The European Union has fined Apple €1.84bn (£1.6bn) for raising the cost of music streaming by imposing illegal restrictions on apps such as Spotify.
Margrethe Vestager, the European Commission’s competition chief, said Apple had abused its dominant position for a decade, using its control over the iPhone App Store to impose fees on music streaming services.
Hundreds of thousands of iPhone users were paying around £3 more a month for Spotify because of Apple’s fees. The company is facing multiple lawsuits on behalf of millions of users over the cost of the app.
Monday’s larger-than-expected fine is the latest in a series of EU actions against Silicon Valley companies that have led to accusations of anti-American bias in Brussels. It is the first fine imposed by the EU on Apple and the third largest antitrust fine in Europe, behind the two fines against Google.
Apple shares fell more than 2.5 per cent on Monday after the announcement, knocking around $70bn (£55bn) off their market value.
The fine comes five years after Spotify formally complained to the EU, accusing Apple of imposing unfair terms on streaming apps, and four years after the bloc opened an investigation.
Apple hit back at the decision, saying the fine followed “coordination” between the Commission and Spotify. He has promised an appeal, raising the prospect of years of legal battles.
The fine comes days before sweeping EU internet competition laws come into force that will require companies including Apple, Google and Meta to change the way they do business.
Under the new laws, Apple will have to offer alternatives to its App Store, which is currently the only way to download iPhone apps and generates billions in fees for the company.
On Monday, Ms Vestager said Apple’s control over how iPhone apps are downloaded meant many music fans were paying significantly more for music streaming services than they should have.
Apple charges fees of up to 30 percent for music subscriptions purchased through apps, meaning many streaming companies have been charging extra when users buy memberships this way.
Spotify, for example, charged £12.99 a month for in-app subscriptions – £3 more than the regular price.
It later stopped selling subscriptions through its app, but it later emerged that Spotify’s 680,000 subscribers had paid a higher price. Music streaming apps like Deezer continue to charge extra for in-app memberships. Apple is facing a lawsuit in the UK on behalf of 20 million customers who claim they were overcharged.
Apple has imposed “anti-steering” rules prohibiting apps from directing users to cheaper subscriptions on their websites. The commission said this meant many listeners may not have been aware of the cheaper option.
The iPhone maker runs its own streaming service, Apple Music, which competes with Spotify.
The commission “found that Apple applied restrictions on app developers by preventing them from informing iOS users of alternative and cheaper music subscription services available outside the app. This is illegal under EU antitrust rules,” it said.
“Apple’s conduct, spanning nearly 10 years, may have led many iOS users to pay substantially higher subscription prices for music streaming because of the high commission Apple imposed on developers and passed on to consumers in the form of higher subscription prices for the same Apple service App Store.”
Ms Vestager said: “For a decade, Apple abused its dominant market position to distribute music streaming apps through the App Store.
“They did this by prohibiting developers from informing consumers about alternative, cheaper music services available outside the Apple ecosystem. This is illegal under EU antitrust rules, so today we have fined Apple more than €1.8 billion.”
Apple suggested the fine was the result of Spotify’s nine-year campaign, saying the streaming giant had worked closely with the EU “on an investigation with little basis in reality”.
The California-based company said: “The main proponent 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.
“The reality is that European consumers have more choices than ever. Ironically, in the name of competition, today’s decision only cements the dominant position of a successful European company that is a persistent leader in the digital music market.
Spotify said: “This decision sends a strong message: no company, not even a monopoly like Apple, can abuse its power to control how other companies communicate with their customers.”
Spotify shares rose nearly 3 percent in New York.
The UK will receive part of the fine because the investigation was opened before the end of the Brexit transition period.
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