Apple fined 1.8 billion euros over its App Store rules in the EU

Apple was hit on March 4 with a 1.8 billion euros (S$2.62 billion) penalty from the European Union after an investigation into allegations that it shut out music-streaming rivals, including Spotify Technology, on its platforms.

The European Commission also ordered the Cupertino, California-based firm to stop preventing music streaming apps from informing users of cheaper deals away from Apple’s App Store.

“For a decade, Apple abused its dominant position in the market for the distribution of music streaming apps through the App Store,” EU antitrust chief Margrethe Vestager said. “They did so by restricting developers from informing consumers about alternative, cheaper music services available outside of the Apple ecosystem.”

Apple said it will appeal against the EU’s decision, which sets off a legal battle that could last for years. In a statement, the company said regulators failed to “uncover any credible evidence of consumer harm, and ignores the realities of a market that is thriving, competitive and growing fast”.

Apple reported revenue of US$119.6 billion in the first quarter, including US$69.7 billion from the iPhone alone, with sales from the device up 6 per cent from a year ago.

Ms Vestager has made it a core strategy to attempt to dismantle Big Tech’s dominance in the bloc through fines and regulatory actions. She slapped Alphabet’s Google with penalties of more than 8 billion euros and also ordered Apple to repay 13 billion euros in allegedly unfair tax breaks from Ireland.

The EU’s investigation was sparked by a complaint nearly five years ago from Stockholm-based Spotify, which claimed it was forced to ramp up the price of its monthly subscriptions to cover costs associated with Apple’s alleged stranglehold on how the App Store operates.

The European Commission homed in on Apple’s so-called anti-steering rules in a formal charge sheet in February, saying the conditions were unnecessary and meant customers faced higher prices.

“The reality is that European consumers have more choices than ever,” Apple wrote in a post about the EU decision. “Ironically, in the name of competition, today’s decision just cements the dominant position of a successful European company that is the digital music market’s runaway leader.”

Ms Vetager said that Apple’s rules prevented consumers from making informed choices, meaning some may have paid more than they needed to.

“The commission found that Apple’s rules result in withholding key information on prices and features of services from consumers,” she said in a news conference.

The EU crackdown on Apple’s App Store has run alongside sweeping new rules aimed at heading off market abuses before they take root. Under the Digital Markets Act, which comes into full effect this week, it’ll be illegal for the most powerful tech firms to favour their own services over their rivals.

Companies will be barred from combining personal data across their different services and from using data they collect from third-party merchants to compete against them. They will also have to allow users to download apps from rival’s platforms. The rules come into full force on March 7 and Apple has also challenged its designation under the new regime.

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