would switch to another OS”.
642
Responses to question 7 of the Spotify survey: “What factors were important when you
chose/purchased your current [smartphone/tablet]? Select up to 5 factors.” – see Table 3, pages 36 et
seq., ID 900.
643
CMA “Mobile ecosystems market study final report”, accessed on 14 June 2022, ID 2431, paragraph
3.61.
644
See Commission decision of 18 July 2018 in Case AT.40099 – Google Android, paragraphs 533-535.
This evidence was also deemed relevant by the General Court in Case T-604/18 Google Android,
EU:T:2022:541, paragraphs 184 et seq., to conclude that the Commission was entitled to rely on user
loyalty to their operating system when assessing the competitive constraints exerted by Apple on
Android.
645
See Commission decision of 18 July 2018 in Case AT.40099 – Google Android, paragraph 534.
646
See, inter alia, Telefonica’s statement in paragraph. 534 of Commission decision of 18 July 2018 in
Case AT.40099 – Google Android: “Once any customer has been using an ecosystem and has
EN 127 EN
(413) Therefore, Apple’s arguments do not invalidate the Commission’s finding that Apple
has a significant market position and holds market power, particularly in the
premium segment. The evidence in the file shows that competitive constraints on
Apple from rival suppliers of smart mobile devices are limited and that competition
in the market for smart mobile devices is not fully effective.
8.2.2.5.2.2. The link between the market for smart mobile devices and the provision of a
platform for music streaming app distribution
8.2.2.5.2.2.1. The Commission’s position
(414) As described above, although the present case exhibits some differences to
traditional aftermarket cases, the Commission considers the elements in the
framework provided by the Court in aftermarket cases, including in the EFIM
case,
647
as useful and informative in the present case to assess whether competition at
the level of smart mobile devices may potentially limit Apple’s ability to behave
independently at the level of music streaming app distribution and to set the
conditions under which such apps are accepted to the App Store. In this context, it
must be taken into account that music streaming service providers do not charge
consumers for the app as such, which can be downloaded for free, but only for paid
subscriptions purchased within those apps. A worsening of the commercial terms
offered by Apple to developers of music streaming apps on the developer side of the
platform could reach users pre-dominantly in the form of an increase of the
subscription price paid by users of Apple’s smart mobile devices, in case the rise of
the commission fee by Apple for in-app sales of digital content or services within the
app is passed on by developers to users.
648
In the analysis below, the rise of the
subscription fee charged to consumers can therefore be understood as a proxy for an
increased price or lower attractiveness of the app.
(415) For the following reasons the Commission considers that the link between smart
mobile devices and app distribution, and in particular music streaming app
distribution is not sufficiently strong to discipline Apple at the level of app
distribution, and in particular of music streaming app distribution.
(416) First, if significantly higher in-app subscription fees on iOS devices for music
streaming services or the inability for iOS users to subscribe to certain music
streaming offers within the app of the respective providers were to negatively impact
device sales by Apple, then Apple would already have adapted its policies at the app
distribution level to avoid the significant price differences in its iOS app compared to
other channels
649
, and in particular compared to apps on Android devices. However,
Apple has so far refrained from relaxing its app store terms in way that would
purchased several apps for it, it is very unlikely that the specific customer would jump to another
ecosystem unless it had a bad experience with it or because of aggressive counter offers from the
different devices manufacturers. Most of them, keep loyal to the ecosystem after 1 year of use. The
main reason for that loyalty is that there are costs of switching to alternative platforms for end
users.”
647
Case T-296/09 European Federation of Ink and Ink Cartridge Manufacturers (EFIM) v Commission,
EU: T:2011:693, paragraphs 60, 90 and 91, confirmed in Case C-56/12 European Federation of Ink and
Ink Cartridge Manufacturers (EFIM) v Commission, EU:C:2013:575, paragraphs 12 and 36 et seq.
648
A de-listing of their app from the App Store is clearly not a viable option for music streaming service
providers - see Section 8.1.4.1.3.
649
See Section 7.5 on difference of prices of in-app music streaming subscriptions on iOS compared to the
subscription prices available elsewhere.
EN 128 EN
facilitate lower in-app prices of third-party music streaming subscriptions or would
incentivise those third-party music streaming service providers that have disabled in-
app purchases to offer subscriptions directly in the app.
650
To the contrary, Apple has
on 19 September 2022 announced a (unilateral) price increase for apps and in-app
purchases across all apps covering many countries in the EEA, including those that
use the euro currency. This price increase has been achieved by updating the
respective price tiers developers can chose from when setting their prices. For
example, tier one will be rising from EUR 0.99 to EUR 1.19 (.i.e., by 20 %), while
the maximum tier is set to increase from EUR 999 to EUR 1 199. While, this does
not exclude that some developers may reduce the price of their apps or in-app
purchases by adjusting to a price tier with a lower price subsequently, the fact that
Apple unilaterally and on short notice announces such a price increase directly
affecting consumers does not support the argument that increases of app and in-app
prices could lead to less device sales making such a price increase unprofitable.
(417) Second, the prices of smart mobile devices exceed the expenditure paid by
consumers for their music streaming apps multiple times. As can be seen from Figure
29, the average sales price of iPhones throughout the years 2011 to 2018 was
constantly above USD 600 and typically increasing over time. The price of iPhone
models in the EEA in 2022 ranges from USD 407.65 for iPhone SE (2
nd
Gen) to
USD 1 211.88 for iPhone 14 Pro Max.
651
Figure 29 – Average sales prices
652
650
See https://developer.apple.com/news/?id=e1b1hcmv, accessed on 10 October 2022, ID 2571, and
https://www.macrumors.com/2022/09/19/app-store-prices-to-increase-in-europe-next-month/, accessed
on 10 October 2022, ID 2570.
651
See Figures reported by Apple in Annex Q14 to its response to request for information dated 3 August
2023, ID 3004.
652
Source: Statista based on data from Apple, ID 892. The average sales price of an iPad is typically lower.
[…]. See also Figure 21.
EN 129 EN
(418) These device prices are much higher than the prices paid by consumers for their
music streaming apps. The download of a music streaming app is typically for free as
music streaming service providers only charge in the case of an upgrade to the
premium/paid service. An increase of the monthly music streaming subscription fees
within the app by EUR 1 from EUR 9.99 to EUR 10.99 corresponds to only a very
small increase […].
653
Moreover, a 10 % increase of the 30 % commission fee
charged by Apple to developers would normally not translate into a 10 % price
increase of the apps (or of the in-app subscriptions) to iOS users but it would – if
fully passed on to consumers – only translate into a much lower increase of the price
of apps (or in-app subscriptions) and thus to the consumers total cost of ownership of
an iPhone.
(419) Third, consumers lack transparency over the prices for app distribution and in-app
conditions for accessing content and can therefore not make an informed choice,
including life-cycle pricing, between various manufacturers in the market for smart
mobile devices.
(420) The lifecycle cost of apps in general is much less transparent at the point of the
purchase decision of smart mobile devices, compared to, for example, mobile tariffs.
The prices of apps and in-app content are not systematically available at the time and
place where a mobile device purchase decision is taken, irrespective of whether
consumers purchase their devices in a physical shop or online. Moreover, there are
no effective comparison tools or websites available that allow consumers to
systematically and easily compare app prices or in-app subscription conditions across
app stores for different smart mobile OS.
654
(421) Consumers that are interested to learn more about app prices and in-app purchase
prices have therefore in practice two main possibilities to compare them. First, they
could access both the App Store and the Google Play Store. However, since these
stores are only available as apps on their own smart mobile device and respective
OS, this would mainly require that they have access to smart mobile devices running
on the different smart mobile OSs. Second, they could compare the descriptions of
the individual apps on Apple’s and Google’s homepages for their respective app
stores.
655
(422) With respect to music streaming apps specifically, while Apple provides some
information on music streaming apps available in the App Store and in-app
subscription conditions on its homepage, this information is difficult to reach,
difficult to compare and sometimes inaccurate. The information is difficult to reach
among other reasons because users cannot have both the App Store (iOS) and Play
Store (Android) apps on the same device, and hence need to open the mobile
browser, type in the url of at least one app store, or arrive from a bookmark, link or a
dedicated search to the store, and subsequently search for the specific music
streaming app in the browser. The information is difficult to compare and incomplete
as shown for example by the fact that both the App Store and the Play Store tend to
653
[…].
654
As also confirmed by BEUC’s representative at the oral hearing (recording of the oral hearing in Case
AT.40437, as of 06:22:15, ID 3131).
655
For example, for the Spotify app this would mean opening in the mobile browser the links
https://play.google.com/store/apps/details?id=com.spotify.music (Android), accessed on 2 May 2022,
ID 2385, and https://apps.apple.com/us/app/spotify-new-music-and-podcasts/id324684580 (iOS),
accessed on 13 May 2022, IDs 2412 and 2421.
EN 130 EN
mention in-app price ranges, leaving unclear which of those prices would apply to
the user.
656
The information is sometimes not even available. For example Apple’s
App Store website indicates that Spotify’s app is free and that there are four
subscription options available, but does not indicate any price information for these
subscription possibilities.
657
Conversely, there is either no information on in-app
music streaming subscription prices on Google’s Play Store website for music
streaming apps or the information is only provided at a very general level that does
not allow users to make an informed choice.
658
Importantly, this does not imply that
there are no differences in in-app prices and in-app purchase conditions across
Android and iOS apps. On the contrary, such differences exist, but are difficult for
users to realise, and to take into account to inform their smart device purchase
decisions.
(423) The Commission does not consider it likely that users would make an effort to
compare music streaming apps and in-app subscription conditions on both mobile
operating systems and notice that differences in in-app purchase conditions exist.
Even if they made this effort, the available information would not allow them to
make an informed choice due to the poor quality of the information available on the
websites of the Apple and Google app stores.
(424) With respect to the lifecycle costs of apps in general beyond music streaming,
consumers can only have an incomplete conception of the apps they may use over
the lifetime of the device and on how much they will use them. They cannot know
what apps will be made available over the lifetime of their device and on which ones
they will decide to spend money on. On average, developers release more than 30
000 new apps in the App Store each month.
659
The most natural moment for a user to
learn about the real price and in-app purchase conditions for a particular app is when
the user already holds the device in his or her hand and is interested in a particular
app. At this point in time, the device purchase decision had been taken. App prices
and in-app purchase conditions therefore are unlikely to significantly influence
device choice.
(425) […]
660
[…].
(426) The consumer surveys conducted independently by […] Spotify
661
[…]
662
which
focused on music streaming apps confirm that consumers rarely compare in-app
656
For example, the Deezer app is indicated to include in-app products for “EUR 2.59 – EUR 218.99 if
billed through Play” in the Google Play Store,
https://play.google.com/store/apps/details?id=deezer.android.app, accessed on 26 September 2023, ID
3188, whereas for the App Store, the Deezer app shows several prices ranging from USD 5.49 to
USD 20.99 and https://apps.apple.com/app/deezer-music-podcast-player/id292738169, accessed on
7 November 2023, ID 3189.
657
See https://apps.apple.com/us/app/spotify-new-music-and-podcasts/id324684580, accessed on
30 October 2023, ID 3198.
658
See for example for Tidal https://play.google.com/store/apps/details?id=com.aspiro.tidal, accessed on
2 May 2022, ID 2383, or for Spotify https://play.google.com/store/apps/details?id=com.spotify.music,
(mentioning for in-app products “EUR 10.99 – EUR 104.99 if billed through Play”), accessed on
26 September 2023, ID 3197, or for Deezer,
https://play.google.com/store/apps/details?id=deezer.android.app, (mentioning for in-app products
“EUR 2.59 – EUR 218.99 if billed through Play”), accessed on 26 September 2023, ID 3188.
659
https://www.statista.com/statistics/1020964/apple-app-store-app-releases-worldwide/, accessed on
2 May 2022, ID 2375.
660
[…] https://about.fb.com/news/2020/08/paid-online-events/, accessed on 16 December 2020, ID 1089.
EN 131 EN
prices of music streaming subscriptions when purchasing a smart mobile device.
Even if they do so, they typically do not compare prices across apps for different
mobile operating system (i.e., in the iOS app and the Android app). Since they lack
information regarding differences in in-app music streaming subscription conditions
between Android and Apple devices, they are not in a position to make an informed
smart device purchase choice including lifecycle pricing.
(427) In the Spotify survey only a small proportion (8 %) of iOS users and (6 %) of
Android users responded that they had compared the prices of music streaming
services when buying their current smart mobile device. Nearly 90 % of respondents
on both operating systems confirmed not having compared these prices. […].
(428) Furthermore, even among respondents who claimed to have compared the prices of
music streaming services at the time of their smart mobile device purchase only a
small minority made this comparison in a manner that would actually reveal
differences in in-app music streaming subscription conditions between Android and
iOS. For a consumer to realise that an Android device may provide different (better)
in-app conditions to subscribe to music streaming services, (s)he would need to
compare music streaming prices in both the Google Play Store for Android and the
App Store for iOS devices. For example, comparing the prices of different music
streaming services on their websites does not reveal any information to the user
about differences in in-app music streaming subscription conditions. Nor is it
informative to check music streaming fees on a just one mobile device (iOS or
Android) and the website of the service provider, because even if a difference in the
subscription conditions may be observed, the consumer would still not know about
different subscription conditions of the other platform.
(429) The surveys conducted by […] Spotify contained questions regarding where users
compared music streaming service prices. The responses show that even among the
very low number of users that actually made any comparison, very few compared
prices on both mobile operating systems.
(430) In particular, in Spotify’s survey only 13 (4 %) out of the 321 iOS users who
responded to have compared music streaming prices when purchasing their device
actually compared those prices both in the Google Play Store and the App Store. The
remaining 96 % of iOS users that claimed to have compared prices did not check
those prices in both major app stores.
663
These users therefore could not have seen
that music streaming subscription prices may differ on Android and iOS.
(431) […].
664
(432) The fact that only a negligible share of users inform themselves about how in-app
music streaming subscription prices and conditions differ across iOS and Android
devices shows that consumers are typically not in a position to make an informed
661
Spotify Survey, ID 900 (Compass Lexecon document “Is Apple’s dominance in the market for
developers’ access to iOS constrained by competition for iPhone sales”, dated 22 March 2020),
IDs 902, 903, 904, 905 (Spotify survey data and statistics), ID 901 (Spotify survey methodology note),
IDs 956 (raw Spotify data and Stata codes) and 500 (Questionnaire for Spotify Premium (iOS &
Android) & Free users).
662
[…].
663
This should be seen in light of the fact that only 8 % of iOS users performed any comparison in the first
place (see recital (427)).
664
[…].
EN 132 EN
choice that would take into account these differences when taking a purchase
decision in the market for smart mobile devices.
(433) Fourth, consumers are not likely to make an informed choice that would take into
account app and in-app purchase conditions when buying smart mobile devices. This
is for the following reasons.
(434) In the first place, the surveys of […] Spotify confirm that consumers to a very large
extent fail to take into account the range and price of apps in general in their decision
to purchase their smart mobile device.
(435) In Spotify’s survey merely 14 % of iOS users indicated “range of applications for
download” as an important factor when purchasing their current smartphone/tablet
(Figure 25). […].
665
Several other factors were clearly more important for device
choice, such as the ease of use and connecting, the brand of the device and wanting
to stick with an Apple device. Upon the same question in Spotify’s survey only 1 %
of iOS users mentioned “the prices of applications” to have been an important factor
behind their device choice (Figure 25). […].
666
(436) […].
667
(437) The fact that consumers do not consider the range and price of applications in
general to be of high importance for their device choice shows that they are unlikely
to make an informed choice when purchasing a smart mobile device engaging in
whole life costing.
(438) In the second place, the surveys of […] Spotify confirm that consumers do not take
into account factors related to the price of the music streaming apps or in-app
subscriptions when deciding to purchase their smart mobile device.
(439) Less than 4 % of iOS users mentioned “the range of music streaming apps“ as
important device purchase factors in Spotify’s survey, and only 1 % mentioned “the
price of music streaming services” as important (Figure 24). […].
668
(440) The fact that consumers do not consider factors related to the ease and price of in-app
music streaming subscriptions in their smart device purchase indicates that they are
unlikely to make an informed choice including lifecycle pricing regarding music
streaming apps and subscriptions when purchasing smart mobile devices.
(441) In the third place, the primary factors that drive the smart mobile device choice of
existing iOS users as well as the role of app prices have been analysed in the
consumers’ survey conducted by Spotify among Spotify customers […]. […].
(442) In the survey conducted by Spotify (Figure 24), the five most important factors
influencing device choice indicated by users of iOS devices were “ease of use”
(considered as an important factor by 59 % respondents), “brand of mobile device”
665
[…].
666
[…].
667
[…].
668
Even those few consumers who mentioned to have considered factors related to the ease and price of in-
app music streaming subscriptions in their smart device purchase attributed a relatively low importance
to these factors. In Spotify’s survey iOS respondents that mentioned as device choice factors “range of
music streaming services for download” and “the prices of music streaming services” attributed on a
scale between 1 (least important) to 5 (most important) an average score of respectively 3.8 and 4.0 to
these factors. Other, more often cited factors such as “ease of use” or “brand of mobile device” received
higher average importance ratings. […].
EN 133 EN
(52 %), camera (38 %), “wanted/preferred to stick to same Apple device” (35 %), and
“ease to connect with other devices” (33 %).
669
[…].
(443) In the fourth place, only very few users are first time buyers of smart mobile devices
that are not already locked in, which increases the relevance of brand loyalty and
lock-in effects and reduces the likelihood of an informed choice in the primary
market.
670
The vast majority of users have already an existing smartphone when they
decide to purchase a new one. For these consumers loyalty to their existing mobile
ecosystem plays a significant role in their smart device purchase decision.
(444) In the fifth place, iOS users typically are less price sensitive than Android users and
are therefore less likely to make an informed choice, taking life-cycle pricing of the
device into account. In the Spotify survey, 17 % of iOS users considered the price of
the device to be an important choice factor compared to 57 % of Android users
(Figure 25). […].
(445) Fifth, the Commission considers that it is unlikely that consumers would adapt their
purchasing behaviour at the level of smart mobile devices in case of an apparent
policy of exploitation being pursued at the level of app distribution.
(446) […] the survey conducted by Spotify […] included a hypothetical question regarding
whether iPhone/iPad users would have still purchased their device in case the prices
for music streaming services were observably approximately 10 % higher on Apple
devices than on non-Apple devices.
671
In response to the survey by Spotify, 10 % of
respondents indicated that it is unlikely or extremely unlikely that they would have
still purchased an iOS device.
672
[…].
673
(447) While these responses indicate that for the majority of users, an observable price
difference of 10 % between iOS and Android devices would not have impacted their
choice of smart mobile device, there is a non-negligible proportion of survey
respondents […] indicating that their choice of smart mobile device would likely
have been affected.
(448) The Commission considers that the response to the questions about a hypothetical
price increase, when interpreted in light of the responses to other questions of the
survey, does not indicate a sufficient link between the market of smart mobile
devices and the app distribution level that could discipline Apple’s market power.
This is for the following reasons:
(449) In the first place, this question makes the survey respondents aware of a price
difference for music streaming services between iOS devices and Android devices,
669
Responses to question 7 of the Spotify survey: “What factors were important when you
chose/purchased your current [smartphone/tablet]? Select up to 5 factors.” – see Table 3, page 36 et
seq., ID 900.
670
See recital (398).
671
In the Spotify survey, the following question 11 was asked: “If at the time of purchasing your [iPhone/
iPad] the prices of music streaming services on all Apple devices had been [membership price+10 %] a
month rather than [membership price] a month, but the prices of music streaming services on Non-
Apple devices were still [membership price] a month, how likely is it that you would still have
purchased an [iPhone/ iPad]? [Only applies to iOS premium users]”, Table 4, Q.11, page 41, ID 900.
[…].
672
4 % of premium users said it was extremely unlikely and 6 % indicated, it was unlikely that they would
have purchased an iPhone/iPad if the price of music streaming services was 10 % higher only on iOS.
12 % of respondents indicated “don’t know” to the respective question.
673
[…].
EN 134 EN
which they would typically not have been aware of at the time of smart mobile
device purchase in view of the limited transparency of prices at the time of purchase.
Indeed, the responses are inconsistent with the actual conduct of the same
respondents in the past. Since at least 2015, the prices of most music streaming
services for which an in-app subscription was possible on iOS apps were 30 %
higher on iOS than on Android (typically EUR 12.99 compared to EUR 9.99 for an
individual subscription plan). All of the iOS users that responded to the respective
question decided to nonetheless purchase an iOS device - including those who said
they would switch to Android – which in itself questions the reliability of the
response to this question.
(450) […].
674
It means that consumers are in reality (and without being made aware of it by
a specific survey question) unlikely to associate high in-app subscription fees for
music streaming services with Apple. Consumers are not able to allocate costs for
their in-app purchases between developers and Apple as the operator of the App
Store). Conversely, some iOS users would naturally – and wrongly – think that high
fees for in-app subscriptions are solely the consequence of the price-setting decision
of the music streaming service provider itself. In light of this, it is unlikely that they
would consider switching smart mobile devices to avoid higher costs as the costs
would not be associated with Apple.
(451) In the second place, the questions in the surveys were hypothetical in respect to a
number of elements, which was difficult to avoid for these purposes:
– They take a price level as the starting point that is for many if not most
iOS users hypothetical and not the price level at which they currently
purchase music streaming subscriptions on iOS devices.
675
– iOS customers of Spotify’s music streaming service cannot currently
subscribe to Spotify’s paid service in the Spotify app at all, as Spotify
decided in May 2016 to disable IAP because of the commission fees
charged by Apple for in-app subscriptions and the price increases this
would lead to for its customers.
– Apple’s own service Apple Music does not have to pay the commission
fee of 30 %. Given its low price, it provides an alternative customers can
turn to in case they want to avoid higher subscription fees on their iOS
devices which does not require switching devices.
– Subscriptions can also be purchased outside an iOS app. This also means
that, iOS users that are faced with a higher in-app subscription price,
could - if aware of this possibility - rather than switching to a non-iOS
smart mobile device subscribe to their favourite music streaming service
outside of the app, which further limits any disciplinary effect
competition for smart mobile devices could have on Apple’s ability to
behave independently when setting the terms for app distribution.
674
[…]. See https://about.fb.com/news/2020/08/paid-online-events/, accessed on 16 December 2020
ID 1089; and Katie Paul, Stephen Nellis, “Exclusive: Facebook says Apple rejected its attempt to tell
users about App Store fees”, Reuters, 28 August 2020, available at https://www.reuters.com/article/us-
facebookapple-exclusive-idUSKBN25O042, accessed on 17 December 2020 ID 1037.
675
[…].
EN 135 EN
(452) It is widely documented that survey respondents tend to have difficulties answering
hypothetical questions. Consumer researchers denote this phenomenon as the
“hypothetical bias”. Therefore, the Commission generally puts more weight on non-
hypothetical survey questions, such as regarding factors consumers took into account
in their last smart mobile device purchase decision than on hypothetical questions
about a price increase.
676
(453) In the third place, the responses to this question in […] surveys have to be read in
light of responses by the same respondents to other questions in the […] survey.
(454) […].
(455) […]
677
, […]
678
[…].
679
[…].
(456) In the fourth place, survey questions with the hypothetical price increase
680
are likely
prone to the Cellophane fallacy in a context where Apple is suspected to hold some
power to raise prices to a supra-competitive level on any component of its devices,
including hardware and software. Questions about hypothetical price increases need
to be treated cautiously when applied to abuse of dominance cases. If a SNIPP test is
applied between a monopolised product and another one, the results may suggest a
degree of substitutability between the two because consumers are already at the point
where they stop purchasing from the monopolist or switch to alternative products. As
shown by Apple’s ability to sustain high prices and margins on its devices and to
reap a disproportionately large share of smart mobile market profits, Apple device
prices are likely already at an elevated level compared to a fully competitive situation
in the market of smart mobile devices (see Section 8.2.2.5.2.1 on the level of
competition in the market for smart mobile devices). Therefore, even the few
consumers who in theory may engage in life-cycle cost calculations would have to
make their device choice decision in light of Apple’s current, likely elevated smart
mobile device prices. Their response to the survey question with a hypothetical
music streaming fee increase is therefore prone to the Cellophane fallacy.
676
There is broad consensus on the need to treat survey responses to questions with hypothetical price
increases with caution. See for example UK CMA (2018), "Good practice in the design and
presentation of customer survey evidence in merger cases",
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/7081
69/Survey good practice.pdf, accessed on 16 December 2020 ID 1115. “Hypothetical diversion
questions are inevitably subject to [the hypothetical] bias; this should always be carefully considered
when interpreting findings based on them.” “Generally, the CMA does not consider responses to price
diversion questions to be fit for the purpose of estimating own price elasticities. […] this calculation
requires a degree of accuracy that is particularly sensitive to the bias introduced by the hypothetical
nature of the question.” The Commission has in the past expressed serious concerns about the quality of
survey respondent’s answers to questions about hypothetical switching behaviour. In
Staples/OfficeDepot (M.7555), the Commission contacted survey respondents to verify their answers to
questions about the extent a hypothetical scenario would trigger switching. The Commission found that
“while there was evidence of overstated switching behaviour in their replies to the SSNIP question,
there was no evidence of an understated switching behaviour in reply to the same question.”
Commission decision of 10 February 2016 in Case M.7555 – Staples/OfficeDepot, Section 6.1.3.3.4.
and paragraph 130.
677
[…].
678
[…].
679
With the exception of Apple Music and Spotify who decided to disable the in-app subscription
possibility of Apple in view of the IAP obligation and the requirement to pay a 30 % IAP commission
fee to Apple.
680
See footnote 671.
EN 136 EN
(457) In the fifth place, even for those consumers […].
681
A lot of switching in response to
such a price increase may – as Apple points out – in theory indicate that Apple is
facing strong competition from Android devices. However, one would also expect to
observe significant switching if instead Apple faced no or limited competition from
Android devices. […].”
682
Observing a relatively high number of consumers
switching away from Apple in response to any price increase on Apple devices is
therefore consistent with the Commission’s view that Apple is not constrained by
strong competition in the market for smart mobile devices. […].”
683
(458) In sum, the questions about actual behaviour in the surveys show that consumers are
typically not aware of music streaming subscription price differences on and off the
iOS platform and do not take these into account in their device purchase decisions.
This lack of awareness of price differences as well as the responses about actual past
behaviour raise doubts about the reliability of the responses about the impact of a
hypothetical price increase on device choice. Furthermore, the questions are likely
subject to response biases, and their economic interpretation is ambiguous about the
extent to which Android devices are able to discipline Apple in the smart mobile
device market. Apple itself recognises this and confirms that “we do not suggest that
the findings of the SSNIP test [confidential quote] should be regarded as conclusive
evidence in favour of a broad market definition” in the primary market of smart
mobile devices.
684
(459) The Commission puts more trust into the non-hypothetical survey results presented
in recitals (433) to (444) regarding whether consumers took into account app prices
and music streaming subscription price differences in their device choice than in the
hypothetical question about switching. Those non-hypothetical responses indicate
that consumers are most likely not even aware of differences in-app prices and in-app
subscription conditions on various mobile devices and do not take such factors into
account when buying a smart mobile device.
(460) The Commission therefore concludes that it is unlikely that consumers would adapt
their purchasing behaviour at the level of smart mobile devices to react to an
apparent policy of exploitation at the level of the distribution of music streaming
apps by Apple.
685
(461) Sixth, consumers would not adapt their purchasing behaviour at the level of smart
mobile devices to an apparent effective price increase within a reasonable time.
(462) The vast majority of consumers are not aware of differences on various mobile
devices with respect to music streaming apps and in-app music distribution
conditions.
686
Even if they were aware of such differences, and they overcame the
very significant switching costs entailed in changing the operating system of their
681
[…].
682
[…].
683
Ibid.
684
ID 990.
685
See also Commission decision of 18 July 2018 in Case AT.40099 – Google Android, paragraph 543 on
the limited switching between smart mobile OSs and the fact that only very significant changes in
number, range, quality or prices of apps could trigger such a switch. These arguments have been
confirmed by the General Court in Case T-604/18 Google Android, EU:T:2022:541, paragraphs 192-
199.
686
See recitals (438) et seq.
EN 137 EN
mobile device, any switching would occur with a very significant time delay, i.e., not
within a reasonable time.
(463) In the first place, according to a recent Eurobarometer
687
report, upon the question
“for how long would you like to keep using your current digital devices (e.g.,
smartphone or tablet) provided that there is no severe drop in performance (QC2)”
81 % of respondents in the EU28 indicated their desire to keep their current device
for at least 2 years, and typically for at least 5 years.
688
Consumers therefore have a
desire to keep their smart mobile device typically a very long period (at least 5 years)
unless there is a drop in performance.
(464) In the second place, Spotify’s survey shows that more than two thirds of current iOS
device users and 63 % of Android users have had their current device for longer than
a year.
689
67 % of iOS users and 48 % of Android users explicitly stated their intent
to purchase their next smartphone/tablet in more than one year of time. On both
smart mobile operating system only 24 % of respondents indicated their willingness
to buy their next smart device in less than a year of time.
690
This confirms that the
majority of smart mobile device users use their device for a significantly longer
period than a year and less than a quarter would switch within a year’s time. […].
691
[…]
692
. […].
(465) In summary, consumers cannot make an informed choice about the life-cycle costs of
their smart mobile devices, at the time of purchase. Prices at the app distribution
level are not sufficiently transparent to allow them to make accurate calculations
when purchasing smart mobile devices. iOS users typically do not compare app
prices and subscription prices when purchasing their smart mobile devices and they
are unlikely to make an informed decision when purchasing their devices, taking life-
cycle costs, and in particular the conditions for in-app music streaming subscriptions
into account.
693
The link between smart mobile devices and the provision of
platforms for the distribution of music streaming apps is therefore limited. Moreover,
competition in the smart mobile device market, and in particular the high end
segment is not effective and Apple enjoys market power even in this market. It is
therefore unrealistic that music streaming apps, and in particular in-app subscription
conditions in music streaming apps, influence sales at the level of smart mobile
devices in a way that disciplines Apple’s market power vis-à-vis consumers at the
app distribution level. The Commission therefore concludes that there are no
meaningful constraints on the consumer side from competition on the market for
smart mobile devices that constrain Apple’s ability to behave independently vis-à-vis
687
Special Eurobarometer 503, Report, Attitudes towards the impact of digitalisation on daily lives, from
March 2020, in particular pages 5, 12 and 17, ID 887. Only 3 % say they would like to keep using them
for at least a year. The most common reasons for purchasing a new digital device are that the user broke
the old device (38 %) or that its performance had significantly deteriorated (30 %). […].
688
Special Eurobarometer 503, Report, Attitudes towards the impact of digitalisation on daily lives,
ID 887.
689
Compass Lexecon report “Is Apple’s dominance in the market for developers' access to iOS constrained
by competition for iPhone sales?” 22 March 2020, page 36, Q.6, ID 900.
690
Compass Lexecon report "Is Apple’s dominance in the market for developers' access to iOS constrained
by competition for iPhone sales?" 22 March 2020, page 40, Q.14, ID 900.
691
[…].
692
[…].
693
These findings on the limited interdependence between the market for smart mobile devices and the
level of app distribution speak against a single “systems” market on the consumer side of the platform
comprising both purchases of smart mobile device and purchases at the level of the app store.
EN 138 EN
developers of music streaming apps when setting the terms for the access to the App
Store.
8.2.2.5.2.2.2. Assessment of Apple’s arguments
(466) In its Response to the Statement of Objections of 28 February 2023
694
Apple argues
against the application of the EFIM test to the present case as it would not take into
account some key features that distinguish it from classic aftermarket cases. In
particular, music-streaming apps and services obtained through the App Store (i) are
not “indispensable” for the use of smart mobile devices; (ii) are not available to users
only through a device; (iii) are not priced by the provider of the device, but by app
developers; and (iv) are only subject to the payment of a commission fee in specific
cases, i.e., when their in-app content is transacted through the App Store.
695
According to Apple, there is therefore not the type of lock-in that characterises
aftermarket cases and the EFIM test cannot be applied to this case.
696
In Apple’s
view, the Commission misapplies the EFIM test to the present case, which involves a
platform with a business model primarily based on monetisation through devices.
697
(467) As explained in recital (336), in the context of markets where users need to
separately obtain complementary components to make use of a particular service
(e.g., a smart mobile device and an app), it may be relevant to analyse how
consumers take the decisions to obtain those components. The Commission
acknowledges that the case at hand exhibits some features that make it different from
traditional markets such as razors and razor blades, or printers and ink cartridges,
where aftermarkets were originally considered in an antitrust context. However, as
explained in recital (414), the Commission considers elements in the framework
provided by the Court in aftermarket cases, including in the EFIM case,
698
as useful
and informative in the present case to assess whether competition at the level of
smart mobile devices may potentially limit Apple’s ability to behave independently
at the level of music streaming app distribution and to set the conditions under which
such apps are accepted to the App Store. Contrary to Apple’s arguments,
aftermarkets may exist also where the use of the secondary product is not
indispensable for the use of the primary service, such as in the case of repair services
which may or not may need to be used.
699
It is therefore incorrect that the case law
only relates to consumables or spare parts, as Apple suggests. Moreover, as
explained in Section 8.1.4, the relevant market in this case is the market for the
provision to developers of platforms for the distribution of music streaming apps to
iOS users and not that for the sale of music streaming subscriptions, as claimed by
694
Apple considers the arguments brought forward with regards to market definition and dominance in its
Response to the Statement of Objections of 28 February 2023, ID 2800, are a complement to its
Response to the Statement of Objections of 30 April 2021, ID 2165, which it still considers applicable
(see Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, footnote 160) and
which the Commission has also taken into account in its analysis.
695
Apple’s Response to the Statement of Objections of 28 February 2023, Annex 6, page 2, ID 2806.
696
Apple’s Response to the Statement of Objections of 28 February 2023, Annex 6, pages 3, ID 2806.
697
Apple’s Response to the Statement of Objections of 28 February 2023, paragraph 152 and 153, ID
2800, and Annex 6, ID 2806.
698
Case T-296/09 European Federation of Ink and Ink Cartridge Manufacturers (EFIM) v Commission,
EU: T:2011:693, paragraphs 60, 90 and 91, confirmed in Case C-56/12 European Federation of Ink and
Ink Cartridge Manufacturers (EFIM) v Commission, EU:C:2013:575, paragraphs 12 and 36 et seq.
699
Case T-427/08 Confédération européenne des associations d’horlogers-réparateurs (CEAHR) v
European Commission, EU:T:2010:517.
EN 139 EN
Apple.
700
Contrary to Apple’s claims, the “secondary” product/service in question
(i.e., apps) that can run on Apple’s smart mobile devices can only be downloaded
from Apple’s App Store.
(468) In addition to opposing to the Commission’s framework of analysis, Apple also
disagrees with various specific elements of the Commission’s assesment.
(469) First, Apple claims that the Commission misses the causality link between app
distribution and devices, as well as the rationale of Apple’s overall business model.
Apple considers that, in a device-funded model such as the one of Apple, revenues
from the commission fee at the app distribution level can discipline Apple’s price-
setting for its devices.
701
Apple criticises that the Commission has not analysed
whether Apple has made terms for its devices more attractive to encourage device
sales and monetise more in-app commission fees, rather than reducing in-app
commission fees in view of competition at the device level.
702
Apple also argues that
the link does not operate at the level of a single genre of apps but in terms of App
Store revenues overall.
703
(470) As explained, the Commission assessed whether and to what extent consumers are
likely to take informed choice about lifecycle pricing, that takes into account device
prices as well as in-app subscription fees. In light of this analysis, the Commission
concludes that consumers cannot make an informed choice about like-cycle costs of
their smart mobile devices at the time of purchase and competition in the smart
mobile devices does not meaningfully constrain Apple’s market power at the app
distribution level. This framework of analysis takes into account the perspective of
consumers. In particular, it assesses how aware consumers are of product features
and prices over the lifecycle of a product. The origin of those features and prices are
not relevant for this analysis. Therefore, Apple's arguments regarding its alleged
incentives to balance its revenues from its commission fees and the prices of devices
carries no relevance for the analysis.
(471) Second, Apple denies that there is a lack of transparency regarding app prices and
their comparison and that consumers can take an informed choice, including life-
cycle pricing, when purchasing a smart mobile device.
(472) In the first place, according to Apple, when consumers decide to purchase a device,
which involves an implicit asssessment of spending on future apps, they do not need
to compare all current prices of all potentially interesting apps, subscriptions and
add-ons, but they rather accumulate information on the quality and variety of
available apps taking into account their past experience and the experience of other
people they know that have purchased different devices and apps. This general
information generates an expectation about their future likely spend and prices they
700
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 124 to 129.
701
Apple’s Response to the Statement of Objections of 28 February 2023, paragraph 152 and 153, ID
2800, and Annex 6, ID 2806. See also Apple’s Response to the Letter of Facts, ID 3330, paragraphs 181
and 183.
702
Apple’s Response to the Statement of Objections of 28 February 2023, paragraph 156, ID 2800, and
Annex 6, page 5, ID, 2806.
703
Apple’s Response to the Statement of Objections of 28 February 2023, paragraph 156, ID 2800, and
Annex 6, page 5, ID, 2806.
EN 140 EN
will face. In any event, Apple also claims that price comparison websites offer vast
information to consumers about prices of apps and in-app content.
704
(473) However, as explained in recital (420), the evidence in this case shows that the
lifecycle cost of apps is not really transparent at the point of the purchase decision of
smart mobile devices. The prices of apps and in-app content are not systematically
available at the time and place where a mobile device purchase decision is taken,
irrespective of whether consumers purchase their devices in a physical shop or
online.
(474) The Commission does not consider it likely that users would make an effort to
compare music streaming apps and in-app subscription conditions on Android and
iOS and notice differences in in-app purchase conditions. Even if they made this
effort, the available information would not allow them to make an informed choice
due to the poor quality of the information available on the websites of the App Store
and Google Play, as detailed in recitals (422) to (425).
(475) Contrary to Apple’s claims, there are no effective comparison tools or websites
available that allow consumers to systematically and easily compare app prices or in-
app subscription conditions across app stores for different smart mobile OSs.
705
Apple claims that there is a large number of price comparison websites that allow
customers to identify any price difference from music streaming subscriptions
purchased through IAP or through other channels. However, the examples provided
by Apple do not seem to be an effective option for consumers to reliably compare
prices. Most of the examples provided by Apple
706
only compare prices among music
streaming service providers generally, but do not compare the different prices
available on different distribution channels, such as the price offered for in-app
subscriptions on different platforms (Android and iOS) or on the providers’
websites. Apple only provides a couple of national websites, which do not seem
straightforward to find to most consumers, comparing in-app and web offers for only
certain music streaming services. In particular, the websites only show such a price
comparison for one music streaming service provider (IDAGIO in one of the
websites and YouTube Music in the other), rather than a full comparison for the main
music streaming service providers for which there are price differences, such as
Deezer, Tidal, Napster or SoundCloud.
(476) The Commission has not found easily accessible and reliable comparison tools or
websites that would allow consumers to systematically and easily compare app prices
or in-app subscription conditions across app stores. Most comparison websites easily
available to consumers only compare the services and general prices of music
streaming services. This has also been confirmed by BEUC¸ noting that some of its
member occasionally publish reports and surveys regarding music streaming
services, but these do not compare differences in price depending on whether the
music streaming service is purchased in-app or through a website. It also noted that
these surveys are generally behind paywalls and consumers would need to subscribe
704
Apple’s Response to the Statement of Objections of 28 February 2023, Annex 6, pages 5 and 6, ID,
2806
705
Apple’s Response to the Statement of Objections of 28 February 2023, Annex 4, ID 2804.
706
This was also supported by BEUC during their intervention at the oral hearing (recording of the oral
hearing in Case AT.40437, as of 06:22:15, ID 3131).
EN 141 EN
to access them. BEUC also found Apple’s examples to not be effective price
comparison options for consumers.
707
(477) With respect to the lifecycle costs of apps in general beyond music streaming, as
explained in recital (420), consumers can only have an incomplete conception of the
apps they may use over the lifetime of the device and on how much they will use
them. App prices and in-app purchase conditions therefore are unlikely to
significantly influence device choice.
(478) The fact that many users of smart mobile devices accumulate information based on
past experience and are familiar with the range of apps, prices and quality does not
change these findings. These users may only be familiar with the conditions for
existing apps they have used in the past on the smart mobile device they had already
owned, but not with those running on a different smart mobile operating system or
those which they have not yet used or which are only released over the lifecycle of
the device.
708
(479) Moreover, as explained in recital (419), users typically do not have sufficient
information to be able to allocate costs for their app or in-app purchases between
developers and Apple and make informed choices on the lifecycle costs of iOS
devices, […].
(480) As shown in recitals (426) to (431), the consumer surveys conducted by […]
Spotify
709
[…]
710
confirm that consumers rarely compare in-app prices of music
streaming subscriptions when purchasing a smart mobile device and even if they do
so, they do not compare prices across different mobile OSs (i.e., in the iOS app and
the Android app). Even among respondents who claimed to have compared the prices
of music streaming services when purchasing their smart mobile device, only a small
minority made this comparison in a manner that would actually reveal differences in
in-app music streaming subscription conditions between Android and iOS. This
shows that consumers are typically not in a position to make an informed choice that
would take into account these differences when taking a purchase decision in the
market for smart mobile devices.
(481) In the second place, in its Response to the Statement of Objections of
28 February 2023, Apple also argues that the prices of music streaming subscriptions
are not informative for the analysis of whether consumers can make an informed
choice when purchasing their smart mobile devices. Since subscriptions on iOS
devices for competing music streaming services are mostly purchased through the
website of the respective music streaming service providers (thanks to the reader and
multiplatform rules) and not in-app, the device choice has in practice a limited
impact on consumers’ subscription costs, since the prices for in-app content “are
707
Ibid.
708
A user of an iPhone might not be familiar with the conditions on the Google Play Store when buying a
new smartphone.
709
Spotify Survey, ID 900 (Compass Lexecon document “Is Apple’s dominance in the market for
developers’ access to iOS constrained by competition for iPhone sales”, dated 22 March 2020),
IDs 902, 903, 904, 905 (Spotify survey data and statistics), ID 901 (Spotify survey methodology note),
IDs 956 (raw Spotify data and Stata codes) and 500 (Questionnaire for Spotify Premium (iOS &
Android) & Free users).
710
[…].
EN 142 EN
effectively the same on Android and iOS".
711
For a meaningful conclusion, the
Commission should have looked at those respondents whose life-cycle costs might
have been affected by the music streaming subscription prices and whether they have
compared prices for music streaming subscriptions before purchasing their device.
