The European Union is set to fine Apple €500mn for allegedly elbowing out competitors to its music streaming business, the Financial Times reported on Sunday, citing unmanned sources familiar with the matter.
EU officials first started investigating the matter in 2019, following a complaint for Spotify. The Swedish company claimed it was made to ramp up its monthly subscription to cover the 30% fee Apple charges to operate on its App Store. This would force it to charge more for its service than Apple Music.
“In recent years, Apple has introduced rules to the App Store that purposely limit choice and stifle innovation at the expense of the user experience — essentially acting as both a player and referee to deliberately disadvantage other app developers,” Daniel Ek, Spotify’s CEO and founder, said in a blog post at the time.
Four years on and the Commission is expected to hand down its judgment early next month. It will say Apple’s actions are illegal and go against the bloc’s rules that enforce competition in the single market, according to the FT.
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As a result, the EU is expected to ban Apple’s practice of blocking music services from letting users outside its App Store switch to cheaper alternatives. If imposed, the fine would be one of the largest single penalties the EU has ever imposed on a big tech company.
It could have been a lot bigger though. At one stage, the EU was considering a maximum penalty of 10% of Apple’s annual global turnover — or around $40bn. The bloc also whittled down the scope of the investigation last year, abandoning a probe into Apple’s in-app payment system.
At the time, Apple spokesperson Hannah Smith, said: “We’re pleased that the Commission has narrowed its case and is no longer challenging Apple’s right to collect a commission for digital goods and require the use of the In-App Payment systems users trust. The App Store has helped Spotify become the top music streaming service across Europe and we hope the European Commission will end its pursuit of a complaint that has no merit.”
The EU’s reported fine against Apple comes at a time when big tech companies are being forced to show how they are complying with landmark new rules aimed at ensuring fair competition in the bloc’s single market. Smaller internet firms and other tech businesses, such as Spotify, have long complained of being unfairly limited by these tech giant’s business practices. The Digital Markets Act, with which companies will need to comply come March 7, looks to level the playing field.