Here’s why EU is set to hit Apple with €500 million fine

SHAH ALAM - Tech giant Apple is about to be fined around €500 million for allegedly breaking the European Union (EU) law over its music streaming practices.

Reports by international news agencies said that EU's antitrust regulator, the European Commission has accused Apple of abusing its dominant position in the music streaming market to stifle competition.

The European Commission has alleged that Apple had used its control over the App Store to give its own music streaming service, Apple Music, an unfair advantage over its competitors.

Why is Apple facing the prospect of a fine?

According to the reports, following a 2019 complaint by Spotify, the EU conducted an inquiry into Apple's role in the music streaming app market.

It was reported that subsequently, the investigation has narrowed its scope to scrutinise specific restrictions enforced on app developers by Apple.

These constraints hindered developers like Spotify from informing users of iPhones and iPads about potentially more cost-effective music subscription options accessible outside the App Store.

Spotify contended that this situation favoured Apple's competitor application, Apple Music.

How does the EU view Apple's actions?

It was reported that the EU refrained from offering a direct comment. However, it hinted at its intention to penalise Apple back in February last year.

This announcement came alongside a formal statement of objections over the case, a procedural step by Brussels outlining concerns about the company's conduct.

The commission characterised the restrictions as "unfair trading conditions" violating Article 102 of the Treaty on the Functioning of the European Union.

In simpler terms, it amounted to an abuse of a dominant position in a specific market.

The commission also expressed worry that these restrictions hindered developers from "informing consumers about where and how to subscribe to streaming services at lower prices."

What’s next?

According to a report by British daily business newspaper Financial Times, the commission was expected to announce the fine early next month.

It was reported that the maximum penalty that a company could encounter for engaging in anti-competitive behaviour was capped at 10 per cent of its global turnover.

In Apple’s case, the newspaper reported that this suggested a potential fine of $30 billion (£24 billion) although the ultimate sum was expected to be considerably lower.

Apple will also be able to later appeal against any decision made by the commission.

What did Apple and Spotify say?

It was reported that both companies declined to provide any comments.

Apple had stated last year that its platform had facilitated Spotify's ascent to the position of Europe’s leading music streaming service and expressed the hope that the commission would "cease its pursuit of a complaint lacking merit."

According to the Financial Times, this seemed unlikely.