712
(482) The Commission does not consider this criticism as well founded. As explained in
recital (414), the Commission uses the price of the music subscription within the app
as a proxy for the price and quality of the app as the commission fee is the main
element through which a deterioration of the access conditions set by Apple vis-à-vis
developers could reach users. The Commission’s analysis revolves around the
question to which extent competition in the market for smart mobile devices may
discipline Apple’s market power vis-à-vis music streaming service providers when
setting the terms for access to its app distribution platform. Those iOS users that are
well aware of the possibility to subscribe to music streaming services outside of the
iOS app, would – as Apple points out itself
713
– not need to switch smart mobile
devices to avoid higher in-app subscription fees. For them, there is no possible
disciplinary link between the market for smart mobile devices and the market for the
provision to developers of platforms for the distribution of music streaming apps to
iOS users where Apple sets the conditions for access of apps.
(483) Third, Apple disagrees with the Commission’s conclusions that consumers are not
likely to make an informed choice that would take into account app and in-app
purchase conditions when buying a smart mobile device […].
714
According to Apple,
the main reason why survey respondents did not take into account the range and
prices of apps and the ease to subscribe to premium music streaming service within
the respective app when buying a smart mobile device is, because device choice is
driven by those factors where there is a material degree of differentiation between
Apple devices and Android devices. According to Apple, this is not the case for
Apple’s App Store and Google’s Play Store as both app stores offer a wide range of
apps at comparable prices.
715
Moreover, the existence of the possibility to subscribe
to music streaming services outside of the app and the application of the
multiplatform and reader rules can explain why few users would consider the price of
in-app subscriptions as an important factor for device choice.
716
(484) The Commission considers that Apple’s criticism is unfounded.
(485) In the first place, while there is a strong overlap in the presence of the main apps in
the Apple App Store and Google Play Stores because the main app developers need
711
Apple’s Response to the Statement of Objections of 28 February 2023, Annex 8, pages 7 and 8, ID
2810.
712
ID 2170, paragraph 30, and CRA, “Do Consumers Care about the App Store when Purchasing a Mobile
Device?”, ID 990, p. 35 where it is argued that premium subscribers to music streaming services that
have pre-existing subscriptions prior to their device purchase would not need to compare music
streaming subscription prices when purchasing their device as they can access these subscriptions at no
extra cost on the other smart mobile device.
713
Apple’s Response to the Statement of Objections of 28 February 2023, Annex 8, pages 7 and 8, ID
2810.
714
Apple’s Response to the Statement of Objections of 28 February 2023, paragraph 158, ID 2800 and
Annex 8, pages 1 to 8, ID 2810.
715
Apple’s Response to the Statement of Objections of 28 February 2023, paragraph 159 to 160, ID 2800,
and Annex 8, pages 1 to 8, ID 2810.
716
Apple’s Response to the Statement of Objections of 28 February 2023, paragraph 159 to 160, ID 2800,
and Annex 8, pages 7 and 8, ID 2810.
EN 143 EN
to multi-home to reach the distinct groups of users of these stores, differences
between Android and iOS exist in both the range and price of apps. As shown in
Figure 30, the number of apps in the two app stores is close, albeit with a meaningful
difference. This difference could in theory play a role for consumers for their device
choice. However, as the survey evidence shows, the range of apps (including of
music streaming apps) is not an important factor consumers tend to take into account
for their device purchase decision.
EN
144
EN
Figure 30 – Number of apps available in Google Play
717
Figure 31 – Number of apps available in the App Store
718
717
https://www.statista.com/statistics/266210/number-of-available-applications-in-the-google-play-store/,
ID 3186
718
https://www.statista.com/statistics/779768/number-of-available-apps-in-the-apple-app-store-quarter/,
ID 3187.
EN 145 EN
(486) In the second place, app prices differ between iOS and Android, both in terms of
download price and in-app purchase fees. For example, the Heads Up app (a top app
in category “word games on iOS”) is free on Android and costs EUR 1.99 on iOS.
719
Plague Inc (a top game in the “simulation” category) costs EUR 0.99 on iOS and is
free on Android.
720
The Forest-Stay focused app (top in the “productivity” app
category) costs EUR 4.99 on iOS and is free on Android.
721
Finally, the prices of in-
app purchases and subscriptions as well as the purchase conditions can differ
significantly between the App Store on iOS devices and the Google Play Store on
Android devices
722
, in particular in the case of music streaming apps where
subscriptions in iOS apps were typically 30 % more expensive than on Android, or
not available.
723
Evidence in the file shows that there are significant differences in
the monthly subscription fees and functionalities of these music streaming services
depending on whether a subscription takes place in-app on iOS devices or in other
environments, and music streaming services also offer multiple subscription
packages at different prices, which may also differ on the subscription channel.
724
Therefore, the lifetime costs of apps and music streaming apps in particular differ
between iOS and Android.
725
This also indicates that the survey respondents fail to
take into account the range and prices of apps, in-app purchases and the ease to
subscribe to premium music streaming service within the respective app when
buying a smartphone. The Commission considers it much more likely that the reason
why very few consumers consider the range and price of apps and in particular music
streaming apps for their smart device purchase is that users are not aware about price
and functionality differences across apps available on smart mobile devices running
on a different mobile OS. This is evidenced by upset customer testimonies, when
users discover price differences across mobile platforms.
726
719
See https://play.google.com/store/apps/details?id=com.wb.headsup&gl=DE, accessed on
15 February 2022, ID 2370; and https://apps.apple.com/de/app/heads-up/id623592465, accessed on
26 October 2023, ID 3190.
720
See https://play.google.com/store/apps/details?id=com.miniclip.plagueinc, accessed on
15 February 2022, ID 2372, and https://apps.apple.com/de/app/plague-inc/id525818839, accessed on
15 February 2022, ID 2382.
721
See https://apps.apple.com/be/app/forest-stay-focused/id866450515, accessed on 27 November 2023,
ID 3203, and https://play.google.com/store/apps/details?id=cc.forestapp, accessed on 15 February 2022,
ID 2373.
722
See for example explanations of a game developer on https://smallgiantgames.helpshift.com/hc/de/4-
empires-puzzles/faq/864-why-are-the-prices-different-between-ios-android/, accessed on
15 February 2022, ID 2376.
723
As of 1 April 2022, the terms available for end-users may also deteriorate in Android apps of music
streaming service providers as Google forces developers to mandatorily use Google Billing for in-app
payments for subscriptions to music streaming services and prohibits informing users about alternative
methods of payments, see ID 2339. While Spotify has obtained a bespoke arrangement with Google
allowing it to offer its own in-app payment mechanism and maintaining its retail price, other music
streaming services like Tidal have disabled in-app subscriptions in their Google Play Store app as a
consequence of Google’s policy change. See https://support.tidal.com/hc/en-
us/articles/4472166442769-Google-Play-Store for Tidal, accessed on 3 June 2022, ID 2424.
724
For example, as opposed to other environments, the Spotify music streaming service is not-available for
in-app subscription on iOS devices, and most other music streaming services charge a higher monthly
subscription fee in-app on iOS devices.
725
For example, many Deezer premium subscribers pay EUR 12.99 per month when subscribing to the
service in the iOS app, whereas Deezer users subscribing in the Android app pay EUR 9.99.
726
See https://discussions.apple.com/thread/8031795, accessed on 20 January 2021, ID 1177;
https://forums.macrumors.com/threads/why-ios-apps-are-more-expensive-than-android-
EN 146 EN
(487) Apple downplays the prevalence of differences in the price and accessibility of
digital content on iOS and Android. Apple argues that only a small share of apps is
paid in the first place.
727
However, Statista data shows that a significant share of
users pay for digital content. In particular, 17 % pay for mobile apps and 12 % pay
for in-app purchases.
728
(488) Apple’s arguments do not contradict the Commission’s finding that there are
differences between Android and iOS in the number of apps, the prices of apps and
the functionalities and features of apps (e.g., in the subscription through the app
features and even prices to music streaming services). Apple merely argues that these
differences are small. However, this is irrelevant. The only relevant issue in this
assessment is that consumers do not take into account the range and price of apps in
their choice of smart mobile device, despite the fact that there are differences in the
range and price of apps.
(489) In the third place, […],
729
[…]. The data from the Spotify […] surveys suggest that
there are no qualitative differences between the relevant responses of users that had
and those that did not have a music streaming subscription prior to their device
purchase.
(490) […]. Users of only free music streaming services are more likely to have had no or a
free subscription when they purchased their device than premium-only users. In
theory, free-only users’ device choices may more likely have been affected by higher
in-app subscription prices or a deteriorated experience than that of premium-only
users.
730
[…]
731
[…].
732
(491) The same insight emerges from the Spotify survey: comparing music streaming
subscription prices is rare even among users that are in theory more likely to be
affected by lifecycle pricing. The Spotify survey asked in question 6 about how long
the respondents had their current device.
733
It also included the registration date of
the user with the music streaming service. From this information, the Commission
could identify the iOS respondents who registered with Spotify before and those
which registered with Spotify after they purchased their current device. Respondents
having registered with Spotify after their current device purchase likely did not yet
have a paid music streaming subscription at the point of device purchase. Regardless
of whether the respondents registered before or after buying their current device,
only few respondents (9.4 % and 7.4 %, respectively) compared the prices of music
streaming services to decide on their device purchase
734
and they were unlikely to
apps.1948047/, accessed on 20 January 2021, ID 1178; https://mobilesyrup.com/2018/06/19/youtube-
music-3-expensive-on-ios/, accessed on 20 January 2021, ID 1179.
727
Apple’s Response to the Statement of Objections of 28 February 2023, Annex 8, ID 2810, pages 5 to 7.
728
https://www.statista.com/statistics/1330125/leading-types-digital-content-purchased-worldwide/, ID
3193
729
Annex 2 to Apple’s Response to the Statement of Objections of 30 April 2021, paragraph 47, ID 2170.
730
As premium subscribers can continue to use their pre-existing subscriptions at no extra cost with their
new devices.
731
[…].
732
[…].
733
Question 6 of the Spotify survey asked: “How long have you had your current [smartphone/tablet].”
734
Respectively 83 % and 89 % stated not having compared these prices. The Commission could identify
382 iOS respondents who registered with Spotify after having purchased their device, implying that
they had their ‘current’ device (at the time of completing the survey) when they registered with Spotify.
3,199 respondents registered with Spotify before their device purchase, so that they did not have their
EN 147 EN
have taken into account “prices of applications”, “range of music streaming apps
for download”, or “the prices of music streaming services” for their device
choice.
735
(492) This shows that even if the Commission were to focus on those respondents whose
life-cycle costs are more likely to be affected by music streaming subscription prices,
its conclusions would not change. In general, consumers lack transparency over the
prices for app distribution and in-app conditions for accessing content. They
therefore cannot make a fully informed choice, including life-cycle pricing that
would factor in differences in in-app purchase conditions, when they decide between
various manufacturers in the market for smart mobile devices and this is the case
irrespective of whether users had or did not have a music streaming subscription at
the moment of device purchase.
(493) Fourth, Apple disagrees with the Commission’s […] with regards to consumers’
reaction to a hypothetical difference in music streaming service prices on Android
and iOS.
736
Apple argues that the response to the hypothetical price increase
questions in […] Spotify’s surveys indicate show a high degree of price elasticity of
demand of Apple devices (approximately in the range of […]), which implies –
according to Apple - that music streaming users’ smartphone choice is significantly
impacted by even small increases in music streaming prices.
737
[…].
738
(494) Such a high level of demand elasticity appears unrealistic. A demand elasticity of 11
would mean, for example, that if Apple increased the overall price of device and
apps (expected over the lifetime of the device) by 5 %, it would lose 55 % of device
sales. Or differently, if it was to reduce the overall price by 5 %, its device sales
would increase by 55 %. Both seem far away from reality. In the same submission
[…]”. Clearly, consumers are less willing to switch smart devices, as explained in
recitals (381) et seq. […]. The average iPhone price increased from USD 650-750 in
2015 to around USD 1 000 in 2019 while Apple maintained a constant profit margin
rate per device. In the same period Apple did not lose significant market share among
mobile devices.
739
(495) As explained in recitals (456) to (465), the Commission considers that the response
to the questions about a hypothetical price increase, when interpreted in light of the
responses to other questions of the survey, does not indicate a sufficient link between
‘current’ device at the time of registering with Spotify. Survey question 9 related to the comparison of
music streaming service prices. See Commission calculation based on the Spotify survey, ID 2607.
735
Among the 382 iOS respondents in the Spotify survey who registered with Spotify after purchasing
their current device, "prices of applications", "range of music streaming apps for download", or "the
prices of music streaming services" were mentioned by respectively […]. See Commission calculations,
ID 2607.
736
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 158 and
161, and Annex 8, ID 2810, pages 8 to 10.
737
This argument is inconsistent with Apple’s argument that music streaming subscription prices are not
relevant for making an informed device choice in view of the ability to purchase subscriptions also
outside the app. See Annex 2 to Apple’s Response to the Statement of Objections of 30 April 2021,
pages 7 and 8, ID 2170.
738
[…].
739
For the average iPhone prices: https://www.allconnect.com/blog/iphone-price-increases-over-past-
decade, accessed on 22 January 2021, ID 1186; for Apple’s mobile device market share:
https://gs.statcounter.com/os-market-share/mobile/worldwide/#yearly-2009-2020, accessed on
22 January 2021; ID 1188; for Apple’s margin per device over time: https://wccftech.com/apple-
iphone-profits-declining/, accessed on 22 January 2021, ID 1169, chart “The cost of iPhones”.
EN 148 EN
the market of smart mobile devices and the app distribution level that could
discipline Apple’s market power. The questions about actual behaviour in the
surveys show that consumers are typically not aware of music streaming subscription
price differences on and off Apple’s smart mobile devices and do not take these into
account in their device purchase decisions. As explained above, the questions are
likely subject to response biases, and their economic interpretation is ambiguous
about the extent to which Android devices are able to discipline Apple in the smart
mobile device market. Apple itself recognises this and confirms that “we do not
suggest that the findings of the SSNIP test [confidential quote] should be regarded as
conclusive evidence in favour of a broad market definition” in the primary market of
smart mobile devices.
740
(496) The Commission puts more trust into the non-hypothetical survey results presented
in recitals (433) to (458) regarding whether consumers took into account app prices
and music streaming subscription price differences in their device choice than in the
hypothetical question about switching. Those non-hypothetical responses indicate
that consumers are most likely not even aware of differences in-app prices and in-app
subscription conditions on various mobile devices and do not take such factors into
account when buying a smart mobile device.
(497) Therefore, Apple’s arguments do not alter the Commission’s conclusion that it is
unlikely that consumers would adapt their purchasing behaviour at the level of smart
mobile devices to react to an apparent policy of exploitation at the level of the
distribution of music streaming apps by Apple.
(498) Fifth, Apple argues that the assessment whether consumers would react within
reasonable time would need to take into account “the time gap between the start of
the exploitative conduct and the consumers’ reaction” and whether this gap “is not
long enough to make the exploitative conduct profitable.”
741
Apple adds that even if
the average Apple customer could only react within two years, gains from an
exploitative behaviour by Apple in the aftermarket during these two years would
hardly outweigh the future loss of the device margin.
(499) The Commission preliminarily considers these arguments unfounded.
(500) In the first place, the relevant question is not to find the time gap that would render
Apple’s conduct profitable, but to assess whether consumers could and would react
to deteriorated app conditions within a reasonable time. In the case of smart mobile
devices, it is unrealistic that consumers would react before the moment when they
replace their smart mobile device at the end of its life-cycle (of at least 2-3 years) in
view of the high costs of smart mobile devices and that they already made their
investment and their desire to use them as long as possible unless the performance
deteriorates.
(501) In the second place, as outlined above, there is little transparency over the lifecycle
costs associated with app purchases and in-app subscriptions and consumers
typically do not take these issues into account as a factor for their device choice. As
the surveys by Spotify […] show, other factors influence device choice much more
than app availability, app prices or prices for in-app subscriptions to music streaming
service which renders any reaction in the smart mobile device market unlikely in the
740
ID 990.
741
ID 2170, Annex 2 Observations of the EFIM test.
EN 149 EN
first place, even once the lifetime of a device has come to an end.
742
Even after the
lifetime of their smart mobile device has come to an end, the majority of iOS users
are loyal to their current smart mobile device/OS and are unlikely to switch, also
because of their lock-in through monetary and non-monetary switching costs.
743
(502) As the evidence gathered by the Commission indicates,
744
iOS device users are very
brand loyal and likely to again purchase an iOS device, irrespective of how long they
have had their device. […].
745
These users are more likely to purchase a new device
in the near future, and consequently are likely to have owned their current device for
relatively long. The fact that they plan to remain with the same brand and its
operating system testifies that even users who have had their iOS device for a longer
time are likely to repurchase the same brand. The fact that those users who are
closest in time to purchasing a new device are very likely to stay on iOS again
indicates that consumers are unlikely to act in the smart mobile device market within
reasonable time, regardless of the time horizon taken into account.
(503) In the third place, Apple’s arguments disregard that subscription prices for most
music streaming service providers were until very recently (when Google tightened
its own in-app payment terms) 30 % higher in iOS apps than in Android apps. If
device sales were indeed to be impacted in the long run by the level of in-app
subscription fees for music streaming apps, then the question arises why Apple has
for years not reduced the commission fee charged to music streaming service
providers or removed the Anti-Steering Provision thereby allowing web-based
checkouts as those that were allowed on Android in order to improve device sales.
The fact that Apple has not done this supports the conclusion that the link between
the smart mobile device market and the distribution of music streaming apps is
limited. This is confirmed by the survey results, which show that Android users are
unlikely to switch to iOS devices in reaction to unattractive in-app subscriptions
conditions for music streaming apps on Android based devices for the same reasons
why iOS users are unlikely to switch to Android. […].
746
The Spotify survey
confirms the same conclusion. Android users – similar to iOS users – attribute very
little importance in their device purchase decisions to factors such as “range of
applications to download” (Android: […] %, iOS: […] % mentioning), the “prices of
music streaming services” and “prices of applications” in general (less than […] %
mentioning these on both platforms). With in-app purchase conditions playing so
little role for Android users’ device choice, it is unlikely that even in the long run,
when replacing their devices, attracting Android users would create incentives for
Apple to improve its in-app subscription conditions.
(504) In the fourth place, only very few consumers are first time owners of smart mobile
devices. […].
747
New users typically have - in the absence of any prior experience on
either of the App Store or the Google Play Store on Android - even less information
and transparency than existing users about the availability of apps, their prices and
in-app subscription prices across smart mobile OS. It is therefore highly unlikely that
742
See Figures 24 and 25.
743
See Section 8.2.2.5.2.1.
744
Ibid.
745
[…].
746
See Figure 24.
747
[…].
EN 150 EN
such new customer would protect – as argued by Apple – the installed base from the
exercise of market power that Apple enjoys at the level of app distribution. […]
748
(505) For all the reasons stated above, the Commission considers that Apple’s arguments
are unfounded and do not alter the Commission’s finding that the link between smart
mobile devices and the provision of platforms for the distribution of music streaming
apps is limited and that music streaming apps, and in particular in-app subscription
conditions in music streaming apps, would not realistically influence sales at the
level of smart mobile devices in a way that disciplines Apple’s market power vis-à-
vis consumers at the app distribution level. The Commission therefore concludes that
there are no meaningful constraints on the consumer side from competition on the
market for smart mobile devices that constrain Apple’s ability to behave
independently vis-à-vis developers of music streaming apps when setting the terms
for the access to the App Store.
8.2.2.5.3. Constraints on market power vis-à-vis developers through alternative
subscription mechanisms outside of the iOS app
8.2.2.5.3.1. The Commission’s position
(506) The Commission considers that alternative subscription mechanisms outside of the
iOS app do not constrain Apple’s power to behave to an appreciable extent
independently of music streaming service providers in the market for the provision to
developers of platforms for the distribution of music streaming apps to iOS users,
including with regard to the conditions for in-app sales which it attaches to the
acceptance of apps in the App Store.
(507) While the Commission acknowledges that there are other channels through which
third-party music streaming service providers can and do acquire customers for their
paid subscriptions, these channels, and in particular the possibility to subscribe
directly through the website of the music streaming service provider, do not
meaningfully constrain Apple when setting the terms for app distribution for music
streaming apps where it enjoys a monopoly position. This is for the following
reasons:
(508) First, the possibility to sell music streaming subscriptions on the music streaming
service providers’ website or through alternative channels such as through telco
carriers, partnerships or social media platforms, does not replace the need for
developers of music streaming services to use Apple’s App Store for the distribution
of their apps to iOS users and to abide in this respect by all the rules that Apple
imposes on app developers.
749
It is precisely in this relationship and with this
distribution platform for apps to iOS users where Apple enjoys a position of
dominance vis-à-vis developers. Even if music streaming service providers can revert
to subscribing users through the website, through telco carriers or otherwise, music
streaming service providers still need to have a native app as smart mobile devices
are the primary means of consumption of music streaming services and consumers
that have subscribed through alternative channels still want to use their subscription
within an app.
750
This includes those music streaming service providers like Spotify
748
See Commission calculations in ID 2607.
749
These terms include inter alia the requirement to conduct all in-app sales of digital content in the app
through Apple and its IAP, the requirement to pay a 30 %/15 % commission fee as well as the Anti-
Steering Provisions.
750
See Section 8.1.4.1.3.
EN 151 EN
that have disabled IAP in view of the conditions Apple attaches to in-app sales and
therefore do not sell subscriptions in their iOS apps. Irrespective of the possibility to
sell subscriptions elsewhere, every music streaming service provider must have both
an iOS app and an Android app, because of the importance of smart mobile devices
for the consumption of streamed music and the distinct group of device users on
these platforms.
751
In this respect, developers need to follow the users, who are to a
large extent locked into their iOS devices, as examined above
752
.
(509) Second, the ability – provided by Apple consistently (since 2011 through the reader
rule and since 2018 also through the multiplatform rule) – of music streaming service
providers to get users with iOS devices to subscribe to their paid service outside the
iOS app and subsequently stream music based on such subscriptions within their iOS
app, does not alter this conclusion. These rules do not open up alternative ways for
developers to distribute their apps to iOS users. The App Store remains the exclusive
platform available for this purpose and music streaming service providers have to
abide by Apple’s terms in this respect. Apple has quasi-regulatory powers for
determining access conditions for developers to users of iOS devices and could
modify its policies at any time.
(510) Third, even popular music streaming service providers with a large number of active
users have not been able to decisively influence the terms Apple set for access of
apps to the App Store.
753
Just like small developers, they have no choice but to abide
by Apple’s license agreement and the Guidelines. While they may – in case their
brand is sufficiently known and popular
754
– decide to disable IAP and not offer in-
app subscriptions at all hoping to attract users outside the iOS ecosystem, this does
not provide them with any meaningful negotiation power vis-à-vis Apple in relation
to the distribution of their apps, and Apple has consistently fended off requests for a
more lenient interpretation or for substantial changes to its rules.
755
(511) Fourth, Apple’s Anti-Steering Provisions themselves – which all music streaming
service providers have to abide to – reduce the benefit of subscription mechanisms
outside the app. Through the Anti-Steering Provisions, Apple actively prohibits
music streaming service providers from informing users about alternative
subscription possibilities outside the app, which for most music streaming service
751
See recitals (278) et seq.
752
See recitals (381) et seq. In its “Mobile ecosystems market study final report”, paragraphs 4.179 and
4.180 the CMA observed “while users moving purchases to an alternative channel may in theory
provide some competitive constraint on the commission rates charge by Apple and Google (given the
current pricing structure), it would provide a weaker or no constraint on the non-price aspects of the
App Store and the Play Store. In particular, app developers will still need to accept the terms and
conditions imposed by Apple and Google to distribute their native apps on the App Store and Play
Store, respectively. On balance, the evidence suggests that Apple and Google face a limited constraint
from alternative devices and users switching away from purchasing content and features in native
apps.”, accessed on 14 June 2022, ID 2431.
753
See Spotify’s Complaint, in particular paragraph 118, ID 1457.
754
Deezer explains in its response to question 32 of the Commission’s request for information
(2019/048643), ID 1377: “Deezer cannot consider this scenario as its brand awareness is way much
lower than Spotify and Netflix. Besides, we strongly need our iOS subscriber base to keep growing even
by increasing our retail price to € 12.99 (+30 %) in order to cope with the App Store commission. This
makes us the most expensive music streaming platform on the market.”
755
See Section 3.3. of Spotify’s Complaint detailing Spotify’s history of inability to achieve more lenient
terms from Apple, ID 1457. Rather than achieving a more lenient treatment, Apple has broadened the
wording of the Anti-Steering Provisions and their interpretation as outlined in Sections 7.2 and 7.3.
EN 152 EN
providers are offered at a significantly lower retail price. The Anti-Steering
Provisions therefore remove the ability of app users that are unaware of price
differences to make an informed choice in full knowledge of the facts through which
they could exert some competitive pressure on Apple’s in-app subscription
conditions and the commercial terms attached to it. While many app users may
ultimately find a way to subscribe to alternative subscription mechanisms, others are
not aware of the existence of other (lower-cost) subscription channels than in-app
purchase. For example, Napster who offers in-app subscriptions through IAP submits
that only 0.2 % of its subscribers who subscribed through an in-app purchase,
switched to a direct subscription with Napster.
756
This is a very low share in light of
the fact that a monthly Napster iOS subscription typically costs EU 12.99 if
concluded in-app, compared to EUR 9.95 when made directly with Napster outside
the IAP.
757
Even for a well-known brand like Spotify and in situations where IAP has
been disabled, the Anti-Steering Provisions limit the benefit of subscription
mechanisms outside the app as exhibited by experiments that Spotify conducted to
assess the impact of the Anti-Steering Provisions on conversion from free to
premium users. These experiments indicate that a significant share of users ([…] %)
that would otherwise upgrade from Spotify’s free service to the premium tier are
permanently lost on their “journey” as a result of having to face the sign-up
experience that results from Apple’s Anti-Steering Provisions.
758
(512) Apple’s reduction of the commission fee as of the second year of a subscription to
15 % in September 2016 is in the Commission’s preliminary view not evidence of
meaningful constraints from outside subscriptions on Apple’s ability to act
independently in the market for the provision to developers of platforms for the
distribution of music streaming apps to iOS users. In fact, in 2016, Phil Schiller, at
the time senior vice president of worldwide marketing at Apple, explicitly insisted in
an interview that this reduction was not in any way linked to companies encouraging
users to go to their own websites to subscribe, but Apple rather wanted to reward
companies more for their work in retaining subscribing customers.
759
[…].
760
[…]
Changes like the small business user program
761
, which followed a class action in the
US by small developers, have not provided relief to music streaming service
providers and can therefore not be explained by competitive constraints from outside
subscription offers. Overall, the main commercial conditions for the distribution of
music streaming apps on iOS devices (and in particular the 30 % commission fee)
have not meaningfully changed over the last 10 years.
762
756
Napster’s supplemental response to question 18 of the Commission’s request for information
(2019/029321), ID 778.
757
Napster’s response to questions 4 and 28 of the Commission’s request for information (2019/048724),
ID 1345.
758
See recitals (743) et seq.
759
See article in The Verge of 8 June 2016, https://www.theverge.com/2016/6/8/11880730/apple-app-
store-subscription-update-phil-schiller-interview, accessed on 2 May 2022, ID 2371.
760
See ID 772 – 000219.
761
https://developer.apple.com/app-store/small-business-program/, accessed on 11 May 2022, ID 2398.
762
In the Epic Games, Inc. v. Apple Inc., Rule 52 Order after Trial on the Merits, Case No. 4:20-cv-05640-
YGR, 10 September 2021, page 144, the Court considered that there are limited constraints on Apple’s
terms for app distribution and the commission fee it charges: “Apple set its 30 % commission rate
almost by accident when it first launched the App Store without considering operational costs, benefit
to users, or value to developers, that is, both sides of the platform. That commission has enabled Apple
to collect extraordinary profits as Mr. Barnes credibly shows that the operating margins have exceeded
EN 153 EN
(513) Overall, the Commission concludes that outside subscription mechanism for music
streaming services does not reduce the ability of Apple to unilaterally and
independently determine the conditions for the provision of a distribution platform
for music streaming apps to iOS users and the terms it sets for apps to be accepted on
the App Store.
8.2.2.5.3.2. Assessment of Apple’s arguments
(514) In its Response to the Statement of Objections of 28 February 2023, Apple disagrees
with the Commission’s views. Apple claims that the Commission’s assessment on
the unilateral imposition of Apple’s rules is not indicative of dominance.
763
Apple
claims that the Commission fails to appreciate the competitive pressure that such
channels exert on Apple thanks to the reader and multiplatform Rules and
overestimates the practical significance of the Anti-Steering Provisions. Apple notes
that in-app subscriptions concluded through IAP represented less than […] % of the
music streaming subscriptions by iOS users in December 2021, which shows that the
App Store is not an important channel for music streaming service providers to get
iOS users to subscribe.
764
(515) These arguments do not alter the Commision’s findings above.
(516) First, as explained in Section 8.2.2.4, the Commission considers that Apple’s
unilateral imposition of the App Store rules, which cannot be influenced by
developers, reflects the weak negotiation position of app developers vis-à-vis Apple,
which controls the only distribution channel for apps on iOS.
(517) Second, as explained in more detail in Sections 8.1.4 and 8.2.2, the relevant market
in this case, where Apple enjoys a position of dominance, is the market for the
provision to developers of platforms for the distribution of music streaming apps to
iOS users and not that for the sale of music streaming subscriptions, as claimed by
Apple.
765
In this context, as explained above, the reader and multiplatform rules do
not open up alternative ways for developers to distribute their apps to iOS users, as
the App Store remains the exclusive platform available for this purpose. Even if
music streaming service providers can obtain users from alternative channels, they
still need to distribute a native app and abide by Apple’s rules, as smart mobile
devices are the primary means of consumption of music streaming services (as
shown in recital (508)).
(518) Third, the Anti-Steering Provisions reduce the benefit of subscription mechanisms
outside the app. These rules prevent users who are unaware of price differences to
make an informed choice through which they could exert some competitive pressure
on Apple. As shown in detail in recital (511), while many app users may ultimately
find a way to subscribe to alternative subscription mechanisms, others are not aware
of the existence of other (lower-cost) subscription channels than in-app purchase.
The evidence shows that the Anti-Steering Provisions do limit the benefit of
75 % for years. Yet the 30 % commission rate has barely budged in over a decade despite developer
complaints and regulatory pressure.” https://cand.uscourts.gov/wp-content/uploads/cases-of-
interest/epic-games-v-apple/Epic-v.-Apple-20-cv-05640-YGR-Dkt-812-Order.pdf, accessed on
2 May 2022, ID 2378.
763
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 134.
764
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 134 to 147.
See also Apple’s Response to the Letter of Facts, ID 3330, paragraph 176.
765
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 124 to 129.
EN 154 EN
subscription mechanisms outside the app. As explained in Section 9.3.2.2, the low
numbers of in-app subscriptions on iOS are precisely a result of the Anti-Steering
Provisions hampering the ability of music streaming developers to effectively
acquire their iOS users through their iOS app.
(519) In any event, as shown above, outside subscription mechanisms for music streaming
services do not reduce the ability of Apple to unilaterally and independently
determine the conditions for the provision of a distribution platform for music
streaming apps to iOS users and the terms it sets for apps to be accepted on the App
Store.
8.2.3. Conclusion
(520) In light of the above, the Commission concludes that Apple holds a dominant
position in the EEA on the developer facing market for the provision to developers of
platforms for the distribution of music streaming apps to iOS users for the EEA since
at least 30 June 2015 where it enjoys a 100 % market share. App distribution on iOS
devices not only exhibits indirect network effects, but also extremely high barriers to
entry. Apple’s ability to behave independently vis-à-vis developers of music
streaming apps when setting the terms and conditions for access by developers to the
App Store is neither constrained by the consumer side of the App Store nor by
alternative mechanisms to subscribe to music streaming services outside the iOS app.
9. T
HE ABUSE
9.1. Principles
9.1.1. The relevant legal test
(521) Article 102 of the Treaty prohibits as incompatible with the internal market any
abuse of a dominant position insofar as it may affect trade between Member States.
(522) Article 102 of the Treaty therefore places a special responsibility on undertakings in
a dominant position, in requiring them not to abuse their dominant position.
766
The
actual scope of the responsibility imposed on a dominant undertaking must be
considered in the light of the specific circumstances of each case.
767
(523) It follows that, in specific circumstances, undertakings in a dominant position may be
deprived of the right to adopt a course of conduct or take measures which would be
unobjectionable if adopted by non-dominant undertakings. Considering the special
responsibility of such undertakings, their conduct cannot cease to be abusive merely
because it is standard practice in a particular sector, as to hold otherwise would
deprive Article 102 of the Treaty of any effect.
768
(524) The concept of abuse covers not only practices which cause harm to consumers
through their impact on competition, but also those which may cause damage to
consumers directly.
769
Furthermore, the concept of abuse also covers practices that
766
See in particular, concerning the imposition of unfair trading conditions under Article 102(a) of the
Treaty, the opinion of Advocate General Trstenjak in Case C‑52/07 Kanal 5, EU:C:2008:491,
paragraph 35.
767
Case C-52/09 TeliaSonera Sverige, EU:C:2011:83, paragraph 84; Case T-162/17 Google and Alphabet
v Commission (Google Shopping), EU:T:2021:763, paragraph 165.
768
Joined Cases T-191/98 and T-212/98 to T-214/98 Atlantic Container Line and Others v Commission,
EU:T:2003:245, paragraph 1124.
769
Case 6/72 Europemballage and Continental Can v Commission, EU:C:1973:22, paragraph 26.
EN 155 EN
cause harm directly to other undertakings, irrespectively of whether these
undertakings compete with the dominant undertaking or not.
770
(525) As a result, the special responsibility of dominant undertakings is not limited solely
to conduct likely to reinforce the dominance of the undertaking concerned or reduce
the level of competition on the market, since Article 102 of the Treaty concerns not
only practices which hinder effective competition, but also those which may cause
harm to either consumers or undertakings directly.
771
In light of their special
responsibility, the onus is on the dominant undertakings to behave in a way which is
proportionate to the legitimate objectives they seek to achieve.
772
(526) Under Article 102(a) of the Treaty, the direct or indirect imposition by an
undertaking in a dominant position of unfair trading conditions constitutes an abuse
of that position.
(527) Although the case law on the concept of unfair trading conditions is rather limited to
date, it can provide some useful indications thereon. In particular, in a preliminary
ruling involving contractual clauses between an association managing copyright and
its members, the Court of Justice qualified trading conditions imposed by a dominant
undertaking as unfair where they involve obligations that are not absolutely
necessary
773
for the attainment of that undertaking’s legitimate objectives and which
thus encroach unfairly upon third parties’ economic freedom, bearing in mind their
effects.
774
(528) According to the Court, trading conditions can be regarded as unfair either in relation
to trading partners or to third parties, including consumers.
775
(529) It can be inferred from the case law that, in essence, to be qualified as unfair under
Article 102(a) of the Treaty and thus abusive, trading conditions must be: (i) imposed
by a dominant undertaking on its trading partners,
776
(ii) unfavourable or detrimental
to the interests of that undertaking’s trading partners or of third parties, including
consumers,
that are affected by the trading conditions imposed by the dominant
undertaking,
777
and (iii) not necessary for the achievement of a legitimate objective
770
Case 27/76 United Brands v Commission, EU:C:1978:22, paragraphs 248, 250; Case C-66/86 Ahmed
Saeed Flugreisen and Others v Zentrale zur Bekämpfung unlauteren Wettbewerbs, EU:C:1989:140,
paragraph 42.
771
Case 6/72 Europemballage and Continental Can v Commission, EU:C:1973:22, paragraph 26; Joined
Cases T-191/98 and T-212/98 to T-214/98 Atlantic Container Line and Others v Commission,
EU:T:2003:245, paragraph 1124.
772
Joined Cases T-191/98 and T-212/98 to T-214/98 Atlantic Container Line and Others v Commission,
EU:T:2003:245, paragraph 1120.
773
Case C-127/73 BRT v SABAM, EU:C:1974:25, paragraphs 9-11.
774
Case C-127/73 BRT v SABAM, EU:C:1974:25, paragraphs 11 and 15. See also, to this effect, Case C-
247/86 Alsatel v Novasam, EU:1988:469, paragraph 10.
775
See to that effect Case C-66/86 Ahmed Saeed Flugreisen and Others v Zentrale zur Bekämpfung
unlauteren Wettbewerbs, EU:C:1989:140, paragraph 42. See also Commission decision of 20 July 1999
in Case No IV/36.888 – 1998 Football World Cup, paragraph 88; Commission decision of 24 July 1991
in Case IV/31043 – Tetra Pak II, paragraph 123.
776
For the imposition criterion see Case C-127/73 BRT v SABAM, EU:C:1974:25, paragraph 15; Case C-
247/86 Alsatel v Novasam, EU:1988:469, paragraph 10.
777
See to that effect Case C-27/76 United Brands, EU:C:1978:22, paragraphs 156-159 where the Court
analyses the ways in which the conditions imposed were detrimental to the interests of the companies
affected by them. See also Case C-66/86 Ahmed Saeed Flugreisen and Others v Zentrale zur
Bekämpfung unlauteren Wettbewerbs, EU:C:1989:140, paragraphs 42 and 46.
EN 156 EN
or in any event not proportionate for that purpose, in that they go beyond what is
strictly necessary to achieve it.
778
(530) A finding that a dominant undertaking imposes unfair trading conditions is sufficient
to establish an abuse of a dominant position pursuant to Article 102(a) of the Treaty,
without it being necessary to further consider whether the object or effect of the
dominant undertaking’s activities was to restrict competition between undertakings
within the internal market.
779
Rather, it is sufficient that the trading conditions in
question affect parameters of competition such as price, choice, quality or innovation
to the detriment of the interests of (or, in other words, harm), the dominant
undertaking’s trading partners or third parties, including in particular consumers.
9.1.2. Assessment of Apple’s arguments
(531) Apple argues that terms and conditions are not unfair if they are merely unfavourable
or detrimental to the interests of trading partners or consumers. According to Apple,
established categories of abuse such as margin squeeze and excessive pricing rely on
and further define the notion of “unfairness” under Article 102(a) of the Treaty. To
be unfair, terms should be so “disadvantageous” that no user would be interested in
purchasing music streaming subscriptions. According to Apple, the Commission
found in Slovak Telekom that the terms and conditions were unfair because they were
set “so as to render [them] unacceptable.”
780
(532) Apple also submits that an exploitative abuse consisting in the imposition of unfair
trading conditions under Article 102(a) of the Treaty can be found only if it is
possible to show a causal link between the existence of a dominant position and the
ability to impose the terms in question.
781
(533) Apple submits that the requirement of such a causal link is needed to distinguish
exploitative and exclusionary abuses as well as to preserve the effectiveness of the
requirements set by the Court of Justice for showing that the terms and conditions at
issue are at least capable of foreclosing equally efficient competitors.
782
(534) Apple argues that, otherwise, the Commission could establish an exploitative abuse
within the meaning of Article 102(a) of the Treaty by “circumvent[ing] the Court of
Justice’s requirement for showing threshold foreclosure effects for exclusionary
abuses”.
783
(535) Apple also argues that the Commission is obliged to benchmark the conditions
imposed by the dominant undertaking against the conduct of other players, who do
not have a dominant position, in order to be able to find an exploitative abuse within
the meaning of Article 102(a) of the Treaty.
784
According to Apple, the terms in
questions must be “manifestly more disadvantageous to business partners than they
would be in a competitive market.”
785
778
Case T-139/98, AAMS, EU:T:2001:272, paragraph 79.
779
See opinion of Advocate General Mayras in Case 26/75 General Motors v Commission,
EU:C:1975:141, under III.
780
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 173.
781
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 190-198.
782
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 190-205.
783
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 169, 204.
784
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 169, 201,
246.
785
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 176.
EN 157 EN
(536) Apple’s view has to be rejected for the following reasons.
(537) Article 102(a) of the Treaty expressly refers to the direct or indirect “imposition” of
unfair trading conditions without requiring a specific causal link between the
dominance and the content of those unfair trading conditions.
(538) It is precisely the position of economic strength which follows from a dominant
position, and which makes the dominant undertaking an unavoidable trading partner
that enables that undertaking to impose trading conditions on its trading partners.
This “power” to impose conditions constitutes the specific link between the dominant
position and the conduct in question, irrespectively of whether other non-dominant
undertakings may use similar trading conditions.
(539) It follows from the special responsibility of dominant undertakings that their conduct
can be subjected to the prohibition in Article 102 of the Treaty irrespectively of
whether that same conduct is also shown by other, non-dominant undertakings.
786
(540) In Europemballage, the Court of Justice explicitly rejected the requirement of a
causal link between the dominant position and the abuse, noting that “the question of
the link of causality raised by the applicants which in their opinion has to question
exist between the dominant position and its abuse, is of no consequence, the
strengthening of the position of an undertaking may be an abuse and prohibited
under Article [102] of the Treaty, regardless of the means and procedure by which it
is achieved, if it has the effects mentioned above.”
787
In Atlantic Container Line, the
General Court clarified that this does not apply only in cases of reinforcement of a
dominant position but also to conducts that harm consumers directly, and therefore
also to exploitative abuses. Indeed, the General Court explained that “[…] conduct
cannot cease to be abusive merely because it is the standard practice in a particular
sector; to hold otherwise would deprive Article [102] of the Treaty of any effect.
Dominant undertakings within the meaning of Article [102] of the Treaty have a
special responsibility not to allow their conduct to impair genuine undistorted
competition on the relevant market […]. Contrary to the submission of the applicant
in Case T-213/98, that responsibility is not limited solely to conduct likely to
reinforce the dominance of the undertaking concerned or reduce the level of
competition on the market, since Article [102] of the Treaty concerns not only
practices which hinder effective competition but also those which, as in this case,
may cause damage to consumers directly […].”
788
(541) Similarly, in BRT/SABAM, the Court of Justice considered that the “imposition”
criterion was met because the dominant copyright management association required
its members to assign to it copyrights under certain conditions,
789
irrespectively of
whether similar requirements were also requested by other non-dominant
associations. In Tournier, another preliminary ruling relating to a copyright
management society, the Court of Justice expressly underlined the optional nature of
a comparison with the conduct of other market players, noting “that a comparison
with the situation in other Member States may provide useful indications regarding
786
Joined Cases T-191/98 and T-212/98 to T-214/98 Atlantic Container Line and Others v Commission,
EU:T:2003:245, paragraph 1124.
