Apple Hit with $2 bn EU Fine Over Abusive App Store Rules for Music Streaming Providers

The European Commission has fined Apple a €1.84 billion ($2 billion), marking the tech giant’s first-ever antitrust penalty in the EU. The fine was imposed for allegedly stifling competition by preventing music streaming rivals, such as Spotify, from informing users about alternative payment options outside of its App Store.
Apple app store for businessThe decision by the European Commission stemmed from a 2019 complaint filed by Spotify, which highlighted Apple’s restrictive practices and its imposition of a 30 percent fee on App Store transactions. This ruling, which deemed Apple’s actions as creating unfair trading conditions, follows a similar case brought by Dutch antitrust authorities against Apple in 2021 concerning dating app providers.

The EU Commission found that Apple applied restrictions on app developers preventing them from informing iOS users about alternative and cheaper music subscription services available outside of the app. This is illegal under EU antitrust rules.

Apple is currently the sole provider of an App Store where developers can distribute their apps to iOS users throughout the European Economic Area (EEA). Apple controls every aspect of the iOS user experience and sets the terms and conditions that developers need to abide by to be present on the App Store and be able to reach iOS users in the EEA.

Apple bans music streaming app developers from informing iOS users about alternative and cheaper music subscription services available outside of the app and from providing any instructions about how to subscribe to such offers.

The fine issued by the EU surpassed initial expectations, dwarfing the projected €500 million penalty. It consisted of a base amount of €40 million, described by European Competition Commissioner Margarethe Vestager as a mere “parking ticket” for the tech giant, supplemented by a hefty deterrent sum of €1.8 billion. Margarethe Vestager in a news statement clarified that the total fine equated to 0.5 percent of Apple’s global turnover.

Reacting to the decision, Apple expressed its intention to challenge the ruling in court, suggesting a prolonged legal battle ahead. However, until a ruling from the Luxembourg-based General Court is reached, Apple is obligated to pay the fine and adhere to the EU’s directives, Reuter news report said.

In response to Apple’s criticisms, Margarethe Vestager emphasized the Commission’s duty to address concerns regarding consumer harm and market fairness. She noted that Apple’s anti-steering rules not only limited user choice but also led to inflated costs for consumers due to high commission fees imposed on developers.

As part of the ruling, Apple has been ordered to eliminate its anti-steering provisions and refrain from engaging in similar practices in the future. This directive aligns with upcoming EU regulations, such as the Digital Markets Act (DMA), which aim to foster fair competition and consumer choice in the digital market.

While Spotify welcomed the EU’s decision, it highlighted broader concerns about Apple’s conduct beyond the music streaming sector. Nonetheless, Margarethe Vestager’s order underscores the EU’s commitment to enforcing antitrust regulations and promoting a level playing field in the tech industry.

Apple’s hefty fine marks a significant development in the ongoing debate surrounding Big Tech’s market dominance and antitrust scrutiny in the EU. Despite ongoing legal challenges, the EU’s stance signals a concerted effort to hold tech giants accountable for anti-competitive practices.