Apple has a Spotify problem that only resulted in the iPhone maker being fined $2 billion by the European Commission.
The two companies have been at war for years as the streaming service lured users away from Apple’s iTunes and accused the tech giant of using its dominance to stifle innovation. In the long conflict, each side invaded the other’s territory. When Apple launched its own streaming service, Apple Music, in 2015, Spotify claimed that Apple was able to lower the price of the platform because it didn’t have to pay the same App Store fees as competitors. In 2019, Spotify embarked on an ambitious podcast consumption spree, spending heavily on high-profile shows in another direct challenge to Apple.
Early fights were civilized, with little verbal abuse exchanged in public. “We worry about music draining humanity,” Apple CEO Tim Cook said in 2018, a cryptic comment widely interpreted as a mockery of Spotify’s heavy use of algorithmic recommendations. But Spotify has become more outspoken as EU politicians have begun calling for laws to regulate big tech companies. The European Commission’s announcement today of a €1.8 billion ($1.9 billion) fine against Apple shows that its strategy is working.
The fine stems from a legal complaint Spotify filed with the European Commission in 2019, which challenged Apple’s restrictions and fees for developers to list their apps on the App Store. Today, the European Commission agreed, saying Apple’s App Store restrictions amount to unfair trading conditions and could lead to iOS users paying significantly higher prices for music streaming subscriptions.
“For a decade, Apple has abused its market dominance in distributing music streaming apps through the App Store,” EU competition chief Margrethe Vestager said in a statement. “They This is done by restricting developers from informing consumers about alternative, cheaper music services available outside the Apple ecosystem.”
Apple’s App Store rules restrict music streaming companies and other apps from telling users on their Apple devices 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, which can be more expensive due to Apple’s commission. Some app makers, including Spotify, don’t offer in-app purchases because they don’t want to pay the commission. “Some consumers may have paid more because they didn’t know they could pay less if they subscribed outside of the app. This is illegal under EU antitrust rules,” Vestager said. Apple The company said the EU failed to provide credible evidence that consumers had been harmed and promised to appeal.
big numbers
The amount of the fine was far higher than expected, causing Apple’s stock price to fall 3% on Monday. According to media reports from unnamed sources, the fine is expected to be around 500 million euros. This is also one of the largest fines ever issued against a technology company in the European Union, only lower than Google’s two fines ($5.1 billion and $2.4 billion respectively). Vestager explained at a press conference that the size of the fine was intended to prevent the company from violating the rules in the future. She added that the amount included a “one-time payment” to “achieve deterrence”. She said that $1.9 billion is equivalent to 0.5% of Apple’s global revenue.
Spotify CEO Daniel Ek has also been a reluctant figurehead in Europe’s fight against Apple, despite his dissatisfaction with Apple’s business tactics. The self-described introvert has become a spokesman for disgruntled European app developers who finally feel their complaints against big tech companies are being heard.
On Monday, Ek posted Videos on X In it, he described Apple as a threat to the open internet. “Apple has decided to shut down the internet and make it their own, and they see everyone who uses an iPhone as their user and they should be able to dictate what the user experience should be,” he said. Ek also claims that Apple wants to tax Spotify while exempting its own music service, Apple Music.