In the EU’s latest crackdown on Big Tech, Apple could be facing a hefty fine and a ban on App Store rules after allegedly using it to thwart music streaming rivals.
Regulators are completing a decision on the practice of the company of blocking music services from pushing users away from the App Store to cheaper alternative subscription options. The decision is expected to be announced early next year, according to insiders.
Part of the upcoming decision sees Apple at risk of a potential fine of as much as 10% of its annual sales.
The probe began after a complaint almost four years ago from Sweden’s Spotify Technology SA, which claimed it was forced to increase the price of its monthly subscriptions to cover costs that came with Apple’s alleged hold on how the App Store operates.
The European Commission focused on the company’s so-called anti-seering rules in a formal charge sheet back in February. It said the conditions were unnecessary, with customers facing higher prices.
Apple’s stance at a private June hearing in the case, was that it already addressed possible competition concerns. Early 2022 saw Apple begin allowing Spotify and other services to direct users to the web in apps to sign up for subscriptions.
It bypassed Apple’s revenue cut of up to 30% and provided consumers with more pricing / subscription options.
Months earlier, Apple agreed to allows apps to advertise lower subscription prices outside the App Store for the first time.
However, Spotify hit back and said the restrictions still existed and the changes were “just for show.”
The crackdown on the App Store rules by the EU has run alongside another probe that focused on how the company controls tap-to-pay technology.
That case is in talks to be settled, according to inside sources. There has also been a similar focus on app store abuses. Just this week, jurors found Google unfairly holds monopoly power.
Margrethe Vestager has a history of taking on Apple and other giants, having slapped Google with fines of over €8 billion, and ordering Apple to repay €13 billion in allegedly unfair tax breaks from Ireland.
The Digital Markets Act (DMA) will go into full force in March 2024, laying out a series of dos and don’ts, meaning it will be illegal for powerful firms to favour their own services. They will be banned from combining personal data across different services, prohibited from using collected data from third parties to compete against them, and will have to allow users to download apps from rivals.
Apple, Meta, and ByteDance have asked the EU courts to double check whether some of their services should come under the DMA.
