Why did the EU impose a € 1.8 billion fine on Apple?
What was Spotify’s complaint against the company? How did Apple violate antitrust provisions?
The story so far:
On March 5, the European Commission imposed its first antitrust penalty against Apple for unfairly favouring Apple Music over its rivals. The €1.8 billion ($1.95 billion) antitrust fine concludes the commission’s nearly fouryear long investigation following a complaint from Spotify accusing the company of purposely not disclosing to customers alternative options to pay for their streaming music subscriptions.
What did the commission find?
The EU’s antitrust regulator found that Apple unfairly favoured its own music streaming service by banning rivals like Spotify from telling users, and failing to include links, about cheaper subscription options available outside of the App Store. Apple charges up to 30% commission on purchases made through its App Store. It won’t receive this fee if the user makes the payment directly on the app’s website. The regulator noted that Apple muzzled music streaming apps from informing iOS users about alternative and cheaper music subscription services available on their websites.
What is the significance of the fine?
While having a dominant market position is not illegal in the EU, the penalty in this case highlights the bloc’s seriousness in handling corporations that abuse their dominant market positions. This is also one of the biggest fines levied against a major tech company in the EU. Further, under the provisions of the EU’s antitrust laws, the fine exposes Apple against companies affected by anticompetitive behaviour. This means that anyone affected by Apple’s anticompetitive behaviour in this case may bring the matter before the courts of the EU states and seek damages. This decision comes at a time when Apple is overhauling its app marketplace to comply with Europe’s Digital Markets Act (DMA) to allow thirdparty apps on iOS devices.
Which law did Apple violate?
The regulator concluded that Apple’s antisteering provisions, that include Apple not allowing app developers to steer users towards alternative payment options, amounted to “unfair trading” conditions, in breach of provisions under the Treaty on the Functioning of the European Union (TFEU). The regulator found Apple to have violated Article 102 of the TFEU and Article 54 of the European Economic Area Agreement that prohibit the abuse of a dominant position. The fine comes months after the EU implemented the DMA to put an end to unfair practices by tech companies that act as “gatekeepers” in the online space. Apple will now be barred from applying antisteering provisions on any iOS apps under the bloc’s competition reforms, as it has been designated a gatekeeper. Companies in the EU risk fines of up to 10% of their global turnover for antitrust violations. In the event of repeated
violations, the fine can be extended up to 20%. In a sharp response to the fine, Apple released a statement in which it attacked the EU, claiming enforcers failed to uncover “any credible evidence of consumer harm, and ignored the realities of the market that is thriving, competitive, and growing fast.” Apple further said that there was “no evidence of anticompetitive behaviour”, and that the investigations did not yield a viable theory explaining how it thwarted competition in a thriving market. The iPhone maker said that though it respects the Commission’s decision, the facts do not support it [the ruling], and as such Apple will be appealing the decision.
Which other companies are facing antitrust investigations?
In December last year, Apple offered to let rivals access its tapandgo mobile payments system used for mobile wallets in a bid to settle EU antitrust charges.
The investigation charged Apple with curbing rival’s access to its tapandgo technology, NearField Communication (NFC), making it difficult for them to develop rival services on Apple devices. A longrunning investigation into Google found that the company gave its own shopping recommendations an illegal advantage over rivals in search results. In December 2022, the European Commission informed Meta that they believe the company has breached EU antitrust rules by distorting competition in the market for online classified ads.