Apple (AAPL.O) was hit with a EUR 1.84 billion (USD 2 bn) European Union (EU) antitrust fine on Monday, its first ever and comprising mostly a deterrent, for preventing Spotify (SPOT.N) and other music streaming services from informing users of payment options outside its App Store.
The EU enforcer said Apple’s restrictions constituted unfair trading conditions, a relatively novel argument in an antitrust case and also used by the Dutch antitrust agency in a decision against Apple in 2021 in a case brought by dating app providers.
The fine looks insignificant in comparison to the EUR 500 million (USD 542 mln) which the company was originally expected to be meted out by the EU. The regulator said in a statement it added an additional lump sum of EUR 1.8 bn (USD 2 bn) as a deterrent to Apple and because a significant part of the harm caused by Apple’s conduct was non-monetary resulting in a total of EUR 1.84 bn ((USD 2 bn), 0.5% of Apple’s worldwide turnover.We've fined Apple over €1.8 billion over abusive App Store rules for music streaming providers
— European Commission (@EU_Commission) March 4, 2024
For a decade, Apple abused its dominant position by restricting developers from informing consumers about alternative, cheaper music services available outside of the Apple ecosystem.… pic.twitter.com/0Kp6qugArE
EU antitrust chief Margrethe Vestager said this was the first time the Commission has added a deterrent lump sum on top of an antitrust fine as a deterrent.
“For a decade, Apple abused its dominant position in the market for the distribution of music streaming apps through the App Store,” Vestager said in a statement.
“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,” she added.
Vestager ordered Apple to remove the anti-steering provisions and to refrain from similar practices in the future.Today, @EU_Commission has fined @Apple 1.84 bn € for abusing its dominant position on the market for the distribution of #music #streaming #apps.
— Margrethe Vestager (@vestager) March 4, 2024
👉@Apple illegally restricted #app developers’ ability to inform #users about cheaper options to buy🎶, outside the🍏ecosystem.
Criticism from Apple
Apple criticized the EU decision, saying it would challenge it in court. A ruling at the Luxembourg-based General Court, Europe’s second-highest, is likely to take several years. Until then, Apple will have to pay the fine and comply with the EU order.
“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 company said in a statement.
“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 EC more than 65 times during this investigation,” it said.
It said the Swedish company pays no commission to Apple as it sells its subscriptions on its website and not on Apple’s App Store.
Vestager’s order to Apple to remove its App Store restrictions echoes the same requirement under new EU tech rules known as the Digital Markets Act (DMA) which Apple has to comply with on March 7.
Apple’s fine, however, is about a quarter of the EUR 8.25 bn (USD 8.92 bn) fines the EU regulator meted out to Alphabet’s (GOOGL.O) Google in three cases in the previous decade.
