Europe has been fined over $2 billion by Apple

The European Commission has ruled out unfair trade practices in the music streaming app store using the digital markets act. The case against Apple, Meta, Alphabet, and ByteDance

“Apple will have to open its gates to its ecosystem to allow users to easily find the apps they want, pay for them in any way they want and use them on any device that they want,” she said.

The DMA’s provisions are designed to prevent tech giants from the sort of behavior that’s at the heart of the Apple investigation. Apple has already revealed how it will comply, including allowing iPhone users in Europe to use app stores other than its own and enabling developers to offer alternative payment systems.

The Digital Markets Act, due to take effect Thursday, imposes a set of do’s and don’ts on “gatekeeper” companies including Apple, Meta, Google parent Alphabet, and TikTok parent ByteDance — under threat of hefty fines.

The early days of the feud were civil with few public barbs being traded. “We worry about the humanity being drained out of music,” said Apple CEO Tim Cook in 2018, a cryptic comment widely interpreted as a jibe at Spotify’s heavy use of algorithmic recommendations. As EU politicians started to call for laws to control Big Tech, that’s when Spotify became more outspoken. The €1.8 billion ($1.9 billion) fine on Apple announced by the European Commission today shows that its tactics are working. The fine is the result of a legal complaint filed with the European Commission, challenging the restrictions and fees Apple places on developers for using 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 music streaming subscriptions.

Apple — which contests the decision — behaved this way for a decade, resulting in “millions of people who have paid two, three euros more per month for their music streaming service than they would otherwise have had to pay,” she said.

The Commission said it took into account the “duration and gravity of the infringement” when setting the fine, as well as Apple’s total turnover and market capitalization, while also factoring in “incorrect information” submitted by Apple during the administrative procedure.

“Despite the Commission’s failure to uncover any credible evidence of consumer harm, the decision was reached even though the market was thriving, competitive, and growing fast,” the company said.

Music streaming companies and other apps that offer subscription services can only tell users how to upgrade or sign up for their service outside of the app, so they cant inform users on their Apple devices. Instead app users can only see sign up options for in-app subscriptions via Apple’s payments system, where prices are likely to be higher because Apple takes a cut. Some app makers don’t offer in-app purchases because they do not want to pay the commission. Some consumers may have paid more because they weren’t aware that they could save money if they subscribed outside of the app. This is not allowed under EU antitrust rules. Apple plans to appeal because it says the EU failed to provide evidence of consumer harm.

“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,” Apple said.

Over time, the commission’s investigation has homed in on App Store rules that prevent developers from telling their users about alternatives to Apple’s own payment options. The commission said that its initial view was that the anti-steering obligation represented unfair trading conditions and argued that the policies of the App Store could result in users paying more.

Those fees have turned into a significant part of Apple’s service’s division, which generated $85 billion in revenue during the company’s last fiscal year ending in September.

The stock of the company has fallen 9% this year because of legal developments in the US and Europe that are likely to undermine the Apple’s commission from App Store. Apple’s shares declined in the US on Monday.

Apple has made some changes. In 2021, it said that developers could advertise payment methods outside of the iOS app via communications such as email. It began allowing developers to link out to their own sites from inside the iOS apps. The new change only applied to reader apps that are designed to provide access to digital content and developers needed to request an entitlement before they could add an external link. The EU’s antitrust fine was reported earlier, and it is said that the Apple rule changes were just for show.

Apple has banned streaming services from telling users about prices outside of their apps, linking users to alternative subscription options or even email users to know about different price options, found the investigation.

US courts ruled that Apple has to allow developers to link out to other payment methods as a result of a legal challenge from game developer, the creators of “Fortnite”. But when Apple did start allowing developers to link out, it maintained that it would still take a cut of up to 27 percent from any digital purchases — a small reduction over its typical 30 percent rate. Apple’s critics called out the changes, with Spotify saying they showed that Apple “will stop at nothing to protect the profits they exact on the backs of developers and consumers under their app store monopoly.”

Alongside its investigation into Apple’s App Store policies, the European Commission has also been looking at Apple’s policy of restricting the iPhone’s tap-top-pay NFC (near-field communication) to its own wallet and payment services. As a result of the investigation, Apple has offered to let third-party mobile wallet and payment providers use the iPhone’s NFC feature for payments.

On Monday, Ek posted a video on X in which he described Apple as a threat to the open internet. He said that apple wants to close down the internet and make it their own and that they should be able to decide on what the user experience should be. Ek also claimed Apple also wants to effectively levy a tax on Spotify while exempting its own music service, Apple Music.