Apple is being sued in Belgium, Italy, Spain and Portugal by a consumer rights organisation which says that people paid over the odds when they signed up to music services other than Apple Music on iOS.
Euroconsumers, which is coordinating the lawsuits as a class action, says that Apple’s App Store payment rules meant subscribers to Spotify and other services paid higher subscription fees because of Apple’s App Store commission, and are demanding that the tech giant refunds those commissions - to the tune of €62 million.
The lawsuit follows the European Commission’s ruling earlier this year that Apple violated competition law by stopping music services from directing consumers to other places online where they could subscribe without paying the so-called ‘Apple tax’.
“Apple used its dominant position to charge extra fees on music streaming services” and “blocked these services from informing users about cheaper subscription options”, resulting in consumers having to pay “up to 30% more”, Euroconsumers says in a statement. “This behaviour is not only unfair and anti-competitive but also illegal”.
With that in mind, “Euroconsumers is launching a coordinated class action in Belgium, Italy, Spain and Portugal”, with the aim of “holding Apple accountable and making them return the undue charges paid by consumers”.
For years, the consumer group continues, “Apple made unfair profits - approximately €259 million in Europe - by overcharging consumers” and “now, it’s time for Apple to make things right”. The legal action reportedly aims to recover around €62 million on behalf of over 500,000 subscribers in the four countries where lawsuits are being filed.
Announcing the litigation, Els Bruggeman, Head Of Policy And Enforcement at Euroconsumers, says, “Now that the European Commission has condemned and fined Apple for its behaviour, it’s time for Apple to make things right for consumers. This class action is about giving power back to people, making sure Apple is held accountable for the harm caused and standing up for a fair digital market”.
Streaming services like Spotify and Deezer have long criticised Apple’s App Store rules around in-app payments. Until recently, under those rules, a service had to use Apple’s transactions system to take in-app payments on iOS devices, which charges a 15-30% commission, and it couldn't direct users from its app to a payment page on a website where Apple’s system could be circumvented.
The rules have started to change in some countries as a result of regulator intervention and litigation, in the EU as a result of both the European Commission’s competition law ruling and the new Digital Markets Act. Although Spotify remains very critical of the amended rules.
Because streaming services already pay up to 70% of their revenue to the music industry, they couldn’t afford to swallow Apple’s fees. Therefore, they passed them onto the consumer, meaning a 9.99 subscription would become a 12.99 subscription when a user signed up within the service’s iOS app.
That became all the more annoying for Spotify et al once Apple had its own streaming service, which didn’t have to worry about the commissions, because - within the Apple ecosystem - it looked like Spotify was 2.99 a month more expensive than Apple Music.
So much so, in May 2016, Spotify stopped selling subscriptions through its iOS app, hoping that consumers interested in its premium offering would know to look for the subscriptions page on its website. However, those that had signed up via the iOS app prior to that date continued to pay the Apple commission until Spotify decided to downgrade them all to the free tier last year, forcing them to subscribe anew via the streaming service’s website.
In 2019, when Spotify first filed its complaint with the European Commission, which ultimately led to this year’s decision on Apple’s rules, Apple said that about 680,000 Spotify subscribers were making payments via its transactions system at that point.
It’s those subscribers that the Euroconsumers lawsuit aims to benefit, arguing that - because Apple was in breach of European law when it stopped music services from sign-posting payment options outside of their iOS apps - it inappropriately forced those consumers into paying the extra fees.
Its statement concludes, “Euroconsumers is taking a stand against Apple’s power abuse, sending a strong message to all market players: with power comes responsibility. Fair competition ensures that consumers have access to quality services at fair prices. When companies exploit their dominant position to jeopardise this, we will hold them accountable and stand up for a fair digital market”.