European Union Imposes First Antitrust Fine on Apple Over Music Streaming Practices

The European Union has imposed its inaugural antitrust fine against American technology behemoth Apple (NASDAQ:AAPL), amounting to nearly $2 billion.

The fine was levied for violating the bloc’s competition laws by preferentially promoting its own music streaming service at the expense of competitors. According to the European Commission, the executive arm and principal antitrust authority of the 27-nation bloc, Apple prohibited app developers from adequately informing iOS users about alternative and more affordable music subscription services available outside of the app.

Margrethe Vestager, the EU’s competition commissioner, highlighted the illegality of Apple’s actions in a press conference, emphasizing the adverse impact on millions of European consumers. The commission accused Apple of engaging in such practices for almost a decade, leading to consumers paying inflated prices for music streaming subscriptions.

This 1.8 billion-euro penalty follows an extensive investigation initiated by a complaint from Spotify, the Swedish streaming service, five years prior. The European Union has been at the forefront of global efforts to regulate Big Tech companies, having previously imposed multibillion-dollar fines on Google and charged Meta with distorting the online classified ad market. Additionally, the commission has launched a separate antitrust probe into Apple’s mobile payment service.

In response, Apple has criticized the commission and Spotify, announcing its intention to appeal the fine. The company disputed the commission’s findings, arguing that the decision was made without substantial evidence of consumer harm and failed to acknowledge the competitive and rapidly expanding market landscape. Apple also pointed out Spotify’s significant market share in Europe’s music streaming sector and its extensive interactions with the commission, suggesting that the decision unfairly benefits Spotify while entrenching its dominant market position.

The commission’s initial investigation focused on Apple’s requirement for app developers selling digital content to use its proprietary payment system, which incurs a 30% commission on all subscriptions. However, the focus later shifted to Apple’s restrictions on app developers from informing users about cheaper subscription payment methods outside of the apps.

The investigation revealed that Apple prevented streaming services from disclosing subscription costs outside their apps, including links to alternative subscriptions or emailing users about different pricing options.

This fine coincides with the impending implementation of new EU regulations under the Digital Markets Act (DMA), set to take effect this week, aimed at curbing the dominance of tech companies in digital markets. The DMA introduces specific regulations for “gatekeeper” companies, including Apple, Meta, Google’s parent Alphabet, and TikTok’s parent ByteDance, with the threat of significant fines for non-compliance.

Apple has already outlined its compliance measures with the DMA, including allowing iPhone users in Europe access to third-party app stores and enabling developers to offer alternative payment systems. Additionally, in response to a separate antitrust investigation into its mobile payment service, Apple has committed to opening its tap-and-go mobile payment system to competitors.

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