787
Case 6/72 Europemballage and Continental Can v Commission, EU:C:1973:22, paragraph 27.
788
Joined Cases T-191/98 and T-212/98 to T-214/98 Atlantic Container Line and Others v Commission,
EU:T:2003:245, paragraph 1124.
789
Case C-127/73 BRT v SABAM, EU:C:1974:25, paragraphs 7 to 12.
EN 158 EN
the possible abuse of a dominant position by a national copyright-management
society”, without such comparison being required.
790
The Court of Justice even
explicitly stated that there may be “other criteria not mentioned in the questions
submitted by the national court which might serve to establish the unfairness of the
rate of royalty.”
791
In Alsatel, the Court of Justice stated, while ultimately not finding
an infringement due to the lack of a dominant position, that the imposition of unfair
trading conditions may consist of “the obligation imposed on customers to deal
exclusively with the installer as regards any modification of the installation”,
792
without considering whether other companies requested similar conditions or not to
their customers. In AAMS, the General Court found that certain conditions imposed
in distribution agreements by a monopolist on a number of cigarette manufacturers
constituted an exploitation of the monopolist’s dominant position without assessing
whether there was a causal link between the dominant position and the imposition of
the exploitative conditions.
793
(542) The aforementioned interpretation is not affected by the judgments in Tetra Pak II
794
and Kanal 5
795
referred to by Apple.
796
(543) While in Tetra Pak II the Court of Justice stated that “the application of Article [102]
presupposes a link between the dominant position and the alleged abusive conduct”,
this related to the question whether a conduct in a market distinct from the dominated
market could constitute an abuse of a dominant position in that distinct market.
When read in full, the quote referred to by Apple actually shows that there is no
additional causality requirement beyond a specific link (see recital (538)), as the
Court does not require the Commission to compare the conduct of the undertaking
concerned with the conduct of other, non-dominant competitors: “It is true that
application of Article [102] presupposes a link between the dominant position and
the alleged abusive conduct, which is normally not present where conduct on a
market distinct from the dominated market produces effects on that distinct market.
In the case of distinct, but associated, markets, as in the present case, application of
Article [102] to conduct found on the associated, non-dominated, market and having
effects on that associated market can only be justified by special circumstances.”
(544) Apple’s claim is also not supported by Kanal 5, where the Court of Justice stated that
“it is advisable therefore to ascertain whether the dominant undertaking has made
use of the opportunities arising out of its dominant position in such a way as to reap
trading benefits which it would not have reaped if there had been normal and
sufficiently effective competition (United Brands and United Brands Continentaal v
Commission, paragraph 249).”
797
This statement, which is a direct quote from
United Brands, only applies in excessive prices cases, where it should generally be
established whether the price actually charged by the dominant undertaking exceeds
the price which that undertaking would hypothetically have charged had there been
790
Case 395/87 Tournier,EU:C:1989:319, paragraph 43.
791
Case 395/87 Tournier, EU:C:1989:319, paragraph 44.
792
Case C-247/86 Alsatel v Novasam, EU:1988:469, paragraph 10.
793
Case T-139/98 AAMS, EU:T:2001:272, paragraph 79, concerning Commission decision 98/538/EC of
17 June 1998 relating to a proceeding pursuant to Article 86 of the EC Treaty (IV/36.010- F3 —
Amministrazione Autonoma dei Monopoli di Stato), paragraph 34.
794
Case C-333/94 P Tetra Pak v Commission, EU:C:1996:436, paragraph 27.
795
Case C‑52/07 Kanal 5, EU:C:2008:491, paragraph 27.
796
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 194.
797
Case C‑52/07 Kanal 5, EU:C:2008:491, paragraph 27.
EN 159 EN
effective competition.
798
This approach is therefore specific to excessive pricing
cases and cannot be generalised. Moreover, even in excessive pricing cases, the case
law does not require benchmarking the prices of the dominant company to those of
competitors. The Court of Justice indeed clarified that “[t]he questions therefore to
be determined are whether the difference between the costs actually incurred and the
price actually charged is excessive, and, if the answer to this question is in the
affirmative, whether a price has been imposed which is either unfair in itself or when
compared to competing products.”
799
In other words, a benchmarking with
competitors is only one of the options to find an infringement of Article 102(a) of the
Treaty, but not a mandatory requirement. The same reasoning is applied by the Court
of Justice in Kanal 5, where the Court does not require a benchmarking of the
conduct in question but simply notes that “it is therefore appropriate to ascertain
whether the royalties levied by STIM are reasonable in relation to the economic
value of the service provided by that organisation, which consists in making the
repertoire of music protected by copyright that it manages available to the
broadcasting companies which have concluded licensing agreements with it.”
800
(545) In general, it would not be appropriate to adopt a restrictive reading of Article 102(a)
of the Treaty excluding from its scope any trading condition imposed by a dominant
company, even if unfair (such as the imposition of disproportionate exclusivity
requirements extending far beyond the duration of a contractual commitment to
provide certain services
801
), simply because also non-dominant companies could (or
do) request their trading partners to accept similar unfair conditions. Even if similar
unfair conditions can be requested by non-dominant companies, they can still lead to
an abuse if they are imposed by a dominant undertaking which has a special position
of economic strength giving it the power to behave independently of its customers
(for instance because it is an unavoidable trading partner), and therefore – according
to the established case law – has a special responsibility under Article 102 of the
Treaty.
(546) Furthermore, contrary to Apple’s view, the causal link between the dominant
position of the undertaking concerned and the conduct in question is also not
required to distinguish exploitative from exclusionary abuses. Both types of abuses
are directly rooted in Article 102 of the Treaty and neither the wording of that
provision nor the case law of the Court of Justice provide for any reason to generally
require a causal link between the dominant position and an exploitative conduct as
alleged by Apple.
802
(547) The case law clarified that Article 102 of the Treaty covers both practices which may
cause harm to consumers directly as well as those which are detrimental to them
through their impact on an effective competition structure.
803
Contrary to Apple’s
view, exclusionary abuses do not take precedence over exploitative abuses.
804
798
See the opinion of Advocate General Wahl in Case C-177/16, Autortiesību un komunicēšanās
konsultāciju aģentūra / Latvijas Autoru apvienība v Konkurences padome, EU:C:2017:286, paragraph
17.
799
Case 27/76 United Brands v Commission, EU:C:1978:22, paragraph 252 (emphasis added).
800
Case C‑52/07 Kanal 5, EU:C:2008:491, paragraph 29.
801
As indicated, this was for instance the situation in Case C-127/73 BRT v SABAM, EU:C:1974:25 (see in
particular paragraph 12).
802
Case 6/72 Europembellage, EU:C:1973:22, paragraph 26.
803
Case 6/72 Europemballage and Continental Can v Commission, EU:C:1973:22, paragraph 26.
804
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 197.
EN 160 EN
Nothing in Article 102 of the Treaty suggests that the finding of an exploitative
abuse within the meaning of Article 102(a) of the Treaty depends in any way on
whether the conduct in question could potentially also be investigated as an
exclusionary abuse, e.g., within the meaning of Article 102(b) of the Treaty. Notably,
the different types of abuses address different legal and economic aspects and
consequences arising from a given conduct. The case law concerning exploitative
abuses within the meaning of Article 102(a) of the Treaty consisting in the
imposition of unfair trading conditions does not require the demonstration that the
conduct of the dominant company is liable to foreclose competitors. Foreclosure
effects can only relate to undertakings that are competing in the market, not to
conducts harming consumers who are not undertakings and therefore do not compete
in any market. Accordingly, if there were a requirement for the Commission to show
the capability to foreclose in the case of exploitative abuses under Article 102(a) of
the Treaty, that would make it impossible to find an abuse where only consumers are
harmed.
(548) As stated by the General Court in its Google Android judgment, “[e]xclusionary
effects characterise situations in which effective access of actual or potential
competitors to markets or to their components is hampered or eliminated as a result
of the conduct of the dominant undertaking, thus allowing that undertaking
negatively to influence, to its own advantage and to the detriment of consumers, the
various parameters of competition, such as price, production, innovation, variety or
quality of goods or services.”
805
However, this Decision does not analyse the
question whether actual or potential competitors of Apple Music have effective
access to any specific market. Rather, the analysis focusses exclusively on an
exploitative conduct covered by Article 102(a) of the Treaty consisting in the
imposition on Apple’s trading partners, the music streaming service providers, of
conditions that are unfair vis-à-vis iOS users.
(549) Contrary to Apple’s claim,
806
Article 102(a) of the Treaty does not require that the
conditions imposed on the trading partners be necessarily unfair vis-à-vis those
trading partners, as they could be unfair also vis-à vis third parties, including
consumers, that are affected by the conditions in question. This applies in particular
where, as in the present case, the unfair trading conditions imposed on the trading
partners of the dominant undertaking specifically concern and specifically affect end
users. Indeed, the Anti-Steering Provisions are specifically designed and applied to
prevent music streaming service providers from informing iOS users about options
available to them under the reader rule and the multiplatform rule and from allowing
iOS users to effectively exercise an informed choice between different options. The
iOS users are therefore the target of the Anti-Steering Provisions, which are
specifically detrimental to them in the different ways set out in more detail in Section
9.3.
(550) Contrary to Apple’s claim, once the Commission has shown that a given conduct
gives rise to an exploitative abuse under Article 102(a) of the Treaty, it is not
required to also assess whether the conditions for finding an exclusionary abuse are
met. Thus, if the Commission establishes the existence of an exploitative abuse under
Article 102(a) of the Treaty focusing only on the harm to consumers, it does not
805
Case T-604/18 Google Android, EU:T:2022:541, paragraph 281.
806
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 215;
Apple’s Response to the Letter of Facts, ID 3330, paragraphs 32, 186-188.
EN 161 EN
“circumvent the Court of Justice’s requirement for showing threshold foreclosure
effects for exclusionary abuses”.
807
(551) Moreover, contrary to Apple’s claim,
808
the distinction between EU competition law
on the one hand and the secondary EU legislation cited by Apple on the other hand
cannot be made according to whether they are aimed at the pursuit of fairness. The
fact that both Article 102(a) of the Treaty and that secondary EU legislation concern
the fairness of certain conducts does not mean that they pursue the very same
objective. As underlined, for example, by recital 11 of Regulation (EU) 2022/1925,
that regulation “pursues an objective that is complementary to, but different from that
of protecting undistorted competition on any given market, as defined in competition-
law terms, which is to ensure that markets where gatekeepers are present are and
remain contestable and fair, independently from the actual, potential or presumed
effects of the conduct of a given gatekeeper covered by this Regulation on
competition on a given market. This Regulation therefore aims to protect a different
legal interest from that protected by those rules and it should apply without prejudice
to their application.” By consequence, it is the complementary goal and the ex-ante
nature of those rules which distinguishes the cited secondary EU legislation from
Article 102(a) of the Treaty.
(552) Rather, the fact that Article 5(4) of Regulation (EU) 2022/1925 generally prohibits,
due to their unfair character, the imposition by gatekeepers of anti-steering rules
further supports the Commission’s view that such conditions imposed by a dominant
undertaking should be qualified as unfair.
809
(553) Finally, contrary to Apple’s claim, if certain trading conditions imposed by a
dominant undertaking are (appreciably and not insignificantly) detrimental to the
interests of the trading partners or third parties, including consumers, and are not
necessary or proportionate for the attainment of a legitimate objective, they can be
qualified as unfair, without having to show that they have “an unacceptable impact”.
The very fact that those conditions are “imposed” by the dominant undertaking,
which due to its market position has a special responsibility, means that the trading
partners have no effective possibility not to accept those conditions. In any event, in
the present case the Commission has shown that Apple’s Anti-Steering Provisions
are significantly detrimental to the interests of iOS users or, in other words, they
cause harm to them.
(554) Contrary to what Apple suggests,
810
this assessment was not carried out by
examining the Anti-Steering Provisions in isolation. Indeed, the Commission
examined them in their context, by assessing how they affect iOS users in the
framework of the music streaming services market, and by assessing their necessity
for the achievement of a legitimate objective.
807
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 169.
808
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 190-205.
809
Article 5(4) of Regulation (EU) 2022/1925 provides that undertakings such as Apple, that have been
designated as gatekeepers within the meaning of Article 3 of Regulation (EU) 2022/1925, shall allow
business users, free of charge, to (i) communicate and promote offers, including under different
conditions, to end users acquired via its core platform service or through other channels, and (ii) to
conclude contracts with those end users, regardless of whether, for that purpose, they use the core
platform services of the gatekeeper.
810
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 186.
EN 162 EN
(555) It follows from the above that Apple’s Anti-Steering Provisions give rise to an
(exploitative) abuse under Article 102(a) of the Treaty, due to the imposition of
unfair trading conditions, if: (i) they are unilaterally imposed by Apple on music
streaming service providers; (ii) they are detrimental to the interests of iOS users of
music streaming services; and (iii) they are not necessary for the achievement of a
legitimate objective or in any event not proportionate for that purpose.
9.2. Apple’s special responsibility under Article 102 of the Treaty
9.2.1. Introduction
(556) In Section 8, the Commission concludes that Apple holds a dominant position with
respect to the provision to developers of platforms for the distribution of music
streaming apps to iOS users. The App Store serves as an exclusive gateway to iOS
users.
(557) As a result of this dominant position, Apple has a special responsibility to ensure
inter alia that it does not impose unfair trading conditions on music streaming
service providers. This special responsibility should be considered in light of the
specific circumstances of the case at hand, and in particular the lack of competition at
the App Store level in the iOS ecosystem, where Apple fully determines and controls
the process of approval of apps for iOS devices.
(558) As explained in detail in Section 8.1 on the relevant markets and Section 8.2 on
dominance, Apple’s App Store is the only channel through which native apps can be
distributed to iOS users, such that all developers that wish to offer native apps to iOS
users have to do so through Apple’s App Store, abiding by the License Agreement
and Guidelines as formulated and enforced by Apple and following exclusively an
app review process in which Apple enjoys full discretion to approve or reject apps.
(559) Consumers are to a considerable degree locked into iOS devices once they have
purchased them, inter alia because of various monetary and non-monetary switching
costs (see for instance recital (382)).
(560) The App Store’s position as the only gateway for developers to reach iOS users
which are to a considerable degree locked-in, together with the key importance of
smart mobile devices and native apps to consume music streaming services,
accentuates the special responsibility that Apple has with regard to the trading
conditions it imposes upon music streaming service providers which concern (and
are detrimental to the interests of) iOS users.
(561) In assessing Apple’s special responsibility under Article 102 of the Treaty, the
Commission has considered the following specific circumstances of the case: (a)
Apple’s monopoly on music streaming app distribution on iOS; (b) the fact that
consumers predominantly use native apps on smart mobile devices to stream music
and; (c) Apple’s full control over the apps for iOS devices.
9.2.2. Apple’s monopoly on music streaming app distribution on iOS
(562) As explained in Section 8.1 on the relevant markets and Section 8.2 on dominance,
there is no realistic alternative for music streaming service providers to provide their
services to iOS users other than through Apple. Apple does not face any competition
with respect to the distribution of music streaming apps on iOS and dictates the
conditions for the sale of in-app digital content, including subscriptions, in those iOS
apps without facing any countervailing buyer power from music streaming service
providers.
EN 163 EN
(563) The App Store is the only channel available for developers to offer native apps to
iOS users, as Apple does not allow any competition from alternative app distribution
platforms for iOS devices as of the date of this Decision. Apple is therefore facing no
competition from third parties for the distribution of native music streaming apps on
iOS and, as of the date of this Decision, excludes third parties from offering
alternative in-app sales functionalities and related payment services.
(564) Music streaming service providers fully depend on Apple to have their apps
distributed to iOS users and have no choice but to abide by Apple’s rules in order to
do so. At the same time, owners of iOS devices who have made a considerable
investment in their devices are without alternative choices for app distribution and
subsequent in-app purchases.
9.2.3. Consumers predominantly use native apps on smart mobile devices to stream music
(565) The evidence in the Commission’s file shows that consumers stream music mostly
on smart mobile devices.
811
Moreover, streamed music consumption on smart mobile
devices takes place almost entirely through native apps, which currently cannot be
effectively replaced by other means of consumption such as web apps accessible
through browsers or sideloading methods, which are hence not a viable alternative
for providers of music streaming services (see Section 8.1). Music streaming service
providers therefore need to multi-home in order to reach all their potential users and
must have a native app for both iOS and Android devices.
812
They are fully
dependent on Apple for distributing their apps to iOS users. Conversely, iOS
consumers that are interested in music streaming services will overwhelmingly use
iOS native apps to access such services on their iOS devices.
9.2.4. Apple has full control in relation to apps for iOS devices
(566) Apple’s role as platform operator and the lack of competition at the app distribution
level on iOS devices provides it with the power to determine independently the rules
according to which iOS users and music streaming service providers interact on the
iOS platform, in particular the power to set and impose the terms and conditions
under which the App Store operates, including the Anti-Steering Provisions and
payment rules, as well as the power to accept or reject music streaming developers’
apps and apps updates in the App Store.
9.2.5. Conclusion
(567) In light of the above, the Commission concludes that Apple has a special
responsibility not to impose on music streaming service providers unfair conditions
which are detrimental to the interests of users of music streaming services on iOS.
811
Google estimates that [70-80 %] of music on YouTube Music is consumed via smart mobile devices
(YouTube Music’s response to question 7 of the Commission’s request for information (2019/048689),
ID 1356); SoundCloud submitted that 85 % of users logged through smart mobile devices
(SoundCloud’s response to question 6 of the Commission’s request for information (2019/048728), ID
1369).
812
Since smart mobile device users tend to own a single device and typically do not multi-home across
different smart mobile operating system to access music streaming services, music streaming service
providers have to offer their apps on both relevant mobile OS, i.e., iOS and Android (see in this regard
recital (271).
EN 164 EN
9.3. Analysis of the unfair character of the Anti-Steering Provisions vis-à-vis iOS
users of music streaming services
(568) The Commission concludes that Apple’s Anti-Steering Provisions constitute unfair
trading conditions pursuant to Article 102(a) of the Treaty, since: (i) they are
unilaterally imposed by Apple on music streaming service providers (Section 9.3.1);
(ii) they are detrimental to the interests of iOS users of music streaming services
(Section 9.3.2); and (iii) they are not necessary for the achievement of a legitimate
objective and in any event not proportionate for that purpose (See Section 9.3.3).
9.3.1. Apple unilaterally imposes the Anti-Steering Provisions on music streaming service
providers
(569) As set out in Section 6.2, Apple unilaterally defines the terms and conditions of the
Anti-Steering Provisions for the App Store and imposes them on app developers. In
particular, the Anti-Steering Provisions are enshrined in the Guidelines and in the
License Agreement which app developers need to abide by at the risk of having their
apps removed from the App Store or having their app updates rejected by Apple.
(570) As further explained in Section 6.2.3, the License Agreement is a contract of
adhesion, pre-defined by Apple and non-negotiable. The Guidelines contain the
criteria that Apple uses to review all apps and app updates submitted to the App
Store. Both the License Agreement and the Guidelines are defined, interpreted and
enforced unilaterally by Apple, which has full discretion to approve or reject apps
and app updates through its app review process.
813
Therefore, music streaming
service providers have no other choice than accepting and abiding by Apple’s rules
to be able to offer their apps in the App Store to iOS users.
(571) As shown in Section 7, Apple has consistently rejected apps and app updates
submitted to the App Store which it believes do not comply with its interpretation of
the Anti-Steering Provisions as set out in the Guidelines.
(572) Moreover, the language of the Guidelines is often ambiguous and unclear.
814
Apple
defines the Guidelines as a “living document” that it has unilaterally updated many
times.
815
Apple has unilaterally modified the wording and interpretation of the
Guidelines over the years, sometimes in contradiction with previous interpretations
and beyond the actual wording of the provisions (see Section 7.3). Changes to the
rules were often decided internally by Apple, without necessarily including them in
the Guidelines (see Section 7.2), making it difficult for developers to understand the
actual scope of the rules and grasp what is expected of them in order to comply with
the rules and to have their apps published in the App Store. . […].
816
(573) Music streaming service providers cannot escape this unilateral imposition of rules
by Apple, as they need to provide their services through native apps for smart mobile
813
Section 6.9 of the License Agreement states that: “[…] Apple may, in its sole discretion […] reject
Your Application for distribution for any reason, even if Your Application meets the Documentation
and Program Requirements” [emphasis added], ID 3015.
814
See the interview to Phillip Shoemaker on 12 January 2021 in the context of the Epic Games, Inc. v.
Apple, Inc., Case No. 4:20-cv-05640-YGR,
https://app.box.com/s/6b9wmjvr582c95uzma1136exumk6p989/file/806840116174, accessed on
6 May 2022, ID 2293.
815
See Apple’s comments on Spotify’s Complaint, ID 330, paragraph 52.
816
[…].
EN 165 EN
devices, which are the primary means of consumption for streamed music (see recital
(508)).
(574) As explained in detail in Section 7, even if consumers subscribe through alternative
(inferior) channels, they still want to use their subscription within an app on their
smart mobile device. Music streaming service providers therefore need to have
native apps for both iOS and Android devices, the two main Oss for mobile devices,
to reach consumers, who typically single-home. Moreover, consumers that have
purchased iOS devices are to a considerable degree locked into their iOS devices.
(575) Given these specific circumstances, music streaming service providers have no
choice but to accept Apple’s conditions for the App Store, however unfavourable,
unclear and ambiguous those conditions may be. The evidence in the Commission’s
file shows that even popular music streaming service providers with a large number
of active iOS users have not been able to influence Apple’s terms for access to the
App Store
817
and have no choice but to abide by Apple’s implementation of the
License Agreement and the Guidelines, including in particular the Anti-Steering
Provisions. It follows from the above that Apple imposes its License Agreeement and
Guidelines on app developers, including on developers of music streaming apps.
9.3.2. The Anti-Steering Provisions are detrimental to the interests of iOS music streaming
users (consumers)
(576) The Commission concludes that the Anti-Steering Provisions are detrimental to the
interests of iOS music streaming users (consumers) in that they are liable to cause
both direct monetary harm (see Section 9.3.2.1) and non-monetary harm (see Section
9.3.2.2) to them.
818
(577) The Anti-Steering Provisions prevent music streaming service providers from
informing iOS users about and allowing them to effectively choose among options
available to them under the reader rule and the multiplatform rule (see Sections 6.2
and 7). More specifically, the Anti-Steering Provisions prevent music streaming
service providers (i) from informing iOS users in their iOS app about the possibility
to purchase music streaming subscriptions outside of that app, generally at lower
prices than through that app, and to use these subscriptions in that app (as explicitly
allowed under the reader rule and the multiplatform rule), and (ii) from enabling iOS
users to effectively exercise the choices available to them, for instance by making
available web-based checkouts in the music streaming service providers’ iOS app
(e.g., through the use of “buy buttons” within the app).
(578) Based on Apple’s interpretation and implementation of the Anti-Steering Provisions
(see Section 7.3), music streaming service providers are prevented from providing
iOS users in their iOS app with information necessary to make informed choices,
namely the prices of subscription offers outside of the iOS app, the price difference
between in-app subscriptions sold through IAP and those available elsewhere, the
address of the developer’s website on which such subscriptions can be bought, as
817
See Section 3.3. of Spotify’s Complaint, ID 1457.
818
C‑377/20 Servizio Elettrico Nazionale, EU:C:2022:379, paragraph 44 (“[…] likely to cause direct harm
to consumers […] ”).
EN 166 EN
well as any explanations or instructions about how to subscribe to music streaming
service providers’ offer outside of the iOS app environment.
819
(579) The Anti-Steering Provisions also limit the possibility of developers to allow iOS
users to actively request in their app additional information about such subscription
possibilities directly from the developer, for example by way of an e-mail with
instructions on where and how to subscribe and under which conditions.
(580) Moreover, the Anti-Steering Provisions prohibit developers from offering buy
buttons or other direct links within their iOS apps to subscription possibilities outside
of the app (such as on the developer’s website). This prevents iOS users from
effectively exercising the choices made available to them by Apple. It prohibits
music streaming service providers from offering in their apps web-based checkouts
to purchasing mechanisms outside the app other than IAP. Such web-based
checkouts would provide consumers with a visible and easy-to-use alternative to
subscribing through IAP and would allow consumers to exercise in an easy and
effective way their choice between subscribing through Apple or subscribing directly
through the respective music streaming service provider.
(581) When permitted,
820
music streaming service providers have enabled web-based
checkout payment solutions in their Android apps, thus allowing consumers to
subscribe to their services at cheaper prices.
(582) In 2020, Spotify described the checkout payment solution it used at the time for its
Android app as follows: “It should be clarified that this is not technically in-app
purchase as the purchase does not take place inside the app. When a user taps the
“Get Premium” button in the app, the app redirects users to Spotify’s organic check-
out on the user’s mobile browser. The transition from the app to the organic check-
out is seamless, giving users the impression that the transaction takes place within
the mobile app. This facilitates the user experience.”
821
In addition, “in that organic
checkout, users can choose from several payment options (e.g., credit/debit card,
PayPal, or mobile carrier), depending on their country of residence”.
822
(583) Deezer reported that “For premium subscriptions made in Android Google Play,
payments are usually directed to Deezer via a web view using the desktop payment
method” where “different payment solutions are available such as the credit card or
Paypal for instance”.
823
Conversely, payments on Android made via Google Billing
(where Google charged Deezer 30 % of the transaction) were rarely used (at least
819
Response by Apple to question 25 of the Commission’s request for information (2022/004722), ID
2232.
820
Until 1 April 2022, music streaming service providers could choose between using an in-app payment
solution on Android via Google Play Billing, or a web-based checkout via their own websites or an
alternative payment solution provided by a third-party. Between 1 April 2022 and 18 July 2022, Google
amended its payment policy rules and introduced comparable anti-steering rules to those of Apple. On
18 July 2022, Google amended once again its payment policy for the EEA allowing app developers to
offer an alternative billing system to EEA users without being required to offer Google Play’s billing
system. See: https://blog.google/around-the-globe/google-europe/an-update-on-google-play-billing-in-
the-eea/, accessed on 5 October 2023, ID 3191.
821
Spotify’s response to question 17 of the Commission’s request for information (2020/002646), ID
1431-2.
822
Spotify’s response to question 32 of the Commissions’ request for information (2020/002646), ID
1431-2.
823
See Deezer’s response to question 27 of the Commission’s request for information (2019/048643), ID
1377.
EN 167 EN
until 1 April 2022), namely in the magnitude of 0.6 %, while “payments on Android
are most of the time made directly to Deezer via a web view”
824
in the magnitude of
99.4 %.
825
(584) Amazon Music reported that it “directs Android customers to its mobile web view
subscription channel” but “Apple does not permit Amazon to take the same
approach”.
826
If Amazon were permitted to use this method in the iOS environment,
it could “notify customers of the lower subscription price in any number of these
other channels and redirect customers to a web-interface from the iOS app for the
sign up process”.
827
(585) Napster stated that, at the time of its response, “Android does not prohibit apps from
informing users about (and linking to) payment systems offered outside of the app. As
such, on Android, we enable credit card billing, with users directed to our website
outside of the app to complete the sign-up process”.
828
Napster’s “price remained at
EUR 9.99 for Android due to the fact that we could avoid the Google billing fees by
enabling users to input credit card details.”
829
(586) SoundCloud explained that, at the time of its response, “in our Android app, we are
able to use a web-based checkout which does not require revenue share with Google
or any other party, and accordingly, we can offer our users a lower subscription
price”.
830
In addition, on Android, SoundCloud is free to “advertise special
promotions and products which can only be purchased on our website” while on iOS
“this is not allowed and offering these products via the App Store would not be cost
effective”.
831
(587) The restrictions stemming from the Anti-Steering Provisions deprive iOS users of the
information and tools within iOS to effectively select their preferred subscription
mechanism. Moreover, in addition to the Anti-Steering Provisions, […]
(588) This also includes the prohibition for developers to inform iOS users, in-app, of the
fact that such commission fee is not due in case of music streaming app subscriptions
concluded outside the app. This contributes to and reinforces the lack of information
that iOS users have on the available options and possible price differences between
them.
832
824
See Deezer’s response to question 24 of the Commission’s request for information (2019/048643), ID
1377.
825
See Deezer’s response to question 13 of the Commission’s request for information (2020/029315), ID
1379.
826
Amazon’s response to question 27 of the Commission’s request for information (2019/048673), ID
1336, page 18.
827
Amazon’s response to question 32 of the Commission’s request for information (2019/048673), ID
1336, page 21.
828
Napster’s response to question 24 of the Commission’s request for information (2019/048724), ID
1345.
829
Napster’s response to question 24 of the Commission’s request for information (2019/048724), ID
1345.
830
SoundCloud’s response to question 24 of the Commission’s request for information (2019/048728), ID
1369.
831
SoundCloud’s response to question 24 of the Commission’s request for information (2019/048728), ID
1369.
832
In this regard, in its Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs
259-260, Apple claims that the Commission’s statement is incorrect and brings up the examples of
Deezer and SoundCloud websites which mention, among others, “Apple’s commission” or
EN 168 EN
(589) The absence of appropriate information for iOS users and the strict limitation on the
tools that developers (including music streaming service providers) can use within
iOS to inform users about and point to alternative subscription mechanisms outside
iOS causes harm to iOS users in a number of ways.
(590) First, insofar as the Anti-Steering Provisions result in iOS users subscribing to a
music streaming service through IAP, these users end up paying a significantly
higher price for their subscription as compared to a situation with the full information
available to them in the absence of such Anti-Steering Provisions (see Section 9.3.2.1
on monetary harm).
(591) Second, because of the Anti-Steering Provisions, many iOS users suffer a degraded
customer experience and have less choice in some iOS music streaming apps (see
Section 9.3.2.2 on non-monetary harm).
(592) Third, because of the Anti-Steering Provisions, some iOS users end up either failing
to subscribe to the music streaming service of their first choice because they are
unable to find out – while they are engaged with the app – where and how to
purchase a subscription to their preferred music streaming service outside that
service’s iOS app or or not subscribing to a music streaming service at all (see
Section 9.3.2.2 on non-monetary harm).
(593) For the sake of completeness, the Commission observes that higher prices or
increased churn and lower conversion rates due to the Anti-Steering Provisions, for
example, not only impact iOS users of music streaming service but, necessarily, also
negatively impact music streaming service providers who incur significant additional
marketing costs.
833
9.3.2.1. Monetary harm to consumers
9.3.2.1.1. Price as a key parameter for consumers of music streaming services
(594) Because of the Anti-Steering Provisions, iOS users of music streaming services that
enable in-app subscriptions through Apple’s IAP are and remain uninformed about
the availability of alternative subscriptions and payment mechanisms as well as about
the costs associated with subscribing to a music streaming service in-app on iOS as
compared to alternative subscription mechanisms.
834
(595) iOS users of music streaming services that enable in-app subscriptions through
Apple’s IAP also lack effective mechanisms to exercise the choice between
“transactional fees” as causes for the higher subscription prices. In fact, Apple’s observation is
misleading in this regard, because such information appears on the music streaming service providers’
website only and is not shown on the app itself, for example at the moment of the conclusion of a
subscription when the iOS user is engaged in-app.
833
Based on data from Spotify, Apple calculates for Spotify “a cost of approximately EUR […] per cpc
conversion to a paid subscription.” This means Spotify has to spend EUR […] on cost-per-click (cpc)
marketing to achieve a conversion to a paid subscription. This is a […] amount of money, which few
music streaming service providers can afford. See Apple’s Response to the Statement of Objections of
30 April 2021, Annex 3, paragraph 30, calculated in 2185-20, worksheet “[…]”, cell B33, and
paragraph 63 in ID 1643 referring to Annex 1 of the response to the Commission’s request for
information dated 23 April 2020, ID 1434-3.
834
See, for example, Amazon’s response to question 32 of the Commission’s request for information
(2019/048673), ID 1336, page 21 where Amazon indicated that “if Apple permitted it in the iOS app,
Amazon could notify customers of the lower subscription price in any number of these other channels
and redirect customers to a web-interface from the iOS app for the sign up process”.
EN 169 EN
subscribing through Apple and IAP or subscribing directly through the music
streaming service provider of their choice.
(596) As a result, a number of iOS users decide to purchase in-app music streaming
subscriptions through IAP as opposed to alternative mechanisms without having
been put in a condition of making an informed and effective choice, for instance in
relation to the price of the subscription.
(597) Price is one of the most important parameters affecting consumer decision for music
streaming services. […].
835
[…].
836
Deezer also confirmed that price is the most
important factor of choice for consumers selecting a music streaming service.
Typically, music streaming services are rather similar on other functionalities.
837
Amazon submitted that “price is a key consideration for customers.”
838
A trial
Napster conducted in 2016 in which it increased the retail price to USD 12.99 for
iOS users who sign-up through the App Store “demonstrated a dramatic decline in
the number of sign-ups [...]. In fact, the $ 12.99 price-point caused a double-hit: (i)
we had less users signing up for the service than at $ 9.99; and (ii) those users
stayed with the service for less time than the equivalent $ 9.99 users - presumably
because they could access a similar service elsewhere for $ 9.99.”
839
SoundCloud’s
research indicates that price is the most important factor affecting consumers’ choice
of music streaming service. SoundCloud explained that its user base was very young
and often budget constrained. In SoundCloud’s user research [40-45 %] of users
selected “to save money/can’t afford” as a reason for cancelling their SoundCloud
Go+ subscription. In addition, another [7-10 %] give “price/affordability” as a churn
reason. For [25-30 %] of users participating in the same survey “to save money/can’t
afford” is the main reason for cancelling.
840
(598)
[…].
841
(599) These uninformed iOS users may end up paying higher prices for music streaming
services on iOS than those they would have paid absent Apple’s Anti-Steering
Provisions.
842
This is the result of the fact that: (a) in-app transactions conducted
through IAP and intermediated by Apple are accompanied by an obligation for app
developers to pay Apple a 30 % commission fee during the first year of a
subscription and 15 % after the first year of uninterrupted subscription (see Section
9.3.2.1.2); (b) the commission fee level imposes a substantial financial burden on
music streaming services (see Section 9.3.2.1.3), and, as a result, (c) the cost of the
commission fee must be and is passed on to iOS users in the form of higher prices for
subscriptions to music streaming services (see Section 9.3.2.1.4).
835
Spotify’s response to question 13 of the Commission’s request for information (2020/002646), ID
1431-2.
836
See Figure at page 13 of Spotify’s response to question 13 of the Commission’s request for information
(2020/002646), ID 1431-2.
837
Deezer’s response to question 9 of the Commission’s request for information (2019/048643), ID 1377.
838
Amazon’s response to question 9 of the Commission’s request for information (2019/048673), ID 1336.
839
Napster’s response to question 9 of the Commission’s request for information (2019/048724), ID 1345.
840
SoundCloud’s response to question 9 of the Commission’s request for information (2019/048728), ID
1369.
841
Slide 21, ID 268-316; see also ID 1615 of February 2015.
842
Some consumers may decide to accept a higher monthly subscription fee for the convenience and
alleged privacy advantages that IAP provides; see also Response to the Statement of Objections of
30 April 2021, ID 2165, paragraph 318; Apple’s Response to the Statement of Objections of
28 February 2023, ID 2800, paragraphs 250 et seq.
EN 170 EN
9.3.2.1.2. In-app sales of music streaming subscriptions are subject to a commission fee
(600) As described in Section 6.2, developers that sell digital content, such as e-books and
music streaming subscriptions, within their iOS app through IAP are required to pay
a commission fee to Apple.
843
9.3.2.1.3. The commission fee level imposes a substantial financial burden on music
streaming services
(601) A 30 % / 15 % commission fee is problematic for developers operating in markets
with thin margins and high fixed and variable costs, such as music streaming
services.
844
Due to the Anti-Steering Provisions, music streaming service providers
are forced to either increase their prices for subscriptions through IAP to iOS users or
to maintain the same price for IAP subscriptions available outside the iOS app and
absorb the loss, thereby impacting or preventing their profitability (see Section
9.3.2.1.3).
(602)
[…]
845
(603)
[…]. In that period, the music streaming service provider Rhapsody (Napster) issued
the following press release which was discussed internally within Apple: “Our
philosophy is simple too – an Apple-imposed arrangement that requires us to pay 30
percent of our revenue to Apple, in addition to content fees that we pay to the music
labels, publishers and artists, is economically untenable. The bottom line is we would
not be able to offer our service through the iTunes store if subjected to Apple’s 30
percent monthly fee vs. a typical 2.5 percent credit card fee”.
846
(604)
[…]”.
847
(605)
[…]”.
848
(606)
[…]
9.3.2.1.4. Music streaming services are compelled to pass-on the commission fee to iOS
users
(607) Music streaming service providers have little choice but to pass-on the commission
fee to iOS users, as it is shown by the evidence below.
(608) Deezer indicated that “Considering its very low margin, Deezer had no other choice
but to pass on this 30 % commission fee payable to Apple for IAP to its iOS
customers, and so to lose its price competitiveness with this different pricing on iOS
from March 2016. Through other OS, such as Android, Deezer’s subscribers are
843
See also Section 3.4 of Schedule 2 to the License agreement, ID 2593.
844
See footnote 372.
845
ID 1612. In its Response to the Statement of Objections of 28 February 2023, Apple argues that “these
quotes relate to a fee of 30 % for the full duration of a subscription, which had not been applicable
since 2017.” (ID 2800, paragraph 227). However, these quotes are still relevant for a subscription of one
year or less. As for the substantial financial burden on music streaming services imposed even by a
lower fee of 15%, see recitals (606) and (649).
846
ID 772-238.
847
ID 1628.
848
Annex 8 to Apple’s response to question 11 of the Commission’s request for information
(2019/050361), Slide 25, ID 268-291.
EN 171 EN
able to pay their subscription at the standard Web retail price because there is no
such restriction with respect to the payment systems available on those platforms.”
849
(609) SoundCloud submitted that its business was “impacted” by Apple’s “stipulation in
paragraph 3.1.3 that “you must not directly or indirectly target iOS users to use a
purchasing method other than in-app purchase, and your general communications
about other purchasing methods must not discourage use of in-app purchase””,
which “keeps us from advertising that purchasing via Web or Android is around
30 % cheaper at, e.g. € 9.99 / month instead of € 12.99 / month (in the EEA)”.
850
(610) Qobuz, which charges high prices in its iOS app for its high-definition sound quality
subscription offers, indicated that “if we would not pass the 30 % commission fee
payable to Apple” for those premium offers “we would simply be unable to cover our
operating expenses and would systematically make a loss on every subscription”.
851
In the same submission, Qobuz indicated that Apple “prevent[s] us to access our
customer in a proper way. We cannot let customers know how to do if they don’t
want to go through the Apple store” and that “Customers should be offered a free
choice inside our iOS application to register or not through the AppStore”.
852
(611) It is therefore unsurprising all major music streaming service providers in the EEA
actually increased their subscription prices for transactions concluded through IAP,
typically from EUR 9.99 to EUR 12.99 for individual subscriptions, compared to the
price they had applied before implementing IAP and/or the price they kept offering
through other channels (such as their own website), thus passing on the commission
to their iOS users in the form of a higher in-app subscription retail price.
(612) This is the case for Spotify during the period it enabled IAP
853
, for Deezer,
854
SoundCloud
855
, Napster
856
, YouTube Music
857
and Tidal
858
. For example, when
Spotify implemented IAP between June 2014 and May 2016 as well as when Deezer
enabled IAP from 2016 onwards, they both increased the monthly subscription fees,
typically from EUR 9.99 to EUR 12.99 for an individual subscription. This triggered
numerous user complaints.
859
849
Deezer’s response to question 4 of the Commission’s request for information (2019/048643), ID 1377.
850
SoundCloud’s response to question 22 of the Commission’s request for information (2019/048728), ID
1369.
851
Qobuz’s response to question 29 of the Commission’s request for information (2019/110473), ID 497.
852
Qobuz’s response to the Commission’s request for information (2019/110473), ID 497.
853
Spotify’s Complaint, paragraph 60: “The IAP tax forced Spotify to choose between two detrimental
alternatives: either raise the price of its subscription on iOS, passing on the 30 % overcharge to
consumers, or absorb the 30 % surcharge at the expense of Spotify's margins. Spotify reluctantly raised
its Premium service price on iOS from € 9.99 to € 12.99 per month”, ID 1457.
854
Deezer’s response to question 23 of the Commission’s request for information (2019/048643), ID 1377.
855
SoundCloud’s response to question 22 of the Commission’s request for information (2019/048728), ID
1369.
856
Napster’s response to question 28 of the Commission’s request for information (2019/048724), ID
1345.
857
YouTube Music’s response to question 4 of the Commission’s request for information (2019/048689),
ID 1356.
858
Screenshots from Tidal App and mobile browser on 12 February 2021, ID 1294.
859
Deezer submitted having “received numerous complaints in reaction to the price increase on iOS”,
mostly focussing on “our customers seeing the price elsewhere being advertised at a lower point and
seeing them charged EUR 12.99 by Apple” (see Deezer’s response to question 23 of the Commission’s
request for information (2019/048643), ID 1377). Spotify reported a number of Twitter messages
complaining about Spotify’s price on iOS compared to Apple’s price in response to question 25 of the
EN 172 EN
(613) When SoundCloud launched paid subscriptions in its iOS app in March 2016, it
equally decided to charge an increased price for its “Go+” premium music
subscription offer in its app (which was comparable to Spotify and YouTube Music
offers combining a paid listener subscription in conjunction with an ad supported
service) at EUR 12.99 rather than EUR 9.99 charged outside the iOS environment.
860
Also Napster “increased the price to EUR 12.99 on iOS to try and absorb the margin
impact of the Apple tax” and “the price remained at EUR 9.99 for Android due to the
fact that we could avoid the Google billing fees by enabling users to input credit card
details”.
861
(614) In its Response to the Letter of Facts, Apple also concedes that music streaming
service providers ““pass on” Apple’s commission”, even if it states that they do it “to
a different extent.”
862
Irrespective of how much of the commission fee each music
streaming service provider passes-on, absent the Anti-Steering Provisions, iOS users
would have been in a position to make an informed choice when first subscribing to a
premium subscription, thereby avoiding both higher subscription fees in the first year
and subsequent years. Even a partial pass-on of the commission fee would cause a
monetary harm to iOS users.
(615) Although in relation to a different industry, […].
863
This supports the finding that app
developers subject to the commission fee have no other option than to pass it on.
(616) In addition, evidence shows that a music streaming service provider operating under
the same financial conditions as Apple Music would not have been able to absorb the
commission fee of 30 % / 15 % and remain profitable without raising its in-app
subscription price. This further supports the finding that music streaming service
providers have no choice but to pass-on such fee to their iOS customers.
