The European Commission, the politically independent executive arm of the European Union (EU), on March 4 imposed a significant fine of over €1.8 billion ($1.95 billion) on Apple.
The fine was imposed for the company's abuse of its dominant position in the market for distributing music streaming apps to iPhone and iPad users through the App Store.
The Commission found Apple guilty of implementing "anti-steering provisions" that restricted app developers from informing iOS users about alternative and cheaper music subscription services available outside of the App Store, violating EU antitrust rules.
Here's all you need to know about the case:
Nature of the violation
Apple, being the sole provider of the App Store in the European Economic Area (EEA), controls the entire iOS user experience and sets terms and conditions for developers.
The Commission's investigation revealed that Apple's anti-steering provisions prevented app developers from sharing information on pricing and alternatives outside the App Store, impacting iOS users' ability to make informed choices.
Background on the case
The Commission launched an antitrust probe against Apple in 2020 following a complaint from Spotify in 2019, accusing Apple of giving an unfair advantage to its own music streaming service, Apple Music.
The complaint centred around Apple's requirement for Spotify and other content providers to pay a 30 percent commission on purchases made through their app, while Apple Music didn't face such a fee.
It has previously said the 30 percent cut it takes on purchases made in its App Store is used to protect consumers in areas such as fraud and privacy.
How was the fine calculated?
The fine, based on the Commission's 2006 Guidelines on fines, considered the duration and gravity of the infringement, Apple's turnover, and market capitlisation. It also factored in that Apple submitted incorrect information in the framework of the administrative procedure.
"In addition, the Commission decided to add to the basic amount of the fine an additional lump sum of €1.8 billion to ensure that the overall fine imposed on Apple is sufficiently deterrent," it said in a press release.
In addition to the fine, the Commission ordered Apple to remove the anti-steering provisions and refrain from repeating similar infringements.
Fines imposed on companies that breach EU antitrust rules are paid into the general EU budget. These proceeds are not earmarked for particular expenses, but Member States' contributions to the EU budget for the following year are reduced accordingly.
What did Apple say?
Apple criticised the EU decision, saying it would challenge it in court.
"The decision was reached despite the Commission’s failure to uncover any credible evidence of consumer harm, and ignores the realities of a market that is thriving, competitive, and growing fast," the company said.
"The primary advocate for this decision and the biggest beneficiary is Spotify, a company based in Stockholm, Sweden. Spotify has the largest music streaming app in the world, and has met with the European Commission more than 65 times during this investigation," it said.
It said the Swedish company pays no commission to Apple as it sells its subscriptions on its website and not on Apple’s App Store.
The timing
Facing the third-largest antitrust fine ever imposed by the European Commission, Apple is scrambling to comply with the upcoming Digital Markets Act (DMA). This new law, taking effect on March 7, mandates significant changes to Apple's app distribution practices in the EU.
In response, Apple has proposed a series of updates to its iOS software. These include allowing users to download apps from outside the App Store and use alternative payment options within apps.
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