In a decision that could have far reaching consequences a European Union antitrust regulatory body has charged Apple with a fine of €1.84 Billion for violating long standing antitrust rules in its App Store. In what looks like some sort of retribution against the company that the EU has allegedly allowed to violate EU law for going on a decade following a formal complaint lodged by digital music service Spotify that Apple has unfairly used the App Store's restrictive access rules via increasingly onerous commission rates to gain market advantage for its own Apple Music, and restrict access of competitors, primarily Spotify.
Following complaints, the European Commission has conducted an investigation into Apple and have said Apple’s rules for app developers on the App Store abused its market position.
Additionally, the fine is more than just a sizable financial penalty. It contains a clear message for all companies, regardless of how big or influential they may be, that no one is above the law. It was ruled under EU antitrust rules that Apple had established an unfair advantage over its competition, thus stifling competition and decreasing the number of options their consumers had.
One of the primary complainants in the case, Spotify also welcomed the decision, saying Apple's rules put it at a disadvantage because it wasn't able to communicate directly with its users about the advantages of a subscription and special promotions. The company said it was relieved the EU's intervention would bring in new rules and mean it could look forward to "fair competition."
Apple, however, has vehemently refuted the court's findings, arguing that Spotify was not harmed economically or suffered from any anti-competitive practices as a result of the App Store's rules, and, therefore, Apple will be appealing the decision. Apple says Spotify wants all benefits associated with the App Store, including access to its platform and wide customer base, but without paying for it.
Apple is currently facing another investigation from the European Union after it fined $12 million in Italy over anti-competition claims of Apple. Apple is being probed for these specific App Store practices, as well as wider reaching checks on whether the company restricts access to near-field communication (NFC) technology so that the devices can only be used for its exclusive payment system, Apple Pay. Apple has made some concessions, driven by regulatory pressure, but the higher hurdle of compliance with the Digital Markets Act looms.
App stores and the rules governing them are a relatively new phenomenon that will shape the entire digital ecosystem for the next century. It is important for regulators to strike the right balance that enables continued innovation, competition, and consumer welfare, while eliminating bad behaviours from so-called tech giants that everyone loves to hate but who consumers continue to use billions of times a day all around the world.
To sum up, the EU fine represents both a turning point in the rather longstanding discussion on digital fairness and a landmark in the realm of the Silicon Valley’s escalating dominance and the imperative to infringe it. It also reflects on the importance of regulatory governance in upholding market integrity and ensuring that all actors enjoy the same privileges as players in the virtual world, regardless of whether they are state-sponsored or not.