(617) In this respect, the Commission has relied on Apple’s […]
864
[…]
865
[…].
866
[…]
(618) The Commission relies on these […].
(619) The results of these calculations show that the commission fee constitutes a
substantial financial burden for music streaming service providers […]. This leads to
the (full or partial) pass-on of the commission fee.
(620) The results of these comparisons (cf. column 3 in Tables 4 and 5) further show that
the commission fees that the music streaming service providers would have to pay
Apple […] over the lifetime of a subscription are of a similar magnitude and in some
cases higher than the lifetime value of an equivalent subscription. A music streaming
Commission’s request for information (2020/002646), ID 1431-2 and in Spotify’s response to question
4 of the Commission’s request for information (2020/147746), ID 1447. These user messages include
the following Tweets “Cancelled my @Spotify premium for a short while. Just gone to sign back up and
it’s know [GBP] 12.99 ?!? Apple Music, I’m coming for you” of 15 May 2016 or “@SaxNStrikeouts
Apple Music has it. I ditched @Spotify when they jacked their price to USD 12.99.” of 8 May 2016 and
“@Spotify is way better than Apple Music, but 12.99 a month is tooooooo much” of 19 February 2016.
860
SoundCloud’s response to question 8 of the Commission’s request for information (2019/048728), ID
1369.
861
Napster’s response to question 28 of the Commission’s request for information (2019/048724), ID
1345.
862
Apple’s Response to the Letter of Facts, ID 3330, paragraph 206.
863
ID 1612.
864
[…]
865
See footnote 54.
866
[…]
EN 173 EN
service offering in-app subscriptions on iOS devices, […] would hence be
significantly impacted in its profitability by the commission fee. Without increasing
the retail price for in-app subscriptions, such a music streaming service provider
would either make losses (in some Member States) as represented by the negative
values in column 3 in both tables, or achieve only minimal profits.
Table 4 – […]
867
[…]
Table 5 – […]
868
[…]
(621) […]
869
[…]
(622) The results of these calculations show […]
870
(623) The above calculations and conclusions are also confirmed when relying on data
from […]. Even when relying on […] data instead of […] data, […].
(624) In particular, in the […] model, […]
(625) […]
(626) Table 6 provides the results of the Commission’s recalculations, […]
Table 6 – […]
871
[…]
(627) […]
(628) […]
Table 7 – […]
872
[…]
(629) […]
873
[…]
874
[…]
(630) […]
875
[…]
(631) Further, the Commission observes that the premium subscription prices remain
higher in the iOS in-app channel, even after the general price increases in music
streaming premium subscriptions in the years 2022-2023 implemented by the main
music streaming service providers in the EEA (see recital (224)). When the
subscription is concluded via IAP rather than via other channels, such as the music
streaming service provider’s website, iOS users end up paying EUR 1 to 3 more. For
example, Deezer Premium currently costs EUR 11.99/month if bought on Deezer’s
website and EUR 13.99/month if bought in-app via Apple’s IAP (see recital (224)).
867
ID 2607.
868
ID 2607.
869
[…]
870
[…] See Commission calculations, ID 2607.
871
Commission calculations based on ID 508-045974, see ID 3217.
872
Commission calculations based on ID 508-045974, see ID 3217.
873
[…]
874
[…]
875
[…]
EN
174
EN
(632) The Commission has calculated that, as of July 2023, more than 1.4 million iOS
subscribers in the EEA of the main music streaming services other than Apple Music
(i.e., Amazon, Napster, SoundCloud, YouTube Music, Tidal, Deezer, Qobuz and
Spotify legacy subscribers
876
) used IAP to subscribe. These customers typically have
been charged monthly subscription prices that exceed those of Apple Music and also
those of their chosen music streaming service provider outside the iOS app.
877
Figure
32 provides the results of the Commission’s calculations, using Apple’s data. As
explained above, higher prices charged by the main music streaming services other
than Apple Music are a consequence of the necessity to pass-on the commission fee.
Absent the possiblity for iOS users to effectively exercise an informed choice
because of the Anti-Steering Provisions, it follows that the latter are detrimental to
the interests of those iOS users that end up paying higher prices for subscribing to
music streaming services.
Figure 32 – Subscribers to music streaming services (other than Apple Music)
through IAP at elevated monthly fee from October 2014 to July 2023 (EEA,
including the UK)
878
(633) These “IAP subscribers”
879
include Spotify’s legacy subscribers who have been
paying an elevated monthly fee due to subscribing in the period when Spotify
adopted IAP and passed Apple’s commission fee on to consumers.
876
Subscribers of the Spotify Premium subscription that have subscribed through IAP during the period
when Spotify enabled IAP, i.e., between June 2014 and May 2016. Spotify announced in July 2023 that
all legacy subscribers would be automatically moved to a free, ad-supported membership (see ID 3194).
877
An exception may be the subscribers to the Deezer family subscriptions, where there does not appear to
be a difference between the website price and the in-app (IAP) price for family subscriptions in France
and Germany (see Apple’s Response to the Letter of Facts, Annex 9, ID 3324, page 13). Note that
Apple Music generally charges the same price that music streaming service providers charge outside the
app, as explained in Section 7.5.
878
Commission calculations based on Apple’s response to the Commission’s request for information of 3
August 2023, Annex Q7 and Q16. Deezer includes “HD” and “Music & Podcast Player”, Qobuz
includes also “Music & Editorial”, Soundcloud includes "Music & Songs" and "Discover New Music",
TIDAL includes "Music" and "Music: HiFi, Ad-free".
879
The term ‘IAP subscribers’ refers to those iOS users that subscribed to one of the music streaming
services (other than Apple Music) through Apple’s in-app purchase mechanism IAP.
EN 175 EN
(634) The difference in price between subscriptions concluded in- app and subscriptions
concluded outside the app depends on the type of subscription plan (e.g.,
student/individual/family). For an individual subscription, this higher payment would
typically be EUR 3 per month per affected iOS user, leading to a price of EUR 12.99
instead of EUR 9.99. After the price increases implemented by major music
streaming service providers in 2022 and 2023, the payment at prices higher than the
price for out-of-app subscriptions represents, e.g., in the example of Deezer EUR 2
per month per affected iOS user, leading to a price of EUR 13.99
880
instead of
EUR 11.99.
881
The current IAP price of YouTube Music subscription is EUR 12.99
and EUR 15.99 for YouTube Premium subscription.
882
On the website, the respective
prices of these subscriptions amount to EUR 9.99
883
and EUR 11.99 respectively.
884
The current IAP price of Napster premium subscription is EUR 13.99,
885
while on its
website subscriptions can be bought at EUR 10.99 after its price increase.
886
The
current IAP price of Tidal is EUR 13.99,
887
while on its website the price amounts to
EUR 10.99 since July 2023.
888
The current IAP price of Amazon Music Unlimited is
EUR 11.99,
889
while the price on Amazon’s website amounts to EUR 10.99 (for non-
Prime customers) since January 2023.
890
(635) As of May 2016, when Spotify disabled IAP altogether, the number of Spotify legacy
subscribers gradually decreased, reducing the number of subscribers to the Spotify
Premium service at elevated prices. Those numbers will be reduced further,
following Spotify’s announcement in July 2023 according to which those premium
users who subscribed through IAP between June 2014 and May 2016 would be
automatically moved to a free account after the end of the last billing period.
891
Despite these recent developments, the number of consumers across music streaming
services paying more because of the IAP has overall been increasing over time (see
Figure 32).
892
Harm to those individual consumers paying more accumulates over
time, as paying iOS users continue their subscriptions over several months or years.
(636) In view of the pass-on by music streaming service providers and the resulting higher
prices for inapp subscriptions, the Commission concludes that the Anti-Steering
Provisions are detrimental to the interests of those iOS users that end up paying
higher prices for subscribing to music streaming services.
880
ID 3164.
881
ID 3205.
882
ID 3167.
883
ID 3215.
884
ID 3216.
885
ID 3165.
886
ID 3175.
887
ID 3171.
888
ID 3181.
889
ID 3172.
890
ID 3182.
891
See footnote 876 about legacy Spotify IAP subscribers.
892
The number of subscribers paying more because of the IAP would furthermore be multiple times
higher, had Spotify not decided to disable in-app subscriptions through IAP in mid-2016 to avoid
offering its users an elevated in-app price without being able to inform them on where to obtain the
subscription at a competitive price.
EN 176 EN
9.3.2.1.5. Assessment of Apple’s arguments
(637) In its Response to the Statement of Objections of 28 February 2023, Apple submits
that the Anti-Steering Provisions do not apply to consumers and that “unfair” terms
must be “disadvantageous” vis-à-vis the trading partner to whom they apply, i.e., the
music streaming service providers in this case.
893
(638) In its Response ot the Letter of Facts, Apple also argues that any monetary harm to
consumers would be irrelevant.
894
(639) Furthermore, Apple also submits that the Anti-Steering Provisions do not have any
cognisable indirect effects on consumers, as they do not entail any “monetary harm”
to consumers. In particular, according to Apple, music streaming service providers
(i) are free to price their music streaming services as they wish,
895
and (ii) charge
their users more than required to compensate for Apple’s commission fee.
896
Apple
also contests in its Response to the Letter of Facts
897
the Commission’s conclusion in
recital (632) according to which 1.4 million iOS subscribers in the EEA of the main
music streaming services other than Apple Music have suffered monetary harm.
(640) According to Apple, in any event, the commission fee does not constitute unfair
prices.
898
(641) Apple’s views need to be rejected for the following reasons.
9.3.2.1.5.1. The Anti-Steering Provisions specifically affect consumers
(642) To the extent that Apple argues that the Anti-Steering Provisions do not apply to
consumers, the Commission submits that trading conditions can be regarded as unfair
under Article 102(a) of the Treaty either in relation to the dominant undertaking’s
trading partners on which those conditions are imposed or to third parties, including
consumers.
899
(643) As set out in Section 9.1.2, the Anti-Steering Provisions are specifically designed and
applied to prevent music streaming service providers from informing iOS users about
options available to them under the reader rule and the multiplatform rule and from
allowing iOS users to effectively exercise an informed choice. The iOS users are
therefore the target of the Anti-Steering Provisions and those provisions affect them
specifically in the different ways set out in this Section 9.3. Accordingly, the Anti-
Steering Provisions specifically concern consumers.
893
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 214-216.
894
Apple’s Response to the Letter of Facts, ID 3330, Section H.II.1.
895
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 224-231.
896
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 232-242.
897
Apple’s Response to the Letter of Facts, ID 3330, paragraph 193.
898
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 243-251.
899
Case C-66/86 Ahmed Saeed Flugreisen and Others v Zentrale zur Bekämpfung unlauteren
Wettbewerbs, EU:C:1989:140, paragraph 42. It does not matter whether the unfairness lies in the
imposition of an unfair condition (in the Ahmed Saeed case, a tariff) that is directly unfair vis-à-vis
consumers or in the imposition of a prohibition to inform consumers (which leads to an indirect impact
on consumers because they are less informed about their choices). It follows from paragraphs 42 and 46
in Ahmed Saeed that unfair conditions (tariffs) imposed on other carriers may be unfair vis-à-vis
passengers, which shows that the unfairness can be assessed vis-à-vis a third-party, different from the
one on which a trading condition is imposed.
EN 177 EN
9.3.2.1.5.2. The Anti-Steering Provisions cause harm to consumers (iOS users)
(644) The Commission rejects Apple’s claim that monetary harm caused to consumers is
irrelevant. Apple argues “that any such monetary harm would have to amount to
excessive pricing under the United Brands test”.
900
Such premise is incorrect. As
mentioned in recital (680), United Brands concerns specifically excessive prices and
does not set forth a general legal test applicable to the imposition of any unfair
trading conditions pursuant to Article 102(a) of the Treaty. Apple cannot therefore
claim that any monetary harm stemming from unfair trading conditions pursuant to
Article 102(a) of the Treaty must equate to an excessive price for it to be relevant.
For the same reasons, the commission fee charged when using IAP does not need to
be excessive for the Commission to find that there is monetary harm to consumers
caused by the Anti-Steering Provisions.
901
Because music streaming service
providers need to pass-on the commission fee, this necessarily translates into higher
prices for consumers. Finally, there is no “paradox” in the Commission’s approach
as argued by Apple.
902
As explained in more detail in recital (819), Apple’s alleged
interest in the Anti-Steering Provisions essentially consists in avoiding a
circumvention of the IAP functionality.
903
However, this alleged objective is
contradicted by the fact that Apple (i) allows for the reader rule and the multi-
platform rule which specifically enable users to use in-app the content purchased
outside the app, (ii) decided not to apply any commission fee for in-app sales to the
majority of app developers, and (iii) does not specifically finance the App Store with
commission fees paid by music streaming service providers. In addition, the Anti-
Steering Provisions entirely disregard iOS users’ legitimate interest in getting
information about the options available to them resulting from the choice made by
Apple to not only allow iOS users to purchase subscriptions and content in-app but
also outside their iOS apps and subsequently access it in the apps.
(645) The Commission further disagrees with Apple’s argument that music streaming
service providers have other alternatives to increasing the prices of subscriptions sold
through IAP to iOS users.
904
As analysed in detail in Section 9.3.2.1.4, music
streaming service providers do not have – with the Anti-Steering Provisions in place
– any other choice than to either increase their in-app retail prices or to forego their
ability of acquiring customers through the iOS app by disabling IAP. Either way
results in harm to consumers (iOS users).
(646) As shown in recitals (608)-(610), music streaming service providers have stated that
they have no other choice than to pass-on the commission fee.
(647) As also shown in recital (602), […]
(648) Apple contends that the payment of higher prices by iOS users cannot be attributed
to its commission fee and that as of year two of a subscription when the commission
fee paid to Apple decreases from 30 % to 15 %, no music streaming service provider
decreased its subscription prices. This would confirm, in Apple’s view, that
subscription pricing is an independent business decision by music streaming service
900
Apple’s Response to the Letter of Facts, ID 3330, paragraph 199.
901
Apple’s Response to the Letter of Facts, ID 3330, paragraph 200.
902
Apple’s Response to the Letter of Facts, ID 3330, paragraph 201.
903
Apple’s Response to the Letter of Facts, ID 3330, paragraph 201.
904
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 225.
EN 178 EN
providers and that those providers maintain increased prices to maximise their
profits.
905
(649) However, Apple’s arguments disregard that even a 15 % fee is problematic for
developers operating in markets with thin margins and high fixed and variable costs
such as music streaming (see recital (601)) and will therefore have to be passed-on to
consumers. For music streaming apps, the higher price (for an individual plan) paid
when subscribing in- app through IAP is paid throughout the entire duration of the
subscription, i.e., is recurrent and may add up to a significant amount. The fact that
music streaming service providers do not lower the price after the first year of the
subscription, when Apple’s commission fee is lowered to 15 %, is not surprising,
given that, in general, discounts for digital products are more likely to be granted for
the initial subscription period(s) than for later subscription periods. In any event, the
failure by music streaming providers to lower the price for subsequent years of
subscription does not contradict the fact that the fee needs to be passed on and that
this pass-on is triggered by Apple’s commission fee. In any case, absent the Anti-
Steering Provisions, consumers could make an informed choice when first
subscribing to a premium subscription, thereby avoiding both higher subscription
fees in the first year and higher subscription fees in subsequent years.
906
(650) Moreover, as set out in recital (627), the […] further supports the finding that the
commission fee leads to increased prices for subscribers of music streaming services
on iOS, as music streaming service providers other than Apple Music would see their
profits erode due to Apple’s conditions and are therefore forced to either increase
prices for in-app subscriptions on iOS or to drop in-app subscriptions on iOS devices
(as can be observed in the case of Spotify). Apple is also wrong to claim that the […]
“attempt to repurpose a margin squeeze analysis”.
907
The Court confirmed in
Deutsche Telekom that “margin squeeze is capable, in itself, of constituting an abuse
within the meaning of Article 82 EC in view of the exclusionary effect that it can
create for competitors who are at least as efficient as the appellant.”
908
As explained
in the rest of Section 9, this Decision concerns an exploitative abuse in the form of
unfair tradition conditions vis-à-vis iOS users of music streaming services. As also
explained in recital (650), the […] confirm that the commission fee leads to
increased prices for subscribers of music streaming services on iOS since music
streaming service providers are forced to either increase prices for in-app
subscriptions on iOS or to drop in-app subscriptions on iOS devices. The […] do not
seek to show an exclusionary effect on music streaming service providers but
provide evidence for the need to pass-on the commission fees to consumers.
(651) Apple is also wrong to claim that the Commission “fails to demonstrate how this fee
charged by Apple for developers’ access to Apple’s whole ecosystem becomes a
consumer harm when developers independently decide to charge their customers for
their own costs”
909
and that the Commission “cannot disregard the benefits that iOS
users and developers get from Apple – free-of-charge – even when consumers do not
purchase through IAP.”
910
First, as explained (Section 9.3.2.1.4), music streaming
905
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 232-235.
906
See also recital (932).
907
Apple’s Response to the Letter of Facts, ID 3330, paragraph 215.
908
C‑280/08 P Deutsche Telekom AG, EU:C:2010:603, paragraph 183.
909
Apple’s Response to the Letter of Facts, ID 3330, paragraph 221.
910
Apple’s Response to the Letter of Facts, ID 3330, paragraphs 227-229.
EN 179 EN
service providers are compelled to pass-on the commission fee. Second, Apple
already charges USD 99 yearly for the Apple Developer Program giving access to
developers to Apple’s ecosystem (see recital (265)). The fee charged for this program
also serves to remunerate Apple for some of the services it provides to developers
such as app updates. Third, Apple cannot ignore that developers, in return, bring
considerable value to the App Store as popular apps generate traffic and therefore
revenues for Apple.
(652) In an attempt to justify higher subscription prices, Apple further submits that
“Apple’s services, including the App Store, are valued by both app developer and
iOS users”
911
who would “clearly value the convenience of being able to use their
existing Apple ID and payment method [...]”.
912
The Commission considers unlikely
that all (or most of) these subscribers – were they fully informed and aware of price
differences and available cheaper subscriptions – would willingly choose such higher
subscription prices only to enjoy the convenience of a smooth in-app subscription
experience without leaving the iOS app. For music streaming apps, iOS users would
enjoy the added convenience only once, at the moment of the subscription (“with one
click, customers pick the length of subscription and are automatically charged based
on their chosen length of commitment (weekly, monthly, etc.)”,
913
whereas they were
obliged to pay higher monthly subscription fees throughout the entire duration of the
subscription (see recitals (222)-(225)), which is recurrent and may add up to a
significant amount over a longer subscription.
914
(653) While some of these subscribers paying higher prices might have chosen to subscribe
through the App Store even if they had been aware of the price difference with
alternative subscription channels, it appears unlikely that all (or most of) IAP
subscribers would have continued paying such higher fees month after month for an
identical service had alternative subscription possibilities been made fully transparent
and available to them within the developer’s iOS app. Evidence in the file confirms
that where consumers are aware of significantly cheaper alternative subscription
channels, a significant number of them would opt for those alternative subscription
channels.
915
(654) Apple also points to other benefits it provides such as ease of use, security, privacy
and reliability that both app developers and iOS users would value.
916
(655) The Commission does not contest that some iOS users may value subscribing
through Apple’s IAP. The fact that “iOS users can access […] user-friendly services
911
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 250-251.
912
Ibid.
913
See https://www.apple.com/newsroom/2011/02/15Apple-Launches-Subscriptions-on-the-App-Store/,
accessed on 15 December 2020, ID 1062.
914
Music streaming services with enabled in-app subscriptions on iOS typically apply an in-app
subscription price that does not change over time, with the exemption of eventual free trials. The
additional amount paid over a typical two-year subscription would amount to 3*24= EUR 72.
915
For example, in 2020 (i.e., before the entry into force of the new payment policy rules for Google Play
Billing) Deezer reported that on Android, only 0.6 % of the payments were made via the higher priced
Google Billing payment mechanism while 99.4 % of subscriptions were made directly through Deezer’s
web-based checkout mechanism. Deezer’s response to question 13 of the Commission’s request for
information (2020/029315), ID 1379.
916
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 250.
Apple’s Response to the Letter of Facts, ID 3330, paragraphs 223 et seq.
EN 180 EN
provided through IAP”
917
is not relevant. The abuse in question relates to the fact that
the Anti-Steering Provisions prevent music streaming service providers (i) from
informing iOS users in their iOS app about the possibility to purchase music
streaming subscriptions outside of that app, generally at lower prices than through
that app, and to use these subscriptions in that app (as explicitly allowed under the
reader rule and the multiplatform rule), and (ii) from enabling users to effectively
exercise the choices available to them, for instance by making available web-based
checkouts in their iOS app (e.g., through the use of “buy buttons” within the app).
Whatever benefits iOS users may derive from IAP are unrelated. Furthermore, as the
judge in the US EPIC trial has observed, “while some consumers may want the
benefits Apple offers (e.g., one-stop shopping, centralization of and easy access to all
purchases, increased security due to centralized billing), Apple actively denies them
the choice”.
918
Indeed, the Anti-Steering Provisions entirely disregard the interest of
iOS users by denying them the possibility to make an informed and effective choice
between the available options on the devices they have bought.
(656) In any event, it is for consumers, and not for Apple via the Anti-Steering Provisions,
to decide whether they value the added convenience of an integrated platform
subscription service so much that they are willing to continuously pay a considerably
higher subscription price.
(657) In its Response to the Statement of Objections of 28 February 2023 and its Response
to the Letter of Facts, Apple further claims that music streaming service providers
charge users more than required to compensate for its commission fee.
919
In
particular, Apple contests the reliability of the […] considered by the Commission
(see Tables 4 to 7).
920
Apple alleges that the Commission attempts to perform a
“margin squeeze analysis” or an “as efficient competitor test” without considering,
however, that other providers of music streaming services do not have the same cost
structure as Apple Music. Apple also submits the following criticisms to the
Commission’s analysis:
921
– […]
– […]
– […]
– The focus on consumer harm makes the Commission’s […] even less
informative. According to Apple, the […] follow the logic of an “as-efficient
competitor test” or a “margin squeeze analysis”, tools which are typically used
to assess potentially exclusionary practices.
922
917
Apple’s Response to the Letter of Facts, ID 3330, paragraph 226.
918
See https://cand.uscourts.gov/wp-content/uploads/cases-of-interest/epic-games-v-apple/Epic-v.-Apple-
20-cv-05640-YGR-Dkt-812-Order.pdf, page 19, accessed on 2 May 2022, ID 2378.
919
Apple’s Response to the Letter of Facts, ID 3330, paragraphs 206-207 and 212.
920
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 239-242.
921
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 240; Charles
Rivers Associates, “Review of the RSO’s analysis”, 19 May 2023, Annex 3 to the Response to the
Statement of Objections of 28 February 2023, ID 2803. See also Apple’s Response to the Letter of
Facts, ID 3330, paragraph 217, and Annex 9 (ID 3324).
922
Apple’s Response to the Letter of Facts, Annex 9, ID 3324, page 6.
EN 181 EN
(658) Apple further claims that the Commission has failed to take into account the price
increases implemented by several music streaming service providers in recent years,
which makes current market realities more nuanced.
(659) Lastly, Apple states that the Commission cannot claim that 1 million users is a
“significant number” of harmed premium subscribers “and at the same time argue
elsewhere that the corresponding commission payments (less than EUR 30 million
for 2021) are too small to matter for Apple”.
(660) The Decision already explained in recital (649) how even a 15 % fee is problematic
for music streaming service providers.
(661) Apple’s arguments need to be rejected from both a legal as well as from an economic
perspective.
(662) From a legal perspective, Apple’s analysis of the […] misconstrues its purpose.
(663) First, Apple conflates (see recital (531)) the notion of exploitative abuses in the form
of unfair trading conditions, for which the Commission relies (inter alia) the […],
with the notion of exclusionary abuses, for which conducting a margin squeeze
analysis or an as efficient competitor test may be relevant.
923
In fact, the Commission
has not conducted any such analysis. […] This supports the finding that Apple’s
commission fee charged to developers constitute a substantial financial burden on
music streaming services which is passed on to consumers. In this regard, even if the
parameters are changed as Apple does by using […] data instead of […] data, there
are still […] Member States with […], representing […] of the European
population.
924
(664) Second, to the extent that Apple argues that there are multiple alternative channels to
acquire subscriptions of music streaming services and that IAP never accounted for
more than […] % of all premium subscribers of third-party music streaming services
on iOS that offered IAP, the Commission notes that Apple […]. The […] are relevant
because they compare how music streaming service offering in-app subscriptions on
iOS devices, with the same cost structure as Apple Music, would be impacted. The
purpose of the […] is therefore to show that music streaming service providers are
forced to pass-on Apple’s commission fee on iOS music streaming subscribers, to the
detriment of iOS users.
(665) Third, the Commission observes that during the investigation it requested Apple to
provide […], and Apple replied that […].
925
Notwithstanding this, the Commission
found that […] and concluded that it submitted incorrect information in this regard
(see Section 17). Under these circumstances, it falls upon Apple that the Commission
was not able to conduct a more recent analysis of Apple’s data.
(666) Fourth, the Commission also disagrees with Apple’s view that the Commission
cannot claim that 1 million users is a “significant number” of harmed premium
subscribers “and at the same time argue elsewhere that the corresponding
commission payments (less than EUR 30 million for 2021) are too small to matter for
Apple”.
926
The fact that music streaming apps only play a minor role in financing the
923
See also recital (650).
924
See recital (624).
925
Apple’s response to question 18(e), referring to Apple’s response to question 18(d) of the
Commission’s request for information (2022/004722), ID 2232.
926
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 242.
EN 182 EN
operation and development of the App Store with just over EUR […] in App Store
commission fees paid by the main music streaming service providers in Apple’s FY
2023 (see recital 0) has no bearing on the question whether more than one million
harmed consumers is a significant number or not. In the Commission’s view, more
than one million misinformed iOS users who end up paying a higher price per month
is a significant number of harmed consumers and the monetary harm to consumers
increases with every month that passes as additional payments of existing IAP
subscribers are made and new misinformed subscribers are subscribing through IAP.
(667) In addition, considering Apple’s market power and the particular conditions of
competition prevailing in the relevant market (see Section 8.2) as well as the fact that
the Anti-Steering Provisions have an appreciable effect on trade between Member
States (see Section 11), it cannot be considered that Apple’s practices have a minimal
or insignificant effect. In any event, according to the case law of the Court of Justice
on Article 102 of the Treaty, “fixing an appreciability (de minimis) threshold for the
purposes of determining whether there is an abuse of a dominant position is not
justified.”
927
(668) Furthermore, the Commission concludes that Apple’s analysis of the […] is also
flawed from an economic perspective.
(669) First, Apple’s economic consultants submitted that “[confidential quote].”
928
(670) The Commission disagrees with Apple […].
(671) Second, Apple’s economic consultants submitted that “[confidential quote].”
929
(672) The Commission considers this argument unfounded. The […] is relevant for the
comparison of how a music streaming service provider in the same situation as Apple
Music would be affected by Apple’s restrictions, facing the same costs, demand and
other business parameters, trying to make an offer such as that of Apple Music. The
assumption behind the modelling exercise of the Commission was therefore that the
music streaming service in question would access the exact same customer
acquisition channels as Apple. The Commission demonstrated elsewhere in this
Decision that music streaming service providers may have used alternative channels
to reach customers but those channels are costly and ineffective, and inferior in terms
of consumer experience (see Section 9.3.2.2.1.2).
(673) Third, Apple’s economic consultants further submitted that “[confidential quote].”
930
(674) The Commission does not agree with this view. The models used by the Commission
are from the time around […] and therefore relevant as part of the infringement
period. They took as input the business parameters such as subscription prices and
costs as well as demand that applied at the time. Furthermore, the models used
should be populated with the relevant input parameters – in particular, subscription
prices – that Apple Music offered at the time the model was valid. More recent
versions of the model with “current price levels” may be informative, but those
927
Case C‑23/14 Post Danmark, EU:C:2015:651, paragraph 73.
928
Charles Rivers Associates, “Review of the RSO’s analysis”, 19 May 2023, Annex 3 to the Response to
the Statement of Objections of 28 February 2023, ID 2803, page 1.
929
Charles Rivers Associates, “Review of the RSO’s analysis”, 19 May 2023, Annex 3 to the Response to
the Statement of Objections of 28 February 2023, ID 2803, page 2.
930
Charles Rivers Associates, “Review of the RSO’s […]”, 19 May 2023, Annex 3 to the Response to the
Statement of Objections of 28 February 2023, ID 2803.
EN 183 EN
“current prices” would need to be applied in versions of the model that contain all
other input assumptions from the same period as the prices. Apple claimed […],
despite the Commission’s explicit request.
931
(675) Apple also contests the Commission’s conclusion in recital (632) because the
Commission “not assess the composition of the allegedly harmed IAP
subscribers”.
932
In particular, Apple argues Amazon Music did not raise its prices as
much as other music streaming service providers. Apple also notes that there is no
price difference for Deezer family subscriptions in certain Member States. In relation
to Amazon Music, the Commission’s calculation of the number of consumers having
suffered monetary harm because of Apple’s conduct does not rely on the price
difference between in-app subscriptions on iOS and on Amazon Music’s website, but
instead on the number of consumers potentially affected. Regardless of whether the
price difference between these two subscription channels is 1 EUR or 3 EUR per
month, Amazon Music subscribers are affected as they have to pay an elevated price
for in-app susbcriptions on iOS due to Apple’s abusive conduct. Regarding the
Deezer family subscribers possibly facing equal prices in the iOS app and outside in
France and Germany, Apple calculates that Deezer accounts for less than a third
(30%) of music streaming IAP subscribers. However, family subscribers constitute
only a share of all Deezer music subscribers. It is therefore unlikely that removing
Deezer family subscribers from the Commission’s calculations would significantly
alter the numbers presented in recital (632). The Commission’s findings would not
change even if all of Deezer’s subscribers were excluded from those that suffered
monetary harm. Removing 30% of the 1.4 million customers who suffered monetary
harm results in around 1 million customers, still a substantial number of customers.
This number is conservative, among other reasons because it is based on the last
period with data available and ignores that consumers have been suffering monetary
harm over a longer period.
(676) Finally, contrary to Apple’s claim,
933
the Commission is under no obligation to
precisely quantify the monetary harm to consumers and there is also no de minimis
harm under which the conduct would not be abusive anymore.
(677) In light of the aforementioned arguments, the Commission concludes that Apple has
failed to refute the Commission’s assessment that the Anti-Steering Provisions cause
harm to consumers.
9.3.2.1.5.3. The Anti-Steering Provisions are unfair trading conditions under the applicable
legal test
(678) Apple submits that the Commission cannot allege that Apple’s commission fee
constitutes “unfair” pricing under the relevant test set out in the United Brands case
law.
934
This argument is ineffective.
(679) First, the Commission does not take a position as to the legality of the IAP obligation
(and the level of the commission fee attached to it) for the purposes of this Decision.
(680) Second, United Brands concerned specifically excessive prices and did not set forth a
general legal test applicable to the imposition of any unfair trading conditions
931
See recitals (946) et seq.
932
Apple’s Response to the Letter of Facts, Annex 9, ID 3324, page 14.
933
Apple’s Response to the Letter of Facts, ID 3330, paragraphs 231 et seq.
934
Case 27/76 United Brands v Commission, EU:C:1978:22.
EN 184 EN
pursuant to Article 102(a) of the Treaty. As set out in Section 9.1.1, to be qualified as
unfair under Article 102(a) of the Treaty and thus abusive, the trading conditions
must be (i) imposed by a dominant undertaking on its trading partners, (ii)
detrimental to the interests of that undertaking’s trading partners or of third parties,
including consumers, that are concerned by the trading conditions imposed by the
dominant undertaking and (iii) not necessary for the achievement of a legitimate
objective or in any event not proportionate for that purpose, in that they go beyond
what is strictly necessary to achieve it. As shown by the Commission in this
Decision, these requirements are met in the present case.
9.3.2.2. Non-monetary harm to consumers
(681) Besides monetary harm (see Section 9.3.2.1), the Anti-Steering Provisions also cause
non-monetary harm to many iOS users of music streaming services in the form of
reduced quality of service and less choice. Specifically, the Anti-Steering Provisions
cause: (i) a degraded user experience in the apps of music streaming service
providers that have disabled IAP and less choice of subscription plans in some iOS
music streaming service apps, and (ii) frustration of iOS users that are not able to
subscribe to any or some of the subscription plans of certain music streaming service
providers in the respective iOS music streaming app.
(682) The Commission sets out its conclusions on these different types of non-monetary
harm in Sections 9.3.2.2.1 and 9.3.2.2.2.
9.3.2.2.1. Degraded user experience in the music streaming apps of developers that have
disabled IAP and less choice of subscription plans within the iOS app
9.3.2.2.1.1. The importance of engaging with the customer in the app
(683) Engaging with the customer in the app is particularly important at the time the
customer is using the service and is most interested in enjoying the benefits of the
premium subscription.
935
Therefore, the information and possibilities offered within
mobile apps are of crucial importance for iOS users to make an effective choice and
subscribe to premium.
(684) On the contrary, music streaming service providers that have decided to disable the
use of IAP as a means to sell subscriptions in their iOS app (notably Spotify since
2016 and Google Play Music while it was still available) cannot – because of the
Anti-Steering Provisions – either offer a web-based payment checkout in the form of
a link in the app allowing them to transact directly with the music streaming service
provider outside of the app or provide any other information in the app on where and
how to subscribe to their paid service outside the app and at what price.
(685) Restrictions on the use of the music streaming apps and the information that can be
provided therein leads to a degraded consumer experience.
(686) This is corroborated by the data on the conversion channels through which Spotify
acquired premium subscribers during the period 2018-2022, including on Android,
where subscriptions and marketing through the app (including web-based checkouts)
were not restricted.
935
See comments by Gustav Gyllenhammer (Spotify) in the minutes of the video call with Spotify of
18 May 2020, page 2: “[confidential quote]”, ID 1350. See also the statements from Spotify’s
representative at the oral hearing (recording of the oral hearing in Case AT.40437, ID 3131, at
05:46:30: “[confidential quote]”.
EN 185 EN
Table 8 – Spotify - Proportion of users by conversion channel, 2018-2022
936
2018-2019 2020 2021 2022
Channel Not
availabl
e on
iOS
iOS Androi
d
Differe
nce
iOS –
Androi
d)
iOS Androi
d
Differe
nce
iOS –
Androi
d)
iOS Androi
d
Differe
nce
iOS –
Androi
d)
iOS Androi
d
Differe
nce
iOS –
Androi
d)
[…] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%]
[…] […] […] […] […] […] […] […] […%] […%] […%] […%] […%] […%]
[…] […] […] […] […] […] […] […] […%] […%] […%] […%] […%] […%]
[…] […] […] […] […] […] […] […] […%] […%] […%] […%] […%] […%]
[…] […] […] […] […] […] […] […] […%] […%] […%] […%] […%] […%]
[…] […] […] […] […] […] […] […] […%] […%] […%] […%] […%] […%]
[…] […] […] […] […] […] […] […] […%] […%] […%] […%] […%] […%]
[…] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%]
[…] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%]
[…] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%]
[…]
937
[…] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%]
[…] […] […%] […%] […%]
[…] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%]
[…] […] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%]
[…] […] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%]
[…] […] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%]
[…] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%]
[…] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%]
[…] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%] […%]
[…] […%] […%] […%] |[…%]
(687) […]:
Table 9 – Spotify premium conversion channels, iOS
938
936
See Spotify’s response to question 4 of the Commission’s request for information of 25 September 2023
in combination with updated Annex 20.2 (Excel table), ID 3097 and ID 3094. […] For 2020-2022, the
Commission calculated the sum of the share of channels indicated as “closed to iOS” on Worksheet
“Updated Figure 45” in Spotify’s response to the Commission’s request for information of 25
September 2023, Confidential Updated Annex 20.2 (Doc. ID 3061).
937
[…].
938
ID 1433, Table 2. Source of the data is Compass Lexecon using data provided by Spotify. ID 1433
presents in a cleaner version the data included in, respectively, ID 1434-5 (Figure 1) and 1434-1 (Figure
2). For the years 2020-2022, see Spotify’s response to question 5 of the Commission's request for
information of 25 September 2023, ID 3097.
EN 186 EN
Channel 2015 2016 2017 2018 2019 2020 2021 2022
[…]
[…] […] […] […] […] […] […] […]
%
[…%] […%] […%] […%] […%] […%] […%] […%]
[…]
#
[…] […] […] […] […] […] […] […]
%
[…%] […%] […%] […%] […%] […%] […%] […%]
[…] [
…
]
[…] […] […] […] […] […] […] […]
%
[…%] […%] […%] […%] […%] […%] […%] […%]
[…] [
…
]
[…] […] […] […] […] […] […] […]
%
[…%] […%] […%] […%] […%] […%] […%] […%]
(688) […].
(689) […].
939
Table 10 – Spotify premium conversion channels, Android
940
Channel 2015 2016 2017 2018 2019 2020 2021 2022
[…] [
…
]
[…] […] […] […] […] […]
[…] […] […] […] […] […] […] […]
[…] […] […] […] […] […] […] […]
%
[…%] […%] […%] […%] […%] […%] […%] […%]
[…] [
…
]
[…] […] […] […] […] […] […] […]
%
[…%] […%] […%] […%] […%] […%] […%] […%]
[…] [
…
]
[…] […] […] […] […] […] […] […]
%
[…%] […%] […%] […%] […%] […%] […%] […%]
[…] [
…
]
[…] […] […] […] […] […] […] […]
%
[…%] […%] […%] […%] […%] […%] […%] […%]
(690) […].
(691) The three tables above confirm that music streaming service providers need to turn to
alternative (paid) promotion methods in order for iOS users to convert their
subscription to premium given that the Anti-Steering Provisions degrade those iOS
users’ experience within the app by depriving them from the necessary information
to make an informed choice.
(692) Table 11 also confirms that Apple itself relies extensively on its in-app subscription
functionality when subscribing consumers to its Apple Music service. Between 2015
and 2022, in each year apart from 2017, more than […] % of Apple Music
subscriptions on iOS were concluded in-app. Contrary to Apple Music, music
streaming service providers that have decided to disable the use of IAP as a means to
939
The acquisition channels in Tables 9 and 10 are the following: […].
940
ID 1433, Table 1. Source of the data is Compass Lexecon using data provided by Spotify. ID 1433
presents in a cleaner version the data included in, respectively, IDs 1434-5 (Figure 1) and 1434-1
(Figure 2). For the years 2020-2022, see Spotify’s response to question 6 of the Commission's request
for information of 25 September 2023, ID 3097.
EN 187 EN
sell subscriptions can only offer a degraded customer experience because of the Anti-
Steering Provisions.
EN 188 EN
Table 11 – […]
941
iOS Android
2015 […] % […] %
2016 […] % […] %
2017 […] % […] %
2018 […] % […] %
2019 […] % […] %
2020 […] % […] %
2021 […] % […] %
2022 […] % […] %
(693) It follows that, because of Apple’s Anti-Steering Provisions, music streaming service
providers that have disabled IAP cannot duly inform iOS users within the app about
alternative (better) subscriptions conditions to subscribe to premium services. Would
music streaming service providers be unrestrained by rules such as the Anti-Steering
Provisions, they would maximise conversions given the central role that the mobile
app plays in this consumer journey. In other words, in the absence of the Anti-
Steering Provisions, music streaming service providers could offer a non-deteriorated
experience to their users (for instance, advertise their subscriptions through their iOS
app in the form of a web-based checkout
942
at better conditions).
(694) Further, a feature of the music streaming services is that consumers of music
streaming services typically obtain the free version of a music streaming app which
is reduced in functionality.
943
Listening to music in the app requires interaction with
the app, but the free functionality limits the consumers’ experience because of the
lack of the typical features of a premium subscription that add value to the music
stream service. At certain points in time of their interaction with the app, iOS users
would typically be prompted to subscribe to the premium version, which “unlocks”
further functionalities such as for example ad-free and off-line listening, the
possibility to create and share playlists or to recommend music. However, the user
experience is degraded when an iOS user who is interested in upgrading the
functionalities of the music streaming app is not able to find the relevant information
within the app about how, where and at what conditions to unlock additional
functionalities, due to the Anti-Steering Provisions.
941
Emails from Mr. Sven Völcker to the Commission of 8 April 2022, ID 2307 and of 28 September 2023,
ID 3052. For completeness, sign-ups do not capture whether the consumer signing-up converted from
trial to pay or cancelled its subscriptions shortly after.
942
From a user perspective a web-based checkout resembles an in-app subscription. While technically not
being concluded within the app, it provides an almost equivalent for users to subscribe “through the
app”. See also footnote 949.
943
As outlined in recital (508), apps for smart mobile devices are the primary means where consumers
engage with music streaming services.
EN 189 EN
(695) […]
944
[…]
945
[…]
946
[…]
(696) […]
(697) […].
947
[…].
948
9.3.2.2.1.2. Subscription channels other than subscriptions through the app are inferior
from the users’ perspective
(698) As evidenced above, because of the Anti-Steering Provisions, providers that do not
offer subscriptions through IAP like Spotify cannot even mention in their app their
website to iOS users as a reference for further information or the price at which a
subscription is offered outside the app. Such music streaming service providers are
thus limited to describing their Premium offers and their functionalities without
being able to tell iOS users where to obtain those services and at what conditions (for
instance, at what price). iOS users of these music streaming service providers
therefore lack information on where and how to unlock the full functionality of the
music streaming app.
(699) Subscription channels other than subscriptions through the app
949
are inferior from
the users’ perspective and do not make up for the degraded experience caused by the
Anti-Steering Provisions.
(700) For example, email marketing is an inferior channel compared to subscriptions
through the app as it is less targeted by not arriving at the time the potential
subscriber is using the service (i.e., when the user is “in” the app) and when s/he
would be most interested in enjoying the additional features and benefits of the
premium subscription.
950
As mentioned in recital (206), general marketing activities
outside of the app, both conventional and digital, are a suboptimal and less efficient
option to attract and convert free subscribers into premium on iOS.
951
[…]
952
In
addition, even if Apple removed the prohibition of out-of-the-app communication
that follows an initial sign-up by a user within the app, those users are not even
shown and cannot even click on an “email me” button within the app that would, at
least partially, help countering the negative impact of the Anti-Steering Provisions.
944
[…]”.
945
Annex 9 to Apple’s response to question 12 and their response to question 44 of the Commission’s
request for information (2019/050361), Slide 128 of Apple’s FY19 Music Plan, ID 268-287.
