A looming fine of up to 500 million euros ($540 million) from the European Union threatens to hit US tech giant Apple for alleged violations of laws governing access to music streaming services, signaling a significant setback for the company.
The European Commission has been conducting an investigation into whether Apple engaged in anti-competitive practices within the music streaming market by purportedly blocking certain apps from informing iPhone users about more cost-effective subscription options available outside of Apple’s own platform.
According to a report by the Financial Times, citing sources close to the investigation, the announcement of the fine, which would mark the EU’s first penalty against Apple, is anticipated early next month. This development follows a 2020 fine of 1.1 billion euros imposed on Apple in France for similar alleged anti-competitive actions.
The EU’s probe was triggered by an official complaint lodged by music streaming service Spotify in 2019, alleging that it had been compelled to raise its monthly subscription fees to compensate for expenses related to Apple’s App Store regulations.
The investigation examined whether Apple’s imposition of “anti-steering” conditions violated the EU’s regulations on abuse of dominance, potentially resulting in disadvantages for music consumers through increased costs for apps.
Spotify argued that Apple’s App Store fee, amounting to 30 percent of all transactions, restricts choice and competition, further alleging that Apple prohibited Spotify and other companies from informing customers on their devices about the option to bypass the commission and secure more favorable deals by registering directly on Spotify’s website.
Apple has defended its fee structure, citing substantial investments in maintaining a secure app store infrastructure and providing access to a vast customer base.
Conversely, Spotify contends that Apple Music, Apple’s proprietary music streaming service, does not bear equivalent expenses, thereby gaining an unfair advantage and characterizing the fees as anti-competitive.
The European Commission is poised to declare Apple’s actions illegal, as they allegedly contravene the bloc’s competition regulations aimed at fostering a level playing field within the single market.
Amid mounting scrutiny over competition concerns, major tech companies like Google are also grappling with ongoing legal challenges. Google is currently appealing fines exceeding 8 billion euros imposed by the EU across three separate competition investigations.
In an effort to address concerns raised by EU regulators, Apple recently unveiled changes to its iOS mobile software, App Store, and Safari browser, allowing companies to highlight more affordable subscription alternatives outside of their platforms. Apple framed these adjustments as offering developers greater choice. However, Spotify criticized the modifications, labeling them as a “complete and total farce.”
The impending fine against Apple underscores the EU’s commitment to reining in the dominance of major tech firms, with new regulations slated to come into effect next month that will designate Apple, Amazon, Google, Meta, and Microsoft as “digital gatekeepers,” subjecting them to stringent competition guidelines.
