Apple has had issues with Spotify, and the iPhone maker was just fined $2 billion by the European Commission.
The two companies have been at odds for years, with the streaming service luring users away from Apple's iTunes and accusing the tech giant of abusing its dominance and stifling innovation. During the long-running conflict, both countries have invaded the other's territory. When Apple launched its own streaming service, Apple Music, in 2015, Spotify claimed it was able to lower the price of its platform because Apple didn't have to pay the same App Store fees as its competitors. In 2019, Spotify launched an ambitious podcast spending spree on high-profile shows in another direct challenge to Apple.
The early days of the conflict were civil war-like, with very few abusive words being exchanged in public. “I'm worried that we're taking the humanity out of music,” Apple CEO Tim Cook said in 2018, a cryptic comment that Spotify said was algorithmically recommended. It is widely interpreted as an incitement to the excessive use of matters. But as EU politicians began pushing for legislation to govern the Big Tech industry, Spotify became more outspoken. The €1.8 billion ($1.9 billion) fine against Apple announced today by the European Commission shows that strategy is working.
The fine stems from a legal complaint filed by Spotify with the European Commission in 2019, challenging the restrictions and fees Apple imposes on developers who list apps on the App Store. ing. Today, the European Commission agreed, saying Apple's App Store restrictions amounted to unfair trading terms and could have forced iOS users to pay significantly higher prices for music streaming subscriptions. said.
“For 10 years, Apple has abused its dominant position in the distribution market for music streaming apps through the App Store,” EU competition chief Margrethe Vestager said in a statement. “They did so by restricting developers from providing information to consumers about alternative, cheaper music services available outside the Apple ecosystem.”
Apple's App Store rules restrict music streaming companies and other apps from informing Apple device users about how to upgrade or sign up for subscription offers outside of the app. Instead, app users will only see the option to sign up for in-app subscriptions through Apple's payment system, and prices can be higher as Apple takes a cut. Some app makers, like Spotify, don't offer in-app purchases because they don't want to pay this fee. “Some consumers may have paid more without knowing that they could pay less if they subscribed outside the app, which is illegal under EU antitrust rules,” Vestager said. said. Apple argued that the EU had failed to provide reliable evidence of consumer harm and vowed to appeal.
big number
The fine was much higher than expected, and Apple shares fell 3% on Monday. Media reports, based on anonymous sources, predicted a penalty of around 500 million euros. This is also one of the highest fines ever issued by the EU against a technology company, and only two of them fall short of Google's fine of $5.1 billion and $2.4 billion. Vestager told a news conference that the size of the fine was intended to prevent the company from violating regulations in the future. He added that the amount also includes a “lump sum” to “achieve deterrence”. He said the $1.9 billion is equivalent to 0.5% of Apple's global sales.
Spotify CEO Daniel Ek has expressed disapproval of Apple's business strategy, but he has also been reluctant to fight Apple in Europe. The self-described introvert has taken on the role of voice for disgruntled European app developers who feel their grievances against Big Tech are finally being heard.
On Monday, Ek posted: X video In it, he described Apple as a threat to the open internet. “Apple has decided they want to shut down the Internet and make it their own. They consider everyone who uses an iPhone to be their user, and they think they should be able to decide what that user experience should be. '' he said. Ek also argued that Apple wants to effectively tax Spotify while exempting its music service, Apple Music.