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EU Slaps Apple with Record $1.95 Billion Fine for App Store Antitrust Violations

 |  March 4, 2024

Apple was dealt a significant blow on Monday as European Union regulators unveiled a hefty fine of 1.8 billion euros ($1.95 billion) for allegedly hampering competition among music streaming rivals via its App Store platform.

On Monday, the European Union announced its first-ever antitrust penalty on Apple, imposing a fine for allegedly preventing rival music streaming services like Spotify from informing iPhone users about cheaper subscription options outside of Apple’s app store.

The fine, delivered by the EU antitrust regulator after a five-year investigation triggered by Spotify’s complaint, accuses Apple of unlawfully exploiting its dominant position in the distribution of music streaming apps via the App Store, reported The New York Times.  Margrethe Vestager, the Executive Vice President of the European Commission responsible for competition policy, condemned Apple’s actions, stating, “For a decade, Apple abused its dominant position in the market for the distribution of music streaming apps through the App Store.”

Vestager emphasized the necessity for Apple to allow music streaming developers to communicate directly with their users, signaling a shift in the regulatory approach towards tech behemoths like Apple. The fine, she asserted, reflects both the company’s immense financial power and the harm inflicted on millions of European consumers.

The ruling by the European Commission, the executive arm of the EU, represents the latest in a series of regulatory actions taken against Apple, primarily centered around the App Store’s policies. Central to these disputes is Apple’s requirement for apps to use its proprietary in-app payment service, which incurs a commission of up to 30 percent on each transaction, a practice vehemently opposed by many developers who deem it excessive.

In response to mounting pressure, regulators in the Netherlands and South Korea have passed legislation mandating Apple to permit alternative payment services, albeit with ongoing challenges from Apple regarding the associated commissions. Despite these directives, Apple has largely stood firm, prompting further legal battles.

Apple swiftly announced its intention to appeal the ruling, asserting that the decision lacks factual support. In a statement issued on Monday, the tech giant expressed respect for the European Commission but dismissed the allegations levied against it.

In a briefing preceding the ruling, Apple refuted the regulatory claims, arguing that Spotify users have always had the option to subscribe to its services through alternative channels. The company pointed out that Spotify had amassed over 100 million subscribers outside its app in the past eight years, challenging the notion of consumer harm.

The fine against Apple underscores the growing global scrutiny of Big Tech’s market dominance and sets a precedent for future regulatory actions aimed at curbing anti-competitive practices within the digital ecosystem. As the tech landscape continues to evolve, the battle between regulators and industry giants like Apple is likely to intensify, shaping the future of digital commerce and competition.

Source: NY Times