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EU to hit Apple with first-ever fine in €500m penalty over music streaming

Move is culmination of long-running European Commission antitrust inquiry after a complaint by Spotify

The inquiry is investigating whether Apple blocked apps from informing iPhone users of cheaper alternatives to access music subscriptions outside the App Store. Photograph: Ming Yeung/Getty Images

Javier Espinoza
Sun Feb 18 2024 - 12:03

The European Commission is to impose its first-ever fine on tech giant Apple for allegedly breaking EU law over access to its music streaming services, according to five people with direct knowledge of the long-running investigation.

The fine, which is in the region of €500 million and is currently expected to be announced early next month, is the culmination of a European Commission antitrust inquiry into whether Apple has used its own platform to favour its services over those of competitors.

The inquiry is investigating whether Apple blocked apps from informing iPhone users of cheaper alternatives to access music subscriptions outside the App Store. It was launched after music-streaming app Spotify made a formal complaint to regulators in 2019.

Apple employs about 6,000 people in the Republic.

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The commission will rule that Apple’s actions are illegal and go against the bloc’s rules which enforce competition in the single market, the people familiar with the case said. It will ban Apple’s practice of blocking music services from letting users outside its App Store to switch to cheaper alternatives.

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Brussels will accuse Apple of abusing its powerful position and imposing anti-competitive trading practices on rivals, the people said, adding that the EU would say the tech giant’s terms were “unfair trading conditions”.

It is one of the most significant financial penalties levied by the EU on big tech companies. A series of fines against Google levied over several years and amounting to about €8 billion are being contested in court.

Although Apple has never previously been fined for antitrust infringements by Brussels, the company was hit in 2020 with a €1.1 billion fine in France for alleged anti-competitive behaviour. The penalty was revised down to €372 million after an appeal.

The EU’s action against Apple will reignite the war between Brussels and Big Tech at a time when companies are being forced to show how they are complying with landmark new rules aimed at opening competition and allowing small tech rivals to thrive.

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Companies that are defined as gatekeepers, including Apple, Amazon and Google, need to fully comply with these rules under the Digital Markets Act by early next month.

The Act requires these tech giants to comply with more stringent rules and will force them to allow rivals to share information about their services.

There are concerns that the rules are not enabling competition as fast as some had hoped, although Brussels has insisted that changes require time.

Brussels formally charged Apple in the anti-competitive investigation in 2021. The commission narrowed the scope of the investigation last year and abandoned a charge of pushing developers to use its own in-app payment system.

Apple last month announced changes to its iOS mobile software, App Store and Safari browser in efforts to appease Brussels after long resisting such steps. But Spotify said at the time that Apple’s compliance was a “complete and total farce”.

[ Disputes among national watchdogs over Big Tech fines are ‘no problem’ - Europe’s chief data regulator ]

Apple responded by saying that “the changes we’re sharing for apps in the European Union give developers choice – with new options to distribute iOS apps and process payments”.

In a separate antitrust case, Brussels is consulting with Apple’s rivals over the tech giant’s concessions to appease worries that it is blocking financial groups from its Apple Pay mobile system.

The timing of the Commission’s announcement has not yet been fixed but it will not change the direction of the antitrust investigation, the people with knowledge of the situation said.

Apple, which can appeal to the EU courts, declined to comment but pointed to a statement a year ago when it said it was “pleased” the commission had narrowed the charges and said it would address concerns while promoting competition.

It added: “The App Store has helped Spotify become the top music streaming service across Europe and we hope the European Commission will end its pursuit of a complaint that has no merit.”

The commission, the executive body of the EU, declined to comment. – Copyright The Financial Times Limited 2024

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