US-based tech giant Apple has received a hefty anti-trust penalty from the European Union’s executive enforcement arm the European Commission. The company received its first antitrust penalty from them in the form of a $2 billion fine.
The European Commission alleges that Apple was engaged in a practice of banning app developers from letting users of IOS know certain things about Apple’s competing music subscription services.
European Commission Ruling
According to AP News, the European Commission ruled that Apple has broken the European Union’s competition laws by using unfair tactics to promote its own music streaming service over others.
The European Commission said that Apple stopped developers of apps from “fully informing iOS users about alternative and cheaper music subscription services outside of the app.
Statement from Competition Commissioner
The European Union’s competition commissioner, Margrethe Vestager, held a press conference in Brussels announcing and explaining the decision. In the news conference, Vestager went over how Apple’s practices run afoul of European Union rules and have affected millions of customers.
“This is illegal. And it has impacted millions of European consumers who were not able to make a free choice as to where, how and at what price to buy music streaming subscriptions,” Vestager said. (via US News)
Investigation from European Union
This announcement of a penalty from the European Union comes after the conclusion of an investigation at least five years in the making, according to AP News. The investigation was set off by the Swedish music streaming service Spotify which filed an anti-trust complaint with the European Union in 2019.
At the time, Spotify founder Daniel Ek wrote Apple is “as both a player and referee to deliberately disadvantage other app developers.” (via AP News)
What Did Apple Do?
Apple is alleged to have engaged in a pattern of behavior for over a decade to stop Europeans from being exposed to competing streaming services by restricting app developers’ ability to tell customers about them.
US News reports that Vestager said the actions resulted in “millions of people who have paid two, three euros more per month for their music streaming service than they would otherwise have had to pay.”
Apple Denies Wrongdoing
In response to the leveled penalty against them by the European Commission, Apple released a statement accusing the Commission of not having credible evidence and ignoring that the music subscription market is still competitive.
“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 statement said.
They Blame Spotify
In Apple’s statement, the company outlines how this decision benefits competitor Spotify and how it had a role in the investigation. Spotify is a company based in Europe, specifically the country of Sweden.
“The primary advocate for this decision — and the biggest beneficiary — is Spotify, a company based in Stockholm, Sweden. Spotify has the largest music streaming app in the world, and has met with the European Commission more than 65 times during this investigation,” Apple said.
Apple Doesn’t Even Hold a Majority Market Share
Apple continued to decry the decision in their statement, asserting that Spotify has a majority share in the market and finds it unfair that they are the ones receiving an anti-trust penalty.
“Today, Spotify has a 56 percent share of Europe’s music streaming market — more than double their closest competitor’s — and pays Apple nothing for the services that have helped make them one of the most recognizable brands in the world. (via Apple)
Intent to Appeal
The US tech giant doesn’t intend to take the judgment without a fight. In their statement, they express their contributions to Europe and say the next step they will take is to appeal the decision.
“Apple has been a part of Europe for over 40 years, and today, we support more than 2.5 million jobs across the continent. We’ve helped markets thrive, promoting competition and innovation at every turn — and the App Store is an important part of that story. So while we respect the European Commission, the facts simply don’t support this decision. And as a result, Apple will appeal,” Apple’s statement said.
Spotify Celebrates
After news of the announcement broke, Spotify decided to release its own statement, celebrating the decision and accusing Apple’s actions of harming consumers.
“Today’s decision marks an important moment in the fight for a more open internet for consumers. The European Commission (EC) has made its conclusion clear: Apple’s behavior limiting communications to consumers is unlawful.” (via Spotify)
Spotify Accuses Apple of ‘Muzzling’
In Spotify’s statement, they accuse Apple of unfairly restricting the ability of Spotify’s music app to reach customers.
“Apple’s rules muzzled Spotify and other music streaming services from sharing with our users directly in our app about various benefits—denying us the ability to communicate with them about how to upgrade and the price of subscriptions, promotions, discounts, or numerous other perks.”
What’s Next?
While the European Commission announcement marked the end of the investigation, the story is likely just beginning. Because Apple announced its intent to appeal there will likely be a long fight in court, with Apple hoping to avoid any penalties.
According to Investor’s Business Daily, the news of this fine has already caused Apple’s Stock to drop more than 2% in the day’s morning trades.
