Apple fined $2 billion by EU antitrust regulators: Here's why
What's the story
Apple has been fined €1.84 billion (around $2 billion) by the European Union (EU) antitrust regulators due to its App Store policies, following a complaint by Spotify.
The EU Commission discovered that Apple hindered music streaming app developers from informing iOS users about alternative and cheaper subscription services outside the app.
Executive vice-president of the commission, Margrethe Vestager, said, "For a decade, Apple abused its dominant position in the market for distribution of music streaming apps through the App Store."
Reasons
Factors considered in determining fine
The hefty fine was calculated based on several factors.
They include the "duration and gravity of the infringement," Apple's total turnover, market capitalization, and "incorrect information" provided by Apple during the administrative process.
The EU's investigation kicked off in 2020 after Spotify filed an antitrust complaint regarding Apple's so-called "Apple Tax" and App Store rules, which limited communication with customers and marketing and promotional deals.
Steps
Apple's concessions and criticisms
Apple did make some concessions in response to the investigation, such as allowing developers to advertise payment options outside of iOS apps via email in 2021.
In early 2022, Apple permitted developers to link out to their own sites within iOS apps, but this change only applied to "reader apps" like Netflix or Spotify.
Developers also had to request an "entitlement" before adding an external link. Spotify slammed these rule changes as being "just for show."
Future
Upcoming changes and concerns
This EU fine comes as Apple gears up to revamp its app distribution regulations in line with the Digital Markets Act (DMA) starting March 7. This will enable third-party app stores on the iPhone for the first time.
However, developers have criticized Apple's approach, which involves a commission of up to 17% from developers using their own payment process.
Linking out to their own website also entails commission, plus a yearly €0.5 fee per app install after the first million.
Others
Tap-to-pay NFC facility also under scanner
Spotify has dubbed the changes made by Apple to be "an unworkable alternative that will stifle developers' businesses immediately."
On a related note, the EU Commission also looked into Apple's decision to restrict the iPhone's tap-to-pay NFC facility to its own wallet as well as payment services.
In response to the investigation, Apple is allowing third-party wallets and payment providers to use the NFC facility for payments.