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Apple has a problem with Spotify, and this has just cost the iPhone maker a $2 billion fine from the European Commission.
For years, the two companies have been at war over the streaming service. drove users away from Apple’s iTunes and accused the technology giant to exploit their dominance to stifle innovation. In their prolonged conflict, each has made incursions into the other’s territory. When Apple launched its own streaming service apple music In 2015, Spotify claimed that Apple was able to lower prices on the platform because it did not have to pay the same App Store fees as its rivals. In 2019, Spotify started an ambitious podcast spending spreesplashing high profile showsin another direct challenge to Apple.
The early days of the dispute were civil and little criticism was exchanged in public. “We’re worried about humanity running out of music,” 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 became more outspoken when EU politicians began calling for laws to reign in Big Tech. The €1.8 billion ($1.9 billion) fine imposed on Apple announced today by the European Commission shows that its tactics are working.
The fine originates from a judicial complaint archived with the European Commission over Spotify in 2019, challenging the restrictions and fees that Apple imposes on developers who list their apps in the Apple App Store. Today, the European Commission agreed, saying that Apple’s App Store restrictions amount to unfair trading conditions that may have led iOS users to pay significantly higher prices for streaming music subscriptions.
“For a decade, Apple abused its dominant position in the market for distributing streaming music applications through the App Store.” saying Margrethe Vestager, EU competition chief, in a statement. “They did this by preventing developers from informing consumers about alternative, cheaper music services available outside of Apple’s ecosystem.”
Apple’s App Store rules prevent music streaming companies and other apps from telling their users on Apple devices how to update or sign up for out-of-app subscription offers. Instead, app users can only see sign-up options for in-app subscriptions through Apple’s payments system, where prices are likely to be higher because Apple takes a cut. Some app makers, including Spotify, don’t offer in-app purchases because they don’t want to pay this fee. “Some consumers may have paid more because they didn’t know they could pay less by subscribing outside of the app,” Vestager said. “This is illegal under EU antitrust rules.” Apple, which claims the EU has failed to provide credible evidence of harm to consumers, has already pledged to appeal.
big number
The fine is much larger than expected, causing Apple shares to fall 3 percent on Monday. Media reports based on anonymous sources had predicted a fine of approximately 500 million euros. It is also one of the largest fines the EU has ever issued against a tech company, ranking behind only two fines from Google. 5.1 billion dollars and 2.4 billion dollars. Vestager explained in a press conference that the size of the fine is intended to prevent the company from violating the rules in the future. He added that the amount includes a “lump sum” to “achieve deterrence.” $1.9 billion represents 0.5 percent of Apple’s global revenue, he said.
Although Spotify CEO Daniel Ek has expressed his disapproval of Apple’s business tactics, he is also something of a reluctant figurehead in Europe’s fight against Apple. The self-described introvert has adopted the role of spokesperson for Disgruntled European app developerswho finally feel like their complaints about Big Tech are finally being heard.
On Monday, Ek posted a video in X in which he described Apple as a threat to the open Internet. “Apple has decided that it wants to shut down the Internet and make it its own, and believes that every person who uses an iPhone is its user, and that it should be able to dictate what the user experience should be,” he said. Ek also claimed that Apple also wants to effectively tax Spotify while exempting its own music service, Apple Music.
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