946
See https://support.google.com/googleplay/android-developer/answer/9992660, accessed on
16 December 2020, ID 1024.
947
[…].
948
[…].
949
Subscription through the app includes marketing and linking external subscription options within the
iOS app, such as buy buttons.
950
See comments by Gustav Gyllenhammer (Spotify) in the minutes of the video call with Spotify of
18 May 2020, page 2: “[confidential quote]”, ID 1350.
951
See also the statements from Spotify’s representative at the oral hearing (recording of the oral hearing in
Case AT.40437, ID 3131, at 05:46:30: “[confidential quote]”); and the statements from BEUC’s
representative at the oral hearing (recording of the oral hearing in Case AT.40437, as of 06:22:15, ID
3131): “Apple argues that consumers can find pricing info elsewhere, for example by searching on the
web, from emails or from other marketing activities of music streaming services providers. But none of
this equivalent to clear price information at the moment it is most relevant, meaning when users are
engaging with a MS provider in the app via their iOS devices and considering subscribing to a paid MS
service or changing its existing subscriptions. This is because Email and marketing activities might
come at times when they are of limited use and therefore not provide information at the right moment.”
952
Commission calculations (ID 2607) based on Annex 14 of Apple’s response to the Commission’s
request for information (2022/004722), ID 2233-26. […].
EN 190 EN
Marketing via emails therefore does not counterbalance the harm suffered by
customers.
(701) The Spotify 2018 experiments (see recitals (743) et seq.) also show that a large share
of consumers who downloaded the Spotify app fail to subsequently upgrade to
Spotify’s Premium service because of the Apple’s Anti-Steering Provisions.
(702) Therefore, when users have the choice to subscribe through the app,
953
they clearly
prefer that option over other subscription channels. This affects a significant number
of consumers, in particular users of Spotify on iOS since the time it disabled IAP on
iOS devices in May 2016. As shown in recitals (686) et seq., data on conversion
channels to Spotify premium show that on Android – where Apple’s restrictions are
not in place – the majority of users convert to Spotify Premium through the app or
via channels that are restricted on iOS due to Apple’s policies.
(703) By way of illustration of the order of magnitude, the Commission estimated the
number of users that did not subscribe to Spotify premium due to the downgraded
experience stemming from Apple’s conduct (see Table 12). In particular, taking the
number of Spotify’s existing iOS subscribers as the basis, the Commission
extrapolated how many additional free users would have converted to premium
subscriptions to Spotify absent the Anti-Steering Provisions. The Commission also
calculated the number of Spotify subscribers that had to go through (inferior)
channels other than subscriptions through the app.
Table 12 – Estimated number of harmed Spotify subscribers (2022)
954
(1) Number of Spotify iOS subscribers (December
2022), EEA excluding the UK
[…]
(2) Estimated share of in-app subscribers in the
absence of the Anti-Steering Provisions
[…] %
(3) Estimated share of lost in-app subscribers […] %
(4)=(1)/[(2)*(1- Estimated number of Spotify iOS subscribers […]
953
See footnote 1106.
954
Sources: (1) Commission calculations of Spotify’s 2022 December iOS premium subscribers, ID 3217,
based on Spotify's response to the Commission’s request for information dated 24 October 2023, using
the midpoint of the non-confidential range provided in the Updated Annex 2.1, ID 3101. (2) The
Commission conservatively assumes that […] % of premium subscriptions on iOS are affected by
Apple’s policies. In reality, this share is likely higher. In 2018/2019, Spotify generated around […] %
of premium subscribers on Android through the use of the app and through marketing channels which
are not available on iOS due to the Anti-Steering Provisions. […] In all years between 2020-2022
Spotify’s share of premium subscriptions on Android in the channels that are affected by Apple’s
restrictions on iOS were always higher than […] %. (3) Spotify’s experiments. As set out in recitals
(746) et seq., the experiments find that the rate at which new registrations to Spotify’s Free service
converted to Spotify’s Premium service was, respectively, […] % lower (May 2018 experiment) and
[…] % lower (December 2018 experiment) in the treatment group (iOS experience) than in the control
group (Android experience), Section 4 (“Results of Spotify’s experiments”) of Compass Lexecon
Report, “An economic assessment of the effects of Apple’s Licence Agreement with Spotify”, ID 1459-
2. The Commission conservatively assumed a loss of in-app subscribers of 20 % on iOS.
EN 191 EN
(3))+(1-(2))] without Anti-Steering Provisions
(5)=(4)-(1) Estimated number of lost Spotify subscribers
due to Apple’s restrictions
[…]
(6)=(4)*(2)*(1-(3)) Est. number of Spotify iOS users who
subscribed under reduced in-app experience
[…]
(704) As set out in Table 12, based on the experience on Android, it can be conservatively
assumed that – absent the Anti-Steering Provisions – at least […] % of subscribers
subscribe through the app and the remaining […] % through other channels.
955
Moreover, Spotify’s experiments suggest that more than […] % of consumers that try
to subscribe in-app on iOS cannot subsequently find a way to subscribe out-of-
app.
956
On this basis,
957
in 2022, under conditions comparable to Android, […] users
would have subscribed to Spotify premium on iOS absent Apple’s restrictions (row 4
in Table 12). This means that […] users (row 5 in Table 12) got lost in the
subscription process and did not end up subscribing to Spotify premium. More than
[…] (row 6 in Table 12) Spotify users had to go through an inferior user experience
outside the app to subscribe. The real number of iOS users affected by the degraded
app experience is likely larger, because the above-mentioned number only relates to
those iOS users that ultimately succeeded in subscribing to the Spotify Premium
service.
(705) While these calculations do not necessarily constitute a precise quantification of the
number of Spotify users that have suffered actual harm, they illustrate that the Anti-
Steering Provisions cause harm to Spotify users in the form of an inferior user
experience and subscription process as well as in the form of an increased number of
subscriptions through IAP at higher prices. In addition, the calculation of harmed
users here captures only the users of Spotify and does not include the iOS users of
other music streaming services that did not enable in-app subscription on iOS such as
Google Play Music. Apple cannot therefore claim that if the “[Anti-Steering]
Provisions were so manifestly burdensome to be unfair, the expectation would be
that in their absence, iOS users would have all subscribed to their premium [Music
Streaming Service] subscriptions through the app.”
958
The legal test is not that the
conditions at stake are “manifestly burdensome”. Rather, they must be detrimental to
the interests of the dominant undertaking’s trading partners or of third parties,
including consumers.
(706) Those consumers who find a way to subscribe outside the iOS app to a premium
music streaming service lacking an in-app subscription mechanism are affected by
potentially delayed subscription times and a more burdensome path for signing up
than via Apple’s IAP or via a web-based checkout mechanism. These iOS users are
955
Between 2018 and 2022 the channels that were restricted on iOS consistently accounted for more than
half of Premium conversions on Android. See Table 8.
956
See Table 8.
957
The Commission notes in this context that the figures for lost subscribers and subscribers going through
an inferior user experience are conservative for several reasons. They are based on a lower share of in-
app subscribers in the absence of the restrictions than the share of Spotify’s in-app subscribers on
Android in all years with data available. Furthermore, these take subscription through the app shares on
Android as basis ([…] %), […]. The calculation of lost and harmed Spotify users also excludes the UK
and relate only to those Spotify users that were paid subscribers in December 2022.
958
Apple’s Response to the Letter of Facts, ID 3330, paragraph 283.
EN 192 EN
faced with a deteriorated experience that requires them to go through various steps
such as opening the browser on their iOS device, potentially search for the music
streaming service’s website on the internet or even switch to another device to
subscribe, and to enter additional payment details.
(707) While such non-monetary harm from inconvenience is relatively small on a per user
basis, it is non-negligible and affects a large number of iOS users. In the case of
Spotify alone, the Commission estimates that out of the […] iOS users that were
subscribers to the Spotify Premium service in December 2022 in the EEA (excluding
the UK), more than […] had to go through an inferior subscription procedure due to
Apple’s Anti-Steering Provisions, who would have otherwise been able to subscribe
through a web-based payment checkout.
959
(708) Customers of (other) music streaming service providers are also harmed, when due to
the Anti-Steering Provisions these providers cannot offer to them certain subscription
plans or promotions for subscription through the app as these offers are not valid
when the subscription is sold within the app on iOS devices through IAP because of
the impact of the commission fee (see recital (739) in relation to SoundCloud).
9.3.2.2.1.3. Assessment of Apple’s arguments
(709) Apple argues that the Commission fails to substantiate the nature and severity of the
alleged harm.
960
However, the Decision sufficiently explains how iOS users of music
streaming service providers lack information on where and how to unlock the full
functionality of their music streaming app. This leads to e.g., loss of time and
frustration (see, for instance, recital (694)).
(710) Apple claims that “it is irrelevant how important apps are (or not) for [music
streaming service] providers to acquire iOS users, as it has nothing to do with an
alleged abuse towards consumers.”
961
This is manifestly wrong. As explained in
recital (683), music streaming apps are the best medium for consumers to effectively
exercise an informed choice. Depriving iOS users of the possibility of effectively
exercising an informed choice within the app is therefore particularly harmful to
them.
(711) Regarding the impact of the Anti-Steering Provisions on conversion of users as
shown in recitals (686)-(693), Apple argues that the high share of Apple Music’s in-
app subscriptions on iOS devices can be explained by its decision to direct mobile
users from its website to the app for concluding the subscription, which is a choice
that is made as part of its vertical integration.
962
(712) According to Apple, other music streaming services could “easily” substitute the
direct in-app sign-up channel with alternative channels.
963
Apple would therefore
consider it appropriate to attribute subscription sign-ups to the “Apple Music iOS
app” only when the sign-up resulted from communication through the app.
964
959
See Table 12.
960
Apple’s Response to the Letter of Facts, Annex 9, ID 3324, page 19.
961
Apple’s Response to the Letter of Facts, ID 3330, paragraph 247.
962
Apple’s Response to the Letter of Facts, ID 3330, paragraph 259.
963
Apple’s response to question 5.a of the Commission’s request for information (2022/019122), ID 2270,
referring to Annex 3 to Apple’s Response to the Statement of Objections of 30 April 2021.
964
Apple’s response to question 5.a of the Commission’s request for information (2022/019122), ID 2270,
paragraph 8, first bullet point.
EN 193 EN
(713) The Commission disagrees and concludes that the high share of in-app subscriptions
of Apple Music on iOS devices nonetheless shows how many more users of a music
streaming service app that is unrestrained by the Anti-Steering Provisions would –
without unnecessary friction – convert to a premium subscription. Moreover, Apple’s
vertical integration on iOS cannot explain the large share of Android subscriptions
which were concluded through web-based checkouts in Apple Music’s Android app,
with more than […] % of Apple Music subscriptions being concluded through the
Android app from 2020 until Apple stopped offering a web-based checkout (initiated
through the app) on its Android version of Apple Music (see Table 11). The fact that
Apple Music relies heavily on its native app both on iOS and Android is consistent
with the finding that a subscription through the app is the preferred option for
consumers, offering a user-friendly experience for concluding a music streaming
subscription. This is further illustrated by Figure 33 […]).
Figure 33 – […]
965
[…]
(714) Apple presents the limited use of the app as a means to acquire paid subscribers on
iOS by other music streaming service providers as evidence that subscriptions
through the app are not important and the app is not an important means to acquire
iOS users. Based on its own calculations, Apple considers that in-app subscribers
never accounted for more than […] % of all third-party music streaming service
providers on iOS and for less than […] % of their premium subscribers across
platforms. In December 2018, Apple estimates that only […] % of all iOS
subscriptions were conducted through IAP.
966
In December 2022 and July 2023, that
figure […] to […] %.
967
For Apple, “[t]he App Store is an insignificant customer
acquisition channel because [Music Streaming Service] providers rely
predominantly on alternative sales channels to acquire customers. The Commission
cannot use that market reality – which it had ignored until now – as a new-found
narrative for its case.”
968
(715) The Commission considers Apple’s presentation as misguided.
(716) The fact that iOS users face limitations for subscribing to premium through the app
(for example, through web-based checkouts), therefore depriving them of a user-
friendly experience for concluding a music streaming subscription, is the direct
consequence of Apple’s Anti-Steering Provisions. Most notably, Spotify shut down
IAP in May 2016 precisely because of the inability to inform its iOS users in the app
about cheaper subscription possibilities outside the app and facilitate such
subscriptions through web-based checkout mechanisms in the iOS app. It is therefore
965
Commission calculations (ID 3217) based on Annexes Q7 and Q16 of Apple’s response to the
Commission’s request for information of 3 August 2023, IDs 3000 and 3005. For Apple Music the
Commission calculated the number of in-app subscribers on iOS by multiplying the number of iOS
subscribers by the share of in-app iOS subscribers. For 2014 and 2023, the iOS in-app subscription
shares were assumed to be equal with that in the closest year with data available.
966
Apple’s Response to the Statement of Objections of 30 April 2021, ID 2165, paragraph 278.
967
Apples’ response to the Commission’s request for information of 3 August 2023, ID 3007, paragraph
27.
968
Apple’s Response to the Letter of Facts, ID 3330, paragraph 249.
EN 194 EN
natural that the vast majority of Spotify’s subscribers have not subscribed through
Spotify’s iOS app.
969
(717) The fact that only a small share of iOS premium music streaming users subscribe
through the app of the music streaming service provider is in the Commission’s view
not supporting Apple’s claim that the app is not relevant for customer acquisition of
iOS users. Music streaming service providers have a logical interest in acquiring
customers outside the iOS app, as this allows them, in compliance with Apple’s
rules, to avoid the payment of the commission fee triggered by in-app subscriptions.
It is the very consequence of the Anti-Steering Provisions that iOS users cannot
successfully be informed within their app about the possibility of subscribing outside
the app and be allowed an effective choice of the preferred subscription channel.
Clearly, consumers would make more use of their iOS music streaming apps as a
means to facilitate subscriptions to the paid service in the absence of the Anti-
Steering Provisions. Deezer, for example, reported in 2019 that on Android, only
0.6 % of the payments were made via the higher priced Google Billing payment
mechanism while 99.4 % of subscriptions were made directly through Deezer’s web-
based checkout mechanism.
970
Therefore, payments on Android made via Google
Play Billing were rarely used (at least until 1 April 2022). The fact that […]
971
of
Spotify’s premium subscriptions on Android come from a web-based checkout
mechanism in the app while this channel is closed on iOS under Apple’s conditions
also shows that consumers would rather subscribe to their services at cheaper prices
via web-based checkout payment solutions in their apps, if permitted.
(718) Apple also raises in its Response to the Statement of Objections of 28 February 2023
other arguments regarding degraded user experience imputable to the Anti-Steering
Provisions.
(719) First, Apple argues that iOS users are not clueless about the possibility to transact
directly with music streaming service providers outside the app, since iOS users
typically own other devices such as laptops, game consoles, smart tvs, e-book
readers, voice assistants or wearables. Music streaming service providers offer their
services across these types of devices, and iOS users can also take a look at the
website of the music streaming service provider.
972
iOS users can also look for price
comparisons online to get a clear picture of the pricing of music streaming services.
The fact that “IAP has at all times accounted for less than 10
% of all music
streaming service providers’ premium subscribers on iOS offering IAP in their app”
demonstrates, according to Apple, that users rely on alternative channels to acquire
those Premium customers. In relation to Spotify, Apple submits that users know
where and how to subscribe, as demonstrated by the fact that Spotify is the dominant
969
The roughly […] Spotify IAP subscribers at the end of 2018 were those legacy subscribers that have
initially subscribed through IAP and then continued to purchase their subscription at an elevated price
month after month. The number of Spotify legacy subscribers naturally decreased over time as no new
IAP subscribers were added. The number was reduced to approximately […] in December 2021. See
Apple’s Annex Q20 (revised) to the response to the Commission’s request for information
(2022/019122), ID 2281. In July 2023, Spotify announced that all legacy subscribers would be
automatically moved to a free, ad-supported membership. See
https://variety.com/2023/digital/news/spotify-cuts-off-apple-in-app-purchase-app-store-1235662082/,
accessed on 5 October 2023, ID 3194.
970
Deezer’s response to question 13 of the Commission’s request for information (2020/029315), ID 1379.
971
See footnote 955.
972
Apple’s Response to the Letter of Facts, ID 3330, paragraph 265.
EN 195 EN
player even if it disabled IAP.
973
This latter point would be further sustained by the
fact that “Spotify’s website is currently the most effective channel for converting
users on iOS.”
974
(720) Apple’s views have to be rejected for the following reasons.
(721) In the first place, it is contradictory that Apple curtails the information available to
consumers directly from the music streaming service provider by means of the Anti-
Steering Provisions and at the same time claims that consumers can inform
themselves through other available, less reliable sources. Apple thereby implicitly
acknowledges that the Anti-Steering Provisions are not necessary to achieve their
purported aim, namely to protect the IAP mechanism and the payment of the related
fee from alleged circumvention (see Section 9.3.3). This is further confirmed by
Apple’s statement according to which “Apple has no interest in [music streaming
service] providers disabling IAP to rely solely on web / alternative subscription
channels and the Reader Rule. Apple receives zero commission from such [music
streaming service] providers despite all the technology it makes available to them for
free through the App Store.”
975
In other words, Apple has a financial interest in
depriving iOS users from having acces within their music streaming app to valuable
information about alternative subscription offers to make them subscribe in- app via
IAP (when not disabled). Apple’s argument is also counterintuitive when music
streaming service providers have disabled IAP. If no commission fee is due to Apple
in such circumstances, then there is no valid reason why Apple needs to curtail the
information available to consumers directly from the music streaming service
provider by means of the Anti-Steering Provisions.
(722) In the second place, the Commission disagrees with Apple’s view that the average
iOS user would compare websites across devices to buy a music streaming
subscription (see recital (420)). Smart mobile devices and in particular native apps
are the main way to consume music streaming services and to convert to a premium
subscription (see recital (683)). In fact, as clarified in Section 9.3.2.2.1.1, users are
most interested in enjoying the benefits of a paid subscription while engaging with
the app.
976
The app is therefore the main support through which iOS consumers of
music streaming services should be informed of key information, especially price
(see recitals (594) et seq.). However, the Anti-Steering Provisions prohibit this, as
evidenced by the information submitted by Apple. In its Responses to the Statement
of Objections of 28 February 2023 and to the Letter of Facts, Apple provided
screenshots of Spotify’s in-app marketing on iOS and the benefits of Spotify’s
various Premium options when tapping the Premium tab at the bottom of the app.
977
Evidently, no price information is given to users. The same holds true for music
streaming service providers other than Spotify and their prices outside IAP.
978
(723) In the third place, Apple’s suggestion that an iOS user owning a game console, a
virtual assistant or a smart TV would use such devices to subscribe to premium
973
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 255-258.
974
Apple’s Response to the Letter of Facts, ID 3330, paragraph 252.
975
Apple’s Response to the Letter of Facts, ID 3330, paragraph 262.
976
See, for instance, comments made by Gustav Gyllenhammer (Spotify) in minutes of video call with
Spotify on 18 May 2020, page 2, ID 1350.
977
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, Figures 3 and 4.
Apple’s Response to the Letter of Facts, Annex 8, ID 3323, Figures 2,4, 6, 7, 10, 12.
978
See footnote 337.
EN 196 EN
music streaming services is highly unlikely and not supported by the evidence in the
Commission’s file. The smartphone remains the main subscription driver for
premium music streaming services. For Apple Music, in 2021, […] % of music
streaming activity took place via smart mobile devices compared to […] % in
desktop products and […] % in other channels, including voice assistants, connected
TVs, cars, connected sound systems wearables and other devices
979
(see recital
(279)). Also, on average between June 2015 and March 2019 the iOS mobile
platform accounted for […] % of Apple Music monthly paid subscribers, while over
the same period Mac devices accounted for an average of […] %. The share of Apple
Music monthly paid subscribers on non-Apple devices – including Android,
Windows and all unknown devices – never exceeded […] %.
980
(724) As regards user conversion through other channels, the Decision has evidenced that
subscription channels other than subscriptions through the app are inferior from the
users’ perspective (see recital (700)). There is also a fallacy in Apple’s argument
according to which users “can and do reach [music streaming service] providers’
websites with a simple online search on any device. Spotify’s website ranks 1st
globally in terms of traffic among music websites, SoundCloud’s 3rd, and Deezer’s
27th.” This is not surprising given that the Anti-Steering Provisions prohibit music
streaming service providers such as Spotify to provide the necessary information to
its iOS users within the app to make an informed choice. iOS users are therefore
obliged to navigate to the music streaming service providers’ website to find the
relevant information.
(725) In the fourth place, as explained by BEUC in the oral hearing, in particular
comparison websites often do not contain accurate information concerning the actual
prices of premium subscriptions of music streaming services. Thus, consumers who
use comparison websites cannot easily obtain an overview of the applicable prices
which poses a further obstacle to making an informed choice.
981
(726) Second, Apple claims that consumers are not clueless about the fact that music
streaming service providers have to pay a commission fee to Apple. According to
Apple, the claim that Apple prevents developers from informing iOS users that
developers have to pay a comission to Apple is contradicted by information provided
on websites such as those of Deezer and SoundCloud about the fact that the price of
the subscription includes “Apple’s commission”.
982
(727) The Commission disagrees with Apple’s views.
(728) In the first place, Apple’s claims disregard that it takes time and effort to compare
prices across devices and websites and the average consumer does not do that. In
fact, the results of experiments conducted by Spotify and Apple show that consumers
rarely compare in-app prices of music streaming subscriptions when purchasing a
smart mobile device (see recital (426)). Expecting the user to take additional steps
and browse price comparative websites before deciding to subscribe to a music
streaming service, as Apple does, is not the right benchmark. Music streaming
979
Apple’s response to question 11 of the Commission’s request for information of 3 August 2023,
ID 3007.
980
Data provided by Apple in its response to question 1 (Annex 1) of the Commission’s request for
information (2019/050361), ID 268-2.
981
Recording of the oral hearing in Case AT.40437, as of 06:22:15, ID 3131.
982
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 259-260.
EN 197 EN
service providers are prevented from indicating the price of their premium services
in-app (see Section 7). […].
(729) In the second place, any information on the website of music streaming service
providers about Apple’s commission fee already implies that the respective user has
found his way to that website, i.e., has overcome the obstacles caused by the Anti-
Steering Provisions.
(730) In the third place, it is unlikely that the average iOS user consults the music
streaming websites and learns about the price difference on iOS due to Apple’s
commission fee, given that most of the conversions happen in the native app of the
music streaming service provider.
(731) Third, Apple claims that subscribing through IAP does not make user switching more
difficult, because it allows consumers to use IAP subscriptions across devices
(including across iOS and Android) provided that they link their subscription to their
Apple ID.
983
(732) The Commission disagrees and notes that the fact that switching to other Apple or
Android devices requires linking the subscription with a users’ Apple ID which is
already an obstacle. In addition, having multiple subscriptions for different services
through IAP and thus through Apple as an intermediary may make such switch more
cumbersome and difficult and therefore increases the lock-in of users into the iOS
ecosystem.
(733) For example, the UK CMA has found that, in case consumers would want to
continue using their in-app subscription on their new Android device (despite the
higher subscription fee for the IAP subscription), they can do so only if they have
previously agreed to link their developer account to their Apple ID, something that
developers cannot insist on vis-à-vis their iOS users as Apple allows them to skip this
step.
984
(734) Apple claims that this is a “self-serving reading” of the CMA’s report.
985
However
the same report provides examples of linking an Apple ID with a newspaper account
and observes that non-linking “can cause serious problems if a user forgets that they
bought the initial subscription via the app and changes phones".
986
(735) Fourth, Apple claims that the decision to disable IAP is an autonomous decision of
music streaming service providers and cannot be attributed to Apple. According to
Apple, any such decision is conscious and results from those music streaming service
providers that prefer not to pay any commission to Apple.
987
In addition, according to
983
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 263-266.
984
CMA “Mobile ecosystems market study interim report”, accessed on 12 January 2022, ID 2208,
paragraph 6.209. The example provided by the CMA in this regard concerns specifically linking an
Apple ID with a newspaper/magazine account. The CMA observes that such non-linking “can cause
serious problems if a user forgets that they bought the initial subscription via the app and changes
phones”.
985
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 263.
986
UK CMA “Mobile ecosystems market study final report”, paragraph 6209, ID 2431.
987
See, for instance, Apple’s Response to the Letter of Facts, ID 3330, paragraph 258: “Spotify’s choice to
invest more in paid marketing channels rather than paying Apple’s commission is a commercial
decision that Spotify, like any other developer on the App Store, can make”.
EN 198 EN
Apple, music streaming service providers have many ways of communicating with
customers and promoting their services, including within their app.
988
(736) The Commission disagrees and notes that, as evidenced in Section 9.3.2.2.1.1, Apple
is well aware that consumers prefer engaging with their music streaming service
provider in the app in order to subscribe to premium.
989
When conversion from free
to premium through the app (including marketing and linking external subscription
options within the iOS app, such as buy buttons) is not enabled, key relevant
information within the app on how to subscribe is withheld from the iOS user.
Accordingly, music streaming service providers are faced with a difficult decision
because IAP involves a high commission fee which requires them to increase their
retail prices and the Anti-Steering Provisions prohibit them to include relevant
information on how to subscribe outside the app and at what price. As shown above
and further set out below, this leads to a deteriorated user experience and risk of
consumer frustration in a channel which is key for customer acquisition and
conversion.
(737) Fifth, Apple claims that it cannot be held responsible for the music streaming service
providers’ decision to not offer promotions on subscriptions through IAP for alleged
economic reasons, especially as the Anti-Steering Provisions do not prevent music
streaming service providers from advertising different subscription plans and
promotions in the app, as the SoundCloud example shows.
990
(738) The Commission disagrees and observes once again that the Anti-Steering Provisions
prevent music streaming service providers from including relevant information about
the price of alternative subscriptions in their apps. It is therefore irrelevant that music
streaming service providers can communicate with their iOS users within the app if
they are – at the same time – prohibited from informing their users, in the same
communication, about key subscription elements such as price. The fact that “[music
streaming service] providers can advertise their out-of-app services inside their apps
by including marketing language such as “Upgrade to Premium” and using pop-ups
and in-streaming advertising”
991
is therefore not a sufficient conduit of information
for iOS users to make an informed choice. The fact that “[t]here is no confusion on
how and where iOS users can subscribe to Spotify Premium”
992
is irrelevant since
iOS users need to leave the Apple enviroment to navigate to the music streaming
service provider’s website, thus leading to a deteriorated experience compared to
subscribing through the app.
(739) Regarding the SoundCloud example provided by Apple, the Commission takes note
that SoundCloud was and still is “For these same reasons, [… ] unable to offer our
50
% discounted offer for college & university students or any other promotional
discounts on iOS. These types of offers not only provide a benefit to our users, they
are also a key retention tactic.”
993
Apple claims that “opening the SoundCloud app
988
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 271.
989
See footnote 949.
990
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 272-273
and Figure 14.
991
Apple’s Response to the Letter of Facts, ID 3330, paragraph 271.
992
Apple’s Response to the Letter of Facts, ID 3330, paragraph 271.
993
According to SoundCloud’s response, “for these same reasons” refers to the following statement: “Due
to the slim margins in music streaming, we are unable to offer an equivalent price on iOS, due to the
30% app store fees. Subscription churn is higher on iOS vs. other platforms, and the audience research
EN 199 EN
shows that SoundCloud does inform users of that promotion”.
994
While SoundCloud
was allowed to inform its iOS users of the existence of such programmes, it could
neither show the price of such programmes nor offer that choice (i.e., make the in-
app subscription available), e.g., via action buttons inside the app therefore depriving
iOS users from key information allowing them to effectively exercise such choice.
995
(740) Finally, the Commission disagrees with Apple’s statement according to which
“[music streaming service] providers recognize the relevance of out-of-app
communications to obtain new premium subscribers, which is also consistent with
the fact that most iOS users do not use IAP to subscribe to [a music streaming
service].”
996
As shown in this Decision, the Anti-Steering Provisions prohibit music
streaming service providers from informing iOS users within the app about
alternative subscriptions methods. These providers therefore need to have recourse to
out-of-app communications to inform users where they can convert to premium. The
Commission does not dispute that these out-of-app communication channels are
relevant. However, they constitute an inferior subscription channel from the users’
perspective compared to subscriptions through the app (see Section 9.3.2.2.1.2).
9.3.2.2.2. Frustration of iOS users that are unable to find out where and how to purchase
their preferred music streaming subscription outside the iOS app and who, as a
result, end up either not subscribing to their preferred music streaming service
or not subscribing at all.
9.3.2.2.2.1. The Commission’s position
(741) iOS users that are unable to find out where and how to purchase their favourite music
streaming subscription outside the iOS app not only suffer, in terms of non-monetary
harm, from a degraded in-app experience (see Section 9.3.2.2.1) as a result of the
Anti-Steering Provisions. They also end up failing either to subscribe to the music
streaming service of their first choice or to subscribe to any music streaming service
at all. For instance, in its observations in response to the Statement of Objections of
28 February 2023, BEUC highlighted that “consumers may not be able to find their
first choice of music streaming service provider at all as a result of the Anti-Steering
Provisions. […] to the extent that premium music streaming service providers no
longer offer in-app subscription because of the IAP, consumers may not find them
elsewhere, further reducing effective consumer choice. Consumer choice is further
reduced if consumers decide not to subscribe to a premium music streaming service
at all (or cancel an existing subscription) because the price is too high.”
997
(742) This affects predominantly users or would-be users of music streaming services such
as Spotify and Google Play Music (while it was still offered), which either disabled
or never enabled in-app payment on iOS and whose users remain (or in the case of
Google Play Music, remained) uninformed of available choices because of the Anti-
Steering Provisions. It also affects potential subscribers of music streaming services
indicates that the primary reason for this is price.” SoundCloud’s response to question 22 of the
Commission’s request for information of 8 April 2019 (2019/048728), ID 1369.
994
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 273. See
also Apple’s Response to the Letter of Facts, Annex 8, ID 3323, paragraph 21.
995
See, in this regard, Figure 16 in Annex 5 to the Response to the Statement Objections of 28 February
2023, ID 2800. See also Figure 16 in Annex 8 to Apple’s Response to the Letter of Facts, ID 3323.
Both Figures are screenshots from the SoundCloud iOS app dated 13 April 2023.
996
Apple’s Response to the Letter of Facts, ID 3330, paragraph 276.
997
BEUC’s comments to the Statement of Objections of 28 February 2023”), ID 2870, paragraph 30.
EN 200 EN
like Deezer or SoundCloud that are not willing or able to pay the elevated
subscription fee and that are unaware of alternative subscription options outside the
app at lower prices in view of the Anti-Steering Provisions.
998
(743) Spotify has also conducted experiments showing that a significant share ([…] %) of
consumers that would otherwise upgrade from Spotify’s free service to the premium
tier are permanently lost on their journey as a result of having to face the sign-up
experience that results from Apple’s Anti-Steering Provisions.
(744) These experiments measure the impact of Apple’s Anti-Steering Provisions on the
rate at which consumers who downloaded the Spotify app subsequently upgraded to
Spotify’s Premium service (i.e., the conversion rate).
(745) These experiments were conducted on the Android platform
999
and compared the
conversion rate in Spotify’s standard Android app at the time (which was not
constrained by any Anti-Steering Provisions) to the conversion rate in a Spotify
Android app that was modified to resemble Spotify’s iOS app with the Anti-Steering
Provisions of Apple in place. In particular, and in contrast to Spotify’s standard
Android app, the modified app did not allow a web-based checkout payment for the
Spotify Premium service on its website, and Spotify’s in-app marketing messages
presented to consumers were modified to be compliant with Apple’s Anti-Steering
Provisions as they were applicable at the time. For each experiment, new downloads
of the Spotify app were randomly given either the standard Android app (the
“control” group) or the modified app with the iOS experience (the “treatment”
group). Spotify then tracked the fraction of consumers in each group (control vs.
treatment) who upgraded to Spotify Premium within 90 days (May 2018 experiment)
or 77 days (December 2018 experiment) of downloading the app.
1000
(746) The experiments find that conditional on being exposed to a marketing message
encouraging conversion to Spotify Premium, the rate at which new registrations to
Spotify’s Free service converted to […].
(747) In the May 2018 experiment which was conducted on all Android users in France,
Germany, Italy, Spain and the UK who registered between 15 and 28 May 2018,
[…] % of consumers that registered for the free service converted to premium after
90 days when they were presented with the Android experience (i.e., an experience
which allowed to convert to a premium subscription through a web-based checkout
via a “Get Premium” button in the app). In contrast, with the iOS experience,
1001
only
[…] % of registered consumers subscribed to premium. In other words, […] %
1002
of
the consumers that would have otherwise subscribed to the premium service did not
do so because of Apple’s Anti-Steering Provisions and the resulting degraded “iOS
998
The choice of those consumers who do not want to purchase a premium music streaming subscription at
the elevated subscription price of EUR 12.99 per month but who are at the same time not aware of
cheaper purchasing options outside of the iOS app, is essentially reduced to Apple Music as the only
provider not subject to any restrictions impacting their ability to offer a lower subscription price and full
information about subscription parameters in the app.
999
Precisely because of Apple’s Anti-Steering Provisions, the experiment could not be conducted on the
iOS platform.
1000
The results remain qualitatively unchanged when a longer period after registration is taken into account.
1001
Instead of a “Get Premium“ button, the users are exposed to a „Learn more“ button that leads to a
walled off page advertising the Premium option without any sign-up option or any information on
where and how to subscribe to it.
1002
[…] %.
EN 201 EN
experience”.
1003
The results remain largely unchanged even when looking at a longer
period following registration for the free service.
1004
Table 13 – Results of Spotify’s experiment of May 2018
1005
Total users registering
[…]
Control group
(Android experience)
Treatment group
(iOS experience)
Random allocation to groups
[…] […]
Exposed users 90 days after registration
[…] […]
Subscribed users 90 days
after registration
[…] […]
Proportion of these subscribing to
paid services
[…] % […] %
(748) In December 2018, Spotify conducted a second experiment in order to separately
identify the effect of several elements in the Anti-Steering Provisions. This second
experiment was conducted on a larger set of consumers, comprising all users in
Spotify’s five largest European markets (France, Germany, Italy, Spain and the UK)
as well as Australia, Brazil, Mexico and United States who registered between 10
and 16 December 2018. Users were randomly allocated to four different groups, each
with a different experience for the subscription to premium. The four groups were
the following:
– “Control group”: Users received the standard Android app with all its normal
Premium conversion features. In this case, users are exposed to a seasonal
campaign banner that includes a “Get Premium” button. When they click that
button they are directed directly to the web-based checkout page for payment.
As before, the Control group is not subject to any of the Anti-Steering
Provisions imposed by Apple. In particular, users in the Control group are able
to convert to Premium using the app and are not affected by the limitations that
Apple imposes on developers.
– “Web page group”: Users received a modified experience whereby they
received an Android app which allowed them to convert to a paid subscription
but only by taking them out of the app and to a web page. In this case, users are
also exposed to a seasonal campaign banner that includes a “Get Premium”
button. However, when they click that button they are redirected to a web page
in a browser where they can subscribe to premium services after having logged
in: there was no “in-app” conversion. This mimics a scenario where Spotify
would be allowed to take iOS users outside of the App Store onto a webpage
opening in the browser to subscribe to Premium.
– “Walled off group”: Users received a modified "iOS-style" app providing
Premium conversion opportunities similar to those experienced by Spotify
users on iOS, i.e., inability to convert in-app and restricted advertising. In this
1003
Section 4 (“Results of Spotify’s experiments”) of Compass Lexecon Report, “An economic assessment
of the effects of Apple's Licence Agreement with Spotify”, ID 1459-2.
1004
See results for longer periods in the rebuttal by Spotify to the response by Apple, Section 3, ID 1442.
1005
Section 4, page 25 of Compass Lexecon Report “An economic assessment of the effects of Apple's
Licence Agreement with Spotify”, ID 1459-2.
EN 202 EN
case, users are exposed to a seasonal campaign banner that includes a “Learn
More” button. When they clicked that button they were redirected to a walled
off page, which did not contain any further information on where and how to
subscribe or links to alternative subscription channels. This would therefore be
equivalent to the experience of the Treatment group in the May 2018
experiment.
– “Generic walled off group”: Users received a further modified app which only
included very generic information about Premium conversions, and unlike the
apps for other groups, did not even specify the price of Premium subscriptions.
That is, the seasonal campaign banner did not include any “Learn More”
button. This mimics the actual iOS experience as it prevailed in December
2018 (the time at which the experiment was carried out).
EN 203 EN
Table 14 – Results of Spotify’s experiment of December 2018
1006
Total users registering
[…]
Control
Group
(Android
experience)
Web page
group
Walled off
group
Generic
walled off
group
(iOS
experience)
Random allocation to groups
[…] […] […] […]
Exposed users 77 days after
registration
[…] […] […] […]
Subscribed users 77 days
after registration
[…] […] […] […]
Proportion of Exposed users
subscribed
[…] % […] % […] % […] %
Notes: ‘Exposed users’ are those that have seen some message relating to conversion
to Premium.
(749) After tracking exposed users in the groups following their registration for 77 days,
Spotify found conversion rates of […] %, […] %, […] % and […] % respectively
among those “exposed users” who reached a point at which they would have been
informed about premium through the app. This means that […] % of the users that
would have otherwise subscribed to Spotify’s premium service did not because they
had to face the “iOS experience” resulting from Apple’s Anti-Steering Provisions.
The Anti-Steering Provisions captured by the “web page group” and “walled off
group” accumulate as each of these groups show significantly lower subscription
rates than the control group with the Android experience. The conversion rate is the
lowest for the participants in the “Generic walled off group”, who did not even
receive any information on the price of Premium subscriptions.
(750) Spotify was not able to provide to the Commission any information about whether
the subjects in the experiment who failed to convert to Premium as a result of
Apple’s Anti-Steering Provisions eventually signed-up with another music streaming
service (including Apple Music) or abandoned their intention to subscribe to any
premium music streaming service. Even those consumers that ultimately found a way
to subscribe to the Spotify paid service had to conduct an inconvenient and time-
consuming search and subscription process. Those who were not successful in
finding a way to subscribe to Spotify outside the app either abandoned their purchase
or signed-up with a provider other than Spotify that would not have been their first
choice if they could have benefited from the same subscription conditions as the
control group.
(751) The experiments show the effect of Apple’s Anti-Steering Provisions on conversions
isolated from other factors. Music streaming services can and to some extent do
partly mitigate the number of lost customers due to Apple’s Anti-Steering
Provisions, for example by increasing the marketing budget to attract iOS customers.
1006
Section 4, page 28 of Compass Lexecon Report, “An economic assessment of the effects of Apple's
Licence Agreement with Spotify”, ID 1459-2.
EN 204 EN
However, as explained in recital (700), this an inferior app experience from a user
perspective.
(752) While the impact on conversions is significant in the case of Spotify, it may not be
fully representative of impact on conversions to paid premium services in the case of
other music streaming service providers. Spotify benefits from a strong brand, unlike
several other smaller rivals.
1007
Moreover, iOS users of those music streaming
services that have decided to use IAP at an elevated price (for instance, as previously
observed, EUR 12.99 instead of EUR 9.99) may often not know that subscription
conditions within the iOS app are worse than those outside the iOS app so that their
incentives to search for outside purchasing possibilities are diminished compared to
iOS users of a service that lacks an in-app subscription possibility. It is therefore less
likely that they will look for alternative ways to subscribe to the respective music
streaming service outside the iOS app and it is precisely the purpose of the Anti-
Steering Provisions to limit the information that such iOS users obtain in the app
about these ways and to prevent checkout mechanisms which would allow iOS users
to make an effective choice.
(753) While it is not necessary to quantify the number of users affected, the Commission
can roughly estimate, in 2022, under conditions comparable to Android, 3.9 million
users got lost in the subscription process and did not end up subscribing to Spotify
premium. In addition, more than 15 million Spotify users had to go through an
inferior user experience outside the app to subscribe (see recital (704)).
(754) In addition, the Anti-Steering Provisions negatively impact the churn of music
streaming service providers on the iOS platform. Indeed, not only are consumers less
likely to subscribe to a more expensive music streaming service; they are also less
likely to continue their subscription for the same time they would have in case they
had benefitted from the more attractive monthly subscription fee.
(755) As explained in Section 9.3.2.1.1, price is one of the most important factors affecting
consumer choice for music streaming services and an important factor for customer
churn, i.e., the termination of recurring subscriptions.
(756) For example, SoundCloud indicated that iOS subscribers which pay through IAP
typically show higher churn rates than subscribers who pay through other channels.
“We see an approximate 30-35 % increase in the average length of time a customer
subscribes when we are able to offer the Android/web price compared to the
increased price offered through iOS. Due to the slim margins in music streaming, we
are unable to offer an equivalent price on iOS, due to the 30 % app store fees.
Subscription churn is higher on iOS vs. other platforms, and the audience research
indicates that the primary reason for this is price.”
1008
1007
For example, since 2017 Spotify has been one of the top 10 most important brands contributing to UK
and German households, and in the UK ranked as second strongest brand in 2019, see
https://www.rankingthebrands.com/The-Brand-Rankings.aspx?rankingID=410, ID 1075 and
https://www.rankingthebrands.com/The-Brand-Rankings.aspx?rankingID=409, ID 1078, both accessed
on 17 December 2020.
1008
SoundCloud’s response to question 22 of the Commission’s request for information (2019/048728), ID
1369. See also response to question 28: “iOS subscribers show higher churn than subscribers who pay
through other channels. Over the past 6 months, this difference has become more pronounced with iOS
churn being 1.5x - 2.5x than the churn rates from other channels.”
EN 205 EN
(757) Deezer indicated that without the Anti-Steering Provisions it “would have been able
to inform its iOS customers that Deezer Premium is available at a similar price than
the premium service offered by Apple Music. This difference of pricing between
Deezer and Apple Music encourages (i) new subscribers to opt for the cheaper
service and (ii) existing Deezer subscribers to churn and subscribe to Apple
Music.”
1009
(758) Napster also reported that the increase of the price in its iOS app significantly
hampered both customer acquisition and retention: “Unfortunately, the test
demonstrated a dramatic decline in the number of sign-ups (as shown below). In fact,
the $ 12.99 price-point caused a double-hit: (i) we had less users signing up for the
service than at $ 9.99; and (ii) those users stayed with the service for less time than
the equivalent $ 9.99 users - presumably because they could access a similar service
elsewhere for $ 9.99.”
1010
(759) Amazon confirmed that the retention rate of customers who subscribed through iOS
IAP is lower than the retention rate for users of Android devices or of users of non-
iOS and non-Android devices.
