Apple facing €1.8bn EU fine for breaking music streaming competition laws

The European Union issued its first antitrust penalty against Apple on Monday, fining the US tech giant €1.8 billion for breaking the bloc's competition laws by unfairly favoring its own music streaming service over rivals.

The Apple logo is seen hanging at the entrance to the Apple store on 5th Avenue in Manhattan, New York, U.S., October 16, 2019. © Mike Segar / Reuters

Apple banned app developers from "fully informing iOS users about alternative and cheaper music subscription services outside of the app," said the European Commission, the 27-nation bloc’s executive arm and top antitrust enforcer.

"This is illegal, and it has impacted millions of European consumers," Margrethe Vestager, the EU's competition commissioner, said at a news conference.

We've imposed a fine on Apple for its abusive App Store rules for music streaming providers.

Press conference by Executive-Vice President @vestager ↓ https://t.co/jZF0TZ05nm

— European Commission (@EU_Commission) March 4, 2024

Apple behaved this way for almost a decade, which meant many users paid "significantly higher prices for music streaming subscriptions," the commission said.

The €1.8 billion fine follows a long-running investigation triggered by a complaint from Swedish streaming service Spotify five years ago.

The EU has led global efforts to crack down on Big Tech companies, including a series of multbillion-dollar fines for Google and charging Meta with distorting the online classified ad market.

The commission also has opened a separate antitrust investigation into Apple’s mobile payments service.

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In a statement, Apple hit back at both the commission and Spotify, saying it would appeal the penalty.

"The decision was reached despite the Commission’s failure to uncover any credible evidence of consumer harm, and ignores the realities of a market that is thriving, competitive, and growing fast," the company said in a statement.

It said Spotify stood to benefit from the decision, asserting that the Swedish streaming service that holds a 56 percent share of Europe’s music streaming market and doesn't pay Apple for using its App Store met 65 times with the commission over eight years.

"All told, the Spotify app has been downloaded, redownloaded, or updated more than 119 billion times on Apple devices. It’s available on the App Store in over 160 countries spanning the globe. And there are many more ways Apple creates value for Spotify, at no cost to their company," according to Apple.

Swedish music streaming service Spotify, whose CEO Daniel Ek is seen here, saw shares drop after a disappointing quarterly update AFP/File

"Ironically, in the name of competition, today’s decision just cements the dominant position of a successful European company that is the digital music market’s runaway leader," Apple said.

The commission's investigation initially centered on two concerns. One was the iPhone maker's practice of forcing app developers that are selling digital content to use its in-house payment system, which charges a 30 percent commission on all subscriptions.

But the EU later dropped that to focus on how Apple prevents app makers from telling their users about cheaper ways to pay for subscriptions that don’t involve going through an app.

The investigation found that Apple banned streaming services from telling users about how much subscription offers cost outside of their apps, including links in their apps to pay for alternative subscriptions or even emailing users to tell them about different pricing options.

Sunnyvale, California, USA - April 23, 2023: Aerial view of Apple Park, the headquarters of Apple, Inc. in Silicon Valley. Getty Images - DutcherAerials

The fine comes the same week that new EU rules are set to kick in that are aimed at preventing tech companies from dominating digital markets.

The Digital Markets Act, due to take effect Thursday, imposes a set of do's and don'ts on "gatekeeper" companies including Apple, Meta, Google parent Alphabet, and TikTok parent ByteDance — under threat of hefty fines.

The DMA's provisions are designed to prevent tech giants from the sort of behavior that's at the heart of the Apple investigation. Apple has already revealed how it will comply, including allowing iPhone users in Europe to use app stores other than its own and enabling developers to offer alternative payment systems.

The commission also has opened a separate antitrust investigation into Apple’s mobile payments service, and the company has promised to open up its tap-and-go mobile payment system to rivals in order to resolve it.

(With newswires)