Apple Faces €500m Fine for Allegedly Restricting Competition in Music Streaming Market

This case underscores the ongoing legal battles over Apple’s App Store, which serves as a critical digital gateway and has been the subject of complaints from various companies.

The EU has refrained from commenting directly on Apple’s behaviour but signalled its intent to penalize the tech giant last year when it issued a statement of objections.

Apple is slated to receive a hefty €500 million fine from the European Commission for allegedly impeding competitors in the music streaming market, as reported by the Financial Times. This significant penalty stems from a prolonged investigation prompted by a complaint from Spotify in 2019.

The European Union has been scrutinizing Apple’s dominance in the music streaming app market, particularly focusing on certain restrictions imposed on app developers. These restrictions hinder developers like Spotify from informing iPhone and iPad users about cheaper music subscription options available outside the App Store. Spotify contends that this favours Apple Music, Apple’s rival app.

This case underscores the ongoing legal battles over Apple’s App Store, which serves as a critical digital gateway and has been the subject of complaints from various companies. Spotify has been a vocal critic of Apple’s App Store rules, including the 30% fee imposed on apps and in-app purchases. In response to mounting pressure from the EU’s Digital Markets Act (DMA), Apple recently announced measures to address some concerns, such as allowing EU customers to download apps without going through its own store.

The EU has refrained from commenting directly on Apple’s behaviour but signalled its intent to penalize the tech giant last year when it issued a statement of objections. The commission views the imposed restrictions as unfair trading conditions that breach EU competition regulations, specifically Article 102 of the treaty on the functioning of the European Union, pertaining to abuse of a dominant market position.

The commission is concerned that these restrictions stifle competition by preventing developers from informing consumers about potentially cheaper streaming service options. The Financial Times anticipates the announcement of the fine early next month, with the maximum penalty capped at 10% of Apple’s global turnover. While this suggests a potential fine of $30 billion, the final amount is expected to be substantially lower. Apple retains the right to appeal any decision made by the commission.

Both Apple and Spotify declined to comment on the impending fine. Apple previously defended its App Store, citing its role in facilitating Spotify’s rise to becoming Europe’s leading music streaming service. Conversely, Spotify asserts that the App Store’s restrictions create an uneven playing field, providing an advantage to Apple Music.

Legal experts weigh in on the situation, noting that Apple faces a more stringent regulatory environment due to the introduction of the DMA, which targets major digital gatekeepers like Apple. While the DMA aims to foster competition, its effectiveness remains to be seen. Anne Witt, a professor of antitrust law, suggests that if Apple faces repercussions following Spotify’s complaint, it will underscore the commission’s commitment to enforcing competition regulations alongside the DMA.

Despite the hefty fine, some experts argue that it may not significantly impact Apple’s behaviour. The Open Markets Institute highlights that the reported fine, while substantial, may not provide sufficient incentive for Apple to adhere to regulations, given its substantial revenue. Max von Thun, the OMI’s Europe director, emphasises that €500 million represents a fraction of Apple’s daily earnings.

Apple’s impending fine reflects the EU’s efforts to regulate digital markets and promote fair competition. However, the outcome of this case will serve as a litmus test for the effectiveness of the DMA in curbing anti-competitive practices among tech giants like Apple.