The European Union’s executive branch, the European Commission, has hit Apple (AAPL) with a nearly $2 billion fine resulting from a complaint from Spotify, marking the E.U.’s first-ever antitrust penalty on the U.S. tech giant. The E.U.’s antitrust chief Margrethe Vestager wrote remarks yesterday (Mar. 4) explaining the decision, stating that Apple is “abusing its dominant position on the market for the distribution of music streaming apps.” According to the European Commission, Apple, which has its own music streaming service, Apple Music, prevents competing apps like Spotify from informing users of their different pricing tiers in subscriptions options.
“For a decade, Apple has restricted music streaming app developers from informing their consumers about cheaper options available outside of the app,” Vestager said in her statement. “Apple has done so by contractually imposing ‘anti-steering rules’ on music streaming app developers.”
In January, Spotify published an open letter to Vestager calling for the European Commission to take a stance against “anticompetitive and unfair practices” by Apple. Spotify first complained about Apple to E.U. regulators in 2019, saying the iPhone maker’s App Store failed to inform customers of different payment options provided by Spotify and other Apple competitors. Spotify also took issue with Apple taking a 30 percent cut from subscriptions purchased in the App Store.
In a statement today, Apple argued that Spotify, which is headquartered in Sweden, owns more than half of Europe’s music streaming market and that it doesn’t pay Apple for its use of the App Store, since users buy subscriptions through Spoitfy’s website.
“The reality is that European consumers have more choices than ever,” Apple said in its statement. “Ironically, in the name of competition, today’s decision just cements the dominant position of a successful European company that is the digital music market’s runaway leader.”
Apple is one of six tech companies designated as “gatekeepers” under the E.U.’s new Digital Markets Act. The designation is designed to identify large tech companies that have the potential to gain too much power in the digital market. The other five companies are Google parent Alphabet, Amazon, Meta, Microsoft and TikTok parent ByteDance.
The DMA is set to take effect this week, and the designated companies will have until March 6 to comply with the regulations. Apple acknowledged the timeframe in its statement, promising it will act in accordance with the policy, but saying the $2 billion fine is a premature extension of the legislation. “What’s clear is that this decision is not grounded in existing competition law,” Apple said. “It’s an effort by the Commission to enforce the DMA before the DMA becomes law.”
