If you’re an iPhone user, then there’s a big chance you use Apple Music for your 🎶 music needs. It’s a ubiquitous part of the iPhone. Some might even argue that Apple pushes Apple Music a little too hard when there are other music streaming services out there that offer more for less.
That’s the gist of what Swedish music-streaming service Spotify claimed in a complaint 📜 filed two years ago, which led to the antitrust charges against Apple in Europe. Apple is facing charges for allegedly abusing its dominance in the music-streaming market using restrictive rules.
The tech giant was charged Friday by European Union (EU) regulators. If the charges are successful, Apple could end up paying a huge fine and making changes to its business model in Europe. Here’s everything we know about Apple’s alleged antitrust practices.
The EU Antitrust Lawsuit
Apple drew the European Commission’s attention after Swedish music streaming service Spotify filed a complaint claiming Apple unfairly restricts services that rival its own music streaming service Apple Music on 📱 iPhones. Spotify cheered the commission’s announcement, saying it was an important step toward holding Apple accountable for its anti-competitive behavior.
“Ensuring the iOS platform operates fairly is an urgent task with far-reaching implications,” Horacio Gutierrez, Spotify’s head of global affairs and chief legal officer, said in a statement.
Apple’s strict rules for its App Store force developers to use its in-app payment system. The company takes a 30% cut 💰 of every transaction, including monthly subscriptions. It also prevents developers from informing users of other purchasing options.
“By setting strict rules on the App store that disadvantage competing music streaming services, Apple deprives users of cheaper music streaming choices and distorts competition,” European Competition Commissioner Margrethe Vestager said in a statement. “This is done by charging high commission fees on each transaction in the App store for rivals and by forbidding them from informing their customers of alternative subscription options.”
This isn’t just about music streaming; Apple can make or break the business of app developers as one of the digital economy’s most important gatekeepers. Its rules apply to any app downloaded to an iPhone or iPad—from Instagram to Bumble to Candy Crush. They all have to comply with Apple’s rules or risk losing access 📉 to millions of customers. The rules also drive up prices because companies end up passing on Apple’s fees to customers, according to EU regulators.
⚠️ Apple’s Antitrust Issues
This isn’t Apple’s first rodeo with antitrust lawsuits. It most recently got sued by Epic Games for antitrust violations after it booted Fortnite off its App Store for attempting to bypass its built-in payment system. Epic argues Apple is using its position in the market to bully competitors. The EU charge comes a week before Apple’s court hearing with Epic.
In 2012, Apple faced another U.S. antitrust case for allegedly conspiring with book publishers to raise and fix the price for 📚 e-books. The publishers settled their claims, while Apple went to trial. That case did not go well for Apple; the court held that Apple conspired to raise the price of e-books in violation of the Sherman Act.
The Sherman Act outlaws two or more legally distinct economic entities from conspiring together to restrain trade or commerce in the U.S. A large amount of evidence in the Apple case showed that the tech giant worked together with publishers in a price-fixing conspiracy. Apple was reportedly a knowing participant in the scheme. The court found Apple guilty and ordered the company to pay a $450 million 💵 fine.
The EU case is Apple’s first antitrust charge in Europe. If it loses the case, then it could end up paying fines as high as 10% of its global turnover. For some context, Apple’s worldwide annual turnover for 2020 was $247.5 billion. The company has a market valuation of more than 🤯 $2.2 trillion—the largest on the planet!
A fine, even in the billions of dollars, would likely be the preferable outcome for Apple. Forcing the company to change its payment system would cost it billions a year.
Ms. Vestager said the commission’s findings were still preliminary. There is no set deadline for regulators to reach a settlement or impose a penalty. Apple will have a chance to fight the charges before the commission makes a final ruling.
This new legal battle is clearly not an isolated incident. There is growing scrutiny of the tech industry worldwide. Cases like this are a critical test of a government’s ability 🧐 to force one of the world’s most powerful companies to change its behavior. But don’t hold your breath—antitrust cases typically take years to resolve, so there won’t be a ruling any time soon.