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The European Union has imposed a fine of almost $2 billion on Apple for infringing on competition in the music streaming industry.
Europe Technology

The European Union has imposed a fine of almost $2 billion on Apple for infringing on competition in the music streaming industry.

The European Union has imposed their initial anti-competitive penalty on Apple, citing a violation of the bloc’s competition regulations. This results in a fine of almost $2 billion for the American technology company due to their biased treatment of their own music streaming platform in comparison to other competing services.

According to the European Commission, Apple has prohibited app developers from completely disclosing to iOS users about other music subscription services that are more affordable and available outside of the app. This action was taken by the executive branch of the 27-country bloc and its primary enforcer of antitrust laws.

According to Margrethe Vestager, the EU’s competition commissioner, this action is against the law and has affected millions of consumers in Europe. She made this statement during a news conference.

According to the commission, Apple has maintained this behavior for nearly ten years, resulting in users paying considerably more for their music streaming subscriptions.

Five years ago, Swedish streaming service Spotify filed a complaint, which sparked a prolonged investigation that resulted in a 1.8 billion-euro fine.

The European Union has taken the lead in international attempts to restrict the power of large technology companies, by imposing several multi-billion dollar penalties on Google and accusing Meta of manipulating the online classified ad industry. Additionally, the EU has initiated a separate inquiry to investigate potential antitrust violations by Apple’s mobile payment platform.

Apple responded to both the commission and Spotify, stating that they will appeal the penalty.

The company stated that the decision was made even though the Commission could not find any valid proof of harm to consumers. They also disregarded the current state of the market, which is successful, competitive, and rapidly expanding.

According to the report, Spotify stands to gain from the ruling. The Swedish streaming platform holds a majority share of Europe’s music streaming market and has not paid Apple for using its App Store. It has had 65 meetings with the commission in the span of eight years.

Apple stated that today’s ruling, intended to promote competition, ironically solidifies the dominant position of a thriving European company that holds a significant lead in the digital music market.

The initial focus of the commission’s inquiry was on two primary issues. The first pertained to the iPhone company’s policy of requiring app developers selling digital goods to utilize their proprietary payment system, which incurs a 30% fee for all subscriptions.

However, the EU subsequently shifted their focus to how Apple limits the ability of app developers to communicate with their users about alternative, less expensive payment methods for subscriptions outside of the app.

During the investigation, it was discovered that Apple had prohibited streaming services from informing users about the prices of subscription offers outside of their apps. This included restricting the use of links within the apps for alternative payment options, as well as sending emails to notify users of alternative pricing options.

The penalty arrives during the same week that the EU is implementing new regulations to prevent tech giants from monopolizing digital markets.

The Digital Markets Act will go into effect on Thursday and enforces a list of actions and restrictions on “gatekeeper” corporations, such as Apple, Meta, Google’s parent company Alphabet, and TikTok’s parent company ByteDance. Failure to comply may result in significant penalties.

The rules of the DMA aim to stop large technology companies from engaging in the type of actions that have sparked an investigation into Apple. Apple has outlined its plans to adhere to these rules, which include permitting European iPhone users to access app stores other than its own and empowering developers to present alternative payment options.

The commission has initiated a distinct antitrust probe into Apple’s mobile payment service. To address this issue, the company has pledged to allow competitors access to its tap-and-go system.