Apple Challenges $2B European Union Fine Over Antitrust Violations
Written by djfrosty on May 22, 2024
Apple has launched a legal challenge against the 1.8 billion euro ($1.95 billion) fine assessed by the European Commission for breaking competition laws and unfairly favoring its own music streaming service over rivals including Spotify.
According to court records, the U.S. tech giant filed an appeal with the EU’s Luxembourg-based General Court earlier this month.
Details of what is contained in the legal action, listed as: “Apple and Apple Distribution International v Commission,” are not yet publicly available. Representatives of Apple and the European Commission did not respond to requests to comment.
Apple had previously said it would appeal the EU’s fine, which was handed down in March following a long-running investigation triggered by complaints from Swedish streaming service Spotify.
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At the time of the ruling, the European Commission’s Margrethe Vestager said Apple had “abused its dominant position” for almost a decade by restricting rival music streaming apps from informing consumers about alternative, cheaper music services available outside of the App Store.
As a result, many users paid “significantly higher prices for music streaming subscriptions” because of the high fee imposed by Apple on developers, which was then passed on to users, the commission said.
Apple has always strongly denied those claims, arguing that EU investigators had failed “to uncover any credible evidence of consumer harm.” The commission’s decision “ignores the realities of a market that is thriving, competitive, and growing fast,” the tech company said in a statement two months ago.
The nearly $2 billion fine was issued as part of an ongoing EU-wide effort to rein in the global dominance of big tech companies through large financial penalties and regulatory measures.
In March, just a few days after Apple received its penalty notice, new EU rules came into force governing how the largest online platforms operate in Europe as part of the Digital Markets Act (DMA).
The DMA requires the six tech giants designated as “gatekeepers” by the European Commission — Apple, Google parent company Alphabet, Amazon, TikTok-owner ByteDance, Meta and Microsoft — to comply with a raft of provisions, including not favoring in-house services at the expense of third-party providers.
The laws are enforceable by fines of up to 20% of total worldwide turnover (a.k.a. gross revenue) or, in extreme cases, the “last resort option” of forced divestments and the break-up of businesses.
In response, companies like Apple have been overhauling how they operate in the 27-member EU bloc, allowing European users to download rival app stores and lowering the fees charged to developers for purchases made through the App Store.
However, Apple’s plans to charge “high volume” services with over 1 million users a €0.50 ($0.54) “core technology fee” per download, per year, for using alternatives to the App Store has been heavily criticized by a number of European businesses, including Spotify and Deezer.
On March 25, the EU announced that it was investigating Apple, along with Meta and Alphabet, for potential breaches and non-compliance with the DMA’s terms.
Apple’s legal challenge against the commission’s $1.95 billion fine opens yet another battlefront with EU regulators. The tech company has previously had some success in the General Court — the European Union‘s second-highest court, which hears cases brought by companies against the commission.
In 2020, EU judges overturned a previous ruling by the commission that Apple had underpaid 13 billion euros in taxes to the Irish government. That case subsequently went to the European Court of Justice and is still slowly making its way through the legal process.
Apple’s latest court fight could be just as longwinded and take several years before any ruling is made by the General Court, which would also be open to appeal.