Following a complaint by Spotify, the European Commission will reportedly hand down penalties after Apple enforced ‘unfair business conditions’.
The European Union is preparing to impose a €500 million (about. $539 million) fine on Apple for allegedly restricting competition in the music streaming business. This would be the first time the group imposed an antitrust sanction against the digital behemoth.
Why is Apple facing the possibility of a fine?
After a complaint from Spotify in 2019, the EU launched an investigation into Apple’s position in the music streaming app industry. It has narrowed its probe to specific restrictions imposed by Apple on app developers. These restrictions hinder companies like Spotify from informing iPhone and iPad consumers about cheaper music subscriptions that are not accessible through the App Store. Spotify claims that this favours the tech company’s rival service, Apple Music. The case is the latest example of legal fighting over Apple’s App Store, a key digital gateway and source of complaints from companies that use it.
In 2020, the European Commission opened a study into Apple’s App Store rules in the European market, seeking to investigate, among other things, the contentious 30% commission — sometimes known as Apple’s ‘app tax’ — that Apple charges third-party software developers on numerous subscriptions. The app charge is also believed to apply to competing music streaming services.
Apple recently tried to address some of those concerns, citing the EU’s Digital Markets Act (DMA), by stating that it will allow EU customers to download apps without going through its own store.
What will happen next?
According to the Financial Times, the commission plans to publish the fine early next month. The highest penalty for anti-competitive activity is 10% of the company’s global turnover. In the case of Apple, this hints at a potential $30 billion (£24 billion) fine, though the actual sum will be far lower, according to the Financial Times. The panel will also allow Apple to challenge any decisions.
The EU’s newest step demonstrates its rising assertiveness in controlling the dominance of giant technology companies. The bloc has previously taken action against other tech behemoths, such as Google and Amazon, over antitrust issues. Apple has never been fined by the EU for antitrust infringement, but it was previously fined €1.1 billion ($1.2 billion) in France, which was eventually lowered to €372 million ($401 million) after an appeal.
