Brussels has imposed a fine of 1.8 billion euros on Apple. According to an investigation by the EU Commission, the US company abused its market power through certain app store rules and thwarted competitors in the music streaming business. The crux of the matter is Apple's general ban on developers referring to cheaper purchase or subscription options in their apps.
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The Commission announced on Monday that this requirement of silence constitutes “unfair trading conditions” that are “neither necessary nor appropriate”.
High punishment as a deterrent
Apple's requirements may have resulted in iOS users paying “significantly higher prices for music streaming subscriptions,” regulators argue. “Apple charged developers high commissions, which were ultimately passed on to consumers through higher subscription prices for the same service in Apple's App Store.” The ban also led to a worse user experience.
“Apple has abused its dominant position in the market for the distribution of music streaming apps via its App Store for a decade,” emphasized Competition Commissioner Margrethe Vestager – which is why she chose a particularly high fine of 1.8 billion euros “for deterrent purposes”. Previous reports mentioned a possible penalty of 500 million euros.
Apple makes counter-accusations
Apple denied the allegations and announced that it would appeal. The digital music market in Europe has grown strongly and the EU Commission has no “substantial evidence of harm to consumers,” according to the iPhone manufacturer. “It is clear that this decision is not based on applicable competition law.” The music streaming giant Spotify, which originally filed the complaint, is the clear market leader and has benefited from Apple's technology without paying anything for it.
At the same time, Apple announced that it would delete the controversial App Store rule in order to meet the new requirements of the Digital Markets Act. With its decision, the EU Commission “ironically” cements the “dominant market position” of the European company Spotify and wants to enforce the Digital Markets Act in advance, complains Apple.
The new rules force Apple to open up the iOS operating system widely in Europe and to allow alternative app marketplaces. Apple is making the fundamental technical changes with iOS 17.4, the update should appear shortly.
(lbe)