EU antitrust chief remarks about $2 billion Apple Music fine ignores Spotify dominance

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  • Reply 21 of 31
    jimh2jimh2 Posts: 643member

    Even with its runaway global number one position, though, Spotify has been regularly posting a loss in its quarterly revenue reports. Consequently, Spotify needs to cut expenses and grow its business, both of which it could do if it can persuade the EU to prevent Apple charging it for in-app subscriptions.

    Less than 1% of Spotify's iOS subscribers paid via that App Store at the time of their official complaint to the EU. 
    You can only run at a loss for so long.
    watto_cobra
  • Reply 22 of 31
    avon b7avon b7 Posts: 7,905member
    darelrex said:
    spheric said:

    darelrex said:

    "[The fine is] the equivalent of 0.5% of global turnover, so obviously, this is not a fine that would sort of shake Apple as such," [Vestager] told CNBC.

    I don't think Apple is comparing the amount of this fine to its annual global revenue, but rather to its annual EU app store profits. That's not 0.5%; it's more like 130%.
    Yeah, but that can't be the yardstick. "I have a trillion dollars, and I'm using my financial clout to fuck over competitors in this tiny market that doesn't really matter much to my financials — so my punishment needs to be appropriate to the piddling amount I make with my illegal behaviour, and not enough to, you know, actually punish me." 
    The reason it matters is because Apple doesn't have to forfeit its global income to get away from crazy new EU laws, only the portion that's earned in the EU. Apple also has made it very clear over the years that it doesn't sell any product or operate in any market where it can't make a profit. And Apple hasn't used its "trillion-dollar clout" to force the EU to do anything; Apple has applied the same rules everywhere in the world, for the entire sixteen-year existence of the App Store.
    That’s irrelevant. Each jurisdiction will decide what's legal and what isn't. 

    In this case, it's illegal now and it was illegal ten years ago. That much is spelt out by the EU. 

    The percentage of global revenue as a fine is a punitive measure and clearly spelt out too in these cases.

    The truth is Apple had a free ride until someone actually complained about it and it got investigated. 

    The DMA/DSA are simply measures to bring laws up to date and in line with current reality. 

    It's quite possible that other jurisdictions will follow suit although from the amount of lobbying going on at the White House by Big Tech, some of those trillions are possibly being used to 'persuade' people to 'think different' on these issues. 
    muthuk_vanalingamspheric
  • Reply 23 of 31
    davidwdavidw Posts: 2,082member
    spheric said:
    dmitrek said:
    Well it's good that he said that Apple is punished for the past behaviour. I think laws does not have backward power and past behaviour can not be objected.

    The antitrust legislation they violated has existed for decades.

    There is absolutely nothing retroactive here. 
    The law existed, Apple broke it, someone complained, Apple got investigated and now gets punished. 
    The end (until appeal).

    What's being applied retroactive is the way the fine was calculated.

    Apple is accused of violating EU Anti-trust laws Article 102. Which is a vague and general law stating that any business practice determined to be anti-competitive is a violation of anti-trust. Not unlike the CA Unfair Competition Law that Apple was only found guilty of in the Epic vs Apple lawsuit. The law doesn't state any specific business practices as the being anti-competitive, as same business practice could be deemed anti-competitive with one company and not with another. The market dominance of the company has a lot to do with determining whether a business practice is determined to be anti-competitive.


    >The Commission found that the anti-steering provisions constituted unfair trading conditions in contravention of Article 102(a) of the Treaty on the Functioning of the European Union. In the Commission’s view, these provisions were neither necessary nor proportionate to protect Apple’s commercial interests and negatively affected the interests of iOS users by preventing them from making an informed decision about where and how to purchase music streaming subscriptions.<

    This is the anti-trust law that has existed for decades.


    However, under this more than a decade old law, (Article102), the fined is calculated as a percentage of the revenue that directly benefited by the anti-competitive business practice.


    >According to the 2006 Guidelines on Fines, undertaking’s starting point for the fine is a percentage of the company’s annual sales of the product or service concerned by the infringement. The relevant sales are usually the sales of the product or service covered by the infringement during the last full business year of the infringement.<

    But the EU is fining Apple based on the DMA. Using a percentage of global revenue because Apple is a "gatekeeper". Apple wasn't a "gatekeeper" before being labeled that under the DMA. And the DMA just recently passed and went into affect this month. If Apple was found guilty of violating EU Anti-trust Article 102 5 years ago, the fine would not be based on a percentage of  total global revenue.

    When Google was fined €2.4B for violating anti-trust laws in 2017, the fine was based on the same 2006 Commission Guidelines on fines. Not based on a percentage of Google global revenue.


    >The Commission's fine of €2 424 495 000 takes account of the duration and gravity of the infringement. In accordance with the Commission's 2006 Guidelines on fines (see press release and MEMO), the fine has been calculated on the basis of the value of Google's revenue from its comparison shopping service in the 13 EEA countries concerned.

    So even though Apple is violating an EU anti-trust law (Article 102) that's been around for decades, they are being fined under a law (DMA) that hasn't been in affect for a month yet. To be fair, Apple fine should be in accordance with the EU commission 2006 Guidelines on fines, not the DMA. But then again, being "fair" is not what the EU Commission is concern about when it comes to extracting money from any of their pre-determined "gatekeepers" (under the DMA).









    edited March 13 darelrextmaywilliamlondonsphericwatto_cobra
  • Reply 24 of 31
    sphericspheric Posts: 2,626member
    Interesting, thanks! And probably sufficient grounds for a plea to reduce the fine. 
    watto_cobra
  • Reply 25 of 31
    sphericspheric Posts: 2,626member
    lowededwookie said:

    So when is the EU going after Spotify? It clearly has a monopoly on the music streaming business, has squashed competition actively, and returns nothing to the artists.

