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European regulators have imposed a fine of €1.8 billion (£1.54 billion) on Apple for anti-competitive practices that hindered competition in the music streaming market.
The fine, marking the third-largest ever issued by the European Commission, is a significant win for Spotify in its ongoing dispute with Apple regarding regulations within the App Store. Apple had enforced rules prohibiting Spotify from promoting subscription offers within its app, resulting in what the European Commission described as “unfair trading conditions.” This situation potentially led to higher subscription prices for music streaming services for iPhone users over the past decade.
The European Commission stated that the substantial fine aims to serve as a deterrent and reflects the severity of the violation, exacerbated by Apple’s provision of inaccurate information during the investigation. Apple has announced plans to challenge the decision.
In response, Apple argued that the fine overlooks the absence of credible evidence of consumer harm and disregards the thriving and competitive nature of the market. Margrethe Vestager, the executive vice-president of the commission responsible for competition regulation, highlighted Apple’s abuse of its dominant position in the music streaming app distribution market, emphasizing its illegal actions under EU antitrust rules.
If the fine is paid, it will provide an unexpected financial boost for British and European taxpayers, contributing to the bloc’s funds and reducing member states’ contributions for the following year. The UK will also receive a portion of the fine as the investigation predates Brexit.
This penalty adds to Apple’s challenges, as it recently revamped its App Store structure following the introduction of new European technology legislation. Under the Digital Markets Act, Apple is now required to offer alternative methods for customers to download and pay for apps, a move it contends jeopardizes user security.
Apple maintains that Spotify and other music streaming services benefit from its services without payment, citing access to its tools and technology, as well as the ability for customers to stream music on various Apple devices. However, Spotify argues that Apple’s rules stifled its ability to communicate directly with users about subscription upgrades, pricing, and promotions, thereby restricting free market principles.
The European Commission launched its investigation into Apple in 2019 following a complaint from Spotify. Alex Haffner, a competition partner at UK law firm Fladgate, noted that the fine and EC statements underscore the determination of European competition authorities to regulate big tech rigorously and effectively, sending a clear message about the consequences of anti-competitive behavior.