In a historic move, tech giant Apple was hit with a substantial 1.8 billion euro ($1.95 billion) antitrust fine by the European Union on Monday.
It is the first such penalty for the company since it allegedly prevented music streaming services, including Spotify, from informing users of alternative payment options outside of its App Store.
The European Commission’s decision, prompted by a 2019 complaint by Swedish music streaming service Spotify, highlights concerns over Apple’s restrictive practices and its imposition of a 30% fee on transactions made through the App Store.
The EU’s competition watchdog argued that Apple’s restrictions on informing users of alternative payment options constituted unfair trading conditions.
This argument, relatively new in antitrust cases, was also used by the Dutch antitrust agency in a 2021 decision against Apple involving a case brought by dating app providers.
In addition to the additional deterrent, the EU’s competition watchdog imposed an additional lump sum of €1.8 billion on top of the undisclosed base amount. The decision reflects the Commission’s position that a significant part of the harm caused by Apple’s conduct was non-monetary in nature.
Margrethe Vestager, the head of the EU’s antitrust authority, said: “For ten years, Apple has abused its dominant position in the market for the distribution of music streaming applications through the App Store. They did so by prohibiting developers from informing consumers about alternative, cheaper music services available outside the Apple ecosystem. This is illegal under EU antitrust rules.
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However, Apple criticized the EU’s decision and promised to challenge it in court. The company argued that the Commission failed to find credible evidence of consumer harm and failed to take into account the thriving competitive nature of the market.
In a statement, Apple said: “The main supporter of this decision – and the biggest beneficiary – is Spotify, a company based in Stockholm, Sweden. Spotify is the largest music streaming app in the world and has met with the European Commission over 65 times during this investigation.”
The tech giant emphasized that Spotify pays no commission to Apple because it sells its subscriptions on its website, bypassing Apple’s App Store.
Vestager’s order to remove App Store restrictions is in line with the upcoming Digital Markets Act (DMA), which is set to be enforced on the 7th.
Despite the hefty fine, it’s notable that Apple’s fine is around a quarter of the €8.25 billion in fines the EU regulator imposed on Alphabet’s Google in three cases over the previous decade.
In a separate EU antitrust investigation, Apple is seeking to settle by offering to open up its tap-and-go mobile payment systems to competitors, a move regulators are likely to accept without further fines after receiving feedback from competitors and users.
