The
European Union
dealt a major blow to
Apple
, imposing a record 1.8 billion euros ($2 billion) fine on the tech giant for abusing its dominant position and restricting competition in the music streaming market through its
App Store
rules.
The European Commission, the
EU
's antitrust watchdog, found that Apple had engaged in anticompetitive practices for nearly a decade by prohibiting app developers from informing users of cheaper ways to pay for subscriptions outside the App Store.
EU cracks down on App Store "anti-steering" rules
In a press conference, Margrethe Vestager, the EU's competition chief, stated, "For a decade, Apple abused its dominant position in the market for the distribution of music streaming apps through the App Store." She added, "They did so by restricting developers from informing consumers about alternative, cheaper music services available outside of the Apple ecosystem."
The Commission specifically targeted Apple's "anti-steering" rules, which prevented music streaming app developers like
Spotify
from advertising subscription options on websites or other platforms that circumvented Apple's in-app purchase system and its commission of up to 30%.
Spotify complaint sparked the investigation
The investigation stemmed from a complaint filed by Spotify, Apple's chief rival in the music streaming space, in 2019. The Swedish company had long accused Apple of unfairly favouring its own Apple Music service by imposing restrictive policies on third-party developers.
In a statement, Spotify welcomed the EU's decision, calling it "a critical step toward holding Apple accountable for its long-standing anti-competitive practices that have disadvantaged consumers and squeezed app developers."
Apple to appeal, defends App Store policies
Apple, however, rejected the EU's findings and vowed to appeal the decision. In a strongly worded statement, the company said, "The Commission failed to uncover any credible evidence of consumer harm and ignores the realities of a market that is thriving, competitive, and growing fast."
The
iPhone
maker defended its App Store policies, arguing that they ensure a safe and secure user experience while providing developers with a valuable platform to reach hundreds of millions of customers worldwide.
Escalating battles
The record fine against Apple is the latest salvo in the EU's ongoing battle to curb the dominance of Big Tech companies and promote fair competition in the digital economy. In recent years, the bloc has levied billions of dollars in fines against Google, Amazon, and Meta (formerly Facebook) for various antitrust violations.
The decision also comes as the EU's landmark Digital Markets Act (DMA) takes effect this week, introducing new rules that will force Apple and other tech giants to open up their platforms to rival services and developers.
While the fine itself is unlikely to dent Apple's massive cash reserves significantly, the EU's ruling could have far-reaching implications for the company's App Store business model. If upheld, it could force Apple to loosen its grip on the distribution and payment systems for apps on its devices, potentially impacting a lucrative revenue stream. And it is happening, at least in the European Union, as the DMA goes into effect later this month, and Apple is being forced to open up iPhones to alternative app marketplaces and third-party payment options with the iOS 17.4 update.
Apple reported revenue of $119.6 billion in the first quarter of 2024, with the App Store contributing a significant portion of its services business, which generated $20.8 billion in revenue during the same period.
Ongoing scrutiny from regulators and developers
The EU's decision is just the latest in a series of legal and regulatory challenges facing Apple over its App Store policies. The company faces antitrust lawsuits from developers and regulatory scrutiny from the Department of Justice and state attorneys general in the United States.
Developers, including Spotify, have long criticised Apple's App Store rules as anticompetitive, arguing that the company's strict control over app distribution and payment systems stifles innovation and forces them to pay excessive commissions.
As the legal battles continue, the pressure on Apple to reform its App Store practices will likely intensify, potentially reshaping the landscape for app developers and consumers.
English (US) ·