EU Regulators Fine Apple $2 Billion For Breaking Competition Rules

• Apple has been fined $2 billion for breaking competition laws in Europe after a complaint was filed by Spotify in 2019.
• Spotify accused Apple of charging 30% on all purchases through the App Store and also limited payment options for the customers.
• Apple has decided to appeal against the decision.

European regulators have fined Apple $2 billion (1.5bn) for being too dominant on iPhones and breaking competition laws in music streaming.

The company was also accused of keeping users in the dark about cheaper streaming services that are available outside the Apple store. This practice is illegal in Europe and is very clearly mentioned in the competition laws.

For a decade, Apple abused its dominant position in the market for the distribution of music streaming apps through the App Store.Margrethe Vestager, executive vice president in charge of competition policy

Vestager also remarked that the fine was quite small, not even a speeding ticket, parking ticket" and that the amount was a mere 0.5% of Apple's global turnover.

So, Apple will now not only have to pay the fine but also remove all these restrictions so that iPhone users can use services and payment options outside its ecosystem.

Apple is understandably not happy with this decision and has said that it will appeal against it. The company also feels that this decision will unfairly benefit one of its biggest competitors-Spotify-which already owns 56% of Europe's music streaming industry.

The company also said that the main goal here is to keep the consumers in benefit. And in this case, there's no proof that the consumers were suffering under the previous arrangement.

Also, they feel that the decision-makers are not in touch with the realities of the industry. It's a growing, thriving, and competitive market so it's natural for companies to do everything in their power to gain the upper hand.

What makes Apple even angrier is that Spotify met with the European Commission over 65 times during the investigation, clearly not helping Apple's case. However, Spotify has not commented on any of these claims made by Apple.

Such a heavy fine is a first for Apple but the EU regulators have justified the numbers citing Apple's massive revenue, the gravity of the situation, and the long duration for which the company continued to break the rules.

Read More: Brussels to impose fine against Apple over lack of compliance with access to music streaming services

Where Did It All Begin?

The investigation by the EU regulators (in 2022) was triggered by Spotify who filed a complaint (in 2019) against the tech giant after being unhappy over some of its practices.

In this complaint, the Swedish streaming app mentioned that Apple forced all third-party content apps to pay up to 30% commission on every subscription they sell. However, this fee was not levied on Apple Music.

Since all the payments had to be made through Apple's in-app payment option, app developers had no means to inform the customers about cheaper alternatives.

The worst part is, since Apple is one of the biggest smartphone sellers in Europe, Spotify had no other option but to comply with Apple's unfair demands. Otherwise, they'll have no means to reach iPhone users.

In 2023, although the EU regulators did not release an official statement, they had recognized Apple's practices as unfair and against the laws. So, the two companies probably had an inkling about what the Commission might ultimately decide.

Now that the decision has finally come in, Spotify is very happy and said that this is an important message for all big companies, even monopolies like Apple, that no company reserves the right to decide how other companies interact with their customers.

Apple, on the other hand, feels that the success that Spotify is enjoying today is much to their credit. It said that being on the Apple App Store gave the streaming service recognition.

On top of that, the platform's built-in tools help these third-party apps build, maintain, update, and share their services with millions of users. According to Apple, all these benefits come at a cost but Spotify wants it all for free.

Read More: Spotify slashes 17% of its workforce as it focuses on AI - share prices soar

The Digital Markets Act & Apple's Change In Policy

Even before this decision, Apple had been making major changes in its policy since January to comply with the Digital Markets Act- a new act introduced by the EU Commission to make the industry more fair and allow healthy competition between companies.

Under this act, Apple will now be allowing third-party app stores and also allow app developers to offer other payment methods to their customers.

However, according to Spotify, this alone would not solve the problem. The company called this an alternative that offers no alternative at all". They feel that even if they allowed third-party app stores, they would have kept charging high commissions to the developers with the regulators' intervention.

The relationship between the two companies is very strained at the moment with Spotify calling Apple inconsistent" and arrogant" and claiming that the changes they are apparently making to their policies are just a facade to show that they are complying with the rules.

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