The European Commission fined Apple €1.84 billion on Monday, March 4, for violating EU competition rules in the online music market, an unprecedented penalty against which the American giant has decided to appeal.
Spotify, a popular music streaming platform, had lodged a complaint with Brussels against the practices of the California-based giant, which it deemed contrary to European rules of "fair competition" and not conducive to "ensuring consumer choice and a level playing field for developers."
After a comprehensive investigation that began in June 2020, the European executive sided with the Swedish platform.
"For a decade, Apple has abused its dominant position in the market for distributing streaming music applications" through its App Store, "which is illegal," criticized Competition Commissioner Margrethe Vestager.
According to Brussels, the tech giant applied restrictions to prevent application developers from promoting "alternative and cheaper offers outside the Apple ecosystem" to iPhone and iPad users, in order to favor its own service, Apple Music.
These practices "led many users to pay significantly higher prices for their subscriptions due to high commissions imposed by Apple on developers and passed on to consumers," the European executive believes.
However, Brussels dropped its grievances regarding Apple's requirement for developers to use its payment system for users subscribing to a service during the investigation. The American company charges commissions of up to 30% on transactions.
Spotify welcomed the Commission's announcement. "Apple's rules prevented us from directly sharing various benefits with our users (...) This sanction sends a powerful message," responded the Swedish firm.
The European Consumer Union Bureau (BEUC) saw it as "very good news confirming the right to access information on cheaper music streaming offers without Apple hindering them."
This is the first time the EU has penalized Apple for breaching competition rules.
The basic penalty for violating EU rules was €40 million, but such an amount would have been "equivalent to a parking fine" for a giant like Apple, explained Margrethe Vestager.
For Brussels, the "flat-rate" fine ultimately imposed is "proportionate to the group's revenues" and "necessary to be dissuasive." It amounts to 0.5% of Apple's annual global turnover, according to Mrs. Vestager.
"For Apple, it's pocket change," lamented German MEP Markus Ferber (EPP, right). In the fourth quarter of 2023 alone, Apple posted a net profit of $33.9 billion (€31.3 billion).
However, this is the third-largest fine ever imposed by the EU on a tech giant for violating competition rules. Google faced larger penalties in 2017 and 2018.
Spotify CEO Daniel Ek expressed "doubts" about Apple's response, fearing it might "simply ignore" the fine.
Apple immediately announced on Monday that it would appeal, accusing the Commission of having "no credible evidence of harm to consumers" and of "ignoring the realities of a thriving, competitive, and rapidly growing market," criticized the group.
Apple also accuses Spotify of "not paying anything to Apple" while owing "much of its success" to the App Store and the company's technologies.
The Swedish service dominates the music streaming market in Europe, with over 50% market share, compared to 8% for Apple Music. Spotify claims around 600 million annual users worldwide.
In addition to the fine, the Commission orders Apple to cease the flagged practices. In any case, it will be obliged to do so by the new strengthened competition rules in digital (DMA) that will apply to sector giants starting Thursday.
The American giant claims it will allow competing app stores to its App Store and will open up to other contactless payment services than its Apple Pay solution, as it is mandated to do so.
However, this does not reassure Spotify, which is among the 34 companies or professional associations that denounced measures on Saturday that "ignore the spirit and letter of the law" and "mock the DMA."
