William Gallagher
Apple is staring down a potential $39.4 billion fine, as the European Commission says that Apple Music has breached antitrust law concerning restrictions on developers advertising subscriptions.
In the same case back in 2021, the EC issued a statement of objections and also stated that Apple had broken antitrust regulations. That was a preliminary conclusion, however, and the Commission has now issued an update.
"Today's Statement of Objections clarifies that the Commission does no longer take a position as to the legality of the IAP [in-app purchasing] obligation for the purposes of this antitrust investigation," says the European Commission in a press release.
"[But it] rather focuses on the contractual restrictions that Apple imposed on app developers," it continues, "which prevent them from informing iPhone and iPad users of alternative music subscription options at lower prices outside of the app and to effectively choose those."
So Apple has effectively beaten the charge about requiring developers to use its in-app purchasing system, which was key to Spotify's original 2019 complaint to the EC.
However, Apple must now respond to the allegation about restrictions it previously placed on developers. Specifically, Apple originally forbade developers of services such as Spotify to mention or link out to alternative methods of subscribing.
"Today, the European Commission sent a clear message that Apple's anticompetitive behavior and unfair practices have harmed consumers and disadvantaged developers for far too long," said Eve Konstan, Spotify's general counsel, in a statement. "We urge the Commission to reach a swift decision in this case to protect consumers and restore fair competition on the iOS platform."
The European Commission's statement of objections will now be responded to by Apple. A final ruling, and a potential fine of up to 10% of Apple's annual worldwide turnover, will then follow.
Apple has not yet responded about the EC's update.
"There is no legal deadline for bringing an antitrust investigation to an end," notes the Commission. "The duration of an antitrust investigation depends on a number of factors, including the complexity of the case, the extent to which the undertakings concerned cooperate with the Commission and the exercise of the rights of defence."
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46 Comments
It was inevitable that somewhere, some day, a government was going to demand such immense fines, and such massive, "antitrust" changes to Apple's products, that Apple would have to bow out of that market until/unless things become viable again. Not sure if this is that breaking point, but I wouldn't be at all surprised if it was.
I agree. It’s time Apple tells the EU to take a hike. $39B is a joke.
Who would end up getting this money? Lawyers and EU management? Would any actually go to the "affected" people? Probably not. From what the article appears to say it's all about Apple preventing iOS users from knowing about alternative music subscriptions. That's not worth $39B. The EU needs to be investigated for frivolous lawsuits but of course they won't because they are the government monopoly in Europe. I think Apple, and the US, should challenge the validity of the EU instead dealing directly with the governments of each sovereign country. The EU is simply a cartel.
I'm sure Apple will get right on paying that. Or they'll spend .5% of that on the best lawyers in the world. I'd rather see Apple tell the EU to pound sand. I'm not saying pull out of Europe. I'm saying they simply refuse to pay or defend the case any longer. Piss off.
1) The inevitable fine won’t be $39B or anywhere close to that, it’s just a theoretical maximum. In actuality the number will probably be under $5B.
2) The notion that Apple would leave the EU even if they were hit with a $39B fine is laughable. Check the 10-K. Apple’s revenue was over $95B in Europe in 2022 alone. The EU probably represents >80% of that. Apple isn’t giving up the $500B in revenue and $100B+ in net income they’d make there the rest of this decade alone just to “stick it” to politicians. Get real.