Apple is reportedly on the verge of receiving a substantial €500m fine from the European Union due to limitations it has placed on accessing music streaming services. This fine would mark a significant setback for the American tech giant.
The investigation by the European Commission centres on allegations that Apple has hindered music streaming services from directing users towards more cost-effective subscription options outside of its App Store, where Apple garners a considerable portion of the revenues.
The Financial Times has reported that Brussels is set to levy a €500m (£427m) fine against Apple, culminating years of grievances from companies reliant on distributing their services through iPhone apps.
Spotify, the Swedish streaming behemoth, complained to Apple with the EU in 2019. The company accused Apple of stifling competition and limiting consumer choice within its App Store by imposing a 30% fee on all transactions. Moreover, Spotify highlighted that Apple obstructed these companies from informing customers through their mobile devices that they could circumvent this fee for a better deal by subscribing directly through Spotify’s website.
In defense, Apple has articulated that the fee is a fair exchange for the security measures and customer base access it provides through its App Store, benefiting companies like Spotify with hundreds of millions of potential customers. Contrarily, Spotify counters this argument by pointing out the preferential treatment Apple Music receives, exempt from the additional costs, thereby skewing competition in its favor.
The European Commission is expected to declare Apple’s practices as unlawful and contrary to the EU’s competition rules designed to maintain a fair single market, as per information from five individuals familiar with the ongoing investigation shared with the Financial Times. There’s also talk of the Commission possibly prohibiting Apple’s practice of preventing music services from promoting cheaper subscription alternatives outside its platform.
While Apple has previously been fined €1.1bn by France in 2020 for anti-competitive agreements with two wholesalers—a decision later adjusted to about €370m upon appeal—this would be its first competition-related fine from the European Commission. Nonetheless, Apple, alongside other tech giants, finds itself increasingly under the microscope for competition issues. Google is currently challenging fines totalling over €8bn from the EU across three different investigations. Meanwhile, Apple managed to overcome a lawsuit from v, which accused the App Store of being an illegal monopoly. However, Epic achieved a victory in a similar lawsuit against Google.
In response to the EU’s Digital Markets Act, Apple announced last month that it would permit EU customers to download apps without using its App Store. This law introduces new regulations for “gatekeepers” like Amazon, Google, and Apple, who play dominant roles in determining mobile software choices, aiming to dismantle barriers and foster competition.
