(Credit: Shutterstock / Songquan Deng)
Apple has been hit with a 1.8 billion euro fine, which is roughly $1.95 billion, in the EU for violating the region's antitrust rules, the European Commission announced Monday.
The Commission argues that Apple has been "abusing its dominant position" by restricting music-streaming app developers, like Spotify, from sharing subscription options that exist outside of Apple's App Store. The EU's decision was also made because Apple's App Store is currently the only app store choice for iOS users.
Apple's $1.95 billion fine is justified, the Commission says, because it's proportionate to the tech giant's revenues and is "necessary" to prevent the trillion-dollar firm from repeating the offending actions. At time of writing, Apple has a total market cap of $2.77 trillion.
"Such [a] lump sum fine was necessary in this case because a significant part of the harm caused by the infringement consists of non-monetary harm, which cannot be properly accounted for under the revenue-based methodology as set out in the Commission's 2006 Guidelines on Fines," the Commission writes. The EU alleges Apple also "submitted incorrect information" during the process.
Apple's wide-ranging restrictions on iOS app developers prohibiting them from being able to inform users about external payment options, external links, and price differences between in-app purchases and external ones led to the EU's decision.
"Apple's anti-steering provisions amount to unfair trading conditions," the Commission states in its announcement, finding that Apple is violating the Treaty on the Functioning of the European Union (TFEU) as a result.
The EU believes that Apple's practices may have led consumers to unknowingly spend more money on music streaming subscriptions than they would have liked, and also created a "degraded user experience" by making it difficult for users to find external payment avenues.
Apple denies that it's harmed consumers, however. "The decision was reached despite the Commission’s failure to uncover any credible evidence of consumer harm, and ignores the realities of a market that is thriving, competitive, and growing fast," Apple says in its response.
Apple says Spotify, which is based in the EU, met with the Commission over 65 times during the investigation and makes up 56% of the EU music streaming market. Spotify's also been downloaded over 119 billion times on Apple devices globally, Apple says.
"Spotify wants to bend the rules in their favor by embedding subscription prices in their app without using the App Store’s in-app purchase system," Apple claims. "They want to use Apple’s tools and technologies, distribute on the App Store, and benefit from the trust we’ve built with users—and to pay Apple nothing for it."
Spotify called the EU's fine against Apple "powerful" and argues the iPhone maker "muzzled" Spotify's music streaming platform. Spotify says it's happy with the Commission's decision, but doesn't think the fine solves the broader perceived problem.
"Our work will not be done until we succeed in securing a truly fair digital marketplace everywhere and our commitment to helping to make this a reality remains unwavering," Spotify said in its statement.
Monday's massive fine is the latest hit against Apple's practices in the EU. The region's Digital Markets Act (DMA) has led to new changes that are starting to force Apple to open up its iOS app market, allowing third-party app stores and other new workarounds. But some are still unhappy with Apple's control over the iOS market and argue that Apple's response to the EU rules by adding a new fee, for instance, is a "step in the wrong direction."
Editors' Note: This story has been updated to include comments from Apple and Spotify.