The Apple logo.
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The European Commission, the executive body of the European Union, struck on Monday An apple with a €1.8 billion ($1.95 billion) antitrust fine for abusing its dominant position in the music streaming app distribution market.
The 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.
Apple also prohibited music streaming app developers from providing any instructions on how users could subscribe to these cheaper offers, the Commission alleged.
This is Apple’s first antitrust fine from Brussels and one of the largest ever imposed on an EU tech company.
The European Commission launched an investigation into Apple following a complaint from Spotify in 2019. The investigation was narrowed to focus on contractual restrictions Apple imposed on app developers that prevented them from informing iPhone and iPad users about alternative music subscription services at lower prices outside the App Store.
Apple’s conduct lasted almost 10 years, according to the Commission, and “may have caused many iOS users to pay significantly higher prices for music streaming subscriptions because of the high commission charged by Apple to developers and passed on to consumers in the form of -high subscription prices for the same service in the Apple App Store.”
Apple’s response
In a scathing response to the fine, Apple said Spotify stood to gain the most from the EU’s statement.
“The main advocate of 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,” Apple said in a statement.
“Today, Spotify has a 56 percent share of the European music streaming market – more than double that of their nearest competitor – and pays Apple nothing for the services that have helped them become one of the most recognizable brands in the world.”
Apple said that “a big part” of Spotify’s success is due to the Cupertino giant’s App Store, “along with all the tools and technology that Spotify uses to build, update and share their app with Apple users around the world.” “
Apple said Spotify doesn’t pay them anything. That’s because instead of selling subscriptions in its iOS app, Spotify sells them through its own website. Apple does not collect a commission on these purchases.
Developers have spoken out over the years against the 30% fee Apple charges for in-app purchases.
Spotify did not immediately respond to CNBC’s request for comment.
The fine will heighten tensions between Big Tech and Brussels at a time when the EU is stepping up scrutiny of these firms.
Last year, the Commission designated Apple among other technology firms as Microsoft and Meta as “gatekeepers” under a landmark regulation called the Digital Markets Act, which broadly came into effect last year.
The term gatekeepers refers to massive internet platforms that the EU believes restrict access to essential platform services such as online search, advertising, messaging and communications.
The Digital Markets Act aims to crack down on anti-competitive practices by tech players and force them to open up some of their services to other competitors. Smaller Internet companies and other businesses complain that they are hurt by these companies’ business practices.
These laws have already had an impact on Apple. The Cupertino, California-based giant has announced plans this year to open up its iPhones and iPads to alternative app stores other than its own. Developers have long complained about the 30% fee Apple charges for in-app purchases.
– CNBC’s Ryan Brown contributed to this article.
https://www.cnbc.com/2024/03/04/apple-hit-with-more-than-1point95-billion-eu-antitrust-fine-over-music-streaming.html
