The European Union has fined Apple €1.8 billion after an investigation found that it had limited competition from music streaming services like Spotify. Apparently, Spotify was complaining for a good reason.
The fine is nearly four times higher than expected, in an attempt by the European Commission to demonstrate that it will act forcefully against technology companies that abuse their dominant position in the online services market.
The European Commissioner for Competition, Margrethe Vestager, said that a smaller fine would not have served much purpose and that the 1.8 billion euros are designed to act as a deterrent against the repetition of such practices by Apple or others.
As a result of Apple’s anti-competitive practices, customers have been paying more than they should for streaming music, explains the commissioner. Hence the hefty fine.
“Apple’s rules ended up harming consumers. Essential information was hidden so that consumers could not use it effectively or make informed decisions. Some consumers may have paid more because they were not aware that they could pay less if they subscribe outside the app,” said Vestager.
The case began as a result of the complaints filed by Spotify and focused on the Apple’s App Store as the only gateway for iPhone applications.
“Apple’s conduct, which lasted almost 10 years, may have led many iOS users to pay significantly higher prices for music streaming subscriptions,” the European Commission said in a statement.
Vestager said that consumers may have paid two or three euros more per month for music streaming due to lack of open competition. However, she admitted that the fine would not be distributed among the supposedly exploited customers, but among the different member states.
The fine represents 0.5% of Apple’s global revenue
According to the Commission, the technology company harmed users by preventing application developers from openly promoting cheaper music subscription services available outside of Apple’s “ecosystem”.
“Streaming music developers were not allowed to inform users within their own applications about cheaper prices for the same internet subscription,” in an “anti-steering” practice, he said.
“They were also not allowed to change the links of their applications so that consumers could access their websites and pay lower prices there,” he said at a press conference in Brussels.
Under the Digital Markets Act (DMA), technology companies were given six months starting from August of last year to comply with the new rules that will require them to allow fair competition from their rivals.
It is expected that the Thursday deadline to comply with the regulations will result in immediate changes in iOS and Android app stores.
Spotify, the world’s largest music streaming service, has argued that the restrictions benefit Apple’s rival music streaming service, Apple Music.
Spotify and other app providers have long criticized Apple’s App Store, which they claim stifles competition by charging a 30% fee for apps and in-app purchases.
In response to the fine, Apple stated: “The decision has been made despite the Commission not finding any credible evidence of harm to consumers, and it ignores the reality of a thriving, competitive, and rapidly growing market.”
