Apple receives €1.8 billion fine for abusive anti-steering provisions

Compass Lexecon advised music streaming service, Spotify, in the complaint that initiated the European Commission investigation into Apple’s App Store anti-steering practices related to music streaming. The European Commission imposed a fine of over €1.8 billion on Apple for abusing its dominant position on the market for the distribution of music streaming apps to iPhone and iPad users through its App Store.

Situation

Apple’s iOS platform and App Store form a closed ecosystem to which Spotify and other app developers need access to distribute their apps. Apple is both the owner of the App Store, as well as a distributor of its own apps, such as the music streaming app ‘Apple Music’. For rivals, Apple charges high commission fees for transactions in the App Store and forbids them from informing their customers of alternative purchasing options (anti-steering provisions). Spotify asked for a level playing field such that all players can operate in an ecosystem in which fair competition is encouraged and guaranteed. They reached out to Compass Lexecon to provide economic evidence on the logic and effects of Apple’s conduct.

Our role

On March 2019, Spotify filed a complaint before the European Commission against Apple, claiming that Apple’s conduct infringed competition law by disadvantaging competitors. A Compass Lexecon report has been submitted to support this claim. In our economic report, we define the relevant market in which to assess the anti-competitive effects, focusing on Apple’s ecosystem and its gatekeeper role. We also showed evidence of the effects on competition resulting from Apple’s anti-steering practices. Based on Spotify’s complaint, the European Commission decided to formally launch an investigation in June 2020. In response to submissions by Apple, we then carried out cutting-edge economic and econometric research that demonstrated how Apple had an incentive to engage in exploitative anti-steering practices as regards music streaming apps and that such practices had harmed app developers, such as Spotify, as well as their customers.

Outcome

After several years of investigation, including two Statement of Objections in April 2021 and February 2023, the European Commission has now imposed a fine of over €1.8 billion on Apple for abusing its dominant position on the market for the distribution of music streaming apps to iPhone and iPad users through its App Store. This abuse focuses on Apple’s anti-steering provisions infringing Article 102 TFEU.

The team

The Compass Lexecon team was led by Jorge Padilla, Ian Small and John Davies (prior to joining the Competition Appeal Tribunal in 2023), and included Joe Perkins, Patricia Lorenzo, Salvatore Piccolo, Kadambari Prasad, Francisco Franchetti, Gwilhem Charbonnier, Raquel Diez, Esteban Cattaneo, Maria Friese, Sander Heinsalu, Sofia Galán, Luke Gardner and Harry Luck. They worked with Spotify’s counsel from Clifford Chance, led by Thomas Vinje and Stavroula Vryna.