On Monday, Apple (AAPL.O) was hit with a record-breaking 1.8 billion euros (1.95 billion) fine by the EU antitrust over Monday for hindering competition in the music-streaming market by blocking rivals such as Spotify (SPOT.N) from telling their customers about alternative ways to pay, while taking up to 30 percent of sums that apps developers charged their customers.
The European Commission ruling came after Spotify, a Swedish music streaming service, filed a 2019 complaint alleging that Apple’s restrictions were anti-competitive, constituting ‘abusive’ trading conditions. But they are not so new: a similar case brought by dating app providers was raised in 2021 by the Netherlands Authority for Consumers and Markets, a Dutch antitrust agency.
”For a decade, Apple abused its dominant position in the market for the distribution of music streaming apps through the App Store,” says Margrethe Vestager, EU’s antitrust chief. ‘By restricting developers from informing consumers about alternative, cheaper music services available outside of the Apple ecosystem,’ Apple deprives consumers of information, thereby restricting competition. By imposing rules for what companies could and could not do with their software, Apple limited the use of iPhones and iPads to its own app store.
Apple described the EU’s ruling as ‘deeply flawed’ and said it planned to appeal the decision, arguing that the Commission’s assessment ‘ignores the competitive realities of the market’ and ‘won’t improve consumers’ lives.’ The company claimed that today, the game has more competition than ever. Apple also criticized Spotify for being the leading proponent of the decision, given that ‘Spotify wants all the benefits of a free app without being free.’ Spotify doesn’t pay Apple a cut of every sale because its subscriptions are not bought through the app store but elsewhere on its own website.
Vestager’s demands to Apple to remove some of its restrictions on using the App Store resemble the coming EU tech rules under the Digital Markets Act (DMA), which Apple must implement by March 7. While Apple’s fine is significant, it amounts to a small fraction of the penalties racked up by other tech titans, such as Alphabet’s Google in prior antitrust cases.
Yet, despite the music-streaming case, Apple proposes to settle another EU antitrust investigation by opening up its tap-and-go mobile payment systems to rivals. EU regulators have agreed not to penalize the company with hefty fines and instead wait to see what certain competitors and users make of the proposal.
While lawsuits targeting Google have historically grabbed the most attention, Apple’s current tussle with the EU over antitrust violations has laid bare the broader issues of competition and dominance, straining a digital world growing ever closer to regulation. The consequences of this particular showdown could dramatically alter the future of app distribution and competition in the tech world at large across the globe.
Source: Foo Yun Chee, Reuters March 4, 2024
