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EU imposes $2 billion fine on Apple for anti-competitive practices via App Store

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European Union regulators fined Apple €1.84 billion (about $2 billion or Rs 16,568 crore) for its App Store policies, forbidding the tech giant from blocking music services from promoting cheaper subscription offers elsewhere.

The EU Commission’s decision, unveiled on Monday, comes after an extensive probe into Apple’s practices regarding music streaming apps on the App Store. Margrethe Vestager, Executive Vice-President overseeing competition policy, condemned Apple’s actions, stating, “For a decade, Apple misused its dominant market position by limiting developers’ ability to inform consumers about cheaper music services outside its ecosystem, breaching EU antitrust rules.”

The Commission highlighted Apple’s ban on music streaming app developers from fully disclosing alternative, more affordable subscription options outside the App Store. Additionally, Apple prohibited app providers from sharing instructions on subscribing to such services, hindering competition and consumer options.

Spotify, a major player in music streaming, criticized Apple’s rules, saying they restricted its ability to communicate directly with users about subscription prices and promotions. Unlike Apple Music, Spotify faced these limitations.

“This ruling sends a clear message — no company, not even a monopoly like Apple, can misuse power to control how other companies engage with their customers. Apple’s regulations silenced Spotify and others from informing users within our app about upgrades, subscription prices, promotions, and other benefits. This denied us the chance to communicate directly with users. Meanwhile, Apple Music, our competitor, faced no such restrictions,” Spotify stated.

Apple strongly opposed the ruling, claiming the Commission lacked credible evidence of harm to consumers or unfair competition. The company accused Spotify of attempting to change App Store rules for its benefit without contributing to Apple’s ecosystem.

The ruling follows an investigation launched in 2020 after Spotify complained about Apple’s “Apple Tax” and restrictive App Store policies. Initially focusing on these issues, the Commission later examined rules limiting developers’ ability to inform users about alternative payment options.

While Apple has made some changes, critics argue they don’t adequately address concerns. The EU’s fine coincides with Apple’s plans to revise app distribution rules to comply with the EU’s Digital Markets Act, allowing third-party app stores on iPhones.

Apple plans to appeal, maintaining the App Store fosters competition and benefits developers. As legal battles loom in Europe, the ruling’s impact is expected to resonate throughout the tech industry globally.

The European Commission’s decision, announced today, claims the App Store hinders competition in the digital music market. However, Apple argues there’s no credible evidence of consumer harm and highlights the thriving, competitive market.

Apple notes Spotify’s choice not to sell subscriptions in its app but on its website, avoiding Apple’s commission. Spotify’s growth undermines its claim of market stagnation.

Apple plans to comply with the upcoming Digital Markets Act (DMA) and adjust rules challenged by the decision. This move seems premature, as the DMA isn’t yet law.

Ironically, the decision solidifies Spotify’s dominant position, contradicting its aim of fostering competition.

Spotify’s grievance

In 2020, the European Commission launched an antitrust probe into Apple following a complaint by Spotify, accusing Apple of unfair practices. Spotify claimed Apple imposed a 30% fee on in-app purchases, exempting its own Apple Music. Apple also allegedly restricted Spotify from sharing subscription details with iPhone users.

Spotify emphasized Apple’s dominance in the smartphone market, stating that its app relies solely on Apple’s operating system for iPhone users. The EU’s fine on Apple was hailed by Spotify as a message against abusive power.

Apple countered, suggesting Spotify benefitted most from the fine, given its leading position in music streaming. Apple announced changes in response, including allowing third-party app stores and reducing app store fees, ahead of new EU regulations under the Digital Markets Act.

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