The European Commission has imposed a massive fine on Apple for thwarting competition from its music streaming competitors. The restrictions enforced on the App Store were found to violate EU regulations. It is the first time an iPhone manufacturer has been fined for breaking European Union rules.

The European Commission accused Apple in 2020 of preventing apps like Spotify from informing users about other payment options outside of the App Store, following a complaint filed by Spotify in 2019.

During a press conference, Margarethe Vestager, European Competition Commissioner, remarked that Apple's practices resulted in European consumers paying more than they should have for music streaming. "Apple's rules ended up in harming consumers. Critical information was withheld so that consumers could not effectively make an informed choice. Some consumers may have paid more because they were unaware they could pay less if they subscribed outside the app," Vestager said.

The fine awarded consists of a €40 million basic penalty for unfair practices and a huge lump sum of €1.84 billion on top, ordered as a "deterrent" against similar conduct in the future. Reuters, which had previously predicted that Apple would have to pay around €500 million, concluded that four times the final fine sends a message from the EU to all digital giants.

Vestager justified the size of the fine on the grounds that a lower one would impress the iPhone maker as much as a "parking ticket". She added that the total amount of €1.84 billion corresponds to 0.5% of the company's worldwide turnover. Analyst Ryan Reith at tech and services company IDC confirmed to reuters.com that Apple will handle it without "any immediate cash impact".

Apple has announced it will appeal the decision. In a statement, the company wrote that it "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 EU General Court in Luxembourg will likely take several years to deliver its ruling. Until then, Apple will have to pay the fine and comply with the EU order, Reuters reports.

The fine imposed on Apple is the third highest ever imposed on technology giants. The first and second positions in this regard belong to Alphabet Inc., the owner of Google. In 2017, the EU fined Alphabet €2.42 billion for unfair online shopping practices, while a year later, the company was fined a record-breaking €4.34 billion for practices that violated EU laws aimed at monopolising the market through its Android operating system.

Source: reuters.com