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Apple Slapped with $2 Billion EU Antitrust Fine in Spotify Case
Apple fined 1.84 billion euros ($2 billion) by the EU for impeding competition from music streaming rivals through App Store restrictions. European Commission deems Apple's restrictions as unfair trading conditions. Apple plans to appeal the decision, but must comply with the EU order and pay the fine.
In a groundbreaking move, Apple has been hit with a hefty 1.84 billion euros ($2 billion) fine by the European Union for impeding competition from music streaming rivals through restrictions on its App Store. This marks the first-ever penalty imposed on the tech giant for breaching EU rules.
The European Commission charged Apple last year after Swedish streaming service Spotify and others complained that the company was preventing them from informing users about payment options outside of the App Store. The Commission deemed Apple's restrictions as unfair trading conditions, a relatively novel argument in an antitrust case. The Dutch antitrust agency also used a similar argument in a recent decision against Apple in a case brought by dating app providers.
As a result, Apple has been ordered to cease such conduct. However, the company has stated that it will appeal the decision. The appeal process, which will take place at the Luxembourg-based General Court, Europe's second-highest court, is expected to span several years. In the meantime, Apple will be required to pay the fine and comply with the EU's order.
The fine imposed on Apple is nearly four times the amount that sources had anticipated. It consists of a basic penalty of 40 million euros, described by European Competition Commissioner Margrethe Vestager as a mere "parking ticket" for the tech giant, along with an additional 1.8 billion euros as a deterrent. The total fine of 1.84 billion euros represents 0.5% of Apple's global turnover.
Apple has criticized the decision, arguing that it was reached without any credible evidence of consumer harm and disregards the thriving and competitive nature of the market. The company also pointed out that Spotify, the primary advocate for the decision, has met with the European Commission over 65 times during the investigation.
European music streaming users were left in the dark about alternative options due to Apple's anti-steering rules, according to Vestager. These rules also resulted in consumers paying higher prices for services due to the commission fees imposed on developers, which were then passed on to the end-users.
While Spotify welcomed the EU's decision, the company highlighted that Apple's problematic behavior extends beyond music streaming and affects developers in other markets worldwide.
Although the fine is substantial, analysts believe that Apple can handle it without immediate cash impact. However, this penalty is seen as another step in the ongoing process of dismantling the walled gardens that Apple has built around its ecosystem.
This case also aligns with the requirements of the Digital Markets Act (DMA), new EU tech rules that mandate Apple to remove its App Store restrictions by March 7. In a separate antitrust investigation, Apple has offered to open up its tap-and-go mobile payment systems to rivals in an attempt to settle the matter without facing fines.
Apple fined 1.84 billion euros ($2 billion) by the EU for impeding competition from music streaming rivals through App Store restrictions.
European Commission deems Apple's restrictions as unfair trading conditions.
Apple plans to appeal the decision, but must comply with the EU order and pay the fine.
Source: REUTERS