Apple hit with $2 billion EU antitrust fine in Spotify case, will appeal


Brussels on Monday fined Apple 1.84 billion euros to $2 billion (roughly Rs. 16,581 crores) for thwarting competition from music streaming rivals through restrictions on its App Store that violate EU rules. This is the iPhone maker's first fine.

The original fine of 40 million euros (about Rs 359 crore) was increased by a larger lump sum included as a deterrent – ​​a first for EU antitrust authorities.

Following Spotify's 2019 complaint, the European Commission last year accused Apple of preventing Swedish streaming service Spotify and others from informing users of payment options outside its App Store.

It said Monday that Apple's restrictions constitute unfair trading conditions, a relatively new argument in an antitrust case and one that was also used by the Dutch antitrust agency in a 2021 ruling against Apple in a case brought by dating app providers. . It ordered to stop such conduct.

Apple said it would appeal the decision. A decision at the Luxembourg-based General Court, Europe's second-highest court, is likely to take years. Until then, Apple will have to pay the fine and comply with the EU order.

Apple shares were down 3.2 percent at $173.88 on Monday afternoon.

The fine was nearly four times the EUR 500 million (roughly Rs. 4,475 crores) that sources with knowledge of the matter told Reuters they expected the European Commission to fine Apple.

This included a core element of EUR 40 million – described by European Competition Commissioner Margrethe Vestager as a “parking ticket” for the US tech giant – as well as EUR 1.8 billion (roughly Rs. 16,189 crores) placed on top as a deterrent. I went. The total of 1.84 billion euros is equivalent to 0.5 percent of Apple's global turnover, he said.

Apple criticized the decision, saying in a statement, “This decision was taken despite the Commission's failure to uncover any credible evidence of consumer harm, and it ignores the realities of a market that is thriving, competitive and is growing rapidly”.

“The primary advocate for this decision – and the largest beneficiary – is Spotify, a company based in Stockholm, Sweden. Spotify has the world's largest music streaming app, and met with the European Commission more than 65 times during the course of this investigation. Is,” it said.

'Left in the dark'

“Millions of European music streaming users were left in the dark about all available options,” Vestager said at a press conference.

“And Apple's anti-steering rules cause consumers to pay more for such services because higher commissions are charged to developers and passed on to consumers.”

Spotify praised the EU's decision but said there were other issues in other regions.

“And we are pleased that this case provides some measure of justice, but it does not resolve Apple's bad behavior toward developers beyond music streaming in other markets around the world,” the company said in a statement.

Ryan Reith, an analyst at technology and services company IDC, said although the fine is large, Apple can handle it without any immediate cash impact.

But he added: “I believe this is another step in the ongoing process of breaking down some of the walled gardens Apple has built around its ecosystem.”

Over the past decade, the EU regulator has fined Alphabet's Google a total of 8.25 billion euros in three cases.

Vestager's order for Apple to lift its App Store restrictions echoes the same requirement under new EU technical regulations known as the Digital Markets Act (DMA), which Apple must comply with on March 7.

Unlike the music streaming case, Apple is trying to settle another EU antitrust investigation by offering to open up its tap-and-go mobile payments system to rivals.

EU regulators, who later sought feedback from rivals and users, will likely accept the company's proposal without fining it.

© Thomson Reuters 2024

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