EU Commission Vice President Margrethe Vestager speaks to the media about the Apple Music streaming service at EU headquarters in Brussels on Monday.
Geert Vanden Wijngaert/AP
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Geert Vanden Wijngaert/AP
EU Commission Vice President Margrethe Vestager speaks to the media about the Apple Music streaming service at EU headquarters in Brussels on Monday.
Geert Vanden Wijngaert/AP
LONDON — The European Union slapped its first antitrust penalty on Apple on Monday, fining the US tech giant nearly $2 billion for unfairly favoring its own music streaming service by banning competitors like Spotify from telling users how they can pay for cheaper subscriptions outside of the iPhone app.
The European Commission, the 27-nation bloc’s executive body and top antitrust agency, said Apple had prevented streaming services from informing users about payment options available through their website, this will avoid the 30% fee when people pay through apps downloaded using the iOS App Store. executor.
Margrethe Vestager, the EU competition commissioner, said: “This is illegal. And it has affected millions of European consumers who cannot freely choose where to buy music streaming subscriptions , how and at what price”. conference in Brussels.
Apple – which opposes the decision – has been behaving this way for a decade, she said, resulting in “millions of people having to pay two, three euros more per month for their music streaming service than with the amount they should have paid”.
It was the culmination of a bitter years-long feud between Apple and Spotify over music streaming supremacy. A complaint from the Swedish streaming service five years ago led to an investigation that resulted in a 1.8 billion euro ($1.95 billion) fine.
The decision comes the same week new regulations came into effect aimed at preventing tech giants from cornering the digital market.
The EU has led global efforts to crack down on Big Tech companies, including three fines against Google totaling more than 8 billion euros, accusing Meta of distorting the online classified advertising market. online and forcing Amazon to change its business methods.
The commission said Apple’s fine was high because it included an additional amount to deter it or other technology companies from committing similar crimes.
This isn’t the only penalty the tech giant could face: Apple is still trying to resolve a separate EU antitrust investigation into its mobile payments service by promised to open up its tap-and-go mobile payment system to competitors.
Apple responded to the commission and Spotify, saying they would appeal Monday’s fine.
“This decision was made despite the Commission’s failure to find any credible evidence of consumer harm and ignores the reality of a growing market,” the company said in a statement. thrive, compete and develop rapidly”.
They said Spotify would benefit from the EU’s move, asserting that the Swedish streaming giant met more than 65 times with the commission during the investigation, holding a 56% share of the country’s music streaming market. Europe and do not pay Apple to use their App Store.
“Ironically, in the name of competition, today’s decision only strengthens the dominant position of a successful European company and leader in the digital music market,” Apple said.
Spotify said it welcomed the EU fine but did not mention Apple’s accusations.
“This decision sends a strong message – no company, not even a monopoly like Apple, can abuse its power to control how companies others interact with their customers”.
The committee’s investigation initially focused on two concerns. One is that the iPhone maker forces app developers selling digital content to use its internal payment system, which charges a 30% commission on all subscriptions.
Those fees have become a key part of Apple’s services division, which generated $85 billion in revenue in the company’s last fiscal year that ended in September.
Various legal and regulatory developments in the United States as well as Europe that are threatening to cut Apple’s App Store commissions have weighed on the company’s stock, which is down 9% year-to-date in as the tech-oriented Nasdaq composite index gained 8%. Apple shares fell 2.5% in Monday’s US trading session
But the EU later shifted focus to focus on how Apple prevents app makers from telling their users about cheaper ways to pay for subscriptions unrelated to app use.
The investigation found that Apple prohibits streaming services from telling users the cost of subscription offers outside of their apps, placing links within their apps to pay for subscriptions instead, or even email users to inform them about different pricing options.
“The result is that millions of music streaming users in Europe are unaware of all the options available,” Vestager said, adding that the commission’s investigation found that just over 20% consumers who signed up for Spotify’s premium service did not sign up. do so because of limitations.
The fine comes just before new EU regulations come into force aimed at preventing tech companies from dominating digital markets.
The Digital Markets Act, which goes into effect on Thursday, imposes a number of dos and don’ts on “gatekeeper” companies including Apple, Meta, Alphabet, Google’s parent company and ByteDance, TikTok’s parent company – are threatened with heavy fines.
The provisions of the DMA are designed to prevent tech giants from engaging in the type of conduct at the heart of Apple’s investigation. Apple has revealed how it will comply, including allowing iPhone users in Europe to use app stores other than its own and allowing developers to offer alternative payment systems .
Vestager warned that the commission will closely examine how Apple complies with the new regulations.
“Apple will have to open up its ecosystem to allow users to easily find the apps they want, pay for them any way they want, and use them on any device,” she said. whatever they want”.
