Apple faces 1.8 billion euro fine over App Store restrictions

WEB DESK: In a historic move, tech giant Apple has been slapped with a substantial 1.8 billion euros ($1.95 billion) antitrust fine by the European Union on Monday.

This marks the first-ever such penalty for the company, as it allegedly impeded music streaming services, including Spotify, from informing users about alternative payment options outside its App Store.

The European Commission’s decision, prompted by a 2019 complaint from Swedish music streaming service Spotify, highlights concerns over Apple’s restrictive practices and its imposition of a 30% fee on transactions made through its App Store.

The EU competition enforcer argued that Apple’s limitations on informing users about alternative payment options amounted to unfair trading conditions.

This argument, relatively novel in antitrust cases, was also employed by the Dutch antitrust agency in a 2021 decision against Apple, involving a case brought by dating app providers.

Adding an extra deterrent, the EU competition enforcer imposed an additional lump sum of 1.8 billion euros on top of the undisclosed basic amount. The decision reflects the Commission’s stance that a significant portion of the harm caused by Apple’s conduct was non-monetary.

EU Antitrust Chief Margrethe Vestager asserted, “For a decade, Apple abused its dominant position in the market for the distribution of music streaming apps through the App Store. 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.”

Apple, however, has criticised the EU decision and vowed to challenge it in court. The company argued that the Commission failed to uncover credible evidence of consumer harm and disregarded the thriving, competitive nature of the market.

In a statement, Apple said, “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.”

The tech giant highlighted that Spotify pays no commission to Apple as it sells its subscriptions on its website, bypassing Apple’s App Store.

Vestager’s order to remove App Store restrictions aligns with the upcoming Digital Markets Act (DMA), set to be enforced on March 7.

Despite the substantial fine, it’s noteworthy that Apple’s penalty amounts to about a quarter of the 8.25 billion euros in fines imposed on Alphabet’s Google by the EU regulator in three cases over the previous decade.

In a separate EU antitrust investigation, Apple seeks to settle by offering to open up its tap-and-go mobile payment systems to rivals, a move that regulators are likely to accept without additional fines after seeking feedback from competitors and users.

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