Context: On March 25, 2024 (games fray article), the European Commission (EC) launched two full-blown investigations into Apple’s suspected non-compliance with the bloc’s Digital Markets Act (DMA) and a third one that is, for now, only a fact-finding mission (“other investigatory steps”) concerning a new Core Technology Fee (CTF) (March 27, 2024 games fray article), though some have interpreted statements by EU competition chief Margrethe Vestager at a European Parliament hearing last week as an indication that the EC is, at minimum, strongly suspicious of Apple in that context. On Friday (April 5, 2024), after a new app version submitted by Spotify had been under review for about a month, Apple announced new EU rules for music streaming services such as spotify, which involve a charge on links to external purchasing options (April 6, 2024 games fray article).
What’s new: Yesterday (Sunday, April 7, 2024), within a fortnight of the above-mentioned announcement, the EC told MLex that it is “currently assessing whether Apple has fully complied with the [March 4, 2024 Spotify antitrust (games fray article)] decision.” MLex also quoted Spotify’s public accusation of non-compliance by Apple. Since Saturday (April 6), the EC can formally enforce the March 4 ruling, such as through daily fines.
Direct impact: The EU Spotify ruling, which Apple is going to appeal, does not (as it would otherwise be known) address Apple’s fees. Spotify’s problem is that the case got narrowed dramatically during the course of multi-year investigations, and after a decade of complaining over Apple’s rules, Spotify may have to complain for another decade or more. Last month’s EU antitrust ruling is merely an anti-anti-steering decision, meaning that Apple must give Spotify more flexibility about how it communicates with customers to steer them to external purchasing options. On the face of it, Apple’s fees can’t constitute a case for non-compliance under the relevant decision. An interesting aspect here is that the new non-compliance inquiry overlaps with one of the DMA compliance investigations. This means the EU has two alternative laws to rely on (Art. 102 of the Treaty on the Functioning of the European Union (TFEU) in Spotify’s case, and the DMA for everything, not just music streaming). But neither one is a solid basis.
Wider ramifications: Another enforcement matter related to anti-anti-steering is pending in the U.S., where Epic Games won a nationwide injunction under California Unfair Competition Law (UCL). Just last week, Apple opposed the filing of amicus curiae briefs by various companies, among them Spotify (despite the U.S. case explicitly not relating to subscription services like Spotify, only to one-off in-app purchases) (April 4, 2024 games fray article). As predicted by games fray, the court allowed those amicus briefs to be submitted over Apple’s objection, but this way Apple got to make certain points, such as suggesting that Epic and its amici are all gatekeepers who do similar things on their own platforms. This coming Friday (April 12, 2024), Apple will file its opposition to Epic’s contempt motion.
As games fray said last month, Spotify (like other Apple foes) came out of the middle game too weak to win the end game. Its blatantly self-serving antitrust strategy against Apple has failed to deliver results after a decade, and will keep failing. Instead of tackling fundamental questions, Spotify was just hoping to get a slightly better deal (as it did with Google, which preferred to avoid this kind of antitrust fight) and focused narrowly on the fact that it must compete with Apple in music streaming. Spotify was hoping that the narrower the issue, and the stronger the case for direct competition with Apple, the more likely the EU would be to take swift and decisive matters. But what came out of it was slow and next to useless.
Lewis Crofts, the Editor-at-Large of MLex, publicly confirmed to games fray’s founder on X (formerly known as Twitter) that the EU ruling does not regulate what Apple may charge:
In a couple of subsequent tweets, Mr. Crofts quoted Spotify’s public statement on the Apple antitrust enforcement situation:
“[EC Executive Vice President Margrethe Vestager] made it clear that Apple must now allow music streaming developers to communicate freely with their users, including offering links to purchase. Following the law is not optional, but Apple continues to defy that decision. Effective April 6th, the Commission can start noncompliance proceedings and impose daily fines. It’s time for decisive action to once and for all give consumers real choice”
What the EC can enforce, however, is only the formal decision, not a public statement by its antitrust chief.
Shortly thereafter, in the early evening on Sunday by local (Brussels) time, Mr. Crofts added an official statement by the EC:
Spotify spent a lot of time, money and energy complaining about Apple’s rules and lobbying for legislative intervention. Now it has an EU antitrust ruling that most people overestimate because of the amount of the fine (close to US$2B), though only about $45M of that was related to the case at hand and the bulk of it is based on a rule not to see too low a fine when a company is huge. And Spotify pushed for the DMA, a law that started with a good idea but is toothless in some critical areas.
The EC may find that it can’t fine Apple, and even if it did, Apple would be very likely to prevail on appeal. Particularly on EU commissioner, Thierry Breton, has repeatedly threatened with “heavy” fines, which comes down to just saber-rattling and at some point even appears desperate (March 26, 2024 games fray article). Therefore, Apple won’t back down on any important question only because of this avalanche of compliance investigations. Some smaller concessions here and there are likely, but nothing more than that.