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EU Commission: Billionaire fine against Apple
The EU Commission has imposed a billion-dollar fine on Apple. photo
© Michael Kappeler/dpa
The next high penalty against a US tech company: According to the EU Commission, Apple has broken competition law. The lion’s share of the punishment was imposed for a reason.
As a deterrent, the EU Commission has imposed a competition fine of around 1.8 billion euros on the tech giant Apple imposed.
The US company abused its dominant market position by selling music streaming apps to iPhone and iPad users via its app store, the Brussels authority said. According to the Commission’s own information, by far the largest part of the penalty consists of a lump sum that the Commission imposed as a deterrent. Only 40 million euros of the fine relate specifically to Apple’s allegedly illegal behavior.
For Apple, the 40 million probably isn’t even a speeding ticket, said EU Commissioner Margrethe Vestager, who is responsible for competition. Such a low penalty would have had no deterrent effect. For a decade, Apple abused its dominant position, for example by preventing developers from informing consumers about alternative, cheaper services. “This is illegal under EU antitrust rules,” said Vestager. Millions of users were left in the dark about the available options.
Years of dispute between Apple and Spotify
The music streaming service Spotify and Apple have been arguing for years. The EU Commission already criticized in 2021 that if an app was downloaded via Apple’s App Store, the sales of subscriptions in the apps must be processed via Apple’s payment platform. The group keeps 30 or 15 percent of the income. Spotify found it unfair that Apple had more money left over from its competing music service because of this levy at the same subscription price.
Apple can take legal action against the penalty. The company criticizes that the decision was made even though the Commission could not find any solid evidence that consumers had been harmed. A large part of Spotify’s success is due to the App Store. Developing technical services that Spotify uses every day costs money, Apple said. According to Apple, the EU Commission has been trying to construct cases for around eight years and after more than 65 meetings with Spotify. It has neither been proven that consumers were harmed nor that Apple violated competition law.
Since the launch of the download platform in 2008, Apple has generally taken a 30 percent levy on revenue from digital items or services such as subscriptions. For subscriptions that last longer than a year, the commission drops to 15 percent – even for developers who earn less than a million dollars a year. According to Apple, Spotify does not pay Apple any money because it sells subscriptions outside of the app. “Ironically, today’s decision in the name of competition only cements the dominant position of a successful European company that is the undisputed leader in the digital music market,” said Apple, referring to Spotify.
New possibilities in the app business
Apple presented alternatives for the app business in the EU in January – the background is a new EU law that will soon be applied. This includes reducing the tax on the sale of digital items and subscriptions via the in-house app store. The previous 30 percent and 15 percent for subscriptions from the second year onwards will become 17 and 10 percent respectively. However, Apple emphasizes that this share should be collected regardless of which payment service an app developer uses. If an app uses Apple’s payment system, an additional three percent is due. Vestager said on Monday that it would look closely at the changes and also take into account the opinions of other companies.
Consumer advocates supported the Commission. The European consumer protection organization Beuc said it was an important step that the Commission had pursued this case. The agency’s decision confirms that European consumers have the right to receive information about cheaper music streaming services without Apple blocking it.
EU competition watchdogs have been scrutinizing American technology platforms for years. Fines amounting to billions of dollars have been imposed on Google alone.