1011
(760) Even if some of the churned IAP subscribers were to subsequently subscribe directly
with the respective music streaming service provider at a lower price, this would not
remove the harmful effects of the Anti-Steering Provisions.
(761) Moreover, and importantly, it is the precise purpose of the Anti-Steering Provisions
to limit the information an iOS user has on subscription possibilities outside the app.
The Anti-Steering Provisions apply not only at the time of the purchase of a
subscription, but also for existing subscribers. In the absence of the Anti-Steering
Provisions, existing subscribers could be informed in their app that their subscription
can be purchased elsewhere at a cheaper price facilitating a transfer of an IAP
subscription to a direct subscription with the music streaming service provider
providing for those consumers that prefer to transact directly with the music
streaming service provider. Moreover, in the absence of the Anti-Steering Provisions,
existing subscribers interested in subscribing outside the app at a cheaper price could
effectively exercise this choice using a web-based checkout mechanism.
(762) In any case, the evidence available does not suggest that many IAP subscribers that
churn subsequently re-subscribe directly with the relevant music streaming service
provider. For example, Napster reported that only 0.2 % of those users who subscribe
through IAP subsequently switch to a direct subscription with Napster.
1012
(763) It follows from the above that iOS consumers of music streaming are unable to find
out where and how to purchase their preferred music streaming subscription outside
the iOS app and who, as a result, end up not subscribing to their preferred music
streaming service.
1009
Deezer’s response to question 33 of the Commission’s request for information (2019/048643), ID 1377.
1010
Napster’s response to question 9 of the Commission’s request for information (2019/048724), ID 1345.
1011
See Amazon’s response to question 4.f) and Table 2 to Table 4 of the Commission’s request for
information (2020/029308), ID 1342.
1012
Napster’s response to question 18 of the Commission’s request for information (2020/029321), ID
1344. Several customer testimonies provided by Napster show that the elevated price of EUR 12.99 was
associated with Napster being responsible for the high price rather than Apple and caused customers to
discontinue the subscription relationship with Napster for good. Napster’s response to question 23 of
the Commission’s request for information (2019/048724), ID 1345.
EN 206 EN
9.3.2.2.2.2. Assessment of Apple’s arguments
(764) In its Response to the Statement of Objections of 28 February 2023, Apple claims
that the Commission has not demonstrated how any alleged “lost” subscribers would
be relevant to the “fairness of Apple’s Anti-Steering Provisions under Article 102(a)
TFEU” and, in addition, it has not proven that Apple Music is imposing unfair
conditions on “such (non-) users”.
1013
(765) The Commission disagrees with this view. The fact that potential subscribers are lost
underlines the unfairness of Apple’s conduct vis-à-vis those iOS users who are
interested in purchasing a music streaming service subscription but either ultimately
do not purchase any subscription or purchase a subscription different from their
preferred one, due to the Anti-Steering Provisions. Absent the Anti-Steering
Provisions, iOS users would have all the information at hand to subscribe to their
preferred option and would be put in a position to exercise an effective choice.
However, as a result of the Anti-Steering Provisions, they may be lost in the process.
This is also confirmed by BEUC (see Section 9.3.2.2.2.1).
(766) In relation to the 2018 Spotify experiments, in its Response to the Statement of
Objections of 28 February 2023,
1014
Apple provides a number of arguments why it
considers that the experiments cannot be generalised to iOS and why they would
overstate the effects of the Anti-Steering Provisions on iOS devices. First, Apple
argues that the Spotify experiments were not conducted on iOS subscribers.
However, Android users would differ in meaningful ways from iOS users on
average.
1015
Second, Apple argues that there are various possibilities for calls to
action outside the app.
1016
Spotify could for example increase communications via e-
mails or on other website and social media platforms to obtain iOS subscribers.
1017
Moreover, Apple argues that the findings are not informative about the long-term
effects and likely overstate them as they define users as converted even if they have
since unsubscribed. The more relevant statistic, however, would be the share of
consumers in each group that has remained subscribed in the long run, considering
that churn is high among the participants in the experiment.
1018
This is because many
consumers that initially enrolled during the promotion do not remain subscribed after
the promotion has expired. Third, Apple contends that, whilst Spotify has grown
considerably on both operating systems, it has added significantly more subscribers
on iOS than on Android.
1019
(767) The Commission considers that Apple’s criticism is not convincing.
(768) First, the experiments tracked conversions via other channels than in-app that
remained open to music streaming services. There were no meaningful differences in
advertising between the two that would drive the results.
1020
While other marketing
channels than the app remain open to Spotify (and Spotify does indeed in practice
1013
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 274-275.
1014
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 334.
1015
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 334, first
bullet point.
1016
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 334, second
bullet point.
1017
Annex 1 to Apple’s Response to the Statement of Objections of 30 April 2021, ID 2171, paragraph 108.
1018
Annex 1 to Apple’s Response to the Statement of Objections of 30 April 2021, ID 2171, paragraph 117.
1019
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 336.
1020
Spotify’s rebuttal to Apple’s response, Annex B and Section 3 paragraph 3.7., ID 1449.
EN 207 EN
rely more heavily on external advertising channels to reach iOS users), the purpose
of the experiment was precisely to single out the impact of the Anti-Steering
Provisions on the user journey to convert to premium. As shown in this Decision, the
Anti-Steering Provisions lead to a deteriorated subscription experience for iOS users.
(769) Moreover, Apple’s claim that its Anti-Steering Provisions and the removal of the
prohibition of out of the app communication that follows an initial sign-up by a user
within the app do not prevent music streaming service providers from sending e-mail
communication to iOS users that have created an account in the iOS app does not
alter the Commission’s findings.
1021
As evidenced in recital (700), email marketing is
an inferior channel compared to subscriptions through the app. […].
1022
In addition,
even if Apple removed the prohibition of out of the app communication that follows
an initial sign-up by a user within the app, iOS users still couldn’t be shown an
“email me” button within the app that would, at least partially, help countering the
negative impact of the Anti-Steering Provisions. Marketing via emails therefore does
not counterbalance the harm suffered by customers due to the lack of information in-
app.
(770) Second, the experiments look at how long after exposure to the different in-app
experience consumers subscribe in both the treatment and the control group. The
main result is that even after months (and beyond the initial period of 77 or 90 days),
a large share of consumers that would otherwise have subscribed fail to subscribe.
This negative impact on conversion does not change even if looking at a longer
period.
1023
(771) The Commission also considers as unconvincing the argument that it would have
been more informative to have taken into account churn over time and to have
focused on the share of users that were still subscribers at a given point in time after
conversion. Doing so and looking for example at the share of users that were still
subscribers after 365 (Experiment 1) or 277 days (Experiment 2)
1024
conflates the
effect of Apple’s Anti-Steering Provisions with subscribers churning over time.
Churn naturally occurs from a music streaming subscription over time; hence the
share of remaining subscribers (the focus of Apple’s analysis) naturally declines in
both control and treatment groups, the longer time period we look at. Apple’s
argument effectively amounts to saying that users have not failed to subscribe to
Premium because of the “iOS experience”, since in a year these subscribers would
have anyhow churned. This does not take away the fact that even during that period
of time, the Anti-Steering Provisions harm consumers inasmuch as they are faced
with a downgraded user experience.
(772) In addition, even in Apple’s own analysis looking at the retention rate (defined as the
share of registered users that remained subscribed with the music streaming service
1021
ID 853 and former App Store Review Guidelines rule 3.1.3.: “Developers cannot use information
obtained within the app to target individual users outside of the app to use purchasing methods other
than in-app purchase (such as sending an individual user an email about other purchasing methods
after that individual signs up for an account within the app).” This restriction has only been removed by
Apple on 22 October 2021 in order to implement the settlement in the consumer class action in the US.
1022
Commission calculations (ID 2607) based on Annex 14 of Apple’s response to the Commission’s
request for information (2022/004722), ID 2233-26. […].
1023
Spotify’s response to Apple, page 31 et seq., ID 1449.
1024
See Table 12 in Annex 1 to Apple’s Response to the Statement of Objections of 30 April 2021: Apple’s
“App Store Practices”: Empirical Evaluation, ID 2171.
EN 208 EN
after a certain period), the negative effect of Apple’s Anti-Steering Provisions as
captured by the experiment remains substantial in the long run. In Experiment 1,
after 120 days the retention rate was 9.3 % in the Control group (unrestricted in-app
subscription experience), reducing to 7.1 under the Treatment group (Apple
experience, no buy button in-app).
1025
This implies a 24 % decline of the 120 day
retention rate under the Apple experience compared to normal circumstances, with a
smooth in-app subscription process.
1026
In Experiment 2 the implied reduction of
retention rates after 120 days compared to the control group depends on the type of
treatment received, and amounted to 8 % (“Web page group”), 15 % (“walled off
group”) and 21 % (“Generic walled off group”).
1027
Even when taking a longer time
horizon, the negative effects of Apple’s conduct remain measurable. After 365 days,
in Experiment 1 Apple calculates “the number of subscribed users in the treatment
groups is just (sic) 13 % less.”
1028
In Experiment 2, in Apple’s own calculation “the
treatment effect of being in the “Generic walled off” group translates into a decrease
of 11 % in terms of registered subscribers on Android” following 277 days after
registration.
1029
These calculations confirm that the harm caused by Apple’s Anti-
Steering Provisions remains substantial even in the longer run.
(773) Overall, the Commission considers that substitution between IAP and other forms of
subscribing to the music streaming service outside the app is limited because turning
off in-app subscriptions leads – in the presence of the Anti-Steering Provisions – to a
considerable number of subscribers that fail to subscribe because of the “iOS
experience”. Further, it should be noted that if some iOS subscribers use alternative
mechanisms to subscribe to Spotify out-of-app, this is precisely because Apple’s
Anti-Steering Provisions prohibit these users from being shown all key information
within the app to make an informed choice. They therefore need to obtain that
information outside the app and subscribe to the music streaming service provider of
their choice outside the app too. It would be wrong for Apple to claim that these
alternative mechanisms to subscribe are interchangeable or even similar from a user
experience perspective.
(774) It follows from the above that Apple’s Anti-Steering Provisions harm iOS users that
are unable to find out where and how to purchase their preferred music streaming
subscription outside the iOS app and who, as a result, end up either not subscribing
to their preferred music streaming service or not subscribing at all.
1025
Table 12 in Annex 1 to Apple’s Response to the Statement of Objections of 30 April 2021: Apple’s
“App Store Practices”: Empirical Evaluation, ID 2171.
1026
(9.3-7.1)/9.3=23.6.
1027
Commission calculations based on Annex 1 to Apple’s Response to the Statement of Objections of
30 April 2021: Apple’s “App Store Practices”: Empirical Evaluation, ID 2171, Table 12, applying the
formula (Control group retention rate-Treatment group retention rate)/(Control group retention rate) to
the 120-day retention rates. The retention rates are: Control group: 7.5 %, Web page group: 6.9 %,
Walled off group: 6.4 %, Generic walled off group: 5.9 %.
1028
Annex 1 to Apple’s Response to the Statement of Objections of 30 April 2021: Apple’s “App Store
Practices”: Empirical Evaluation, ID 2171, Table 12 and footnote 79.
1029
See paragraph 119 and Table 12 in Annex 1 to Apple’s Response to the Statement of Objections of
30 April 2021: Apple’s “App Store Practices”: Empirical Evaluation, ID 2171.
EN 209 EN
9.3.3. The Anti-Steering Provisions are not necessary for the attainment of a legitimate
objective, and in any case they are disproportionate
(775) The Commission concludes that the Anti-Steering Provisions, as formulated,
interpreted and implemented by Apple (see Section 7), are not necessary to achieve a
legitimate objective, and in any event are not proportionate.
9.3.3.1. The Anti-Steering Provisions are not necessary to achieve a legitimate objective
(776) The Commission concludes that the prohibitions imposed by the Anti-Steering
Provisions are not necessary to achieve the objective stated by Apple, namely to
avoid that music streaming service providers circumvent their obligation to pay a fee
when they sell music streaming subscriptions within their iOS app and to make sure
that developers do not engage in free-riding.
(777) Apple explains that the obligation to pay a commission fee is triggered by the sale of
digital content in an iOS app.
1030
On the contrary, as set out in Section 6.2, pursuant
to the reader rule and the multiplatform rule, no obligation to pay a fee is triggered
by the purchase of digital content (including music streaming subscriptions) outside
an iOS app, even if the digital content is subsequently used in an iOS app. In this
context, the App Store rules imposed by Apple include the Anti-Steering Provisions,
which prevent music streaming service providers from informing iOS users in their
apps about the possibility to purchase such digital content or services outside the App
Store as well as from enabling those iOS users to effectively exercise such option,
such as by linking out of the app to the website of music streaming service providers
where the transaction could be concluded.
(778) According to Apple, the purpose of the Anti-Steering Provisions “is to prevent
developers from circumventing payment of Apple’s commission when it is due.”
1031
Furthermore, according to Apple, providers of music streaming services “obtain the
full reward for the value generated by their services outside the iOS app and grant
their users the right to use their content on Apple’s devices without additional
charges. Conversely, to the extent that customers discover the [Music Streaming
Service] providers’ apps and subscribe to their premium versions through the App
Store, Apple requires legitimate monetization by adopting the Anti-Steering
Provisions that avoid systematic circumvention of its legitimate commission.”
1032
Apple claims that, if it is entitled to charge a commission, then it “must have a
means of ensuring that developers pay this commission when it is due and do not
engage in free-riding”.
1033
(779) Apple also claims that consumers are not clueless about transacting directly with
music streaming service providers outside the app or about the fact that developers
have to pay a commission fee, as it emerges for example from the websites of Deezer
or SoundCloud.
1034
According to Apple, consumers can resort to price comparison
websites or consumer reports to get a clear picture about subscription price
differences in-app and outside of the app and find those prices “which are cheaper
1030
Apple’s Response to the Statement of Objections of 28 February 2023 ID 2800, paragraph 68;
Response to the Statement of Objections of 30 April 2021, ID 2165, paragraph 89
1031
Apple’s Response to the Statement of Objections of 28 February 2023 ID 2800, paragraph 99.
1032
Apple’s Response to the Statement of Objections of 28 February 2023 ID 2800, paragraph 119.
1033
Apple’s Response to the Statement of Objections of 28 February 2023 ID 2800, paragraph 68.
1034
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 259-260.
EN 210 EN
than the ones music streaming service providers charge for subscriptions sold via
IAP”.
1035
(780) Apple’s views are to be rejected for the following reasons.
(781) First, the Commission considers that, contrary to Apple’s claims, the prohibition
imposed by the Anti-Steering Provisions on music streaming service providers from
duly informing iOS users about available options to purchase digital content outside
the iOS app and from enabling them to exercise such options effectively cannot be
considered necessary to ensure the objective stated by Apple, namely that music
streaming service providers are not circumventing their contractual payment
obligation when selling music streaming subscriptions within their iOS app and that
developers do not engage in free-riding.
(782) In the first place, Apple itself has chosen to allow iOS users access (at no extra cost)
in their iOS apps to certain digital content that they have purchased outside the App
Store, including directly from music streaming service providers (i.e., through their
websites). The possibility of using such content or subscriptions purchased elsewhere
in-app was offered by Apple to iOS users even before Apple explicitly provided for
it in the Guidelines by formally introducing the reader rule in February 2011. As
indicated in recital (134), already before that date, Apple allowed app developers to
provide access to content subscriptions to users of their iOS app that had previously
been purchased outside of the iOS app without this triggering any payment of a
commission fee to Apple. Before February 2011 – when Apple introduced the Anti-
Steering Provisions – music streaming service providers were not prevented from
informing their users about the possibility to purchase a subscription outside the app
or from including a link to their website within their app.
1036
(783) In 2018, Apple confirmed explicitly that the possibility for users to access content
that they have previously purchased outside the iOS app is not limited to “reader
apps” – i.e., apps that do not require developers to offer in-app purchases of
subscriptions through IAP – but that it is also available for music streaming apps
which offer in-app subscriptions via IAP under the “multiplatform rule” (see Section
6.2.4.2). In both cases, iOS users can access and consume the content they have
purchased elsewhere directly in the apps they have installed on their iOS devices.
These rules increase the appeal and value of iOS devices for consumers by allowing
them to access previously purchased content or services, including music streaming
subscriptions, in the apps they can download from the App Store for their iOS
devices.
(784) Thus, on the basis of this business choice made by Apple – which has been explicitly
enshrined in the reader and the multiplatform rules contained in the Guidelines but
which existed already before – iOS users have the possibility (i) to purchase digital
content including music streaming subscriptions in the iOS app, through IAP, which
involves the payment of a commission fee to Apple by app developers (who in the
music streaming market pass it on to iOS users, see Section 9.3.2.1.4), or (ii) to
purchase such content outside of the iOS app, and subsequently access it within the
app, without this triggering any payment of a commission fee to Apple.
1035
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 257, 258
and Annex 4 (ID 2804).
1036
See Spotify’s response to question 3 of the Commission’s request for information (2020/147746), ID
1447 and […].
EN 211 EN
(785) If iOS users were duly informed about those options offered by Apple and were to
choose to purchase such content outside of the iOS app (and subsequently access it
within the app), this would not trigger any obligation to pay a commission, which
means that the iOS users and music streaming service providers would not be
“circumventing payment of Apple’s commission”. Absent the Anti-Steering
Provisions, music streaming service providers could duly inform iOS users about a
choice that Apple itself has given to them and enable them to effectively exercise
such choice. If iOS users decide to purchase content outside the iOS app in full
knowledge of the available purchasing options, they are making use of a possibility
allowed by Apple, without violating or circumventing any rule established by Apple.
(786) In such a situation, requiring developers of music streaming apps to keep their iOS
users uninformed about the possibility to subscribe to their services outside their iOS
app at better terms and preventing those developers from enabling those users to
effectively exercise an option expressly permitted by Apple cannot be considered
necessary to avoid any alleged circumvention of Apple’s App Store-related rules.
(787) Once Apple has decided to allow iOS users to purchase digital content outside of
their iOS app and access and consume this content within their iOS apps, it cannot
legitimately prevent that those users are fully informed about this possibility and are
put in a position to exercise an effective choice.
(788) In the second place, even if music streaming service providers benefit from iOS
users’ choice to purchase digital content outside the iOS app and subsequently access
it in the app, they cannot be considered to be unduly free-riding, simply because they
inform the iOS users about the options made available to them by Apple and enable
them to effectively make an informed choice.
(789) In the third place, Apple claims that iOS users already know about their cheaper
subscription options outside their music streaming apps.
1037
This claim is
contradicted by the very existence of the restrictions set out in the Anti-Steering
Provisions. It is the very aim of those restrictions to prevent app developers from
informing iOS users about the existence of cheaper alternative subscription channels.
The fact that Apple sees a need to enforce the Anti-Steering Provisions shows that
not all consumers find out about alternative subscriptions channels. Apple also
disregards the fact that information obtained from websites is not as effective,
reliable and immediate as information provided in the app (see Section 9.3.2.2.1).
Moreover, the experiments conducted by Spotify show that even nuances in how the
relevant information is presented to consumers in the subscription process matter and
have a significant impact on the conversion rates to premium music streaming
subscriptions (see Section 9.3.2.2.2.). Concealing critical information from
consumers, which is the very aim of Apple’s Anti-Steering Provisions, distorts the
subscription process of consumers, impacts their choices and by consequence their
purchase decisions.
(790) Second, the Commission considers that Apple cannot validly claim that the Anti-
Steering Provisions vis-à-vis music streaming service providers are necessary to
monetise the App Store.
(791) In the first place, under the business model freely chosen by Apple, absent the Anti-
Steering Provisions, Apple could still charge for the sale of music subscriptions in
1037
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 259-260.
EN 212 EN
the app to those iOS users who wish to subscribe through Apple’s IAP to the
different music streaming services and who value this service and the additional
functionalities that are associated with it.
(792) In its response to the Statement of Objections of 28 February 2023, Apple states that
its services, including the App Store, are valued by both app developers and iOS
users for four reasons, namely ease of use, security, privacy and reliability, and that
“consumers highly value the ‘seamless nature of transactions through IAP’ in
addition to the features mentioned above.”
1038
(793) Whether iOS users who have been fully informed about alternative options and who
have been put in a position to make an effective choice would decide to transact
through Apple and IAP or whether they would decide to leave the iOS app to transact
directly with the music streaming service provider of their choice depends on how
they appreciate the advantages and disadvantages of these two options and the terms
that are associated with them. While some iOS users may value the seamless nature
of transactions through IAP, others may prefer a subscription through the music
streaming service provider at a better price and subject to the payment and privacy
policy of the respective music streaming service provider.
(794) The fact that Apple’s App Store may be less profitable should some additional
consumers decide – in full knowledge of the available options offered by Apple – to
avail themselves of the possibility to subscribe to music streaming services outside
the apps downloaded in the App Store does in the Commission’s view not render the
Anti-Steering Provisions necessary.
1039
Apple can design its business model,
deciding wich options to offer to its users, but cannot validly claim that the chosen
model requires the misinformation of the users, who should not be made aware of the
options avalable and should not be allowed to exercise an effective choice. In the
second place, the revenues generated by Apple at the level of the App Store through
commission fees paid by music streaming service providers do not support a finding
that it is necessary for Apple to avoid transparency about the available options to iOS
users of music streaming services in order to finance the App Store.
(795) […]
1040
[…]
1041
) […]
1042
).
(796) Apple has taken the position in the investigation that it cannot allocate the costs of
setting-up and running the App Store on which it relies to argue that the Anti-
Steering Provisions vis-à-vis music streaming service providers are necessary to
finance the App Store and that it “does not generate actual profit and loss statements
(“P&L”) at the product and service level in the normal course of business.”
1043
This
makes it difficult for the Commission to analyse in more detail to which extent
1038
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 250.
1039
See also Case C‑382/12 P MasterCard v Commission, EU:C:2014:2201, paragraph 91, on the notion of
necessity in the context of Article 101 (1) of the Treaty.
1040
[…].
1041
[…].
1042
[…]. Apple’s response to question 6 of the request for information of the Netherlands Authority for
Consumers and Markets (ACM) of 23 January 2020.
1043
See, in particular, answer to question 18 of Apple’s response to the request for information dated
4 September 2023, ID 3007.
EN 213 EN
commission fees (in particular from music streaming service providers for purchases
through IAP) are required for Apple to cover its costs for the App Store.
1044
[…]
1045
Figure 34 – […]
[…]
Figure 35 – […]
[…]
(797) […]
1046
Figure 36 - […]
[…]
(798) In its response to the Statement of Objections of 30 April 2021, to which Apple
refers in its response to the Statement of Objections of 28 February 2023,
1047
Apple
argued that considering Apple’s total revenues from the App Store when analysing
Apple’s conduct in relation to music streaming would not be appropriate.
1048
Rather
one would need to consider whether specific music streaming related revenues as
such would provide an appropriate contribution to Apple’s investments in the App
Store. According to Apple, annual developer fees of music streaming service
providers in the EEA are limited […] and the aggregate App Store Search Ad spend
of music streaming service providers in the EEA only accounts for […] in Apple’s
FY 2023 (and are thus […] in App Store commission fees paid by the main music
streaming service providers in Apple’s FY 2023 – see recital (7)). In the absence of
the Anti-Steering Provisions developers could – according to Apple – use the iOS
platform (and distribute their apps free of charge) without making any sort of
contribution to Apple’s investments. This is however incorrect if one considers
Apple’s claim that many users value the ease of use, security, privacy and reliability
of transactions through IAP, as those users – even if duly informed about the
available options – might still transact through IAP, thereby triggering the payment
of the commission fee.
(799) In addition, Apple has not provided any evidence that these revenues are insufficient
as a contribution to the cost of operating the App Store and in particular the costs that
are associated with Apple’s review of apps and app updates of music streaming
service providers.
(800) In
its response to the Statement of Objections of 28 February 2023, Apple further
argues that the fact that the commission revenues from music streaming service
subscriptions are low is due to the fact that Apple allows developers such as Spotify
to rely on the reader rule and disable IAP and this should not be a reason to force
Apple to give up its Anti-Steering Provisions.
1049
Similarly, Apple claims that the
revenues it obtains from developer program membership annual fees for music
1044
Apple stated the following in the course of the investigation: “[confidential quote]”; see Apple’s
response to question 18 of the Commission’s request for information (2019/050361), IDs 268-1.
1045
See ID 2233-6. The Commission notes that Apple stated that it could not provide the corresponding
profit and loss statements in relation to the App Store for the years 2020, 2021 and 2022 (see answer to
question 18 of Apple’s response to the request for information dated 4 September 2023, ID 3007).
1046
See ID 2233-6.
1047
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, footnote 160.
1048
Apple’s Response to the Statement of Objections of 30 April 2021, ID 2165, paragraph 374.
1049
Apple’s response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 279.
EN 214 EN
streaming apps in the EEA […] and Apple Search Ads on music streaming service
providers in the EEA […] are “minimal”.
(801) Apple also claims that an assessment of whether or not the revenues are necessary
goes beyond the Commission’s competition powers and that, in the absence of the
Anti-Steering Provisions Apple’s incentives to operate the App Store would
deteriorate.
(802) These arguments do not change the Commission’s conclusions that the Anti-Steering
Provisions vis-à-vis music streaming service providers are not necessary to
contribute to Apple’s investments.
(803) As already explained above, Apple would in the absence of the Anti-Steering
Provisions continue to generate subscription revenues from those iOS users that
prefer to subscribe through IAP because of their appreciation of the advantages of
IAP as compared to other subscription mechanisms outside of the iOS app, even if
those iOS users were fully informed by developers about their available options. In
particular, music streaming service providers would, in the absence of the Anti-
Steering Provisions, compensate Apple for its App Store services to the extent that
their users made the informed choice to subscribe to their services in-app through
IAP.
(804) In addition, […].
1050
(805) With respect to Apple’s argument that the Anti-Steering Provisions vis-à-vis music
streaming service providers are necessary to finance the App Store, it needs to be
borne in mind that according to Apple, around […] % of developers do not pay any
compensation to Apple for the use of the App Store
1051
as their apps are offered free
of charge in the App Store, while around […] % – including a very small number of
music streaming service providers – finance its operation.
1052
The fact that Apple
does not spread the burden of financing the operation of the App Store across
developers does not support a finding that the Anti-Steering Provisions are indeed
necessary to ensure a compensation by developers and in particular music streaming
service providers for their use of the App Store.
(806) Furthermore, as explained by Apple’s external economic adviser during the oral
hearing, there is no clear link between the commission fee charged by Apple and the
financing of the App Store: “The point is that the totality of the investments, and not
just in the App Store, but in fact in the entire ecosystem, are monetized through a
complex set of tools, which is, or channels: the App Store commission, services, most
importantly the price of the device that is the main means through which investments
are recovered, and advertising. So you have a set of channels through which you
recover investments. The point I am trying to make is that that 30
% commission is
not even what is required to map exactly into the investment into the App Store. It’s
one of the channels through which monetization occurs for the entire ecosystem.”
1053
(807) This directly contradicts Apple’s claim that the Commission would need to consider
whether specific music streaming related revenues as such would provide an
1050
[…].
1051
Beyond the Apple Developer Program fee of USD 99 per year.
1052
See ID 378, paragraph 37.
1053
Recording of the oral hearing in Case AT.40437, at 02:51:19, ID 3131.
EN 215 EN
appropriate contribution to Apple’s investments in the App Store (see recital (798)).
Such a specific link, according to Apple’s economic expert, does not exist.
(808) It follows that even according to Apple’s own view it is unclear to what extent the
15 % / 30 % commission fee serves to finance the App Store.
(809) Furthermore Apple has deliberately chosen a business model for the App Store
which relies on the financial contributions of a minority of developers.
(810) Apple’s economic adviser stated during the oral hearing that “the monetisation
objectively falls on a category of developers and there is vast cross-subsidisation to a
huge tail of developers who pay zero, so benefit, get a sweet-heart deal, from this
business model.”
1054
“The point is, someone needs to pay, and at the moment, there is
a bunch of people who pay, but if you change that bunch of people, someone else
needs to pay.”
1055
The same adviser further noted that “by definition, what I am
saying is that in a world in which somebody pays and somebody doesn’t, those who
don’t pay are being cross-subsidised. It’s an objective observation. The point of how
much of this is effectively going to be the component, I don’t know, no-one does those
calculations.”
1056
(811) These statements support the Commission’s findings that the Anti-Steering
Provisions do not serve to prevent an alleged free riding of app developers on
Apple’s services. Apple has failed to explain how its choice to impose the
commission fee only for the sale of digital content which actually leads to a situation
where some app developers that are subject to the commission fee under the
Guidelines (e.g., those that sell digital content) make financial contributions in the
form of commission fees to the financing of the App Store, whereas other app
developers which are not subject to the commission fee under the Guidelines (e.g.,
those that sell physical goods or services or with an ads-based business model) do
not have to pay the commission fee, effectively prevents what Apple refers to as
“free riding” of app developers on Apple’s services.
(812) Against this background, the Commission concludes that the Anti-Steering
Provisions vis-à-vis music streaming service providers (i) are not necessary to
prevent these providers from circumventing their contractual payment obligation
when selling music streaming subscriptions within their iOS app, (ii) they are not
necessary to finance the App Store and (iii) they are not necessary to prevent free-
riding.
9.3.3.2. The Anti-Steering Provisions are in any case disproportionate
(813) The assessment of proportionality requires to verify whether any harmful trading
conditions are limited to what is strictly necessary for the pursuit of a legitimate
objective, or whether they go beyond what is strictly necessary, as the same
legitimate objective could be reached by less onerous means.
(814) When certain trading conditions are (to some extent) necessary for the provision of
the service and the pursuit of other legitimate objectives, they may still be unfair if
they go beyond what would be strictly necessary to achieve that legitimate objective,
and therefore are disproportionate. In applying the principle of proportionality, which
involves a certain balancing of the different interests, special regard has to be given
1054
Recording of the oral hearing in Case AT.40437, at 02:47:10, ID 3131.
1055
Recording of the oral hearing in Case AT.40437, at 02:48:21, ID 3131.
1056
Recording of the oral hearing in Case AT.40437, at 02:52:08, ID 3131.
EN 216 EN
also to the question whether a certain legitimate aim could be achieved by other
means, which are less onerous for the other parties.
(815) The Commission concludes that Apple’s Anti-Steering Provisions in any case fail to
comply with the principle of proportionality.
(816) First, as set out in the necessity assessment in Section 9.3.3.1, the Commission does
not consider the Anti-Steering Provisions vis-à-vis music streaming service providers
necessary (i) to prevent developers of music streaming service providers from
bypassing the contractual obligation to pay a fee for music streaming subscriptions
sold in the app and from free-riding and (ii) to finance the App Store.
(817) Since the Anti-Steering Provisions are therefore not considered necessary to achieve
a legitimate objective, there is no scope for a distinct proportionality assessment of
whether the Anti-Steering provisions are strictly limited to what is required to
achieve that specific legitimate objective.
(818) Second, and in any event, the Commission considers that Apple’s Anti-Steering
Provisions also do not respect a proper balance between Apple’s commercial
interests and the interest of music streaming service providers and of owners of iOS
devices.
(819) Apple’s alleged interest in the Anti-Steering Provisions essentially consists in
avoiding a circumvention of the IAP functionality and to extract the 30 % / 15 %
commission fee from developers by ensuring that developers do not inform users
about alternative purchasing mechanism outside of the iOS app, allowed by Apple,
and do not allow them to exercise an effective choice where to purchase their
subscriptions. This alleged objective is contradicted by the fact that Apple (i) allows
for the reader rule and the multi-platform rule which specifically enable users to use
in-app the content purchased out-of-app (recital (134)), (ii) decided to not to apply
any fee for certain app developers (recital (118)) and (iii) does not specifically
finance the App Store with commission fees paid by music streaming service
providers (recital (795)).
(820) In addition, the Anti-Steering Provisions entirely disregard the interest of iOS users –
who have bought a relatively expensive smart mobile device from Apple – to be able
to make an informed and effective decision, on the basis of the options offered by
Apple, on where to purchase digital content or services within apps downloaded on
those devices, and in particular music streaming subscriptions. In this regard, iOS
users have a legitimate interest in getting information about the options available to
them based on the choice made by Apple to not only allow iOS users to purchase
subscriptions and content in-app but also outside their iOS apps and subsequently
access it in the apps. In light of the above, the Commission takes the view that the
Anti-Steering Provisions imposed on music streaming service providers are in any
case disproportionate.
9.3.4. The Anti-Steering conditions are not objectively justified
(821) When the conduct of a dominant undertaking is liable to be caught by the prohibition
under Article 102(a) of the Treaty, such conduct does not constitute an abuse if the
EN 217 EN
undertaking concerned demonstrates that such conduct is objectively necessary to
protect its commercial interests.
1057
(822) In its Response to the Statement of Objections of 28 February 2023, Apple argues
that (i) the Anti-Steering Provisions are necessary to avoid free-riding by app
developers as well as a circumvention of the requirement on app developers to pay a
legitimate fee to Apple when they sell digital content or services within their apps
which provides an appropriate contribution to Apple’s investment in the App Store,
and (ii) that subscribing through IAP provides a valuable convenience function to
iOS users of music streaming service apps. Furthermore, Apple claims that a
dominant company cannot be penalised for seeking pro-competitive solutions
balancing its own interests against those of its direct and ultimate customers.
1058
(823) The Commission has already explained in Section 9.3.3 that preventing music
streaming service providers from duly informing iOS users about the available
options under the reader and multiplatform rules and from allowing those users to
make an effective choice is neither necessary nor proportionate (i) to prevent
developers of music streaming apps from bypassing the contractual obligation to pay
a fee for music streaming subscriptions sold in the app and from free-riding and (ii)
for financing the provision of the App Store on iOS.
(824) In light of these findings, the Commission does not consider the Anti-Steering
Provisions to be justified in order to protect Apple’s commercial interests.
9.4. Conclusion on the abusive behaviour
(825) On the basis of the above considerations, the Commission concludes that with the
Anti-Steering Provisions Apple imposes unfair trading conditions on music
streaming service providers as (i) the Anti-Steering Provisions are imposed
unilaterally by Apple on music streaming service providers; (ii) they prevent them
from duly informing iOS users about the available options to purchase music
streaming subscriptions outside of the app under the reader and the multiplatform
rules and from enabling them to effectively exercise those options, which is
detrimental to the interests of iOS users, and (iii) they are not necessary for the
attainment of a legitimate objective and are in any case disproportionate.
(826) Therefore, the Commission concludes that Apple has imposed unfair trading
conditions within the meaning of Article 102(a) of the Treaty upon music streaming
service providers through the Anti-Steering Provisions which are detrimental to the
interests of iOS users.
(827) In addition, for the sake of completeness, the Commission observes that, for
example, higher prices or increased churn and lower conversion rates due to the
Anti-Steering Provisions not only impact consumers but, necessarily, also negatively
impact music streaming service providers who incur significant additional marketing
costs.
1059
However, since the Commission focused its assessment on the detriment of
Apple’s Anti-Steering Provisions to the interests of iOS users, concluding on this
basis that Apple has imposed unfair trading conditions within the meaning of Article
102(a) of the Treaty, it is not necessary to take a position as to whether the negative
1057
See Case T-139/98 AAMS vs. Commission, EU:T:2001:272, paragraph 79 and Case T-191/98 Atlantic
Container Line, EU:T:2003:245, paragraphs 1113.
1058
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 276 to 281.
1059
See footnote 833.
EN 218 EN
impact of the Anti-Steering Provisions on music streaming service providers
amounts to an additional ground to conclude that they infringe Article 102(a) of the
Treaty.
10. J
URISDICTION
10.1. Principles
(828) In order to justify the Commission’s jurisdiction, it is sufficient that a conduct is
either implemented in the EEA or is liable to have immediate, substantial and
foreseeable effects in the EEA.
1060
These two approaches for establishing the
Commission’s jurisdiction are alternative.
1061
(829) The criterion of immediate, substantial and foreseeable effects of conduct in the EEA
is satisfied when the conduct in question is capable of having such an effect, there
being no need to show actual effects.
1062
A relevant factor in conducting this
assessment is whether the conduct was intended to produce effects within the internal
market.
1063
10.2. Application to this case
(830) The Commission has jurisdiction to apply both Article 102 of the Treaty and Article
54 of the EEA Agreement to Apple’s conduct described in Section 7 as the Anti-
Steering Provisions are capable of having substantial, immediate and foreseeable
effects in the EEA.
(831) The effects are foreseeable.
(832) First, as mentioned in recital (507), Apple enjoys a monopoly for setting the terms
for app distribution of music streaming apps on iOS. Therefore, if music streaming
service providers want to reach iOS users, including in the EEA, they need to abide
by the terms and conditions determined by Apple, under risk of removal from the
App Store. Further, as stated in recital (310), Apple’s license agreements with
developers as well as the Guidelines – which explicitly prohibit alternative app stores
for iOS devices – are the same throughout the EEA. The conduct therefore has
effects in the EEA since music streaming service providers that do not comply with
Apple’s App Store rules, including the Anti-Steering Provisions, can be removed
from the App Store and thus not be accessible for any iOS users in the EEA.
(833) Second, the unfair trading conditions Apple imposes on music streaming service
providers affect consumers insofar as those providers are prevented from informing
iOS users in the EEA about the options available to them and effectively exercising
an informed choice. The Anti-Steering Provisions have resulted in iOS users
subscribing to a music streaming service through IAP paying a significantly higher
price for their subscription as compared to a situation with the full information
available to them in the absence of such Anti-Steering Provisions. In addition,
because of the Anti-Steering Provisions, many iOS users suffer a degraded customer
experience and have less choice in some iOS music streaming apps.
1060
Joined Cases 89/85, 104/85, 114/85, 116/85, 117/85 and 125/85 to 129/85 Ahlström Osakeyhtiö and
Others v Commission, EU:C:1988:447, paragraphs 11 to 18; Case T-102/96 Gencor v Commission
EU:T:1999:65, paragraphs 89 to 101.
1061
Case C-413/14 P Intel Corp. v Commission, EU:C:2017:632, paragraphs 40-46.
1062
Case T-286/09 Intel Corp. v Commission, EU:T:2014:472, paragraphs 251-252 and 296.
1063
Case T-286/09 Intel Corp. v Commission, EU:T:2014:472, paragraphs 253-255.
EN 219 EN
(834) The effects are substantial. As mentioned in recital (632), as of July 2023, more than
1.4 million iOS subscribers in the EEA of the main music streaming services other
than Apple Music (i.e., Amazon, Napster, SoundCloud, YouTube Music, Tidal,
Deezer, Qobuz and Spotify legacy subscribers) paid an elevated monthly
subscription fee throughout the entire duration of the subscription. As also evidenced
in Table 12, more than […] Spotify users had to go through an inferior user
experience outside the Spotify app to subscribe to Spotify’s premium music service.
Furthermore, almost […] Spotify users were unable to find out where and how to
purchase their preferred music streaming subscription outside the iOS app and, as a
result, ended up either not subscribing to their preferred music streaming service or
not subscribing at all. This is a substantial amount of iOS users.
(835) Finally, the effects are immediate. Because of the Anti-Steering Provisions, music
streaming service providers are prevented from informing iOS users about the
possibility of purchasing music streaming subscriptions outside the iOS app and from
allowing iOS users to effectively exercise their choice.
(836) Apple does not contest that the Commission has jurisdiction over its conduct.
11. E
FFECT ON TRADE BETWEEN MEMBER STATES
11.1. Principles
(837) Article 102 of the Treaty prohibits as incompatible with the internal market an abuse
of a dominant position “in so far as it may affect trade between Member States”.
Article 54 of the EEA Agreement contains a similar prohibition with respect to trade
between Contracting Parties to the EEA Agreement.
(838) According to settled case law, the effect on trade criterion consists of three elements.
(839) First, “trade” must be potentially affected. The concept of trade is not limited to
traditional exchanges of goods and services across borders but covers all cross-
border economic activity. It also encompasses practices affecting the competitive
structure of the internal market by eliminating or threatening to eliminate a
competitor operating within the territory of the Union.
1064
(840) Second, the practice does not necessarily need to reduce trade
1065
; it is sufficient to
show that the abuse “may affect trade between Member States”. In other words, it
must be foreseeable with a sufficient degree of probability on the basis of a set of
objective factors of law or fact that the practice in question has an influence, direct or
indirect, actual or potential, on the pattern of trade between Member States.
1066
(841) Third, the effect on trade between Member States must be “appreciable”. This
element requires that effect on trade between Member States must not be
insignificant and is assessed primarily with reference to the position of an
1064
Joined Cases C-6/73 and C-7/73 Istituto Chemioterapico Italiano S.p.A. and Commercial Solvents
Corporation v Commission, EU:C:1974:18, paragraphs 32-33; Joined Cases T-24/93, T-25/93, T-26/93
and T-28/93 Compagnie Maritime Belge v Commission, EU:T:1996:139, paragraph 203.
1065
Case T-141/89 Tréfileurope v Commission, EU:T:1995:62, paragraphs 57 and 122.
1066
Case C-5/69 Franz Völk v Établissement J. Vervaecke, EU:C:1969:35, paragraph 5/7; Case C-322/81
NV Nederlandsche Banden Industrie Michelin v Commission, EU:C:1983:313, paragraph 104; Case C-
41/90 Höfner and Elsner v Macrotron, EU:C:1991:161, paragraph 32; Case T-228/97 Irish Sugar v
Commission, EU:T:1999:246, paragraph 170.
EN 220 EN
undertaking on a relevant product market.
1067
The stronger the position of an
undertaking, the more likely it is that the effect on trade between Member States of a
practice will be appreciable.
1068
11.2. Application to this case
(842) In the present case, Apple’s conduct has an appreciable effect on trade between
Member States (and Contracting Parties to the EEA Agreement) for the following
reasons.
(843) First, Apple’s conduct is, by its very nature, cross-border in scope. The framework of
agreements governing Apple’s legal and economic relationship with app developers
(described in Section 6.2) are the same throughout the EEA and apply to all app
developers active in the EEA, including in particular the Anti-Steering Provisions,
and Apple enters into a single license agreement with developers covering app
distribution in numerous EEA countries.
(844) Second, Apple’s conduct consisting in the Anti-Steering Provisions constitute unfair
trading conditions in relation to iOS users throughout the EEA.
(845) Third, Apple’s conduct has been implemented in all Member States.
(846) Fourth, since at the latest June 2015, Apple holds a dominant position in the market
for the provision to developers of platforms for the distribution of music streaming
apps to iOS users which is EEA wide.
