The European Commission has imposed a competition fine of 1.8 billion euros on technology giant Apple. The American company abused its dominant market position by selling music streaming apps to iPhone and iPad users through its app store, the Brussels authority said on Monday. Apple imposed restrictions on developers that prevented them from informing Apple users about other and cheaper music subscription services.
“This is illegal under EU antitrust rules,” the Commission argued. The music streaming service Spotify and Apple have been arguing for years. The European Commission already criticized in 2021 that if an app was downloaded via Apple’s App Store, the sale of subscriptions in the apps had to be processed via Apple’s payment platform. The group retains 30 to 15 percent of the income.
Disadvantage for Spotify?
Spotify thought it was unfair that Apple kept more money from its competing music service due to this levy at the same subscription price. Apple argues that the decision was made even though the Commission could not find any solid evidence that consumers had suffered harm. Much of Spotify’s success is due to its App Store.
Since launching the download platform in 2008, Apple has generally levied a 30 percent levy on revenue from digital items or services such as subscriptions. For subscriptions that last longer than a year, the commission drops to 15 percent – even for developers who earn less than a million dollars (925,000 euros) per year. According to Apple, Spotify does not pay Apple money because it sells subscriptions outside the app.
Alternatives under pressure from the EU
Apple presented alternatives for the app business in the EU in January. This includes reducing taxes on sales of digital items and subscriptions through its own app store. The previous 30 percent and 15 percent for subscriptions from the second year onwards will become 17 and 10 percent respectively. However, Apple emphasizes that this share must be collected regardless of which payment service an app developer uses. If an app uses Apple’s payment system, an additional three percent is due.
EU competition watchdogs have been keeping a close eye on US tech platforms for years. Fines of up to billions of dollars have been imposed on Google alone. The Commission also justifies the current fine worth billions by saying that Apple provided incorrect information in the administrative procedure and that the amount should be a deterrent.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
