Apple Music violates EU antitrust laws, $39 billion fine possible
Apple is staring down a potential $39.4 billion fine, as the European Commission says that Apple Music has breached antitrust law concerning restrictions on developers advertising subscriptions.
In the same case back in 2021, the EC issued a statement of objections and also stated that Apple had broken antitrust regulations. That was a preliminary conclusion, however, and the Commission has now issued an update.
"Today's Statement of Objections clarifies that the Commission does no longer take a position as to the legality of the IAP [in-app purchasing] obligation for the purposes of this antitrust investigation," says the European Commission in a press release.
"[But it] rather focuses on the contractual restrictions that Apple imposed on app developers," it continues, "which prevent them from informing iPhone and iPad users of alternative music subscription options at lower prices outside of the app and to effectively choose those."
So Apple has effectively beaten the charge about requiring developers to use its in-app purchasing system, which was key to Spotify's original 2019 complaint to the EC.
However, Apple must now respond to the allegation about restrictions it previously placed on developers. Specifically, Apple originally forbade developers of services such as Spotify to mention or link out to alternative methods of subscribing.
"Today, the European Commission sent a clear message that Apple's anticompetitive behavior and unfair practices have harmed consumers and disadvantaged developers for far too long," said Eve Konstan, Spotify's general counsel, in a statement. "We urge the Commission to reach a swift decision in this case to protect consumers and restore fair competition on the iOS platform."
The European Commission's statement of objections will now be responded to by Apple. A final ruling, and a potential fine of up to 10% of Apple's annual worldwide turnover, will then follow.
Apple has not yet responded about the EC's update.
"There is no legal deadline for bringing an antitrust investigation to an end," notes the Commission. "The duration of an antitrust investigation depends on a number of factors, including the complexity of the case, the extent to which the undertakings concerned cooperate with the Commission and the exercise of the rights of defence."
Read on AppleInsider
In the same case back in 2021, the EC issued a statement of objections and also stated that Apple had broken antitrust regulations. That was a preliminary conclusion, however, and the Commission has now issued an update.
"Today's Statement of Objections clarifies that the Commission does no longer take a position as to the legality of the IAP [in-app purchasing] obligation for the purposes of this antitrust investigation," says the European Commission in a press release.
"[But it] rather focuses on the contractual restrictions that Apple imposed on app developers," it continues, "which prevent them from informing iPhone and iPad users of alternative music subscription options at lower prices outside of the app and to effectively choose those."
So Apple has effectively beaten the charge about requiring developers to use its in-app purchasing system, which was key to Spotify's original 2019 complaint to the EC.
However, Apple must now respond to the allegation about restrictions it previously placed on developers. Specifically, Apple originally forbade developers of services such as Spotify to mention or link out to alternative methods of subscribing.
"Today, the European Commission sent a clear message that Apple's anticompetitive behavior and unfair practices have harmed consumers and disadvantaged developers for far too long," said Eve Konstan, Spotify's general counsel, in a statement. "We urge the Commission to reach a swift decision in this case to protect consumers and restore fair competition on the iOS platform."
The European Commission's statement of objections will now be responded to by Apple. A final ruling, and a potential fine of up to 10% of Apple's annual worldwide turnover, will then follow.
Apple has not yet responded about the EC's update.
"There is no legal deadline for bringing an antitrust investigation to an end," notes the Commission. "The duration of an antitrust investigation depends on a number of factors, including the complexity of the case, the extent to which the undertakings concerned cooperate with the Commission and the exercise of the rights of defence."
Read on AppleInsider
Comments
Who would end up getting this money? Lawyers and EU management? Would any actually go to the "affected" people? Probably not. From what the article appears to say it's all about Apple preventing iOS users from knowing about alternative music subscriptions. That's not worth $39B. The EU needs to be investigated for frivolous lawsuits but of course they won't because they are the government monopoly in Europe. I think Apple, and the US, should challenge the validity of the EU instead dealing directly with the governments of each sovereign country. The EU is simply a cartel.
2) The notion that Apple would leave the EU even if they were hit with a $39B fine is laughable. Check the 10-K. Apple’s revenue was over $95B in Europe in 2022 alone. The EU probably represents >80% of that. Apple isn’t giving up the $500B in revenue and $100B+ in net income they’d make there the rest of this decade alone just to “stick it” to politicians. Get real.
The fine is an 'up to...' figure, not a fixed $39B.
The fact that Apple changed its ways to a degree will place it in a better situation if it comes to determining an amount for a fine.
Of course, your 'take a hike' claim could be applied to what the EU has done here too.
Take a hike if you don't like the laws. Just don't forget to pay the fine on your way out.
Or do you think that Apple placing its restrictions in the first place met the EU's idea of fair competition?
If there is a fine, I expect Apple to pay it and move on.
You do realise that a US official went to the UK, stood in front of MPs and proceeded to shout US demands on 5G infrastructure to them for five hours.
https://www.thetimes.co.uk/article/5g-wars-the-us-plot-to-make-britain-ditch-huawei-mcqdld8sx
The EU has done nothing of the sort. The EU is tackling issues within its borders.
All of my family, except one, voted for Brexit. They all openly regret it and blame UK politicians for lying their way through the process.
As for Brexit regret in general, it looks like it is pretty widespread.
If the EU has any dominance over world affairs it is through leading by example.
"Spotify transformed music listening forever when it launched in 2008. Discover, manage and share over 100 million tracks and 5 million podcasts titles, for free, or upgrade to Spotify Premium to access exclusive features for music including improved sound quality and an on-demand, offline, and ad-free music listening experience. Today, Spotify is the world’s most popular audio streaming subscription service with 489 million users, including 205 million subscribers in more than 180 markets."
Heck, even Apple subsidizing Spotify's losses is a couple of orders of magnitude less than the $39B Euro potential fine.
The amusing thing is that most of UK antitrust law is based on the EU law, so you can bet your arse that UK antitrust officials are watching very closely what is happening here — ready to file their own case, should Apple be convicted of unfairly disadvantaging competitors (and not change its rules globally as a result).
And the idiocy is that, due to Brexit, the UK will end up running completely redundant investigation and legal proceedings, rather than just having the EU ruling apply to their jurisdiction. A waste of time and money for the British taxpayer.
The world’s most admired company sells hundreds of millions of dollars of products a year.
It’s time for the European Commission to get off Apple’s financial back and let the company continue to innovate and set its own course without interference.