(847) The abuse is therefore capable of having an appreciable effect on trade between
Member States (and Contracting Parties to the EEA Agreement).
12. D
URATION
(848) The Commission concludes that the infringement started at the latest on 30 June
2015 when Apple had already achieved a dominant position in the market for the
provision to developers of platforms for the distribution of music streaming apps to
iOS users in the EEA.
1069
(849) On the date of adoption of this Decision, Apple has not removed the Anti-Steering
Provisions.
1070
Therefore, the Commission concludes that the infringement of Article
102 of the Treaty is ongoing at the date of adoption of this Decision (except for the
UK).
(850) In its Response to the Statement of Objections of 28 February 2023, Apple submits
that the Commission has delayed these proceedings and unduly extended the duration
of the alleged infringement. It therefore expects a reduction of a possible fine solely
for reason of excessive length.
1071
Apple’s arguments in this regard should be
dismissed.
1067
Case C-5/69 Franz Völk v Établissement J. Vervaecke, EU:C:1969:35, paragraph 5/7.
1068
Case T-65/89 BPB Industries and British Gypsum v Commission, EU:T:1993:31, paragraph 138.
1069
For the purposes of this Section, the EEA includes the UK for the period until and including
31 December 2020 pursuant to Article 92 of the Agreement on the withdrawal of the UK of Great
Britain and Northern Ireland from the European Union and the European Atomic Energy Community.
1070
As explained in recital (183), Apple announced on 25 January 2024 that it will implement certain
changes to its App Store rules in March 2024. However, these rules are not yet in place at the time of
adoption of this Decision and thus do not alter the Commission’s assessment in this Decision.
1071
Apple’s response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 392-395.
EN 221 EN
(851) As regards Apple’s argument that the calculation of the duration must reflect the
alleged delays in the Commission’s investigation, the Commission observes that the
duration of an antitrust investigation depends on a number of factors, including the
complexity of the case, the extent to which the undertaking concerned cooperates
with the Commission and the exercise of the investigated undertaking’s rights of
defence.
1072
Further, it is settled case law that, for the purposes of assessing the
reasonableness of the length of the administrative procedure before the Commission,
the Union Courts distinguish between the investigative phase prior to the statement
of objections and the remainder of the administrative procedure.
1073
In a procedure
relating to EU competition law, the persons concerned are not the subjects of any
formal accusation until they receive the Statement of Objections.
1074
Accordingly,
the prolongation of this stage of the procedure alone is not in itself capable of
adversely affecting defence rights and cannot be deemed as excessive.
1075
Further,
the Commission issued the Statement of Objections of 28 February 2023 to replace
the Statement of Objections of 30 April 2021 in light of Apple’s arguments in
response to the latter. There have been less than three years between the 2021
Statement of Objections and the adoption of this Decision (and one year between the
2023 Statement of objections and this Decision). That period of time cannot be
deemed to constitute an unprecedented delay as Apple claims. Indeed, the specific
duration of this case is not excessive compared to the average duration of other
investigations vis-à-vis undertakings of a similar size and active in digital markets
such as Apple.
1076
(852) There is therefore no basis for considering that the duration of the investigation was
excessive in this case, and no reason for the Commission to reduce the amount of the
fine on account of the duration of the administrative proceedings.
13. A
DDRESSEES
13.1. Principles
(853) Union competition law refers to the activities of undertakings and the concept of an
undertaking covers any entity engaged in an economic activity, irrespective of its
legal status and the way in which it is financed.
1077
(854) When such an economic entity infringes the Union competition rules, it falls,
according to the principle of personal responsibility, to that entity to answer for that
infringement.
1078
The conduct of a subsidiary may be imputed to the parent company
1072
See e.g., Case C-238/99 P Limburgse Vinyl Maatschappij and others v Commission, EU:C:2002:582,
paragraph 187.
1073
See e.g., Case C-238/99 P Limburgse Vinyl Maatschappij and others v Commission, EU:C:2002:582,
paragraphs 181-182.
1074
Commission notice on best practices for the conduct of proceedings concerning Articles 101 and 102
TFEU, OJ C 308, 20.10.2011, p. 6–32, paragraph 82.
1075
See e.g., Joined Cases T-5/00 and T-6/00 Nederlandse Federatieve Vereniging voor de Groothandel op
Elektrotechnisch Gebied and Technische Unie BV v Commission, EU:T:2003:342, paragraphs 78-79.
1076
For example, the Commission’s investigation against Google lasted 2 years and 3 months (from the date
of the Statement of Objections on 20 April 2016 until the decision on 18 July 2018) in Case AT.40099
– Google Android and 2 years and 2 months (from the date of the Statement of Objections on
15 April 2015 until the decision on 27 June 2017) in Case AT.39740 – Google Search (Shopping).
1077
Case C-511/11 P Versalis v Commission, EU:C:2013:386, paragraph 51.
1078
Case C-90/09 P General Química and Others v Commission, EU:C:2011:21, paragraph 35 and the case
law cited therein.
EN 222 EN
in particular where that subsidiary, despite having a separate legal personality, does
not decide independently upon its own conduct on the market, but carries out, in all
material respects, the instructions given to it by the parent company, regard being
had in particular to the economic, organisational and legal links between those two
legal entities.
1079
(855) In the specific case, however, in which a parent holds all or almost all of the capital
in a subsidiary that has committed an infringement of the Union competition rules,
there is a rebuttable presumption that that parent company in fact exercises a decisive
influence over its subsidiary. In such a situation, it is sufficient for the Commission
to prove that all or almost all of the capital in the subsidiary is held by the parent
company in order to take the view that that presumption applies.
1080
13.2. Application to this case
(856) For the reasons set out in this Decision, the Commission concludes that the
infringement should be imputed to Apple Inc. as (i) the company which – for the
entire period of the infringement – was and continues to be party to the License
Agreements with developers, formulated and continues to formulate the App Store
Review Guidelines and conducted and continues to conduct app reviews based on
them and as (ii) the entity which (directly or indirectly) wholly owned and continues
to fully own Apple Distribution International Limited (and which previously owned
iTunes Sàrl as well as Apple Distribution International).
1081
(857) The infringement should also be imputed to Apple Distribution International Limited
as the legal entity which developers in Europe appoint as a commissionaire for the
marketing and end-user download of applications sold through the App Store in the
EEA.
1082
14. S
INGLE AND CONTINUOUS INFRINGEMENT
14.1. Principles
(858) An infringement of the competition rules may result not only from an isolated act,
but also from a series of acts or from a continuous conduct.
1083
It would be artificial
to split up such continuous conduct, characterised by a single purpose, by treating it
as consisting of several separate infringements, when what was involved was a single
infringement which progressively would manifest itself in abusive behaviour. Such
interpretation cannot be challenged on the ground that one or more aspects of that
series of acts or continuous conduct could also, in themselves and taken in isolation,
constitute an infringement of the competition rules of the Treaty.
1084
When the
different actions form part of an “overall plan”, the Commission is entitled to impute
responsibility for those actions on the basis of the infringement considered as a
whole.
1085
1079
Case C-521/09 P Elf Aquitaine v Commission, EU:C:2011:620, paragraph 54.
1080
Case C-97/08 P Akzo Nobel and Others v Commission, EU:C:2009:536, paragraph 60.
1081
See recital (5) and Exhibit 21.1 of Apple’s Annual Report 2022, where Apple Distribution International
Limited, incorporated in Ireland, is listed among the subsidiaries of Apple Inc.
1082
For a description of the Apple group’s companies incorporated in the EEA, see recital (5).
1083
Case T-6/89 Polypropylene, EU:T:1991:74, paragraph 204 refers to a series of single efforts.
1084
Case C-49/92 P Commission v Anic Partecipazioni, EU:C:1999:356, paragraph 81.
1085
Case T-321/05 AstraZeneca v Commission, EU:T:2010:266, paragraph 892, referring to Joined Cases
C-204/00 P and others Aalborg Portland and Others v Commission, EU:C:2004:6, paragraph 258. See
EN 223 EN
(859) For the purposes of characterising various instances of conduct as a single and
continuous infringement, it is necessary to establish whether they complement each
other inasmuch as each of them is intended to deal with one or more consequences of
the normal pattern of competition and, by interacting, contribute to the realisation of
the objectives intended within the framework of that overall plan. In that regard, it
will be necessary to take into account any circumstance capable of establishing or
casting doubt on that complementary link, such as the period of application, the
content (including the methods used) and, correlatively, the objective of the various
actions in question.
1086
14.2. Application to this case
(860) For the reasons set out in Section 9, the Commission concludes that Apple’s conduct
described in Section 7 constitutes a single and continuous infringement of Article
102 of the Treaty and Article 54 of the EEA Agreement.
(861) First, the Anti-Steering Provisions as described in Section 7 and as adapted
throughout the infringement period pursue an identical objective, namely to prevent
music streaming service providers from informing iOS users about the possibility of
purchasing music streaming subscriptions outside the iOS app and from allowing
iOS users to effectively exercise their choice. With the Anti-Steering Provisions in
place, iOS users that are unaware of alternative subscription possibilities outside the
iOS app cannot make an informed and effective choice about potential alternative
(and often cheaper) subscription possibilities outside of the iOS app.
(862) Second, the successive changes Apple introduced to the wording of the Anti-Steering
Provisions as well as their interpretation over time, as assessed by the Commission in
the present Decision (see Section 7), do not affect the conclusion that music
streaming service providers have been – and still are – severely limited in their
ability to inform iOS users inside the app, and to a certain extent also outside of the
app, about alternative (cheaper) subscriptions possibilities outside of the app and
from allowing an effective choice.
(863) Third, Apple adopted a consistent course of conduct over time, characterised by its
continuous reliance upon – and strict enforcement of – the Anti-Steering Provisions
vis-à-vis music streaming service providers.
(864) Fourth, the Commission’s conclusion that Apple’s conduct described in Section 7
throughout the period of infringement forms part of an identical pattern of conduct
and constitutes a single and continuous infringement of Article 102 of the Treaty and
Article 54 of the EEA Agreement is not affected by Apple’s claims in its Response to
the Statement of Objections of 28 February 2023 that:
(a) Apple “had to clarify the Anti-Steering Provisions a number of times over the
years, in particular in response to some developers’ (including Spotify’s)
multiple attempts at circumventing Apple’s rules”;
1087
(b) the Anti-Steering Provisions were introduced in the Guidelines in 2011, i.e.,
“before Apple Music was launched” and they
“have always been applied
also Case C-49/92 P Commission v Anic Partecipazioni, EU:C:1999:356, paragraphs 78-81, 83-85 and
203.
1086
Case T-321/05 AstraZeneca v Commission, EU:T:2010:266, paragraph 892, referring also to Joined
Cases T-101/05 and T-111/05 BASF and UCB v Commission, EU:T:2007:380, paragraphs 179 and 181.
1087
Apple’s response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 95.
EN 224 EN
equally to all apps that sell digital goods and services, regardless of whether
they compete with Apple’s own apps”;
1088
(c) from 2011 onwards, Apple has “constantly made available programs to
developers that attract users without having to pay anything to Apple” such as
the introduction of the External Link Account Entitlement program in March
2022.
1089
(865) In the first place, Apple’s claim that it adopted a consistent course of conduct over
time aimed at enforcing the Anti-Steering Provisions to avoid circumvention of the
obligation to pay its commission fee when developers use their iOS app to monetise
their digital services does not affect the Commission’s conclusion that the Anti-
Steering Provisions as described in Section 7 pursue the identical objective of
restricting the developers’ ability to effectively communicate with their iOS users.
(866) In the second place, the Commission does not contest that Apple has introduced the
Anti-Steering Provisions a few years before Apple Music was launched nor that it
has applied the rules equally to all apps that sell digital goods and services. The
Commission however objects to the unfair character of the Anti-Steering Provisions
as from 30 June 2015 when Apple had already achieved a dominant position in the
market for the provision to developers of platforms for the distribution of music
streaming apps to iOS users in the EEA.
(867) In the third place, the various programs introduced by Apple allegedly facilitating
developers to perform certain out-of-platform communication or allowing “reader
apps to include a link to their websites in their iOS apps”
1090
are not such to
substantially change the nature of the Anti-Steering Provisions. For example, under
the External Link Account Entitlement program (see recital (209)) Apple prohibits
app developers from mentioning the price of their products as part of the link (as
confirmed by the different screenshots provided by Apple in its Response to the
Letter of Facts
1091
) and also requires app developers to display a security warning
when a user clicks on the external link.
1092
Therefore, those programs do not
substantially change the unfair nature of the Anti-Steering Provisions.
(868) Therefore, the Commission concludes that, notwithstanding the more recent changes
that Apple has made to the rules as described in Section 7, this set of rules, including
the Anti-Steering Provisions have been in place – without interruption – throughout
the entire period of the infringement.
15. R
EMEDIES
15.1. Principles
(869) Article 7 of Regulation (EC) No 1/2003 provides that where the Commission finds
that there is an infringement of Article 102 of the Treaty and Article 54 of the EEA
Agreement it may by decision require the undertaking concerned to bring such
infringement to an end. For this purpose, it may also impose on the undertaking
concerned any behavioural or structural remedies which are proportionate to the
1088
Apple’s response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 99.
1089
Apple’s response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 111.
1090
Apple’s response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 111.
1091
Apple’s Response to the Letter of Facts, ID 3330, Figures 10-12,
1092
Spotify’s observations on the Statement of Objections of 28 February 2023, point 7.16, ID 2799.
EN 225 EN
infringement committed and necessary to bring the infringement effectively to an
end.
(870) It follows that a decision pursuant to Article 7(1) of Regulation (EC) No 1/2003 may
include an order to “do certain acts or provide certain advantages which have been
wrongfully withheld as well as prohibiting the continuation of certain action,
practices or situations which are contrary to the Treaty”.
1093
The requirement that a
remedy has to be effective
1094
empowers the Commission to enjoin a dominant
undertaking to refrain from adopting any measures having the same or an equivalent
object or effect as the conduct identified as abusive.
1095
Any remedy must also apply
in relation to the infringement that has been established
1096
and be proportionate to
the infringement identified.
1097
15.2. Application to this case
(871) It is necessary to order Apple to bring the single and continuous infringement
described in Section 9 to an end without undue delay. For this purpose, Apple should
remove the Anti-Steering Provisions from the relevant terms and conditions
governing the use of Apple’s App Store by music streaming service providers,
namely from the Guidelines and from Schedule 2 to the Licence Agreement.
(872) The removal of the Anti-Steering Provisions from the relevant terms and conditions
should enable music streaming service providers to freely communicate with, and
inform, iOS users in the EEA within their apps about available subscription options
as well as to allow those users to effectively choose among the options available,
including by communicating and/or linking to external subscription options within
their iOS apps. By removing the Anti-Steering Provisions, Apple should in particular
not prohibit anymore any of the following:
– the use by music streaming service providers of hyperlinks, “buy buttons” or
external links in their iOS app that point iOS users based in the EEA to other
purchasing methods outside the app or to those providers’ websites. Apple
should allow music streaming service providers to include, in the
accompanying language, information about prices and to redirect users to any
landing page chosen by those providers;
– the use by music streaming service providers of emails to iOS users based in
the EEA which are triggered by actions by iOS users within the iOS app,
including any calls to action initiated from within the app such as an “e-mail
me” button;
– the use by music streaming service providers of any other method that
effectively informs iOS users based in the EEA about the prices charged by
1093
Joined Cases 6/73 and 7/73 Istituto Chemioterapico Italiano S.p.A. and Commercial Solvents,
EU:C:1974:18, paragraph 45; see also, to this effect, Joined Cases C-241/91 P and C-242/91 P RTE and
ITP v Commission, EU:C:1995:98, paragraph 90.
1094
Joined Cases 6/73 and 7/73 Istituto Chemioterapico Italiano S.p.A. and Commercial Solvents,
EU:C:1974:18, paragraph 46.
1095
Case T-83/91 Tetra Pak v Commission, EU:T:1994:246, paragraphs 220-21.
1096
Joined Cases 6/73 and 7/73 Istituto Chemioterapico Italiano S.p.A. and Commercial Solvents,
EU:C:1974:18, paragraph 45.
1097
Joined Cases C-241/91 P and C-242/91 P RTE and ITP v Commission, EU:C:1995:98, paragraph 93;
Case C-119/97 P Ufex and Others v Commission, EU:C:1999:116, paragraph 94.
EN 226 EN
those providers, where or how subscriptions can be purchased outside of their
iOS app.
(873) Moreover, in order to ensure the effectiveness of the remedy,
1098
it is necessary to
order Apple to refrain from adopting any practice or measure having an equivalent
object or effect as the Anti-Steering Provisions described in Section 7.
1099
Apple
should, in particular, refrain from making the acceptance of music streaming apps on
the App Store conditional upon the adherence by developers of those apps to any
limitations or requirements which would have an equivalent object or effect as the
Anti-Steering Provisions and would lead to making the above remedies ineffective.
(874) Apple shall not deteriorate the quality of any service it provides to music streaming
service providers or iOS users based in the EEA who avail themselves of this
Decision by informing those iOS users within their apps about available subscription
options and allowing them to effectively choose among the options available to them.
This includes the obligation for Apple not to discriminate in any way music
streaming service providers who inform iOS users within their apps about available
subscription options and allow them to effectively choose among the options
available compared to those providers who choose not to do so. These examples are
not exhaustive and do not prejudice other practices or measures that have an
equivalent object or effect as explained in recital (873).
15.2.1. Assessment of Apple’s arguments about the remedies
(875) In its Response to the Statement of Objections of 28 February 2023, Apple claimed
that the envisaged remedies would be unnecessary and disproportionate. Apple
claimed in particular that, in relation to the lack of consumer information, the
Statement of Objections of 28 February 2023 contains no separate analysis as to how
the absence of “one click” means to exercise informed choices – such as “buy
buttons” or “links” – would be sufficient to characterise the Anti-Steering Provisions
as unfair. Apple also argued that the Commission has not examined the “impact of
Apple having already relaxed its rules on developers sending email communications
to consumers since 2021”
1100
nor whether any (possible, future) change to the Anti-
Steering Provisions to the effect that music streaming service providers could
“advertise in-app the price of their premium subscriptions outside the app (“digital
billboards”) would be sufficient to address any alleged detriment to consumers and
developers”.
1101
In Apple’s view these providers could use, for example, banners and
pop-ups “to inform iOS users about their premium options, the relevant prices, as
well as a description of where to go to sign up”.
1102
In addition, Apple claimed that
“solutions such as “buy buttons” or “external links” are neither necessary nor
proportionate”,
1103
and would also “make it difficult for consumers to understand
that they are leaving the confines of the app itself and thus the protections of Apple’s
app review process”.
1104
For Apple, such “linking out” has “significant consequences
1098
Joined Cases 6/73 and 7/73 Commercial Solvents, EU:C:1974:18, paragraph 46.
1099
Case T-83/91 Tetra Pak v Commission, EU:T:1994:246 paragraphs 220-21.
1100
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 369.
1101
Ibid.
1102
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 370.
1103
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 371.
1104
Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 372.
EN 227 EN
for both consumers and Apple itself, as consumers having a negative experience
resulting from such linking out may blame Apple for allowing such mechanism”.
1105
(876) Apple’s claims do not affect the Commission’s conclusion that remedies consisting
in the removal of the Anti-Steering Provisions, as described in Section 7, are both
necessary and proportionate to bring the infringement effectively to an end.
(877) This Decision has shown that (i) the information and options offered within the app
are key for iOS users of music streaming apps to make an effective choice and
subscribe to premium, since iOS users are most interested in enjoying the benefits of
the premium subscription at the time when they are using a music streaming service
in their app (see Section 9.3.2.2.1.1) and (ii) subscription channels other than
subscriptions through the app
1106
are inferior from the users’ perspective and do not
make up for the degraded experience caused by the Anti-Steering Provisions (see
Section 9.3.2.2.1.2). The Decision has also shown that the Anti-Steering Provisions
prevent music streaming service providers (i) from informing iOS users in their iOS
app about the possibility to purchase music streaming subscriptions outside of that
app, generally at lower prices than through that app, and to use these subscriptions in
that app (as explicitly allowed by Apple under the reader rule and the multiplatform
rule), and (ii) from enabling users to effectively exercise the choices available to
them, for instance by making available web-based checkouts in the iOS app of the
music streaming service providers (e.g., through the use of “buy buttons” within the
app) (see recital (577)). Allowing hyperlinks, “buy buttons” or external links in the
app that point iOS users based in the EEA to other purchasing methods outside the
app is therefore necessary for enabling users to effectively exercise the choices
available to them and thus bringing the abuse effectively to an end.
(878) This is further evidenced by the May 2018 experiment (see recital (747)), which
demonstrates that communicating and/or linking to external subscription options
within the app is the most effective method to allow users to convert their
subscriptions to premium. Furthermore, the December 2018 experiment shows that
even nuanced design features of the checkout process have a significant effect on the
ability of users to subscribe to premium music streaming services. Table 15 recaps
the experiment results already presented in Section 9.3.2.2.2.1. In particular,
compared to the experience where users can in a smooth manner subscribe through a
web-based checkout to premium music streaming (“Control group”), the conversion
rate is […] % lower when users are first taken out of the app to an external webpage
to complete the checkout process (“Web page group”). If instead of the “Get
premium” button users see only a “Learn more button” and are not provided with a
direct link to subscription options (“Walled off group”), the conversion rate is nearly
[…] % lower than under the smooth subscription through the app experience
(“Control group”). This shows that allowing hyperlinks, “buy buttons” or external
links in the app that link iOS users based in the EEA to other purchasing methods
outside the app is necessary to allow users to exercise an effective choice.
1105
Ibid.
1106
Subscription through the app includes marketing and linking external subscription options within the
iOS app, such as buy buttons.
EN 228 EN
Table 15 – Summary of the results of the 2018 December Spotify experiment
1107
Experiment
(December
2018) scenario
Scenario features D77
conversion
rate (%)
% reduction of
conversion rate
compared to
control group
1108
“Control
group”:
Users are able to convert to
Premium using the app
through a web-based checkout
and are not affected by the
limitations that Apple imposes
on developers.
[…] […]
“Web page
group”:
No in-app conversion. Taking
users onto a webpage opening
in the browser to subscribe to
Premium.
[…] […] %
“Walled off
group”:
Instead of “Get Premium”
button, just a “Learn More”
button. When clicked,
redirected to a walled off page,
without further information on
where and how to subscribe or
links to alternative
subscription channels.
[…] […] %
“Generic
walled off
group”:
Only very generic information
about Premium conversions,
even without specifying the
price of Premium
subscriptions. Not even a
“Learn More” button.
[…] […] %
(879) The Decision has also evidenced that – while Apple has relaxed the Anti-Steering
Provisions with respect to outside communication through the change of the
Guidelines on 7 June 2021 – it continues to object to outside e-mails to the extent
that they have been triggered by some form of “call to action” within the iOS app or
followed account creation within a time-lapse of 10 days (see recital (210)).
(880) Digital billboards would not be sufficient to address the detriment to iOS users of
music streaming services. According to Apple, music streaming service providers
“could use similar designs to inform iOS users about their premium options, the
relevant prices, as well as a description of where to go to sign up. Such solutions
1107
See Table 14 and footnote 1006.
1108
Calculated for the “Web page group” as […] %. This can be read as the “Web page group”
experiencing a […] % lower conversion rate than the “Control group”, since the conversion rate
difference of […] % is […] % if the conversion rate in the “Control group “([…] %). The calculations
for all other experiment scenarios are analogous.
EN 229 EN
would fully remedy the concerns set out in the [Statement of Objections of
28 February 2023], as iOS users would be informed and could choose
accordingly.”
1109
As shown just in recital (877), these billboards would still not make
up for the lack of possibility for iOS users to engage within the app and thus
subscribe through the app. These billboards would therefore continue to constitute a
degraded alternative to subscriptions through the app.
(881) Finally, Apple’s argument that the remedies would have significant negative
consequences for both consumers and Apple itself must also be rejected. As
evidenced in this Decision (see e.g., recital (577)), Apple’s conduct, inasmuch as it
unnecessarily prevents iOS users based in the EEA from being duly informed and
effectively exercising the choices available to them when using their music streaming
app, is abusive under Article 102(a) of the Treaty.
(882) Therefore, Apple’s arguments about the lack of necessity and proportionality of the
remedies are to be rejected.
15.2.2. Implementation of the remedies
(883) Apple should comply without undue delay with this Decision.
(884) The Commission is entitled to monitor the implementation by Apple of the remedies
ordered by this Decision. For those purposes, the Commission is entitled to use the
powers of investigation provided for in Regulation (EC) No 1/2003.
1110
16. P
ERIODIC PENALTY PAYMENTS
16.1. Principles
(885) Pursuant to Article 24(1)(a) of Regulation (EC) No 1/2003 and Article 5 of Council
Regulation (EC) No 2894/94 of 28 November 1994 concerning arrangements for
implementing the EEA Agreement,
1111
the Commission may, by decision, impose on
undertakings or associations of undertakings periodic penalty payments not
exceeding 5 % of the average daily turnover in the preceding business year per day
and calculated from the day appointed by the decision, in order to compel them to
put an end to the infringement, in accordance with a decision taken pursuant to
Article 7 of Regulation (EC) No 1/2003.
16.2. Application to this case
(886) The Commission concludes that it is necessary to impose periodic penalty payments
pursuant to Article 24(1)(a) of Regulation (EC) No 1/2003 and Article 5 of Council
Regulation (EC) No 2894/94 if Apple were to fail to implement measures that bring
the infringement effectively to an end within 30 days from the date of notification of
this Decision.
(887) In setting the level of the periodic penalty payments, the Commission considers that
they must be sufficient to ensure compliance by Apple with this Decision. The
Commission has also taken Apple’s significant financial resources into account.
(888) Consequently, if Apple were to fail to comply with the obligation to remove the
Anti-Steering Provisions as set out in this Decision, Apple would incur a daily
1109
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 370.
1110
Case T-201/04 Microsoft v Commission, EU:T:2007:289, paragraph 1265.
1111
OJ L 305, 30.11.1994, p. 6.
EN 230 EN
periodic penalty payment of 5 % of Apple’s average daily turnover in the business
year preceding such failure to comply.
17. F
INES
17.1. Principles
(889) Pursuant to Article 23(2) of Regulation (EC) No 1/2003 and Article 5 of Council
Regulation (EC) No 2894/94, the Commission may by decision impose fines on
undertakings where, either intentionally or negligently, they infringe Article 102 of
the Treaty and Article 54 of the EEA Agreement.
(890) An infringement of Article 102 of the Treaty or Article 54 of the EEA Agreement is
committed intentionally or negligently where the undertaking concerned cannot be
unaware of the abusive nature of its conduct, whether or not it was aware that it was
infringing the competition rules of the Treaty.
1112
Regarding an undertaking in a
dominant position, the undertaking is aware of the abusive nature of its conduct
where it is aware of the essential facts justifying both the finding of a dominant
position on the relevant market and the finding by the Commission of an abuse of
that dominant position.
1113
(891) Pursuant to Article 23(3) of Regulation (EC) No 1/2003, in fixing the amount of the
fines, the Commission must have regard to all relevant circumstances and
particularly to the gravity and the duration of the infringement. In doing so, the
Commission sets the fines at a level sufficient to ensure deterrence. The Commission
ensures that any aggravating or mitigating circumstances are reflected in the fines
imposed.
(892) The Commission enjoys a broad discretion as regards the setting of fines in relation
to infringement of the EU competition rules.
1114
(893) In setting the fines to be imposed, the Commission will, as a matter of principle, refer
to the general methodology laid down in its Guidelines on Fines.
(894) Point 37 of the Guidelines on Fines provides that the particularities of a given case or
the need to achieve deterrence in a particular case may justify departing from such
general methodology.
1112
Case T-83/91 Tetra Pak v Commission, EU:T:1994:246, paragraph 239, upheld on appeal in Case
C333/94 P, EU:C:1996:246, paragraph 48; Case T-229/94 Deutsche Bahn v Commission,
EU:T:1997:155, paragraph 130; Case T-271/03 Deutsche Telekom v Commission, EU:T:2008:101,
paragraph 295 upheld on appeal in Case C-280/08 P, EU:C:2010:603, paragraph 124; Case T-336/07
Telefónica SA v Commission, EU:T:2012:172, paragraph 319, upheld on appeal in Case C-295/12 P,
EU:C:2014:2062, paragraph 156; Case C-681/11 Schenker & Co. and Others, EU:C:2013:404,
paragraph 37; Case T-286/09 Intel Corp. v Commission, EU:T:2014:547, paragraph 1601; Case
T472/13 Lundbeck v Commission, EU:T:2016:449, paragraph 762.
1113
Case 322/81 NV Nederlandsche Banden Industrie Michelin v Commission, EU:C:1983:313, paragraph
107; Case T-336/07 Telefónica SA v Commission, EU:T:2012:172, paragraph 320; Case T-286/09 Intel
Corp. v Commission, EU:T:2014:547, paragraph 1601.
1114
Case C‑452/11 P Heineken Nederland and Heineken v Commission, EU:C:2012:829, paragraph 92;
Case C-39/18 P Icap, EU:C:2019:584, paragraph 25.
EN 231 EN
17.1.1. General methodology of the Guidelines on Fines
(895) Under the general methodology laid down in the Guidelines on Fines, the
Commission sets the fine to be imposed in a given case on the basis of four distinct
steps.
(896) First, the Commission defines the basic amount of the fine.
1115
That amount is to be
set by reference to the value of sales, namely the value of the undertaking’s sales of
goods or services to which the infringement directly or indirectly relates in the
relevant geographic area in the EEA.
1116
The value of sales will be assessed before
VAT and other taxes directly related to the sales.
1117
(897) The Commission will normally take into account the sales made by the undertaking
during the last full business year of the occurrence of the infringement.
1118
(898) The amount of the value of sales taken into account will correspond to a percentage
which is set at a level of up to 30 % of the value of sales.
1119
The choice of a given
percentage will depend on the degree of gravity of the infringement. In assessing the
gravity of the infringement, the Commission has regard to a number of factors, such
as the nature of the infringement, the market shares of the undertaking concerned, the
geographic scope of the infringement and whether or not the infringement has been
implemented.
1120
(899) The proportion of the value of sales resulting from that percentage will then be
multiplied by the duration of the infringement.
1121
(900) The Commission may also include in the basic amount an additional amount of up to
25 % of the value of sales, irrespective of the duration.
1122
(901) Second, where applicable, the Commission adjusts the basic amount upwards or
downwards to take into account aggravating or mitigating circumstances.
1123
Those
circumstances are listed non-exhaustively in points 28 and 29 of the Guidelines on
Fines.
(902) Third, the Commission will pay particular attention to the need to ensure that fines
have a sufficiently deterrent effect. To that end, the Commission may increase the
fine to be imposed on an undertaking which has a particularly large turnover beyond
the sales of goods or services to which the infringement relates.
1124
(903) Fourth, pursuant to Article 23(2) of Regulation (EC) No 1/2003, the fine for an
infringement must not exceed 10 % of the undertaking’s total turnover in the
preceding business year.
1115
Point 10 of the Guidelines on Fines.
1116
Point 13 of the Guidelines on Fines.
1117
Point 17 of the Guidelines on Fines.
1118
Point 13 of the Guidelines on Fines.
1119
Point 21 of the Guidelines on Fines.
1120
Point 22 of the Guidelines on Fines.
1121
Point 19 of the Guidelines on Fines.
1122
Point 25 of the Guidelines on Fines.
1123
Point 27 of the Guidelines on Fines.
1124
Point 30 of the Guidelines on Fines.
EN 232 EN
17.1.2. Point 37 of the Guidelines on Fines
(904) According to point 37 of the Guidelines on Fines, the Commission may depart from
the general methodology laid down in the Guidelines on Fines, if the particularities
of a given case or the need to achieve deterrence in a particular case justify such
departure.
(905) This is, in particular, the case where, following the general methodology of the
Guidelines on Fines, sufficient deterrence would not be achieved, as the resulting
fine would be particularly low, taking into account parameters such as the high total
turnover of the undertakings concerned.
(906) The Guidelines on Fines provide only limited guidance on the application of point
37. As a result, the fine to be imposed under point 37 of the Guidelines on Fines must
be determined in accordance with the requirements of Regulation (EC) No 1/2003
and the case law, which underlines that point 37 of the Guidelines on Fines is
intended to give the Commission some flexibility to ensure that the overall amount of
the fine is sufficiently high to be deterrent in the light of the particularities of the
case.
1125
(907) Article 23(3) of Regulation (EC) No 1/2003 provides that the Commission must take
into account the gravity and the duration of the infringement in setting the amount of
the fine. The gravity of the infringement has to be determined on the basis of
numerous factors, such as, in particular, the circumstances of the case, its context, the
size and economic strength of the undertaking
1126
and the dissuasive effects of the
fine; there is no binding or exhaustive list of criteria which must be applied.
1127
(908) According to the case law of the Union courts, when departing from the general
methodology set out in the Guidelines on Fines in accordance with point 37, the
Commission may impose a lump sum fine on the undertaking concerned.
1128
Point 37
of the Guidelines of Fines may be applied either on a stand-alone basis
1129
or in
combination with the general methodology set out in the Guidelines on Fines.
1130
1125
Case T‑240/17 Campine v Commission, EU:T:2019:778, paragraph 346.
1126
Case 322/81 Michelin v Commision, EU:C:1983:313, paragraph 111; Joined Cases T-305/94, T-306/94,
T-307/94, T-313/94, T-314/94, T-315/94, T-316/94, T-318/94, T-325/94, T-328/94, T-329/94 and T-
335/94 LVM and others v Commission, EU:T:1999:80 paragraph 1190, confirmed in Case C-238/99 P
Limburgse Vinyl Maatschappij and Others v Commission, EU:C:2002:582, paragraph 605.
1127
e.g., Case T‑679/14 Teva, EU:T:2018:919, paragraph 409; Case C-137/95 P SPO and others v
Commission, EU:C:1996:130, paragraph 54; Case C-219/95 P Ferriere Nord v Commission,
EU:C:1997:375, paragraph 33; Case 100/80 Musique Diffusion francaise v Commission,
EU:C:1983:158 paragraph 120; Case 322/81 Michelin v Commision, EU:C:1983:313, paragraph 111.
1128
Case C-39/18 P Icap, EU:C:2019:584, paragraph 27; Case C-194/14 P AC-Treuhand, EU:C:2015:717,
paragraph 67; Case T‑679/14 Teva, EU:T:2018:919, paragraph 401.
1129
Case T-180/15 Icap, EU:T:2017:795, paragraph 286 et seq.; Case C-39/18 P Icap, EU:C:2019:584,
paragraph 27; Case T-27/10 AC-Treuhand, EU:T:2014:59, paragraph 305; Case C-194/14 P AC-
Treuhand, EU:C:2015:717, paragraph 67.
1130
Case T‑240/17 Campine, EU:T:2019:778, paragraphs 333, 336 and 349.
EN 233 EN
17.2. Imposition of a fine
17.2.1. Intent and/or negligence
(909) The Commission concludes that, contrary to what Apple claims,
1131
Apple
committed the infringement described in this Decision intentionally or at least
negligently.
(910) First, as regards Apple’s claims regarding market definition, Apple ought to have
been familiar with the principles governing market definition in the context of
competition cases and, where necessary, ought to have solicited appropriate legal
advice regarding the definition of the market for the provision to developers of
platforms for the distribution of music streaming apps to iOS users in the EEA.
1132
In
this regard, Apple’s claim that the Commission should have rather defined a “market
for the sale and purchase of [Music Streaming Service] subscriptions on iOS” or
analysed the alleged competitive constraints it faces on that market or at the device
level
1133
is unfounded (see Section 8.1.4.1).
(911) Second, Apple could not have been unaware that the facts described in Section 6 and
7 could lead to the finding of an abuse of its dominant position on the market for the
provision to developers of platforms for the distribution of music streaming apps to
iOS users in the EEA.
(912) Indeed, the circumstances under which conduct by a dominant undertaking can be
considered to infringe Article 102(a) of the Treaty can, contrary to Apple’s claims,
clearly be understood from the case law (see Section 9.1.1).
(913) Moreover, even if Apple’s claim that certain features of its business model have not
been challenged by any jurisdiction
1134
or have not been examined in the past were
correct, this would not prevent the finding of intent and/or negligence on the part of
Apple in this case.
(914) Third, Apple’s reference to its acquisition of Beats does not alter the conclusions set
out above. Apple mentions that, in examining that acquisition, “the Commission
rejected the theory that Apple could use the App Store to foreclose competition in the
downstream [Music Streaming Service] market.”
1135
It suffices to state that the
present case concerns a very different theory of harm (based on an exploitative, not
exclusionary, abuse). The remainder of Apple’s arguments (“Spotify has continued to
grow” and “new entrants have emerged”
1136
) can be dismissed for the same reason,
i.e., that this Decision is not concerned with any exclusionary effect on competitors
in the music streaming service market.
1131
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 384.
1132
Case T-336/07 Telefónica SA v Commission, EU:T:2012:172, paragraph 323.
1133
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraphs 22-24.
1134
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 375: “To
date no jurisdiction has required Apple to facilitate alternative payment mechanisms for the App Store
without “any” payment to Apple”, and footnote 507: “No regulator has challenged Apple’s right to a
commission per se”.
1135
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 385.
1136
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 385.
EN 234 EN
17.2.2. Joint and several liability
(915) The Commission has concluded that Apple Inc. and Apple Distribution International
Limited are jointly and severally liable for the infringement as of 30 June 2015 (see
Section 13).
(916) The Commission therefore concludes that Apple Inc. and Apple Distribution
International Limited should be held jointly and severally liable to pay the fine.
17.3. Amount of the fine
(917) The Commission sets the fine in the present case on the basis of a combination of (i)
the general methodology of the Guidelines on Fines (see Section 17.1.1) as well as
(ii) point 37 of the Guidelines on Fines which allows for the imposition of an
additional lump sum (see Section 17.1.2).
(918) When setting the fine, the Commission ensured in accordance with Article 23(3) of
Regulation (EC) No 1/2003 that the amount of the overall fine imposed is
proportionate and reflects the gravity and duration of the infringement.
17.3.1. Application of the general methodology of the Guidelines on Fines
17.3.1.1. Determination of the basic amount of the fine
(919) The basic amount of the fine is to be determined on the basis of a proportion of the
value of sales, depending on the degree of gravity of the infringement, multiplied by
the number of years of infringement.
1137
17.3.1.1.1. Value of sales
(920) The Commission determines the value of sales based on the turnover generated by
Apple in the EEA from the App Store commission fees paid by the main music
streaming service providers to Apple in Apple’s FY 2023, which lasted from
25 September 2022 to 30 September 2023
1138
and which is Apple’s last full business
year of its participation in the infringement with regard to the EEA.
1139
(921) In Apple’s FY 2023, the commission fees generated by Apple from the main music
streaming service providers in the EEA amounted to […].
1140
(922) In addition, the Commission concludes that the value of sales should also include the
revenues generated by Apple from the App Store commission fees paid by the main
music streaming service providers to Apple in the UK in Apple’s FY 2020,
1141
as that
was the last full business year of Apple’s participation in the infringement
concerning the UK. In Apple’s FY 2020, which lasted from 29 September 2019 to
1137
Point 19 of the Guidelines on Fines.
1138
Apple’s Response to the Commission’s request for information of 1 December 2023, ID 3312,
paragraph 6.
1139
Paragraph 13 of the Guidelines on Fines. For the purposes of this Section, the last full business year of
the infringement with regard to the UK is calculated taking into account the period until and including
31 December 2020 pursuant to Article 92 of the Agreement on the withdrawal of the UK of Great
Britain and Northern Ireland from the European Union and the European Atomic Energy Community.
1140
Annex Q6 to Apple’s Response to the Commission’s request for information of 1 December 2023, ID
3310.
1141
The abuse involves the entire territory of the EEA which included the UK for the period until and
including 31 December 2020.
EN 235 EN
26 September 2020, the commission fees generated by Apple from music streaming
service providers in the UK amounted to […].
1142
(923) The App Store commission fees generated by Apple from music streaming service
providers are directly or indirectly related to the infringement consisting in the
imposition of the Anti-Steering Provisions on providers of music streaming services
in the EEA to the detriment of iOS users (see Section 9). While in Apple’s view no
fine should be imposed at all (see Section 17.3.2.3), Apple agrees that, if a fine were
to be imposed, the fine should be set on the basis of the App Store commission fees
which Apple generates from music streaming service providers.
1143
(924) In this regard, Apple’s clarification that these payments should be correctly qualified
as retained billings from the commission share of billings rather than “revenues”
because “billings do not account for accounting-related adjustments and have not
been verified by an authorised auditing firm or auditor”
1144
does not affect the
Commission’s conclusion that the infringement directly relates to those retained
billings from Apple’s commission share of billings.
17.3.1.1.2. Gravity
(925) The proportion of sales to be taken into account depends on the gravity of the
infringement, which in turn depends on a number of factors such as the nature of the
infringement, the geographic scope of the infringement and whether or not the
infringement has been implemented.
1145
(926) The Commission concludes that the proportion of the value of sales to be used to
establish the basic amount of the fine in this case should be 11 %. In reaching this
conclusion, the Commission takes into account the following factors under point 19
et seq. of the Guidelines on Fines.
(927) First, the Commission takes into account that the geographic scope of the relevant
market concerned by the infringement, namely the market for the provision to
developers of platforms for the distribution of music streaming apps to iOS users, is
EEA-wide, as described in Section 8.1.4.2. The infringement therefore covers the
entire territory of the EEA, as well as the territory of the UK until 31 December
2020.
(928) Second, Apple holds a monopoly in the market for the provision to developers of
platforms for the distribution of music streaming apps to iOS users, with a market
share of 100
%. In particular, Apple unilaterally defines the terms and conditions of
the Anti-Steering Provisions for the App Store and imposes them on app developers.
Therefore, music streaming service providers have no other choice than accepting
and abiding by Apple’s rules to be able to offer their apps in the App Store to iOS
users.
1142
Annex Q7 to Apple’s Response to the Commission’s request for information of 1 December 2023, ID
3309.
1143
“Apple’s EEA commission fee revenues from [Music Streaming Service] providers must thus constitute
the ceiling for the calculation of the value of sales”, see Apple’s Response to the Statement of
Objections of 28 February 2023, ID 2800, paragraphs 385-387. See also Apple’s Response to the Letter
of Facts, ID 3330, paragraph 24.
1144
See, e.g., Apple’s response to question 12 of the Commission’s request for information of 3 August
2023, ID 2987.
1145
Points 20 et seq. of the Guidelines on Fines.
