Apple fined by the EU for anticompetitive practices

The backstory: The European Commission has been leading the charge to crack down on big tech companies that are dominant in the market. The Digital Markets Act (DMA), which was introduced by the EU in late 2022, is meant to make things fairer for competing companies so that consumers can more easily move between digital services like social media platforms, internet browsers, apps and app stores. Last year, the EU named six major companies as “gatekeepers,” meaning they had a specific set of rules they needed to follow to comply with the DMA. That included tech giants Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft. These companies were given until March 7 this year to fall in line with the guidelines or face massive penalties.

More recently: Tech giant Apple is the second-largest company in the world, just behind Microsoft, but it’s been facing some legal troubles over its App Store policies. For example, nearly five years ago, Swedish-owned digital music streaming platform Spotify filed a complaint against Apple, saying that it prevented outside developers from letting customers know about cheaper streaming and subscription options outside of Apple’s App Store. 

Apple has had to make changes to its App Store to comply with the DMA by allowing users to download apps from outside the App Store onto their iPhones. It also said it would allow Spotify and other music services to direct users to the web in their apps to sign up for subscriptions.

The development: On Monday, Apple was hit with a massive €1.8 billion (US$2 billion) penalty from the EU in relation to the Spotify complaint. Brussels also ordered Apple to stop preventing these streaming apps from letting users know about cheaper deals and subscriptions outside the App Store. This is the third-largest fine the EU has recently handed out for anticompetitive business practices. Apple has said it will appeal, adding that this really benefits Spotify, which has a majority market share for music streaming in the EU and doesn’t pay Apple for using its App Store.

Key comments:

“For a decade, Apple abused its dominant position in the market for the distribution of music streaming apps through the App Store,” EU antitrust chief Margrethe Vestager said. “They did so by restricting developers from informing consumers about alternative, cheaper music services available outside of the Apple ecosystem.”

“This decision sends a powerful message—no company, not even a monopoly like Apple, can wield power abusively to control how other companies interact with their customers,” Spotify said in a statement.

“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,” Apple said in a statement.

“The reality is that European consumers have more choices than ever,” Apple wrote in a post about the EU decision. “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.”