On Monday, the EU fined Apple 1.8 billion euros ($1.9 billion) for violating the bloc’s laws by preventing music streaming services from informing users of subscription options outside the App Store.
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The iPhone maker immediately vowed to appeal the first-ever antitrust fine imposed on Apple by Brussels, the culmination of a lawsuit sparked by a complaint from Swedish music streaming giant Spotify.
The European Commission said it “found that Apple imposed restrictions on app developers that prevented them from informing iOS users of alternative and cheaper music subscription services available outside the app”.
“This is illegal under EU antitrust rules,” the EU’s powerful antitrust regulator said.
“Apple’s conduct, which has continued for nearly ten years, may have caused many iOS users to pay substantially higher prices for music streaming subscriptions because of the high commission charged by Apple to developers and passed on to consumers,” he adds.
Spotify’s complaint in 2019 sparked a broad commission investigation into the iPhone maker in 2021, but Brussels narrowed the investigation last year to focus on Apple’s actions to prevent apps from giving users information about competing subscription options for music.
“For a decade, Apple has abused its dominant market position for the distribution of music streaming apps through the App Store,” Commission Vice President Margrethe Vestager said in a statement.
“We ordered Apple to remove the necessary regulations and refrain from similar practices in the future,” Vestager told reporters.
Apple criticized the commission’s decision and said it would appeal.
“The decision was made despite the Commission’s failure to uncover any credible evidence of consumer harm and ignores the realities of a thriving, competitive and rapidly growing market,” Apple said in a statement.
“While we respect the European Commission, the facts simply do not support this decision. And as a result, Apple will appeal,” the company added.
Sour apple
Despite the scale of the penalty, critics point out that even fines over hundreds of millions of euros pale in comparison to how much Apple is making. In the last three months of 2023, Apple reported $33.92 billion in earnings.
Brussels has already hit Google with around eight billion euros in fines over the past few years, although the US-based firm is challenging the fines in EU courts.
But the EU expects the fine to force Apple to stop restricting access to rival streaming services – especially since it will also be required to do so under a new law known as the Digital Markets Act, which it must comply with by March 7.
Google owner Alphabet, Amazon, TikTok parent company ByteDance, Meta and Microsoft must also comply.
The DMA gives the commission the power to fine companies up to 10 percent of global revenue for any violations, or 20 percent for repeat offenders.
Apple rejects Spotify’s claims and points to the streaming giant’s market dominance in online music.
Spotify has more than 600 million monthly users, a third of whom are subscribers, according to the company’s latest data, released last month.
Apple Music, a music streaming service, accounts for eight percent of the European market, the company said, compared to Spotify’s more than 50 percent share.
Apple also says Spotify hasn’t paid them anything — other than a $99 developer program fee — even though the iPhone maker claims it played a significant role in the firm’s success.
Bitter battles
This isn’t the first time Apple and Spotify have butted heads.
Spotify has been one of the most vocal critics of Apple’s changes to its App Store as part of compliance with EU DMA law.
As part of the changes, the company will allow rivals to build iPhone app stores and enable payment services outside of Apple Pay on the devices.
Spotify CEO Daniel Ek accused the iPhone maker’s attitude of “making a mockery of the spirit of the law.”
On Friday, 34 digital organizations, including video game maker Epic Games and Spotify, wrote to the commission to raise concerns about Apple’s plans.
They said Apple’s new terms, “if left unchanged, would make a mockery of the DMA and the significant efforts of the European Commission and EU institutions to make digital markets competitive”.
(AFP)
