EU Fines Apple Nearly $2B Following Spotify Lawsuit

Improve the News Foundation -

Facts

  • The EU fined Apple €1.8B ($1.9B) on Monday — four times more than expected — for illegally edging out music streaming rivals like Spotify.1
  • Apple must now let rival streamers 'communicate freely with their own users,' said Margrethe Vestager, the European Commission Executive Vice President for competition policy.2
  • The hefty fine comes five years after Swedish company Spotify filed a complaint about what's characterized as the 30% 'Apple Tax' levied by the iPhone maker on subscriptions to other services via the App Store.3
  • The European Commission viewed the 30% fee as an unfair trade practice that restricts free market competition.4
  • This is the first time the Commission has fined Apple. It said the huge fine imposed was 'necessary to achieve deterrence,' although Apple has said it will appeal the ruling.5
  • The order reflects the EU's laws under its new Digital Markets Act, which Apple must follow beginning March 7. The EU has previously fined Google a combined €8.25B ($8.96) in three separate cases.6

Sources: 1The Guardian, 2The New York Times, 3Verge, 4RTE, 5POLITICO and 6Reuters.

Narratives

  • Narrative A, as provided by Apple Newsroom. The European Commission has not presented ample evidence in this case. Spotify itself has grown and cornered a huge 56% share of the European music streaming market — mostly piggybacking off of Apple for free. Other developers, too, have gained a lot from Apple's App Store, and yet around 86% do not pay the 'store owner' any commission. Spotify isn't even satisfied with this outcome and wants the App Store revamped to suit itself. Apple should and will appeal this ruling.
  • Narrative B, as provided by Spotify. Apple has long praised itself even as it crushed smaller rivals of Apple Music. It's difficult to understand how Spotify reaching out to its own users with information about deals that benefit the same users can be Apple's problem just because it owns the App Store. Apple curbing Spotify users' choices is repugnant to the idea of a fair and open digital marketplace — a pillar of the internet itself. One 'bad Apple' can ruin an entire industry, which is why the EU has put an end to such behavior.

Predictions