Europe: Apple has been fined a sum of €1.8 billion ($1.5 billion) by the EU as a penalty for the curtailing competition from rival music streaming services such as Spotify.
The European Commission imposed a fine that is four times higher than expected on tech companies that abuse their dominant position in the market for phones and online services.
According to Margrethe Vestager, the European competition commissioner, a slight fine would have been nothing more than the equivalent of ‘a parking fine’ and was designed to act as ‘a deterrent’ to such preparations by Apple and others.
“I think it is important to see that if you are a company who is dominant and you do something illegal, it will be punished. We want to show our resolve that we will go into these cases. As a result of the anti-competitive practices, the public ended up paying more than they should have for music streaming,” Vestager said.
The commissioner stated that, “Apple’s rules ended up harming consumers. Critical information was withheld so that consumers could not effectively use or make informed choices. Some consumers may have paid more because they weren’t aware that they can pay less if they subscribed outside of the app.”
The commission found that the tech company contractually disadvantaged users by limiting app developers from publicly announcing cheaper services. “Music streaming developers were not allowed to inform the users inside their own apps of cheaper prices for the same subscription on the internet, in an anti-steering practice,” Margrethe Vestager added.
The European Commission remarked that, “Investigation found that Apple bans music streaming app developers from fully 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. In particular, the anti-steering provisions ban app developers.”
Vestager said that, “For decades, Apple has restricted music streaming app developers from informing their consumers about cheaper options available outside of the app, and has done so contractually.”
The investigation into a restriction that prevents developers from telling iPhone and iPad users about other ways to subscribe to music streaming services that bypass Apple’s was sparked by a complaint from Spotify. According to Spotify, the regulation favours Apple’s rival music streaming service, Apple Music.
Spotify and other app providers have been slamming Apple’s App Store for a long time, claiming that it restricts competition by charging a 30 percent fee on apps and in-app purchases. However, in response to the introduction of the Digital Markets Act (DMA), which is designed to regulate major tech firms such as Apple, Microsoft, and Meta, formerly known as Facebook, Apple has announced plans to allow EU customers to download apps onto their iPhones outside the App Store.
Apple while responding to the fine stating that, “The decision was reached despite the commission’s failure to uncover any credible evidence of consumer harm, and ignores the realities of a market that is thriving, competitive, and growing fast. The primary advocate for 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.”
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