Apple faced a significant blow on Monday as the European Union imposed an antitrust fine of over 1.8 billion euros ($1.95 billion). This penalty, the first ever for the company, was issued due to alleged practices hindering competition within its App Store ecosystem.
The European Commission’s decision stemmed from a 2019 complaint filed by Swedish music streaming service Spotify. Spotify accused Apple of unfairly restricting its ability to inform users about alternative payment options outside of the App Store, alongside criticizing its 30 percent App Store fees. Apple restricted developers from informing consumers about alternative, cheaper music services available outside of its ecosystem and this is illegal under EU antitrust rules.
Unfair trading conditions
The European Union’s competition enforcer revealed that Apple’s restrictions constituted unfair trading conditions. That is a relatively novel argument in an antitrust case. The decision echoes a similar stance taken by the Dutch antitrust agency in a 2021 case against Apple involving dating app providers. The EU competition enforcer added an additional lump sum of $1.95 billion to the basic amount as a deterrent to Apple.
Apple’s response
In response, Apple criticized the EU decision, announcing its intention to challenge it in court. The tech giant refuted claims of consumer harm, asserting the thriving and competitive nature of the market. Additionally, it pointed out Spotify’s significant role in the dispute, emphasizing its numerous interactions with the European Commission during the investigation. Moreover, it stated that the Swedish company pays no commission to Apple as it sells its subscriptions on its website and not on the App Store.
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Digital Markets Act
The EU’s fine and order to Apple to remove its App Store restrictions fall under the requirement of the new EU tech rules known as the Digital Markets Act (DMA) which the tech giant has to comply with on March 7.
Notably, Apple’s fine is about a quarter of the 8.25 billion euro fine the EU ruled to Alphabet’s Google in three cases in the last 10 years. In addition to the Spotify case, Apple aims to settle another EU antitrust investigation by offering its tap-and-go mobile payment systems to rivals. EU regulators, who subsequently sought feedback from rivals and users, will probably accept its offer without fining the company.
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