EN 236 EN
(929) Apple states that the Commission’s considerations as to the “gravity” of the alleged
infringement were focused on alleged harm to developers and that it is unclear how
the Commission proposes to “adapt” that finding given its new focus on alleged
consumer harm.
1146
In addition, Apple submits that the Commission should also take
into account the minimal impact that IAP represents as a marginal customer
acquisition channel.
1147
In this regard the Commission notes the following.
(930) In the first place, the preliminary findings set out in the Statement of Objections of
28 February 2023 in respect of the gravity of Apple’s infringement related, among
other factors, to the harm caused by the infringement to both developers and
consumers. Since the harm caused to developers no longer forms part of the
assessment in this Decision, the Commission adapted its objections in a clear and
unambiguous manner and assesses the gravity of the infringement, as set out in the
present section, without taking into account the harm caused by the infringement to
developers.
(931) In the second place, the Commission notes that the importance of IAP as an
acquisition channel is not relevant for the purpose of determining the gravity of the
present infringement as the present infringement relates to Apple’s Anti-Steering
Provisions which apply to all apps on iOS, not only to apps that have enabled IAP,
and Apple holds a monopoly on iOS, as set out in recital (928). In addition, the
subscribers of the biggest music streaming service provider in the EEA, namely
Spotify, currently cannot subscribe through Apple’s IAP and have not been able to
do so since Spotify disabled IAP in May 2016.
(932) Third, the number of premium (i.e., paying) iOS subscribers of the main music
streaming service providers that have been charged high monthly subscription prices
is not insignificant. As indicated in recital (632)), as of July 2023 more than 1.4
million iOS subscribers in the EEA of the main music streaming services other than
Apple Music (i.e., Amazon, Napster, SoundCloud, YouTube Music, Tidal, Deezer,
Qobuz and Spotify legacy subscribers) paid the typical difference (for an individual
plan) of EUR 3 (or of EUR 2 at current prices) in monthly subscription fees
throughout the entire duration of their subscription (see recitals (418) and (649)),
which is recurrent and may add up to a significant amount over a longer subscription
period. Over the course of the first year of subscription, these iOS users would
typically pay an additional amount of EUR 36 (assuming a EUR 3 price increase),
and proportionately more over a longer subscription.
1148
(933) Fourth, Apple’s Anti-Steering Provisions have caused other harm for consumers in
terms of subscriptions terminated due to high prices, degraded customer experience
(see recitals (706)-(708), difficulties in switching (see recital (732)) and frustration
for not being able to find the music streaming service provider of first choice (see
Section 9.3.2.2). As set out in recitals (704) and (628), it is likely, by way of
approximation, that the Anti-Steering Provisions have caused direct monetary or
non-monetary harm to around 21 million iOS users which amounts to around 5 % of
the present population of the European Union.
1146
See Apple’s Response to the Letter of Facts, ID 3330, paragraphs 33, 314 and 314 as well as Apple’s
Response to the Statement of Objections of 28 February 2023, ID2800, paragraph 391.
1147
See Apple’s Response to the Letter of Facts, ID 3330, paragraph 314.
1148
E.g., the additional amount paid over a typical two-year subscription would amount to 3*24= EUR 72.
EN 237 EN
(934) Such a high number of directly harmed consumers is unprecedented in the history of
the enforcement of Article 102 of the Treaty.
(935) The Commission's conclusion that the proportion of the value of sales to be used to
establish the basic amount of the fine should be 11 % is not affected by Apple’
claims that “the notion of “affected” developers does not fit with the RSO’s
abandonment of the exclusionary abuse theory” or that Apple “earns very little from
the sale of music streaming subscription sold through IAP in the EEA”.
1149
(936) The fact that Apple allegedly earns “very little” from music streaming subscriptions
sold through IAP in the EEA (i.e., over […] in App Store commission fees paid by
the main music streaming service providers in Apple’s FY 2023, see recital (7)) does
not affect the Commission’s conclusion regarding the proportion of the value of sales
to be used to establish the basic amount of the fine as this percentage is to reflect the
degree of gravity of the infringement and not the profits made by the undertaking
infringing Article 102 of the Treaty.
(937) In any event, a gravity percentage of 11 % is considerably below the upper limit of
the scale referred to in paragraph 21 of the Guidelines on Fines which can go up to
30 %.
17.3.1.1.3. Duration
(938) As set out in Section 12, the infringement started on 30 June 2015 and is ongoing.
(939) For the part of the infringement taking place in the EEA, excluding the UK, the
Commission therefore uses the date of the adoption of this Decision as the end date
of the infringement for the purpose of calculating the fine. The Commission
concludes that the duration with regard to this part of the single and continuous
infringement is 3 171 days (or approx. 8.68 years).
(940) For the part of the infringement taking place in the UK, the Commission uses the
date of the end of the transition period following the UK’s withdrawal from the
European Union and thereby from the EEA, i.e., 31 December 2020, as the end date.
The Commission concludes that the duration with regard to this part of the single and
continuous infringement is 2 012 days (or approx. 5.50 years).
17.3.1.1.4. Additional amount
(941) The Commission concludes that the basic amount should not include an additional
sum of between 15 % and 25 % of the value of sales, irrespective of the duration of
the infringement, in order to deter undertakings from even entering into horizontal
price-fixing, market-sharing and output-limitation agreements.
1150
(942) In the present case, a sufficient level of deterrence is achieved by the additional lump
sum imposed on Apple as described in Section 17.3.2.
17.3.1.2. Conclusion on the basic amount
(943) The basic amount of the fine to be imposed on Apple for the single and continuous
infringement amounts to EUR 34 154 000.
1149
See Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 389-
390.
1150
Point 25 of the Guidelines on Fines.
EN 238 EN
17.3.1.3. Adjustments to the basic amount
17.3.1.3.1. Aggravating factors
17.3.1.3.1.1. Principles
(944) The basic amount may be increased where the Commission finds that there are
aggravating circumstances such as a refusal to cooperate with or an obstruction of the
Commission in carrying out its investigation.
1151
(945) Pursuant to Article 23(1)(a) of Regulation (EC) No 1/2003 the Commission may
impose fines on undertakings that supply incorrect or misleading information in
response to a request made pursuant to Article 18(2) of that regulation. The fact that
Regulation (EC) No 1/2003 allows the Commission to impose a fine of up of 1 % of
an undertaking’s turnover for obstruction or for the supply of incorrect or misleading
information in response to a request for information, as an autonomous infringement,
does not mean that the same conduct cannot be taken into account as an aggravating
circumstance.
1152
17.3.1.3.1.2. Application to this case
(946) In this case, the Commission concludes that there are aggravating circumstances that
should result in an increase in the basic amount of the fine, for the following reasons.
(947) In the course of the investigation, Apple submitted incorrect information in response
to a request for information dated 20 January 2022.
1153
The question concerned
[…]”.
1154
(948) In addition, the Commission requested Apple […].
1155
In response to these two
further questions, […].
1156
(949) Moreover, the Commission requested Apple to “[confidential quote]”.
1157
In its
response, Apple explained […]”.
1158
(950) Finally, the Commission requested Apple to provide.
1159
In its response, Apple
referred the Commission to the previous response i.e., […]”.
1160
(951) Following Apple’s response, the Commission carried out a further review of […] and
found that […]
1161
[…]
1162
[…]
1163
[…]
1164
1165
1151
Point 28 of the Guidelines on Fines.
1152
Case T‑384/06 IBP Ltd and International Building Products v Commission, EU:T:2011:113,
paragraph 109.
1153
Question 18(a) of the Commission’s request for information (2022/004722) to Apple, ID 2212.
1154
Apple’s response to question 18(a) of the Commission’s request for information (2022/004722), ID
2232.
1155
Namely, questions 18(b) and 18(c) of the Commission’s request for information (2022/004722) to
Apple, ID 2212.
1156
Apple’s responses to questions 18(b) and 18(c) of the Commission’s request for information
(2022/004722), ID 2232.
1157
Apple’s response to Question 18(d) of the Commission’s request for information (2022/004722), ID
2212.
1158
Apple’s response to question 18(d) of the Commission’s request for information (2022/004722), ID
2232.
1159
Apple’s response to Question 18(e) of the Commission’s request for information (2022/004722), ID
2212.
1160
Apple’s response to question 18(e), referring to Apple’s response to question 18(d) of the
Commission’s request for information (2022/004722), ID 2232.
EN 239 EN
17.3.1.3.1.3. Assessment of Apple’s arguments
(952) In its Response to the Statement of Objections of 28 February 2023, Apple claims
that its response was not misleading, nor “obstructive” as interpreted under the case
law, and that the present situation is different from previous cases where the
Commission found aggravating circumstances to be present.
(953) Apple claims that, in this case, the Commission was already in possession of certain
of the documents requested “for several years”; that it had provided them “willingly
and in full cooperation with the Commission”
1166
and that its responses in relation to
[…] were not incorrect as “[confidential quote]”.
1167
(954) In addition, according to Apple, the issue concerned by the request of information,
i.e., […], “related to a peripheral issue in the Commission’s investigation”,
1168
“in no
way relates to the scope of the infringement” and, in Apple’s view, the Commission
should have rather asked “[Music Streaming Service] providers for a breakdown of
their actual costs and their own […]
1169
instead of relying on […].
(955) Apple’ claims
1170
do not affect the Commission's conclusion that, in this case,
aggravating circumstances are present.
(956) First, Apple has not justified the submission of incorrect information in response to a
request for information of the Commission (see recital (947)). The information
requested was relevant for the Commission as it allowed it to calculate Apple’s […]
(see Section 9.3.2.1.4).
(957) In the first place, Apple’s statement mentioned in recital (948) according to which it
“[confidential quote]” amounts to incorrect information in response to a
Commission’s request for information because other […] clearly contradicts the
alleged ad hoc nature of […].
(958) In the second place, the use of […]
1171
[…]
1172
[…]. Apple therefore also submitted
incorrect information in response to a Commission’s request for information
pursuant to Article 18(2) of Regulation (EC) No 1/2003 with regard to […]).
(959) Second, as outlined in Section 9.3.2.1.4, the application of […] is relevant for the
investigation in so far as it confirms that music streaming service providers are
compelled to pass on the commission fee, to the detriment of iOS users.
(960) Finally, the submission to the Commission of incorrect information in response to a
request for information pursuant to Regulation (EC) No 1/2003 is one of the
numerous factors that the Commission can take into account as aggravating
circumstance when setting the fine, in respect of which the Commission has a wide
1161
[…]
1162
[…]
1163
[…]
1164
[…]
1165
[…]
1166
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 403.
1167
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 399.
1168
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 398.
1169
Apple’s Response to the Statement of Objections of 28 February 2023, ID 2800, paragraph 403.
1170
See Apple’s Response to the Letter of Facts, ID 3330, paragraph 331 and footnote 422.
1171
See footnotes 1164 and 1165.
1172
See footnotes 1164 and 1165.
EN 240 EN
discretion and which is consistent with the Commission’s task of ensuring
compliance with the competition rules.
1173
(961) In light of the above, the Commission concludes that the aforementioned
circumstances leading to the provision by Apple of incorrect information in response
to a request for information of the Commission as well as in response to follow up
questions by the Commission should be considered as aggravating circumstances.
(962) These aggravating circumstances justify an increase in the basic amount of the fine
of 20 %.
17.3.1.4. Mitigating factors
(963) The Commission concludes that there are no mitigating circumstances in this case.
17.3.1.5. Specific increase for deterrence
(964) In determining the amount of the fine, the Commission pays particular attention to
the need to ensure that fines are sufficiently deterrent. To that end, it may increase
the fine to be imposed on undertakings which have a particularly large turnover
beyond the sales of goods or services to which the infringement relates.
1174
(965) In the present case, in light of the reasons set out in Section 17.3.2, the Commission
decided to add to the adjusted basic amount an additional lump sum. In accordance
with point 37 of the Guidelines on Fines, this lump sum will ensure that the overall
fine imposed on Apple is sufficiently deterrent.
(966) The Commission therefore concludes that there is no need for a specific increase for
deterrence under point 30 of the Guidelines on Fines in addition to the imposition of
such lump sum.
17.3.1.6. Conclusion on the application of the general methodology
(967) In light of the above, the Commission concludes that the fine to be imposed on Apple
on the basis of the application of the general methodology should amount to
EUR 40 984 000.
17.3.2. Application of Point 37 of the Guidelines on Fines
17.3.2.1. The particularities of the present case and the need to achieve deterrence justify a
departure from the general methodology set out in the Guidelines on Fines.
(968) The Commission considers that both the particularities of the present case as well as
the need to achieve deterrence justify a departure from the general methodology for
determining the amount of the fine,
1175
in accordance with point 37 of the Guidelines
on Fines.
1176
(969) First, with regard to the particularities of the present case as described in Sections
9.3.2.1 and 9.3.2.2, a significant part of the harm caused by the infringement consists
of non-monetary harm, in particular in the form of degraded user experiences and
frustration of iOS users.
1173
Case T‑384/06 IBP Ltd and International Building Products v Commission, EU:T:2011:113,
paragraphs 112 et seq.
1174
Point 30 of the Guidelines on Fines.
1175
See Sections 17.1.1 and 17.3.1.
1176
See Section 17.1.2.
EN 241 EN
(970) As set out in Table 12, for example, more than […] Spotify users had to go through
an inferior user experience outside the Spotify app to subscribe to Spotify’s premium
music service. Furthermore, almost […] Spotify users were unable to find out where
and how to purchase their preferred music streaming subscription outside the iOS
app and, as a result, ended up either not subscribing to their preferred music
streaming service or not subscribing at all.
(971) Apple’s relevant value of sales, namely the turnover generated by Apple in the EEA
from the App Store commission fees paid by the main music streaming service
providers to Apple in Apple’s FY 2023 and in the UK in Apple’s FY 2020 (see
Section 17.3.1) only relates to the monetary harm caused by the infringement, as
those fees were passed-on to consumers through higher prices (see Section 9.3.2.1).
Moreover, the subscribers of the largest music streaming service provider in the
EEA, namely Spotify, currently do not subscribe through Apple’s IAP and have not
been able to do so since Spotify disabled IAP in May 2016. The non-monetary harm
accrued by these users is not properly reflected in the general methodology under the
Guidelines on Fines.
(972) Therefore, the general methodology under the Guidelines on Fines does not properly
take into account the non-monetary harm caused by the infringement. Accordingly,
calculating the fine on the basis of Apple’s value of sales in terms of App Store
commission fees does not sufficiently reflect all the harm caused by the
infringement.
(973) Second, with regard to the need to achieve deterrence, the fine imposed by the
Commission must be sufficient (i) to deter Apple from repeating the present or a
similar infringement and (ii) to deter other undertakings of a similar size and with
similar resources from committing the same or a similar infringement.
1177
(974) In this regard, it should be considered that Apple has a particularly large economic
size and strength. Apple’s total worldwide turnover in FY 2023 amounted to EUR
[…].
1178
Apple had an estimated market capitalisation of USD 3 000 000 000 000 in
June 2023,
1179
making it the largest company in the world in terms of market
capitalisation in 2023.
1180
(975) As set out in Section 17.3.1, the fine to be imposed under the standard methodology
amounts to EUR 40 984 000. This represents approximately a mere 0.01 % of
Apple’s worldwide turnover in its FY 2023. Consequently, this fine would not have a
sufficient deterrent effect.
(976) In light of the above, the Commission concludes that the particularities of the present
case as well as the the need to achieve deterrence justify departing from the general
methodology set out in the Guidelines on Fines.
(977) In accordance with the principles set out in Section 17.1.2, the Commission decided
to increase the fine to be imposed on Apple under the general methodology by an
additional lump sum.
1177
Case C-408/12 P YKK v Commission, EU:C:2014:2153, paragraph 93.
1178
Apple’s Response to the Commission’s request for information of 1 December 2023, ID 3312,
paragraph 5.
1179
See https://www.forbes.com/sites/dereksaul/2023/06/30/apple-hits-3-trillion-market-value-and-could-
soar-another-800-billion/?sh=a968d7952b17, accessed on 10 October 2023, ID 3119.
1180
Microsoft briefly surpassed Apple’s market capitalisation in January 2024.
EN 242 EN
17.3.2.2. Determination of the additional lump sum
(978) When determining the amount of the lump sum to be imposed in the present case, the
Commission has taken into account the nature, gravity and duration of the
infringement as well as the need to achieve sufficient deterrence.
1181
(979) In addition, the Commission has taken into account that the overall fine to be
imposed must be proportionate to the infringement as well as to the size and
economic strength of the undertaking concerned.
(980) More specifically, in the present case, the Commission has taken into account the
following aspects.
(981) First, the Commission has taken into account the long duration of the infringement
which has started in 2015 and continues at the date of the adoption of this Decision,
as set out in Sections 12 and 17.3.1.1.3.
(982) Second, as set out in Section 17.3.1.1.2, the Commission considers that Apple’s
conduct amounts to an infringement of a high gravity. Notably, that conduct has
directly harmed a very large number of iOS users of music streaming apps, namely
around 5 % of the population of the European Union, which is unprecedented.
(983) Third, as set out in recital (796), Apple’s App Store has a […] operating margin of
[…] % in FY […] and of […] % FY […]. This shows the […] financial benefits that
Apple draws from the operation of the App Store.
(984) The Commission observes that the Union courts in the past explicitly confirmed that
the Commission has the power to impose a lump sum under point 37 of the
Guidelines on Fines of just below 10 % of the total worldwide turnover of the
undertaking concerned.
1182
(985) The Commission considers that, in order to reflect the nature, gravity and duration of
the infringement and be sufficiently deterrent, taking into account Apple’s size and
economic strength, the lump sum by which the adjusted basic amount as determined
in Section 17.3.1 is to be increased in accordance with point 37 of the Guidelines on
Fines should amount to EUR 1 800 000 000 which represents around 0.5 % of
Apple’s worldwide turnover in FY 2023.
(986) The Commission notes that the overall fine imposed in the present case (adding the
above lump sum to the basic amount as determined in Section 17.3.1) is lower than
the fine that would have been imposed by the Commission under the general
methodology of the Guidelines on Fines as described in Section 17.1.1, had the
Commission also taken into account the turnover of Apple Music for the purposes of
determining the value of sales, as envisaged in the Statement of Objections of
28 February 2023.
1181
Section 17.1.2.
1182
Case COMP/38589 – Heat Stabilisers, paragraphs 744 et seq., Article 2(17) and (38), confirmed in
Case T‑27/10 AC-Treuhand AG, EU:T:2014:59, paragraphs 222, 263 and Case C-194/14 P AC-
Treuhand, EU:C:2015:717. In that case, the Court of Justice also confirmed that the Commission was
entitled to impose two lump sum fines under point 37 of the Guidelines on Fines for two parallel
infringements, which together amounted to more than 10 % of AC-Treuhand AG’s worldwide turnover
in the year preceding the adoption of the decision in Case COMP/38589 – Heat Stabilisers, paragraph
753.
EN 243 EN
(987) The Commission also notes that this overall fine is lower, in proportion, compared to
fines imposed in previous antitrust decisions adopted by the Commission against
other large technology companies.
1183
(988) In those previous decisions, the overall fine imposed consistently amounted to up to
several percentage points of the respective undertaking’s total worldwide turnover in
the financial year preceding the adoption of the Commission’s decision.
1184
(989) Therefore, the Commission considers that the overall fine imposed in the present
case is proportionate, considering the nature, duration and gravity of the
infringement, and sufficiently deterrent.
17.3.2.3. Assessment of Apple’s arguments
(990) Apple submits that “[t]here is no justification for imposing an additional lump sum
unrelated to the gravity and duration of the alleged infringement.”
1185
(991) First, Apple argues that none of the factors brought forward by the Commission in
the Letter of Facts to justify the application of point 37 of the Guidelines on Fines
came to light between the Statement of Objections of 28 February 2023 and the
Letter of Facts and thus justify the alleged departure from the Statement of
Objections of 28 February 2023 and the imposition of a lump sum.
1186
(992) Second, Apple submits that point 37 of the Guidelines on Fines can only be relied on
by the Commission in exceptional circumstances in light of the particularities of the
specific case.
1187
Moreover, the Commission should take into consideration that the
present Decision narrows the scope of the infringement in comparison to the
Statement of Objections of 28 February 2023, which should lead to a reduction of the
gravity of the infringement and be reflected in the calculation of the fine.
1188
(993) Third, Apple takes the view “that the [Statement of Objections of 28 February 2023]
had already addressed the specifics of Apple’s conduct, including in relation to
alleged non-monetary harm to consumers”
1189
and that any non-monetary harm
would be the consequence of Spotify’s strategic business decision to disable IAP, not
of Apple’s conduct.
1190
In any event, the Commission should consider the use of
proxies in order to reflect non-monetary harm in the fines calculation, such as a
portion of the alleged monetary harm to consumers that do use IAP and therefore pay
1183
See e.g., Case AT.40099 – Google Android, paragraphs 1480 et seq.; Case AT.39740 – Google Search
(Shopping), paragraphs 754 et seq.; Case AT.40411 Google Search (AdSense), paragraphs 751 et seq.
1184
In Case AT.40099 – Google Android, the Commission imposed a fine of EUR 4 300 000 000
amounting to 4.43 % of Google’s worldwide turnover in the financial year preceding the adoption of the
decision. In Case AT.39740 – Google Search (Shopping), the Commission imposed a fine of
EUR 2 400 000 000 on Google amounting to 2.97% of Google’s worldwide turnover in the financial
year preceding the adoption of the decision. In Case AT.40411 – Google Search (AdSense), the
Commission imposed a fine of EUR 1 490 000 000 representing 1.29% of Google’s worldwide turnover
in the financial year preceding the adoption of the decision. In Case AT.40220 – Qualcomm (exclusivity
payments), annulled by the General Court for other reasons in Case T-235/18 Qualcomm Inc.,
EU:T:2022:358, the Commission imposed a fine of EUR 997 000 000 which represented 4.94% of
Qualcomm’s worldwide turnover in the financial year preceding the adoption of the decision.
1185
Apple’s Response to the Letter of Facts, ID 3330, Section I.
1186
Apple’s Response to the Letter of Facts, ID 3330, paragraph 307.
1187
Apple’s Response to the Letter of Facts, ID 3330, paragraphs 308-313.
1188
Apple’s Response to the Letter of Facts, ID 3330, paragraph 314.
1189
Apple’s Response to the Letter of Facts, ID 3330, paragraph 316.
1190
Apple’s Response to the Letter of Facts, ID 3330, paragraph 317.
EN 244 EN
higher subscription prices set by music streaming service providers. There would be
no basis to assume that the per-consumer non-monetary harm could exceed the per-
consumer monetary harm.
1191
(994) Fourth, Apple contends that, contrary to the Commission’s observation at paragraph
81 of the Letter of Facts, no considerable number of iOS subscribers of music
streaming services suffered monetary harm and that any alleged monetary harm is
already fully reflected under the standard methodology in the context of which the
Commission relies on Apple’s IAP commission billings for the calculation of the
value of sales.
1192
(995) Fifth, Apple submits that according to Musique diffusion francaise,
1193
deterrence
considerations cannot result in the Commission disproportionately taking into
account the global turnover of the undertakings in question
1194
and that according to
Steel Abrasives,
1195
general deterrence considerations cannot justify the imposition of
a lump sum completely unconnected from the gravity and duration.
1196
In any event,
specific deterrence towards Apple cannot justify the imposition of a lump sum.
1197
(996) Sixth, Apple argues that the lump sum contemplated by the Letter of Facts is
disproportionate. In particular, an overall fine of up to several percentage points of
Apple’s worldwide turnover as referred to in the Letter of Facts would be
disconnected from the gravity and duration of the alleged infringement and would
dwarf the part of the fine that is based on Apple’s value of sales. According to Apple,
any hypothetical fine could not exceed around EUR 50 000 000.
1198
(997) In addition, Apple submits that the contemplated lump sum would likely represent a
multiple of the fine that the Commission could have calculated under the approach
set out in the Statement of Objections of 28 February 2023 which included Apple
Music’s revenues. Apple would be punished for having exercised its rights of
defense with regard to the theory of harm as set out in the Statement of Objections of
28 February 2023 which, according to Apple, had resulted in the Commission
reducing the scope of its case.
(998) Seventh, Apple states that the departure from the Commission’s own Guidelines on
Fines would be unprecedented and contrary to the general EU law principle of
legitimate expectations.
1199
In past cases, the Commission has applied point 37 of the
Guidelines on Fines only either to reduce the fine for in cases in which “it would
either not have been possible or inappropriate, given the objective of the
infringement, to apply the standard fining methodology” because there was no
reasonable value of sales, such as in cases in which the undertaking concerned either
was not active in the relevant market or in which the agreement served to limit the
value of sales.
1200
1191
Apple’s Response to the Letter of Facts, ID 3330, paragraph 319.
1192
Apple’s Response to the Letter of Facts, ID 3330, paragraphs 320-324.
1193
Joined Cases 100 to 103/80 Musique Diffusion française, EU:C:1983:158, paragraph 121.
1194
Apple’s Response to the Letter of Facts, ID 3330, paragraph 325.
1195
Case AT.39792 – Steel Abrasives, paragraph 221.
1196
Apple’s Response to the Letter of Facts, ID 3330, paragraph 328.
1197
Apple’s Response to the Letter of Facts, ID 3330, paragraph 329.
1198
Apple’s Response to the Letter of Facts, ID 3330, paragraph 331.
1199
Apple’s Response to the Letter of Facts, ID 3330, paragraph 333.
1200
Apple’s Response to the Letter of Facts, ID 3330, paragraph 337.
EN 245 EN
(999) Furthermore, Apple maintains that point 37 of the Guidelines on Fines can only be
adopted “instead” of the general methodology set out in the Guidelines on Fines, not
in addition to it.
(1000) Apple’s views have to be rejected.
(1001) First, with regard to Apple’s argument that the application of point 37 of the
Guidelines on Fines must be justified as set out in Section 17.3.2.1, both the specific
particularities of the present case as well as the need to achieve deterrence justify a
departure from the general methodology for determining the amount of the fine, in
accordance with point 37 of the Guidelines on Fines. The imposition of a fine based
on the general methodology would neither accurately reflect the nature of the
infringement, which affected an unprecedented number of users, in particular in the
form of non-monetary harm. Such non-monetary harm is not sufficiently reflected
under the general methodology set out in the Guidelines on Fines.
(1002) Moreover, the imposition of a fine under the general methodology would not be even
close to sufficient to achieve deterrence in the present case. In this context, the fine
of EUR 40 984 000 under the general methodology would represent approximately a
mere 0.01 % of Apple’s worldwide turnover in FY 2023. Such a fine would not be
deterrent, neither in respect of Apple nor in respect of any other undertaking in a
similar position.
(1003) In addition, the application of point 37 of the Guidelines on Fines as communicated
to Apple by the Commission in the Letter of Fact does not require a change of facts
between the issuance of the Statement of Objections of 28 February 2023 and the
sending of the Letter of Facts. As set out in Section 5.1, the Commission was entitled
by means of the Letter of Facts to specify vis-à-vis Apple its intention to make use of
point 37 of the Guidelines on Fines.
(1004) Second, with regard to Apple’s argument that point 37 of the Guidelines on Fines can
only be applied in exceptional circumstances in light of the particularities of the
specific case
1201
and that the Commission should take into consideration that the
present Decision narrowed the scope of the infringement in comparison to the
Statement of Objections of 28 February 2023,
1202
the Commission notes the
following.
(1005) In the first place, as set out in Section 17.3.2.1 as well as in recitals (1001) to (1003),
the application of point 37 of the Guidelines can be justified either by the
particularities of the case or by the need to achieve deterrence. Both alternative
criteria are met in the present case.
(1006) In the second place, Apple is correct in pointing out that the Commission must take
into account that, as set out in the Letter of Facts, the present Decision does no
longer, compared to the Statement of Objections of 28 February 2023, find that the
Anti-Steering Provisions also constitute unfair trading conditions vis-à-vis
developers of music streaming apps within the meaning of Article 102(a) of the
Treaty. As set out in Section 17.3.2.2, the Commission took this fact into account
when determining the amount of the lump sum and ensured that the overall fine
imposed is lower than the fine that would have been imposed by the Commission
under the general methodology of the Guidelines on Fines as described in Section
1201
Apple’s Response to the Letter of Facts, ID 3330, paragraphs 308-313.
1202
Apple’s Response to the Letter of Facts, ID 3330, paragraph 314.
EN 246 EN
17.1.1, had the Commission also taken into account the turnover of Apple Music for
the value of sales, as envisaged in the Statement of Objections of 28 February 2023.
(1007) Third, regarding Apple’s argument that the Statement of Objections of 28 February
2023 had already accounted for the non-monetary harm caused by Apple to
consumers,
1203
that any non-monetary harm would be the consequence of Spotify’s
strategic business decision to disable IAP,
1204
that the Commission should consider
the use of proxies to calculate non-monetary harm such as a portion of the alleged
monetary harm to consumers that do use IAP and that the per-consumer non-
monetary harm could not exceed the per-consumer monetary harm,
1205
the
Commission notes the following.
(1008) In the first place, the methodology for setting the fines as described in the Statement
of Objections of 28 February 2023 was based on a different value of sales taking into
account Apple Music revenues which generally reflected detriment to developers and
consumers but which the Commission decided to drop in the Letter of Facts. The
non-monetary harm caused solely to consumers by the infringement cannot be
properly reflected in the value of sales based on App Store commission fees under
the general methodology of the Guidelines on Fines.
(1009) In the second place, as set out in recital (508), the disabling of IAP by Spotify was a
reaction to Apple’s Anti-Steering Provisions and therefore a consequence of the
infringement.
(1010) In the third place, the Commission chose not to use point 37 of the Guidelines on
Fines to modify the value of sales, e.g. through adding a portion of the alleged
monetary harm to consumers that do use IAP, in order to account for non-monetary
harm. The use of such proxies, which has been duly considered by the Commission,
would encounter a number of difficulties and be likely not to sufficiently capture the
nature and gravity of the infringement, in particular as the setting of the relevant
proxies would have no clear basis and would need to rely on unsubstantiated
assumptions. Rather, as set out in detail in Section 17.3.2.2, the Commission relied
on a number of factors that, taken together, justify the determination of the lump
sum, in line with point 37 of the Guidelines on Fines, the case law of the Union
courts and Article 23(3) of Regulation (EC) No. 1/2003.
(1011) In the fourth place, it is an unsubstantiated assertion by Apple that the monetary
harm caused by the infringement must be higher than the non-monetary harm caused
by it. In any event, the Commission notes that non-monetary harm is a subjective
notion involving aspects such as time waste, inconvenience, frustration or other
forms of inferior usage experiences the impact of which may differ among users.
There is no indication that such harm cannot exceed the monetary harm caused by
the infringement, in particular in light of the fact that the non-monetary harm
affected around 19 million iOS users, as set out in recital (704). Furthermore,
contrary to Apple’s claim, non-monetary harm does not only arise at the subscription
stage but throughout the entire subscription period, for instance in the form of
continued misinformation about alternative subscription plans.
1203
Apple’s Response to the Letter of Facts, ID 3330, paragraph 316.
1204
Apple’s Response to the Letter of Facts, ID 3330, paragraph 317.
1205
Apple’s Response to the Letter of Facts, ID 3330, paragraph 318.
EN 247 EN
(1012) Fourth, with regard to Apple’s argument that no considerable number of iOS
subscribers of music streaming services suffered monetary harm and that any alleged
monetary harm is already fully reflected under the standard methodology,
1206
the
Commission notes the following.
(1013) In the first place, as set out in Section 17.3.2.1, the imposition of a lump sum is
justified by two aspects, namely that the calculation of the fine based on the general
methodology set out in the Guidelines on Fines would (i) neither accurately reflect
the nature of the infringement which affected an unprecedented number of users, in
particular in the form of non-monetary harm, (ii) nor would it achieve a sufficiently
deterrent effect. Therefore, the fact that the infringement also caused monetary harm
to iOS users is not a reason in itself for the Commission’s decision to impose a lump
sum in the present case.
(1014) In the second place, the Commission observes that, by abstaining from applying (i)
an additional amount pursuant to point 25 of the Guidelines on Fines (see recital
(940)) as well as (ii) a deterrence multiplier (Section 17.3.1.5), the Commission
ensured that deterrence is achieved exclusively by the lump sum and not also under
the general methodology, thereby avoiding double-counting.
(1015) In the third place, the need to achieve deterrence under point 37 of the Guidelines on
Fines relates not only to the non-monetary harm but also to the monetary harm
caused to iOS users by the infringement. As set out in recital (632), the Commission
has calculated that, as of July 2023, more than 1.4 million iOS subscribers in the
EEA of the main music streaming services other than Apple Music have been
charged monthly subscription prices exceeding those of their chosen music streaming
service provider outside the iOS app (for an individual plan). As music streaming
service providers are compelled to pass-on the commission fee to iOS users, the
Anti-Steering Provisions cause monetary harm to a considerable number of iOS
users, contrary to Apple’s view.
(1016) Sixth, with respect to Apple’s argument that an overall fine of up to several
percentage points of Apple’s worldwide turnover would be disproportionate, dwarf
the part of the fine that is based on Apple’s value of sales and punish Apple for
having exercised its rights of defence with regard to the theory of harm as set out in
the Statement of Objections of 28 February 2023,
1207
the Commission notes the
following.
(1017) In the first place, as explained in Section 17.3.2.2, the Commission determined the
lump sum amount of the fine in accordance with the criteria set out in Article 23(3)
of Regulation (EC) No. 1/2003, namely the gravity and duration of the infringement,
considering also the need to achieve deterrence in accordance with point 37 of the
Guidelines on Fines, in line with the case law of the Union courts. On this basis, the
Commission arrived at the lump sum stated in recital (1026).
(1018) The Commission established the gravity of the infringement on the basis of a number
of factors (see Section 17.3.1.1.2), and took into account Apple’s total worldwide
turnover in FY 2023 in order to ensure that the fine is (i) sufficiently deterrent as
well as (ii) proportionate, both with regard to Apple as well as when compared to
1206
Apple’s Response to the Letter of Facts, ID 3330, paragraphs 320-324.
1207
Apple’s Response to the Letter of Facts, ID 3330, paragraph 331.
EN 248 EN
other fines decisions adopted by the Commission under Article 102 of the Treaty
against large technology companies.
(1019) In the second place, the fact that the lump sum represents a considerably higher
proportion of the overall fine than the amount determined under the general
methodology of the Guidelines on Fines is owed to the particularities of the case. As
described in recital (508), given that the largest provider of music stream services,
(Spotify) has disabled IAP, the number of iOS users that have suffered non-monetary
harm is considerably higher (more than 19 million (15.6 + 3.9) users, if considering
Spotify alone; see recital (704) ) than the number of iOS users that have suffered
monetary harm (approx. 1.4 million, see recital (632)). This, as well as the fact that
the Commission decided to achieve deterrence through the lump sum under point 37
of the Guidelines on Fines and not by way of an additional amount or a deterrence
multiplier (Sections 17.3.1.1.4 and 17.3.1.5), explains why the lump sum represents a
considerably higher proportion of the overall fine than the amount determined under
the general methodology of the Guidelines on Fines.
(1020) In the third place, as explained in Section 17.3.2.2, the Commission ensured that the
amount of the lump sum imposed in accordance with point 37 of the Guidelines on
Fines reflected the Commission’s finding that the Anti-Steering Provisions are
detrimental to the interests of iOS music streaming users (consumers) and the fact
that the Commission did not find in the present Decision that the Anti-Steering
Provisions were also abusive to the detriment to the interests of developers of music
streaming apps.
(1021) Seventh, with regard to Apple’s argument that the fine imposed would be
unprecedented, contrary to the general EU law principle of legitimate expectations
and that point 37 of the Guidelines on Fines can only be adopted “instead” of the
general methodology,
1208
the Commission notes the following.
(1022) In the first place, the case law relied on by Apple with regard to the principle of
legitimate expectations in the context of the Guidelines on Fines
1209
does not relate to
point 37 of the Guidelines on Fines but to the questions whether the Commission was
entitled (i) to increase the fine despite the short duration of the infringement
1210
or
(ii) in breach of the principle of non-retroactivity.
1211
(1023) Rather, the Court of Justice has specifically addressed the issue whether the
Commission can depart from the Guidelines on Fines under point 37 in Icap. It stated
that the Commission has “adopted, in the interests of transparency, the 2006
Guidelines, in which it indicates the basis on which it will take account of one or
other aspect of the infringement and what this will imply as regards the amount of
the fine”.
1212
The Court also found that “[h]owever, that method may sometimes
prove unsuited to the particular circumstances of a case” and that in such situations
“the Commission was justified in using a calculation method other than that
described in the 2006 Guidelines and, in accordance with paragraph 37 of those
1208
Apple’s Response to the Letter of Facts, ID 3330, paragraphs 333-337.
1209
Case C-70/12 P Quinn Barlo v Commission, EU:C:2013:351, paragraph 53; Case C-189/02 P Dansk
Rorindustri v Commission, EU:C:2005:408, paragraph 211.
1210
See Case C-70/12 P Quinn Barlo v Commission, EU:C:2013:351, paragraph 44.
1211
Case C-189/02 P Dansk Rorindustri v Commission, EU:C:2005:408, paragraph 198.
1212
Case C-39/18 P Icap, EU:C:2019:584, paragraph 25
EN 249 EN
Guidelines, in setting a lump sum basic amount of the fine imposed on the
undertaking.”
1213
(1024) In the second place, the Union Courts have repeatedly held that point 37 of the
Guidelines on Fines not only allows for the imposition of a lump sum but that it can
be applied both on a stand-alone basis
1214
as well as in combination with the general
methodology set out in the Guidelines on Fines.
1215
This interpretation is in line with
the “broad discretion as regards the calculation of fines in relation to infringement
of the EU competition rules”.
1216
In addition, it is also in line with the wording of
point 37 of the Guidelines on Fines which allows the Commission to depart from the
general methodology of the Guidelines on Fines (“departing from such
methodology”) and to impose a lump sum, without limiting the Commission’s
discretion to depart from the general methodology and to impose a lump sum to
cases where the general methodology is not applied as a starting point.
17.3.3. Application of Article 23(2) of Regulation (EC) No 1/2003
(1025) Pursuant to Article 23(2) of Regulation (EC) No 1/2003, the fine for an infringement
must not exceed 10 % of the undertaking’s total turnover in the preceding business
year.
17.3.4. Conclusion: final amount of the fine
(1026) The Commission concludes that the final amount of the fine to be imposed on Apple
amounts to EUR 1 840 984 000. This amount consists of EUR 40 984 000,
determined on the basis of the general methodology set out in the Guidelines on
Fines, as well as an additional lump sum of EUR 1 800 000 000 in accordance with
point 37 of the Guidelines on Fines.
(1027) Apple’s total worldwide turnover in FY 2023 was EUR 359 674 644 000. As the
final amount of the fine set is below 10 % of that figure, no adaptation pursuant to
Article 23(2) of Regulation (EC) No 1/2003 is necessary.
18. C
ONCLUSION
(1028) In light of the considerations set out in this Decision, the Commission:
(1) finds that Apple committed a single and continuous infringement of Article
102 of the Treaty and Article 54 of the EEA Agreement since 30 June 2015,
resulting in the imposition by Apple, through the Anti-Steering Provisions, of
unfair trading conditions within the meaning of Article 102(a) of the Treaty
upon music streaming service providers which are detrimental to the interests
of iOS users;
(2) requires Apple to bring the identified infringement of Article 102 of the Treaty
to an end without undue delay, and refrain from repeating the infringement,
and from any act or conduct having the same or equivalent object or effect as
that infringement.
1213
Case C-39/18 P Icap, EU:C:2019:584, paragraph 27.
1214
Case T-180/15 Icap, EU:T:2017:795, paragraphs 286 et seq.; Case C-39/18 P Icap, EU:C:2019:584,
paragraph 27; Case T-27/10 AC-Treuhand, EU:T:2014:59, paragraph 305; Case C-194/14 P AC-
Treuhand, EU:C:2015:717, paragraph 67.
1215
Case T‑240/17 Campine, EU:T:2019:778, paragraphs 333, 336 and 349.
1216
Case C-39/18 P Icap, EU:C:2019:584, paragraph 25.
EN 250 EN
HAS ADOPTED THIS DECISION:
Article 1
Apple Inc. and Apple Distribution International Limited have committed a single and
continuous infringement of Article 102 of the Treaty and Article 54 of the EEA Agreement by
imposing the Anti-Steering Provisions on music streaming service providers to the detriment of
consumers. The single and continuous infringement has been taking place since 30 June 2015
and is continuing at the date of adoption of this Decision.
Article 2
For the single and continuous infringement referred to in Article 1, a fine of EUR 1 840 984 000
is imposed on Apple Inc, jointly and severally with Apple Distribution International Limited.
The fine shall be credited, in euros, within three months of the date of notification of this
Decision, to the following bank account held in the name of the European Commission:
BANQUE CENTRALE DU LUXEMBOURG
2, Boulevard Royal
L-2983 Luxembourg
IBAN: LU27 9990 0001 1400 100E
BIC: BCLXLULL
Ref.: EC/BUFI/AT.40437
After the expiry of that period, interest shall automatically be payable at the interest rate applied
by the European Central Bank to its main refinancing operations on the first day of the month in
which this Decision is adopted, plus 3.5 percentage points.
Where the undertaking referred to in Article 1 lodges an application for annulment, that
undertaking shall cover the fine by the due date, either by providing an acceptable financial
guarantee or by making a provisional payment of the fine in accordance with Article 108 of
Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council.
1217
Article 3
Apple Inc. and Apple Distribution International Limited shall bring to an end the infringement
referred to in Article 1 without undue delay.
Apple Inc. and Apple Distribution International Limited shall refrain from repeating the
infringement described in Article 1, and from any act or conduct having the same or equivalent
object or effect as that infringement.
Article 4
If the addressees of this Decision fail to comply with the order set out in Article 3, they shall
incur a daily periodic penalty payment of 5 % of the average daily turnover of the undertaking
to which they belong in the business year preceding such a failure to comply.
1217
Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the
financial rues applicable to the general budget of the European Union (OJ L 193, 30.7.2018, p. 80).
EN 251 EN
Article 5
This Decision is addressed to Apple Inc., One Apple Park Way, Cupertino, CA 95014, United
States of America and to Apple Distribution International Limited, Hollyhill Industrial Estate,
T23 YK84 Hollyhill, Cork, Ireland.
This Decision shall be enforceable pursuant to Article 299 of the Treaty and Article 110 of the
EEA Agreement.
Done at Brussels, 4.3.2024
For the Commission
(Signed)
Margrethe Vestager
Executive Vice-President
