In dispute with Spotify

EU Commission fines Apple billions of euros

Spotify found it unfair that Apple was left with more money for its rival music service at the same subscription price because of this levy.

(Bild: AP)

The EU Commission has imposed a competition fine of around 1.8 billion euros on the US tech giant Apple as a deterrent. The Brussels authority announced on Monday that the company had abused its dominant market position for the distribution of music streaming apps to iPhone and iPad users via its App Store.

According to the Commission, by far the largest part of the fine consists of a lump sum imposed by the Commission as a deterrent. Only 40 million euros of the fine relates specifically to alleged illegal behavior by Apple.

The 40 million is probably not even a speeding ticket for Apple, said Margrethe Vestager, the EU Commissioner responsible for competition. Such a small fine would not have had any deterrent effect. Apple had abused its dominant position for a decade, for example by preventing developers from informing consumers about alternative, cheaper services. "This is illegal under EU antitrust rules," said Vestager. Millions of users were left in the dark about the available options.

EU Competition Commissioner Margrethe Vestager

(Bild: AFP)

Years of dispute with Spotify
The music streaming service Spotify and Apple have been at odds for years. As early as 2021, the EU Commission criticized the fact that if an app was downloaded via Apple's App Store, the sales of subscriptions in the apps must be processed via Apple's payment platform. The company retains 30 or 15 percent of the revenue. Spotify found it unfair that Apple was left with more money for its rival music service due to this levy for the same subscription price.

Apple can take legal action against the penalty. The company criticizes that the decision was made even though the Commission was unable to find any solid evidence that consumers had been harmed. A large part of Spotify's success is due to the App Store. According to Apple, the development of technical services that Spotify uses on a daily basis costs money. For around eight years and after more than 65 meetings with Spotify, the EU Commission has been trying to construct cases, according to Apple. It has not been proven that consumers have been harmed, nor that Apple has violated competition law.

30 percent goes to Apple
Since the launch of the download platform in 2008, Apple has generally taken a 30 percent levy on revenue from digital items or services such as subscriptions. For subscriptions lasting longer than one year, the commission is reduced to 15 percent - even for developers who earn less than one million dollars a year. According to Apple, Spotify does not pay any money to Apple because it sells subscriptions outside the app. "Ironically, in the name of competition, today's decision only cements the dominant position of a successful European company that is the undisputed leader in the digital music market," Apple said with regard to Spotify.

Apple already presented alternatives for the app business in the EU in January - the background to this is a new EU law that will soon be applied. This includes a reduction in the tax on the sale of digital items and subscriptions via the company's 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 percentage will be collected regardless of which payment service an app developer uses. If an app uses Apple's payment system, an additional three percent will be due. Vestager said on Monday that the changes would be looked at closely and the opinions of other companies would also be taken into account.

Consumer advocates backed the Commission. The European consumer protection organization Beuc announced that it was an important step that the Commission had pursued this case. The authority's decision confirms that European consumers have the right to receive information about cheaper music streaming services without Apple blocking this.

The EU competition authorities have been scrutinizing American technology platforms for years. Fines in the billions have been imposed on Google alone.