Apple receives a huge fine from the European Commission. Because the American iPhone manufacturer behaves in an anti-competitive manner towards Apple Music’s competitors, the company is allowed to issue a check for 1.8 billion euros.

The European Commission has imposed a fine of 1.8 billion euros on Apple for abusing its dominant market position. The ruling is the result of a complaint that Spotify filed in 2020 and has been pending for some time. The penalty is higher than expected: Apple receives a direct fine from the Commission for the first time and it is the third highest imposed by the Union.

Anti-steering

Europe has traditionally not been interested in anti-competitive behavior and Apple’s case is not very complex at its core. Anyone who uses Apple Music can simply register in the Apple ecosystem at the regular price. However, users who consider a competitor like Spotify will see significantly higher prices: after all, Spotify has to pay a commission on purchases for sales through the Apple ecosystem, which it passes on to customers.

If you buy your subscription directly from Spotify, you’ll pay a normal and competitive price, but Apple prohibits Apple Music’s competitors from advertising this price. Because Apple is the lord and master of the iPhone ecosystem, it abuses its market dominance to promote its own music service at the expense of its competitors. The EU calls this practice Anti-steering.

In particular, developers on iOS are generally allowed to:

• do not inform their users about the prices of subscriptions outside the app;
• No information from iOS users about the price difference caused by Apple commission;
• Don’t include links in your apps that take users to a webpage that lists alternative pricing. Informing an Apple customer about the price difference via email is also not permitted.

Illegal performance

This is therefore illegal, the committee decides on the basis of Article 102(a) of the Treaty on the Functioning of the European Union. The anti-steering practices were neither necessary nor proportionate to protect Apple’s commercial interests, it said.

The EU finds that Apple profited from its position for almost a decade and charged customers significantly higher prices for music streaming subscriptions. The user experience was also worse due to Apple’s practices, as iOS users had to manually search for relevant offers in the app.

deterrence

When determining the fine, the panel took into account the duration, severity and financial benefit to Apple. Sales and market value are also factors. The Committee further finds that Apple made false statements during the administrative procedure. The total amount is 1.8 billion euros. Such a large amount is necessary to deter Apple in the future, it seems. Finally, Apple must end its anti-steering practices unless the company wants to be fined again in the future.

For reference, it may still be relevant to know that Apple had about $73.1 billion in cash on hand as of December 2023. In other words, CEO Tim Cooke can pay the monster fine immediately if he wants.