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EU slates record 500 million euro fine against Apple for antitrust breaches

The European Union (EU) is reportedly planning to impose a record fine of 500 million euros (US$539 million) on Apple Inc. for violating the bloc's competition rules by restricting access to its music streaming services. The fine, which is expected to be announced in early March, would be the first of its kind against the tech giant by the EU.

The case stems from a complaint filed by Spotify Technology SA in 2019, accusing Apple of abusing its dominant position in the app store market to favor its own music streaming service, Apple Music, over its rivals. Spotify claimed that Apple imposed unfair and discriminatory conditions on app developers, such as charging a 30% commission fee on in-app purchases and prohibiting them from informing users of alternative payment methods or subscription options outside the app store.

The EU launched a formal investigation into Apple's app store practices in June 2020, following Spotify's complaint and similar allegations from other app developers, such as Rakuten Inc. and Match Group Inc. The EU's antitrust chief, Margrethe Vestager, said at the time that Apple's app store rules "may distort competition and ultimately harm consumers".

According to the Financial Times, which first reported the news, the EU's investigation found that Apple's app store policies breached the bloc's competition law and harmed consumers by limiting their choice and increasing their costs. The EU will order Apple to stop its anti-competitive behavior and pay a fine of 500 million euros, which is equivalent to 10% of its annual revenue from the app store in Europe.

The fine would be the largest ever imposed by the EU on a single company for a single violation of its competition rules. The previous record was a 397 million euro fine on Microsoft Corp. in 2004 for abusing its dominance in the software market. The EU has also fined Google LLC more than 8 billion euros in total for various antitrust violations in the past few years.

Apple has denied any wrongdoing and defended its app store policies as fair and beneficial for both developers and consumers. The company has argued that its app store provides a secure and reliable platform for app distribution and discovery and that its commission fee is justified by the value and services it offers to developers. Apple has also claimed that Spotify's complaint is motivated by its financial interests and that Spotify is not a direct competitor to Apple Music, as it also operates on other platforms, such as Android and Windows.

Apple has the right to appeal the EU's decision to the European courts, which could take years to resolve. The company has previously challenged the EU's order to pay 13 billion euros in back taxes to Ireland, which is still pending before the EU's top court.

The EU's fine on Apple would mark another escalation in the global regulatory scrutiny of the tech giant, which is also facing antitrust probes and lawsuits in the US, the UK, Australia, and other countries. The EU is also preparing to introduce new legislation, known as the Digital Markets Act, that would impose stricter rules and obligations on large online platforms, such as Apple, Google, Facebook Inc., and Amazon.com Inc., to prevent them from abusing their market power and harming competition and innovation.