The European Union (EU) has fined Apple 1.84-billion euros ($2 billion), due to allegations of the tech giant hindering competition by preventing music streaming services like Spotify from informing users about alternative payment options outside of Apple’s App Store.
The fine marks Apple’s first-ever EU antitrust penalty.
The European Commission’s decision stemmed from a 2019 complaint filed by Spotify, citing Apple’s restrictive practices and its imposition of a 30% commission on App Store transactions. This move by the EU antitrust enforcer is notable for its novel argument regarding unfair trading conditions, a tactic also employed by the Dutch antitrust agency in a previous case against Apple.
EU regulators surpassed initial expectations for the fine, which sources had anticipated to be around 500 million euros. The Commission justified the penalty by citing the non-monetary harm caused by Apple’s actions, and the need to deter a repeat performance. This resulted in a fine equivalent to 0.5% of Apple’s global revenue.
The EU’s antitrust chief, Margrethe Vestager, stressed the severity of Apple’s actions, stating, “for a decade, Apple abused its dominant position in the market for the distribution of music streaming apps through the App Store.” Vestager ordered Apple to cease its anti-steering provisions and to refrain from similar practices in the future.
Apple responded to the EU’s decision by announcing its intention to challenge it in court, criticising the lack of credible evidence of consumer harm, and pointing out the competitiveness of the market. The company tagged Spotify as the primary advocate for the EU’s decision, while noting that the Swedish music streaming giant pays no commissions to Apple due to its direct subscription sales outside the App Store.
Despite the impending legal battle, Apple must comply with the EU order and pay the fine until a ruling is reached, likely taking several years. Additionally, Apple faces pressure to adhere to new EU tech rules, such as the Digital Markets Act, which requires the removal of App Store restrictions, effective 7th March.
Source: Reuters
By Derrick Kafui Deti – Digital Economy Magazine
