The European Union (EU) has fined Apple €1.8 billion for violating EU competition regulations by favouring its own music streaming service over competitors.
This was the EU’s first antitrust penalty against the US tech giant.
The European Commission, the executive body of the 27-nation union and chief antitrust regulator, alleged that Apple has prevented app developers from “fully informing iOS users about alternative and cheaper music subscription services outside of the app.”
“This is unlawful, and it has affected millions of consumers throughout Europe,” stated EU Competition Commissioner Margrethe Vestager during a press conference.
Since Apple acted in this manner for nearly ten years, many customers had to pay “significantly higher prices for music streaming subscriptions,” according to the commission.
The lengthy inquiry that was started five years ago by a complaint from the Swedish streaming service Spotify resulted in the €1.8 billion punishment.
Global efforts to clamp down on large digital corporations have been spearheaded by the EU, which has fined Google billions of dollars and accused Meta of manipulating the online classified ad market.
Additionally, a separate antitrust inquiry into Apple’s mobile payments business has been launched by the commission.
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Apple retaliated, threatening to appeal the fine against Spotify as well as the commission. “The decision was reached despite the Commission’s failure to uncover any credible evidence of consumer harm and ignores the realities of a market that is thriving, competitive, and growing fast,” the business stated in a statement.
It said that Spotify, a Swedish streaming service with a 56 percent market share in Europe for music streaming and no payment to Apple for utilising its App Store, stood to gain from the ruling and that it had met with the commission 65 times in the course of eight years.
“Over 119 billion times have the Spotify app been downloaded, redownloaded, or updated on Apple devices overall. It may be found on the App Store in more than 160 nations worldwide. Additionally, Apple claims that there are numerous other ways it adds value to Spotify without incurring any costs to their business.
“Ironically, in the name of competition, today’s decision just cements the dominant position of a successful European company that is the digital music market’s runaway leader,” Apple stated.
The original focus of the commission’s study was on two issues. One was the iPhone manufacturer’s policy of making an in-house payment processor, which levies a thirty percent commission on all subscriptions, which is mandatory for app developers selling digital content.
However, the EU later abandoned that in favour of concentrating on Apple’s prohibition against app developers informing their users of less expensive alternatives to paying for subscriptions that don’t go through an app.
According to the inquiry, Apple has prohibited streaming services from informing users about the costs of subscription packages that aren’t within their applications, including buttons within the apps that allow users to pay for other subscriptions or even sending customers emails with information about various pricing alternatives.
The sanction is imposed in the same week as new EU regulations that aim to keep tech corporations from controlling the digital market are scheduled to take effect.
The Digital Markets Act, which goes into force on Thursday, places “gatekeeper” companies—like Apple, Meta, Alphabet, the parent company of Google, and ByteDance, the parent company of TikTok—under a series of dos and don’ts with the potential for steep fines.
The terms of the DMA are intended to stop computer firms from acting in a way that is fundamental to the Apple inquiry. Apple has previously disclosed how it will abide by the regulations; among other things, it will permit iPhone owners in Europe to utilise app shops other than its own and developers to provide alternate payment methods.
In order to address the commission’s separate antitrust probe investigating Apple’s mobile payments service, the business has pledged to allow competitors to use its tap-and-go mobile payment system.