The European Union hit Apple with a massive $2 billion fine after finding that the tech giant unfairly favored its own music streaming service over rivals such as Spotify.
Apple banned app developers from ‘fully informing iOS users about alternative and cheaper music subscription services outside of the app,’ said the European Commission, the 27-nation bloc’s executive arm and top antitrust enforcer.
That is illegal under EU antitrust rules. Apple behaved this way for almost a decade, which meant many users paid ‘significantly higher prices for music streaming subscriptions,’ the commission said.
The fine follows a long-running investigation triggered by a complaint from Spotify five years ago.
In response to the fine, Apple released a statement alleging that the commission had failed to find ‘any credible evidence of consumer harm, and ignores the realities of a market that is thriving, competitive, and growing fast.’
At a press conference Monday, Margrethe Vestager, shown here, the European Commission executive vice president, accused Apple of ‘abusing’ its position
The fine comes five years after Spotify first complained about Apple unfairly favoring its own music streaming
In response to the fine, Apple said that the evidence did not back up the commission’s decision and that Spotify pays ‘nothing’ to be present on the app store
‘While we respect the European Commission, the facts simply don’t support this decision,’ the statement continued. Apple has promised to appeal the ruling.
The statement goes on to remark that Spotify pays Apple ‘nothing for the services that have helped to make them one of the most recognizable brands in the world.’
‘We’re proud to play a key role supporting Spotify’s success — as we have for developers of all sizes,’ the statement remarked.
At a press conference Monday, Margrethe Vestager, the European Commission executive vice president, accused Apple of ‘abusing’ its position.
‘For a decade, Apple abused its dominant position in the market for the distribution of music streaming apps through the App Store. From now on, Apple will have to allow music streaming developers to communicate freely with their own users.’
‘[The fine] reflects both Apple’s financial power and the harm that Apple’s conduct inflicted on millions of European users,’ Vestager said.
Vestager has led global efforts to crack down on Big Tech companies, including a series of multibillion-dollar fines for Google and charging Meta with distorting the online classified ad market.
Google was hit with an $10 billion fine from Vestager’s office while Apple was ordered to pay $15 billion to the Irish government over unfair tax breaks.
The commission also has opened a separate antitrust investigation into Apple’s mobile payments service.
The commission’s investigation initially centered on two concerns.
One was the iPhone maker’s practice of forcing app developers that are selling digital content to use its in-house payment system, which charges a 30 percent commission on all subscriptions.
But the EU later dropped that to focus on how Apple prevents app makers from telling their users about cheaper ways to pay for subscriptions that don’t involve going through an app.
The investigation found that Apple banned streaming services from telling users about how much subscription offers cost outside of their apps, including links in their apps to pay for alternative subscriptions or even emailing users to tell them about different pricing options.
The fine comes the same week that new EU rules are set to kick in that are aimed at preventing tech companies from dominating digital markets.
The Digital Markets Act, due to take effect Thursday, imposes a set of do’s and don’ts on ‘gatekeeper’ companies including Apple, Meta, Google parent Alphabet, and TikTok parent ByteDance – under threat of hefty fines.
The DMA’s provisions are designed to prevent tech giants from the sort of behavior that’s at the heart of the Apple investigation.
Apple has already revealed how it will comply, including allowing iPhone users in Europe to use app stores other than its own and enabling developers to offer alternative payment systems.
The commission also has opened a separate antitrust investigation into Apple’s mobile payments service, and the company has promised to open up its tap-and-go mobile payment system to rivals in order to resolve it.