BUSINESS

Apple Could Face hefty $2 billion antitrust fine for allegedly breaking EU regulations

This is Apple’s first-ever penalty for breaking EU regulations; on Monday, Brussels fined the iPhone manufacturer 1.84 billion euros ($2 billion) for using limitations on its App Store to stifle competition from competing music streaming services.

A sizable lump sum was added as a deterrent, bringing the basic penalty of 40 million euros to an unprecedented level for the EU’s antitrust regulators.

After Spotify filed a complaint in 2019, the European Commission accused Apple last year of obstructing the Swedish streaming service and others from notifying consumers of payment choices available outside of its App Store.

It claimed on Monday that Apple’s limitations amounted to unfair market conditions. This is a rather new defense in antitrust cases, and the Dutch antitrust commission used it to rule against Apple in a 2021 lawsuit filed by suppliers of dating apps. It was instructed to cease such behavior.

Apple said that it would challenge the ruling. The General Court, the second-highest court in Europe, is located in Luxembourg, and it will probably take several years to rule. Apple will have to abide by the EU directive and pay the fee until then.

On Monday afternoon, Apple shares were down 3.2% at $173.88.

The amount was almost four times the 500 million euros that Reuters was informed by persons with knowledge of the situation that they anticipated the European Commission would sanction Apple.

It consisted of a base amount of 40 million euros, which European Competition Commissioner Margarethe Vestager referred to as the American tech giant’s “parking ticket,” plus an additional 1.8 billion euros as a warning. According to her, the sum of 1.84 billion euros represents 0.5% of Apple’s worldwide revenue.

In a statement, Apple criticized the judgment, stating that it “ignores the realities of a market that is thriving, competitive, and growing fast” and that it “was reached despite the Commission’s failure to uncover any credible evidence of consumer harm.”

The largest benefactor and main supporter of this decision is the Stockholm, Sweden-based business Spotify. According to the report, Spotify is the most popular music streaming service globally and has had over 65 meetings with the European Commission while under investigation.

“Left in the Dark”
Vestager said during a news conference that “millions of European music streaming users were left in the dark about all available options.”

Additionally, because of the hefty commission fees that are charged to developers and then passed on to customers, Apple’s anti-steering regulations have caused users to pay more for similar services.

Spotify acknowledged that there were still problems in other areas but applauded the EU’s decision.

The business released a statement saying, “And while we are pleased that this case delivers some justice, it does not solve Apple’s bad behavior towards developers beyond music streaming in other markets around the world.”

Despite the substantial penalties, Apple can manage it without suffering any immediate financial consequences, according to analyst Ryan Reith of IT and services firm IDC.

However, he continued, saying, “I think this is another step in the ongoing process of dismantling some of the walled gardens that Apple has built around its ecosystem.”

The EU Commission has fined Alphabet’s Google a total of 8.25 billion euros for three incidents in the last ten years.

The Digital Markets Act (DMA), a new set of EU digital regulations that Apple must abide by by March 7, is similar to Vestager’s mandate to Apple that it remove its App Store limits.

Unlike the music streaming case, Apple is attempting to resolve another EU antitrust inquiry by providing competitors with access to its tap-and-go mobile payment systems.

EU authorities, who subsequently asked competitors and users for input, are probably going to accept its offer without penalizing the corporation.

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