Apple Slapped With $2 Billion Fine for Ripping Off Music Customers

Apple Slapped With $2 Billion Fine for Ripping Off Music Customers

On Monday, Apple was hit with a stunning €1.84 billion ($US2 billion) fine for violating antitrust laws in Europe. The EU said the company “abused its dominant position” by forcing Spotify and other music streaming apps not to tell customers they could save money if they subscribed outside of the App Store.

“This is illegal and it has impacted millions of European consumers,” Margrethe Vestager, the EU’s European Commissioner for Competition, said at a press conference. European users do not have “a free choice as to where, how and at what prices to buy music streaming subscriptions.”

Apple has a competing music service, which makes its policy particularly egregious in the eyes of regulators, but the issue is broader. For years, companies across the digital economy have complained about Apple’s “App Store Tax,” a 30% fee the company charges for purchases made in its App Store. Apps are forbidden from telling users they can avoid the fee if they subscribe using a web browser. As a result, new customers who download apps including Spotify and Netflix won’t find any information about how to subscribe whatsoever. The companies don’t want to charge iPhone users the extra fee and can’t afford to swallow the costs themselves, but if they give you details about where to pay, Apple threatens to ban them.

In a press release, Apple criticized the EU, claiming the app market is competitive and its policies are good for the world. “The decision was reached despite the Commission’s failure to uncover any credible evidence of consumer harm,” the company wrote. Apple went on to imply the fine has something to do with the fact that Spotify is a European company. “The primary advocate for this decision — and the biggest beneficiary — is Spotify, a company based in Stockholm, Sweden,” Apple wrote.

“This decision sends a powerful message—no company, not even a monopoly like Apple, can wield power abusively to control how other companies interact with their customers,” Spotify said in a statement. “It is a basic concept of free markets—customers should know what options they have, and customers, not Apple, should decide what to buy, and where, when and how.”

Epic Games, the maker of Fortnite, recently lost a court battle over the issue in the United States. The EU has been more friendly to developers, however, and will soon require Apple to let users access alternative app stores. Apple maintains the 30% fee is necessary to pay for safety and security processes that keep users safe.

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