Apple Hit with $2 Billion Fine by EU Over Antitrust Concerns

Raised Issue by Spotify
EU Alleges Apple of Antitrust Violation
Apple Expected to Appeal

Once the world’s leading company for monopolizing the smart electronic product market, Apple faced a storm of controversy as it was pushed from its top spot in market value. On the 4th, the European Union reportedly imposed a fine of 1.84 billion euros ($2.2 billion) on Apple for alleged antitrust violations.

The issue is that Apple used its monopoly power by limiting the payment route for Spotify subscriptions to the Apple App Store.

With the implementation of the Digital Market Act (DMA) approaching on the 7th, the European Union is expected to increase pressure on big tech by imposing a more significant fine on Apple than initially expected. This will kick off a power struggle between the EU and big tech.

The European Union (EU) has fined Apple approximately $2 billion for unfair practices. It appears that a full-fledged power struggle between the EU and big tech is about to unfold.

The European Commission imposed a fine on Apple on the 4th for abusing its market dominance in the music streaming application market, which is reported to be approximately $2 billion. This fine amounts to 0.5% of Apple’s global sales, exceeding the initially expected 500 million euros.

The fine imposed by the European Commission ranks third in the history of antitrust-related penalties, following the 4.34 billion euros and 2.4 billion euros that Google received.

Apple, which introduced smartphones to the world in mid-2007, also built an independent App Store platform to generate profits. Although many other platforms, including Google’s Play Store, have emerged since the launch of the App Store, Apple’s monopoly has essentially continued.

Even in a fragmented market, Apple is speculated to have imposed a 30% toll by almost forcing app purchases through the App Store using its monopolized device market as a weapon.

Experts consider the EU’s ruling repudiated Apple’s dominance over the past 17 years. They added that Apple’s policy of excessively restricting competitors’ services within the smart ecosystem and imposing a constant toll is evidence of a violation of antitrust laws.

Apple’s leading position, which has lasted for 17 years, is expected to end.

This lawsuit began in 2019 when the music streaming company Spotify sued Apple on the EU competition authority, claiming Apple forced in-app payments to collect a 15-30% commission. Spotify stated the lawsuit was because Apple disadvantaged apps that used external payment systems by blocking updates. It was shocking that Apple even prohibited informing users about other payment options. The EU declared these actions as unfair trade.

Margrethe Vestager, the EU’s senior executive vice president, said, “Apple has abused its dominant position in the market for supplying music streaming apps through the App Store for ten years. This is illegal and has affected millions of European consumers.”

Apple has expressed its intention to appeal this decision. “The European Commission has made this decision even though it failed to find credible evidence of consumer harm, and it has ignored the reality of a vibrant, competitive, and rapidly growing market,” they said, explaining the reason for the appeal.

In response to Spotify’s issue, it was reported that Apple countered by attracting over 100 million subscribers outside the App Store over the past eight years.

If Apple appeals, it is expected to take several years.

It’s noteworthy that a fine more than triple the initially expected 500 million euros was imposed. The EU’s decision to collect a fine exceeding the revenue from the toll reflects a determination not to allow future attempts. It was also added that they considered that Apple submitted incorrect information during the investigation.

“It has gone beyond the standard fine process to provide a deterrent for other companies of a similar size and with similar resources,” the EU explained the reason for the hefty fine. Companies of similar size and resources are presumed to be big American tech companies. It was a kind of warning, expressing the will to impose antitrust sanctions on them.

It is known that Amazon, Google, Alphabet, Microsoft, and others are already not free from similar issues. The toll issue and the fact that they are known to have more problems with personal data protection and global taxation are shocking.

The DMA, which comes into effect on the 7th, designates platform operators of specific size as “gatekeepers,” requires them to open their services to competitors, and prevents them from freely using users’ personal information. The six companies selected as gatekeepers are Apple, Google Alphabet, Microsoft, Meta Platforms, Amazon, and TikTok’s parent company, China’s ByteDance.

The sanctions resulting from implementing the DMA are seen as the starting signal for full-scale big-tech regulation. If a gatekeeper does not fulfill such duties, they can be fined up to 10% of annual sales; if repeated non-compliance is confirmed, up to 20%.

The DMA includes provisions that tie the monopoly of big tech companies like chains, and the companies can even receive orders to sell off parts of their businesses if “organized violations” are confirmed. Vestager, the Vice President of the Union, reportedly saw the implementation of the DMA as a turning point, saying, “Self-regulation has ended.”

Apple announced last week that it would focus on generative AI, scrapping the self-driving electric car project it had invested in for ten years. The recently unveiled Apple Vision Pro is primarily seen as a failed project.

Even in China, which was once its largest sales market, Apple has started to be ignored due to the recent U.S.-China dispute. Sales have begun to fall as the Chinese government regulates the use of Apple devices and promotes the use of domestic brands.

Most U.S. media outlets have evaluated Apple as facing the most challenging crisis among big tech companies since it introduced its company to the smart industry.