    Oh wait, that’s not going to happen because Spotify is a European business.
    If you have sufficient grounds to suspect that Spotify was/is acting illegally, reference the legislation and file a complaint. 

    The vast majority of antitrust decisions affect European corporations. lowededwookie just never hears of them because they don't happen to affect his little American tech bubble. 
    williamlondon
  • Reply 26 of 31
    avon b7avon b7 Posts: 7,905member
    Apple has the right of appeal. Any disputes over how the fine was calculated will be dealt with accordingly but it's worth taking this summary into account.

    https://www.hfw.com/A-Guide-to-EU-Commission-Fines-Sept-2012#:~:text=The basic amount of the fine will relate to a,of the value of sales.
    sphericmuthuk_vanalingam
  • Reply 27 of 31
    croprcropr Posts: 1,134member
    blastdoor said:
    And the iPhone has a much lower market share than android in Europe, too. 

    If apple’s HQ were in Paris I bet the EU would treat them very differently.
    Just for information.    AB Inbev, the world largest brewer, received in 2019 a huge fine from the EU commission for anti competitive practices.  AB Inbev is a Belgian company with headquarters located roughly 15 miles from the EU commission offices. So no, Apple (or any big  American company) is not targeted because it is American, but because it is considered to behave anti competitive.  Whether the latter is true is up to EU court of justice to decide.
    edited March 14 gatorguymuthuk_vanalingamspheric
  • Reply 28 of 31
    darelrexdarelrex Posts: 138member
    It's not just the size of the fine that's retroactive; it's the whole idea that Apple has been violating the law for years. Apple's had the same App Store rules for 16 years (if anything, they've just gotten more lax), long before it was even a small fraction of its current valuation, and long before iPhone was much more than a sliver of the mobile market. Nobody running the EU thought anything was illegal about it. But now that iPhone is a trillion-dollar, smash success, suddenly it's not only illegal, but it's been illegal for years, and we need to hit them up for that. What's $2 billion here, $5 billion there, to a $3T company? They'll probably just pay, right?

    But Apple's thinking, what happens in the long run if we do pay this? Next thing we know, every government in the world is hitting us up for big bucks, and demanding we trash our most successful product so the "little guys" can screw with it. Better to draw a line now, than to wait until it gets much, much worse.
    watto_cobra
  • Reply 29 of 31
    I think more than anything as an Android user, I am getting annoyed at how the EU is going after Apple and using antitrust & anti competitive claims, yet by making Apple conform to everything, it takes out the core reason Apple exists as a competition to Spotify & Android, like it's truly a fine line to dance and I think after the USB-C win they pulling out all the stops to do that and it's kind of suspicious seeing how they could've done this years ago, but it all happens now 
    watto_cobra
  • Reply 30 of 31
    avon b7avon b7 Posts: 7,905member
    darelrex said:
    It's not just the size of the fine that's retroactive; it's the whole idea that Apple has been violating the law for years. Apple's had the same App Store rules for 16 years (if anything, they've just gotten more lax), long before it was even a small fraction of its current valuation, and long before iPhone was much more than a sliver of the mobile market. Nobody running the EU thought anything was illegal about it. But now that iPhone is a trillion-dollar, smash success, suddenly it's not only illegal, but it's been illegal for years, and we need to hit them up for that. What's $2 billion here, $5 billion there, to a $3T company? They'll probably just pay, right?

    But Apple's thinking, what happens in the long run if we do pay this? Next thing we know, every government in the world is hitting us up for big bucks, and demanding we trash our most successful product so the "little guys" can screw with it. Better to draw a line now, than to wait until it gets much, much worse.
    You're not far off. Apple got away with a lot over the years but size does matter. The bigger you are, the bigger the potential problem and the more likely you are to see complaints. Apple ended up on the radar and got investigated. It was never alone. Many more EU companies got whacked along the way. 

    All the current directives on digital lifestyles make explicit reference to the massive changes brought about by telecommunications advances (the backbone all digital era companies require) and factor those changes into the legislation. Once again, Apple is just another player in that context. 
    muthuk_vanalingamspheric
  • Reply 31 of 31
    sphericspheric Posts: 2,626member
    darelrex said:
    It's not just the size of the fine that's retroactive; it's the whole idea that Apple has been violating the law for years. Apple's had the same App Store rules for 16 years (if anything, they've just gotten more lax), long before it was even a small fraction of its current valuation, and long before iPhone was much more than a sliver of the mobile market. Nobody running the EU thought anything was illegal about it. But now that iPhone is a trillion-dollar, smash success, suddenly it's not only illegal, but it's been illegal for years, and we need to hit them up for that.
    You do realise that laws apply even when nobody notices that they‘re being violated, do you? 

    If you murder someone who isn’t missed for ten years, your defense that nobody pointed it out to law enforcement for ten years is probably not going to fly. 

    But yes, antitrust laws work differently when you’re big enough to violate them. 
    edited March 15 muthuk_vanalingamavon b7
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