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The European Commission, the European Union’s executive arm, on Monday said: apple The music streaming app was slapped with a 1.8 billion euro ($1.95 billion) antitrust fine for abusing its dominant position in the distribution market.
The commission said it found that Apple applied restrictions to app developers that prevented them from informing iOS users about alternative, cheaper music subscription services available outside of the app.
Apple also prohibited music streaming app developers from providing any instructions on how users could subscribe to these cheaper offers, the commission alleged.
This is Apple’s first antitrust fine from Brussels and one of the largest fines ever imposed on a technology company by the EU.
Apple shares fell about 2.5% in morning trading in the United States.
The European Commission launched an investigation after receiving a complaint from Apple. spotify The investigation focused on contractual restrictions Apple has placed on app developers, preventing them from informing iPhone and iPad users of lower-cost alternative music subscription services outside of the App Store.
According to the commission, Apple’s conduct has been going on for nearly a decade, and “many iOS users have lost access to music streaming due to high fees that Apple imposes on developers and passes on to consumers in the form of higher fees.” You may now be paying significantly more for your subscription than the subscription price for the same service in the Apple App Store. ”
Apple’s response
In a furious reaction to the fine, Apple said Spotify stands to benefit the most from the EU ruling.
“The main proponent and biggest beneficiary of this decision is Spotify, based in Stockholm, Sweden. Spotify has the world’s largest music streaming app and has met with the European Commission more than 65 times.” “This investigation is ongoing,” Apple said in a statement.
“Spotify currently has a 56% share of the European music streaming market, more than double that of its closest competitor, and the services that have helped make Spotify one of the most recognizable brands in the world We didn’t pay Apple anything for it.”
Apple says a “large part” of Spotify’s success is due to the Cupertino, California-based giant’s App Store and all the apps Spotify uses to build, update, and share apps with Apple users around the world. He said it was thanks to tools and technology. ”
Apple said Spotify paid nothing. This is because Spotify sells subscriptions through its own website instead of selling subscriptions on its iOS app. Apple doesn’t collect fees on those purchases.
Developers have long voiced opposition to Apple’s 30% fee on in-app purchases.
Spotify said in a statement that the commission’s decision is “an important moment in the fight for a more open internet for consumers.”
“Apple’s rules prevent Spotify and other music streaming services from sharing various benefits directly with users within their apps, including how to upgrade, subscription pricing, promotions, discounts, and many other benefits. We are no longer able to communicate,” Spotify said.
“Of course, Apple Music, a competitor of these apps, is not prohibited from doing the same.”
Apple fines just for ‘parking ticket’
The commission said Apple prevented music streaming app developers from informing iOS users about subscription prices and benefits available elsewhere within their apps.
App developers could not include links in their apps that directed iOS users to the app developer’s website where they could purchase an alternative subscription, the commission argues.
The EU’s enforcement arm also said Apple prevented app developers from contacting their newly acquired users, for example by email, to inform them of alternative pricing options.
EU antitrust chief Margrethe Vestager said at a press conference that the basic amount of Apple’s fine, excluding the one-time €1.8 billion, was “quite small”, adding that it was no better than “a speeding ticket or a parking ticket”. I compared it to Company size.
“If Apple imposes these anti-steering provisions on music providers, developers will have no choice but to accept them or abandon the App Store.Currently, Apple, with the App Store, has exclusive rights. I’m holding on,” Vestager said.
The commission added that it ordered Apple to remove the so-called anti-steering provisions and “to refrain from similar conduct in the future.”
EU scrutiny of tech giants increases
The fines will increase tensions between Big Tech companies and Brussels as the EU increases scrutiny of these companies.
Last year, the committee named Apple among the following technology companies: microsoft and meta It acts as a “gatekeeper” under a landmark regulation called the Digital Markets Act, which broadly took effect last year.
The term gatekeeper refers to large internet platforms that the EU believes restrict access to core platform services such as online search, advertising, messaging and communications.
The Digital Markets Act aims to crack down on anti-competitive behavior by technology companies and force them to open up some of their services to other competitors. Small Internet companies and other companies complain that they are being harmed by these companies’ business practices.
These laws are already impacting Apple. This year, the company announced plans to open up iPhones and iPads to alternative app stores other than its own. Developers have long complained that Apple charges them a 30% commission on in-app purchases.
Vestager warned Apple about DMA.
“In the coming days of March 7th, Apple must comply with a complete list of do’s and don’ts under the DMA. Among other things, Apple can no longer impose rules such as anti-steering obligations. And this applies not only to music streaming apps, but to any app on the App Store. ”
CNBC’s Ryan Browne and Ruxandra Iordache contributed to this article.
