EU Commission: Billion dollar fine against Apple
The trigger was a complaint from Spotify, and now the EU Commission has decided: Apple should pay a fine of 1.8 billion euros. The US company abused its position in the music streaming business.
The EU Commission has imposed a fine of 1.8 billion euros on the iPhone manufacturer Apple. The US company abused its dominant market position by selling music streaming apps to iPhone and iPad users via its app store, the Brussels authority said.
Apple imposed restrictions on app developers that prevented them from informing Apple users about other and cheaper music subscription services. “This is illegal under EU antitrust rules,” the Commission argued.
The penalty was preceded by a lengthy investigation that was triggered by a complaint from the Swedish music streaming service Spotify. The EU Commission criticized in 2021 that the sales of subscriptions in the apps had to be processed via Apple’s payment platform if the app was downloaded via Apple’s App Store. The group keeps 30 or 15 percent of the income.
The company criticizes the evidence
Apple argues that the decision was made even though the Commission could not find any solid evidence that consumers had been harmed. A large part of Spotify’s success is due to the App Store.
Since the launch of the download platform in 2008, Apple has generally taken a 30 percent levy on revenue from digital items or services such as subscriptions. For subscriptions that last longer than a year, the commission drops to 15 percent – even for developers who earn less than a million dollars a year.
EU wants to deter people with money
Apple presented alternatives for its app business in the EU in January. This includes reducing the tax on the sale of digital items and subscriptions via the in-house app store. The previous 30 percent and 15 percent for subscriptions from the second year onwards will become 17 and 10 percent respectively. However, Apple emphasizes that this share should be collected regardless of which payment service an app developer uses. If an app uses Apple’s payment system, an additional three percent is due.
The EU competition watchdogs have been looking closely at American technology platforms for years. Fines amounting to billions of dollars have been imposed on Google alone. The Commission also justifies the current billion-dollar fine by saying that Apple provided incorrect information in the administrative procedure and that the amount should be a deterrent.
