Apple hit with $2 bln antitrust fine

Brussels fined Apple 1.84 billion euros ($2 billion) on Monday, the iPhone maker’s first ever EU antitrust penalty, for preventing Spotify and other music streaming services from informing users of payment options outside its App Store.

The European Commission’s decision was triggered by a 2019 complaint by Swedish music streaming service Spotify over this restriction and Apple’s 30% App Store fees.
The European Union regulator said Apple’s restrictions constituted unfair trading conditions, a relatively novel argument in an antitrust case and also used by the Dutch antitrust agency in a decision against Apple in 2021 in a case brought by dating app providers.

The penalty dwarfed the 500 million euros sources with knowledge of the matter had told Reuters they expected the Commission to mete out to Apple.

It comprised a basic element of 40 million euros – described by European Competition Commissioner Margarethe Vestager as a “parking ticket” for the U.S. tech giant – plus 1.8 billion euros slapped on top as a deterrent. The 1.84 billion euros total is equal to 0.5% of Apple’s global turnover, she said.

Apple criticised the EU decision, saying it would challenge it in court. A ruling at the Luxembourg-based General Court, Europe’s second-highest, is likely to take several years. Until then, Apple will have to pay the fine and comply with the EU order.

“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 company said in a statement.

“The primary advocate for this decision — and the biggest beneficiary — is Spotify, a company based in Stockholm, Sweden. Spotify has the largest music streaming app in the world, and has met with the European Commission more than 65 times during this investigation,” it said.

HIGH COMMISSION FEE

Vestager said this was the first time the Commission has added a deterrent lump sum on top of an antitrust fine as a deterrent.

“Millions of European music streaming users were left in the dark about all available options,” she told a press conference.

“And Apple’s anti-steering rules also made consumers pay more for such services because of the high commission fee imposed on developers and passed on to consumers.”

Vestager ordered Apple to remove the anti-steering provisions and to refrain from similar practices in the future.

Apple said Spotify pays no commission to Apple as it sells its subscriptions on its website and not on Apple’s App Store.

Spotify cheered the EU decision but said there were other issues in other areas.

“And while we are pleased that this case delivers some justice, it does not solve Apple’s bad behaviour towards developers beyond music streaming in other markets around the world,” the company said in a statement.

Vestager’s order to Apple to remove its App Store restrictions echoes the same requirement under new EU tech rules known as the Digital Markets Act (DMA) which Apple has to comply with on March 7.

Apple’s fine, however, is about a quarter of the 8.25 billion euro fines the EU regulator meted out to Alphabet’s Google in three cases in the previous decade.

In contrast to the music streaming case, Apple is seeking to settle another EU antitrust investigation by offering to open up its tap-and-go mobile payment systems to rivals.

EU regulators, who subsequently sought feedback from rivals and users, will likely accept its offer without fining the company.