5 Mar 2024

Apple fined NZ$3.2b for breaking EU streaming rules

7:37 am on 5 March 2024

By Shiona McCallum for the BBC

An iPhone home screen is seen with different applications in this illustrtion photo taken in Warsaw, Poland on 21 November, 2023. (Photo by Jaap Arriens/NurPhoto) (Photo by Jaap Arriens / NurPhoto / NurPhoto via AFP)

An Apple iPhone. Photo: AFP

Apple has been fined €1.8 billion (NZ$3.2b) by the EU for breaking competition laws over music streaming.

The firm had prevented streaming services from informing users of payment options outside the Apple app store, the European Commission said.

Competition commissioner Margrethe Vestager said Apple abused its dominant position in the market for a decade.

She ordered the US tech giant to remove all the restrictions. Apple has said it will appeal against the decision.

The European Commission's decision was triggered by a complaint by Swedish music streaming service Spotify, which was unhappy about the restriction and Apple's 30 percent fee.

Vestager said Apple had restricted "developers from informing consumers about alternative, cheaper music services available outside of the Apple ecosystem".

"This is illegal under EU antitrust rules," she said.

However, Apple said it would appeal, adding there was no evidence consumers had been harmed.

"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," the company said in a statement.

"The primary advocate for this decision, and the biggest beneficiary, is Spotify, a company based in Stockholm, Sweden.

"Spotify has the largest music streaming app in the world, and has met with the EC [European Commission] more than 65 times during this investigation," it said.

Spotify called the fine handed out to Apple "an important moment" and said it sent "a powerful message" that "no company, not even a monopoly like Apple, can wield power abusively to control how other companies interact with their customers".

Apple said the Swedish company pays no commission to them as it sells its subscriptions on its website and not on the app store.

Spotify had argued that the restrictions benefit Apple's rival music streaming service, Apple Music.

Digital Markets Act

In January, Apple announced plans to allow EU customers to download apps outside of their own app store, as the introduction of the Digital Markets Act (DMA) drew closer.

The aim of the European Union's DMA is to help competition in the technology sector and to try to break down the stronghold the likes of Apple and Google have on the market.

The tech companies were given six months from August last year to comply with a full list of requirements under the new legislation, or face a fine of up to 10 percent of their annual turnover.

The firms have until later this week to comply with a raft of changes announced since the start of the year, as Apple, Meta and TikTok pursue challenges to aspects of the law.

Law professor at EDHEC, Anne Witt, told the BBC the DMA will have a "significant impact" on the way designated platforms operate within the EU.

"It is a more effective but also much blunter legal tool in the fight against market concentration in the digital economy," she said.

Last week, Spotify and 33 other companies operating across a wide range of digital sectors wrote to the European Commission with a renewed attack on Apple's "lack of compliance" with the DMA.

"Apple's new terms not only disregard both the spirit and letter of the law, but if left unchanged, make a mockery of the DMA and the considerable efforts by the European Commission and EU institutions to make digital markets competitive," it said.

This story was first published by BBC.

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