The European Union has dealt a significant blow to Apple in a long-running antitrust battle over the tech giant’s App Store policies. In a landmark decision, the European Commission has imposed a staggering fine of €1.8 billion ($1.95 billion) on Apple, marking the first time the company has faced such a penalty from the EU’s competition watchdog.
At the heart of the case lies a complaint filed by Swedish music streaming service Spotify in 2019. Spotify alleged that Apple’s restrictions on informing users about alternative payment options outside the App Store, coupled with the company’s 30% commission on in-app purchases, created unfair trading conditions and stifled competition.
The European Commission’s ruling represents a novel approach in antitrust cases, focusing on the concept of unfair trading conditions. This argument has previously been employed by the Dutch antitrust agency in a similar case against Apple brought by dating app providers in 2021.
Margrethe Vestager, the EU’s antitrust chief, delivered a scathing assessment of Apple’s conduct. “For a decade, Apple abused its dominant position in the market for the distribution of music streaming apps through the App Store,” she stated. “They did so by restricting developers from informing consumers about alternative, cheaper music services available outside of the Apple ecosystem. This is illegal under EU antitrust rules.”
The substantial fine imposed on Apple includes an additional lump sum of €1.8 billion, intended as a deterrent and a reflection of the non-monetary harm caused by the company’s practices. While the exact calculation of the basic fine amount remains undisclosed, the total penalty underscores the EU’s determination to tackle perceived anticompetitive behavior in the digital realm.
Apple, however, has vehemently criticized the EU’s decision and vowed to challenge it in court. In a statement, the company asserted that the Commission failed to uncover credible evidence of consumer harm and disregarded the realities of a thriving, competitive, and rapidly growing market.
Apple’s defense highlighted Spotify’s prominent role in the proceedings, describing the Swedish company as the “primary advocate for this decision” and “the biggest beneficiary.” The tech giant further pointed out that Spotify pays no commission to Apple since it sells subscriptions through its website, not the App Store.
The EU’s order for Apple to remove its App Store restrictions echoes similar requirements under the new Digital Markets Act (DMA), a set of EU tech rules that Apple must comply with by March 7. While the fine imposed on Apple is substantial, it pales in comparison to the €8.25 billion in fines levied against Google by the EU regulator in three separate antitrust cases over the past decade.
Interestingly, Apple is seeking to settle another EU antitrust investigation by offering to open up its tap-and-go mobile payment systems to rivals. If accepted by regulators after seeking feedback from competitors and users, this settlement could potentially resolve the case without incurring additional fines.
As the battle between tech giants and regulatory authorities intensifies, this ruling represents a significant milestone in the ongoing efforts to promote fairness and competition in the digital landscape.
