The European Union has fined Apple 1.84 billion ($2 billion) for violating competition laws.
The European Union said Monday it had fined Apple ( AAPL ) — its first antitrust fine against the U.S. tech giant — for preventing rival music streaming services such as Spotify from telling iPhone users they could find cheaper ways to subscribe outside of Apple’s app store. .
Margrethe Vestager, the EU’s competition and digitalisation chief, said Apple had “abused its dominant position” as a distributor of music streaming apps, adding that, as a result, European consumers had no “free choice of where, how and where at what prices to buy music streaming subscriptions.”
“This is illegal and has affected millions of European consumers,” Vestager told a news conference.
Apple currently prohibits app developers from fully informing users of iOS – the operating system for iPhones and iPads – about cheaper music subscriptions available outside the app, the European Commission, the EU’s executive arm, said in a statement. For example, developers are not allowed to notify iOS users of price differences between in-app subscriptions and those available for the same streaming service on a website.
Apple responded that the European Commission’s decision came despite “its failure to uncover any credible evidence of harm to consumers and ignores the reality of a thriving, competitive and rapidly growing market”.
The company said in a statement that app developers “compete on a level playing field” in Apple’s app store. He plans to appeal the sentence.
The European Commission said it added a lump sum of 1.8 billion ($1.95 billion) to the basic fine in an attempt to deter Apple, as well as other major technology companies, from violating antitrust laws.
“If you’re a company that’s dominant and you do something illegal, it’s going to be punished,” Vestager said, adding that the basic penalty alone is the equivalent of a “parking ticket” for Apple.
The total fine of 1.84 billion is 0.5% of Apple’s worldwide annual turnover, according to Vestager.
Spotify complaint
The European Commission opened a formal antitrust investigation against Apple in 2020 after Spotify ( SPOT ) filed a complaint against Apple the previous year, accusing it of unfairly disadvantaging its competitors.
It said Apple required the Swedish music streamer and other content providers to pay a 30% fee on purchases made through Apple’s in-app payment system, while its own service, Apple Music, did not have to pay a fee. Spotify also said Apple prevented it from sharing information about subscription contracts with iPhone users.
Apple is “one of the biggest smartphone sellers” and its smartphone operating system is “the only way we can offer our app to everyone with an iPhone,” according to Spotify.
The streamer said the EU’s decision to punish Apple sent a “strong message”. “No company, not even a monopoly like Apple, can abuse its power to control how other companies interact with their customers,” the music streamer said in a statement.
In its statement, Apple claimed that Spotify was the “biggest beneficiary” of the EU fine. “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.
Spotify did not immediately respond to a request for comment on the claim.
In January, Apple announced changes to its handling of apps in the EU, including plans to allow third-party app stores on iPhones and iPads for the first time in the company’s history and significant cuts to app store fees.
The changes were introduced in anticipation of new EU rules coming into force this month as part of the Digital Markets Act, a comprehensive set of competition regulations for Big Tech.
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