Apple fined 1.84 billion euros by European Commission

1.84 billion euros: this is the amount of the fine imposed on the IT giant Apple by the European Commission on March 4. A first European sanction for the firm in terms of non-compliance with competition, and a record amount, all grievances combined. “For ten years, Apple abused its dominant market position in the distribution of music streaming apps through its App Store”said Margrethe Vestager, vice-president responsible for competition policy at the European Commission.

The origin of this sanction was a complaint filed in 2019 by one of the main players in music streaming, Spotify. The company accused Apple of circumventing the rules of fair competition. The latter played on two fronts, being both a mobile application store, with the App Store, and an application publisher, with Apple Music. The Cupertino company then imposed a 30% commission on all music streaming services present on the App Store, creating a form of unfair competition.

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Higher prices and limited choice for iOS users

In its decision, the European Commission denounces in particular the fact that Apple imposed on developers “restrictions preventing them from informing iOS users that other, cheaper music streaming services were available outside of the app”. Restrictions qualified as provisions “anti-steering”which infringe Article 102 of the Treaty on the Functioning of the European Union (TFEU).

The European executive believes that these anti-steering provisions prohibit fair information to iOS users “prices of available subscription offers”but also “price differences between subscriptions integrated into applications (…) and subscriptions available elsewhere”. These measures, described as “neither necessary nor proportionate”prohibit developers from including links to their website to offer other subscription plans, and from presenting them with new pricing options after creating an account, notably by email.

Apple's unfair competition practices, which lasted nearly a decade, may have forced users to pay more for music streaming subscriptions. Additionally, the user experience (UX) has been changed, forcing iPhone owners to “launching tedious searches to find relevant offers outside of the app”. The EU executive has ordered Apple to remove its anti-steering provisions.

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An amount 4 times higher than expected, but not exorbitant

The European Commission indicates that it has set the amount of the fine at 1.8 billion euros to make it “sufficiently dissuasive” for Apple and “deter other companies of similar size and resources from committing an identical offense”. The amount is in fact much higher than expected: in mid-February, the Financial Times estimated that Apple would be fined 500 million euros, or almost 4 times less.

But while this is a record fine for Apple from the European body, the amount is far from astronomical. In theory, the European Commission can impose, for this reason, a fine of up to 10% of the company's annual turnover, or $38.3 billion. Here, the fine therefore stops at… 0.48% of its 2023 turnover.

Apple will appeal

In a message published on its newsroom, Apple criticizes the European Commission's judgment: “The decision was taken despite the Commission's failure to uncover any credible evidence of consumer harm and ignores the realities of a thriving, competitive and rapidly growing market”. On the defensive, the firm adds: “Today, Spotify holds 56% of the European music streaming market (…), and pays nothing to Apple for the services that have helped make it one of the most recognizable brands in the world. Much of their success is due to the App Store”. The large American group has announced its intention to appeal.

For its part, Spotify welcomes a “important moment in the battle for a more open internet for users (…). This decision sends a strong message that no company, not even a monopoly like Apple, can exercise abusive power to control how other companies deal with their users.”

Big Tech in the sights of the European Commission

The European Commission is not the first authority to sanction Apple for antitrust measures. At the start of 2022, the Dutch Competition Authority fined him 5 million euros per week, which increased to 50 million euros, for not letting dating apps use other payment systems. than the one she suggests.

Gafam are in the sights of the European body, particularly with regard to competition law. In July 2018, Google was fined a record 4.3 billion euros, accused of using the Android operating system to “consolidate the dominant position of its search engine”. At the end of 2022, Amazon escaped a fine from the European Commission, by committing, among other things, to no longer use data generated by third-party sellers on its marketplace for its own activities.

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