Apple was fined €1.8billion (£1.54billion) by European regulators because it stifled competition from rival music streaming services.
Spotify has won a major victory in the long-running battle with Apple regarding rules that were placed within the App Store, which prohibited it from advertising subscription prices within its app.
The European Commission stated that this led to “unfair trade conditions”, meaning that iPhone users could have paid “significantly more for music subscriptions” in the last decade.
It was stated that the commission intended for such a fine to be a deterrent. Apple also submitted incorrect information to the investigation. Apple intends to appeal the decision.
Apple stated that the fine was imposed because it “failed to uncover any credible proof of harm to consumers, and ignored the realities of an industry which is thriving and competitive and growing rapidly”.
Margrethe Vestager is the executive vice president of the Commission who is responsible for competition regulations. She said: “Apple abused its position as the dominant player in the music streaming market through the App Store for a decade. The company did this by preventing developers from telling consumers about cheaper alternatives to Apple’s ecosystem. “This is illegal under EU antitrust laws.”
The fine, if it is paid, will come as a pleasant surprise to British and European tax payers. The money will be paid into the coffers of the EU and reduce the contributions that the member states will pay for the next year. The UK will get a share as the investigation began before the Brexit.
Apple has suffered another major blow after being forced to restructure the App Store due to new European technology legislation. Apple must now offer customers alternative methods to download apps and pay, as per the Digital Markets Act. This, according to the company, threatens user security.
Apple says that the market leader and others benefit from its services, because they have access to its technology, tools, and other features, as well as being able to stream music through its other devices such Siri and CarPlay.
Apple’s spokesman stated: “Spotify does not pay Apple for services that helped them build, update, and share their app to Apple users across 160 countries. Their complaint is essentially about trying to gain unlimited access to Apple’s products without paying for any value Apple provides.
The Spotify app was downloaded, redownloaded, or updated over 119 billions times on Apple devices.
Spotify stated: “Apple’s rules prevented Spotify and other streaming music services from communicating directly with their users about different benefits. We were unable to inform them of how to upgrade, the cost of subscriptions, special offers, discounts or other benefits.
It is the basic principle of free markets – customers should be aware of their options and they should make decisions about what, where, when, and how to purchase. Not Apple.
In 2019, the commission began investigating Apple after a complaint was received from Spotify.
Alex Haffner of UK law firm Fladgate said that the fines and EC statements show the determination of competition authorities in Europe, to regulate big technology strongly and effectively.
He said: “They were careful to not only emphasize the significant harm to consumers that the Commission believes Apple’s abusive behavior over a long time caused, but to also highlight the very clear message of the competition commissioner about the need for strong deterrents to companies in the similar position as Apple to ensure any such behaviour would be dealt with accordingly.”
Apple shares dropped by 2.5%, or $4.56 to close at $175.10, after the ruling.