Apple Fined $2 Billion in One of Europe’s Largest Antitrust Actions

BRUSSELS—The European Union fined Apple about $2 billion saying the iPhone maker set unfair rules for developers of music-streaming apps, one of the EU’s largest-ever antitrust penalties and a move that could mark the start of a wider battle between the bloc’s regulators and the tech giant.

The European Commission, the EU’s executive body, said it found the company violated antitrust rules by restricting app developers from telling users about alternative ways to subscribe to music-streaming services. The commission said it ordered Apple to change its practices.

“Apple’s conduct, which lasted for almost ten years, may have led many iOS users to pay significantly higher prices for music streaming subscriptions,” the commission said Monday.

Apple said it plans to appeal the decision, which it said was reached “despite the Commission’s failure to uncover any credible evidence of consumer harm.”

Monday’s fine is the culmination of a multiyear investigation into Apple’s App Store practices and represents one of the largest antitrust penalties ever imposed by the Commission against a single company. Google has faced larger fines—of €4.3 billion and €2.4 billion—in two separate cases that the tech company has appealed.

Apple’s fine of €1.84 billion, equivalent to about $2 billion, was larger than some antitrust lawyers had anticipated. The EU’s guidance for calculating an antitrust fine allows it to increase the baseline calculation for what the fine should be to deter a company from its behavior.

“I think it’s important to say that if you are a company who’s dominant, and you do something illegal, you will be punished,” said Margrethe Vestager, the EU’s competition czar. The size of the fine should help demonstrate the bloc’s resolve in tackling anticompetitive behavior, she added.

The Commission’s probe into Apple stemmed from a complaint filed by Spotify, which competes with Apple’s music-streaming service, Apple Music.

Spotify said Apple’s rules prevented it from communicating with users directly in the Spotify app about how to upgrade, the price of subscriptions and its promotions. The company said Monday it hoped the EU’s antitrust decision would lead to changes that conclusively address what it described as Apple’s “longstanding unfair practices.”

Apple shares were down about 2.5% in trading on Monday morning.

The fine comes as Apple has contended with a range of setbacks including falling sales in China, a brief ban on Apple Watch sales and a canceled electric-car project. Some investors are also concerned about the company’s growth prospects and its response to the rise of artificial intelligence.

Moreover, regulatory scrutiny is posing a growing threat to the company in various markets.

This year, Apple said it would change some of its practices to comply with a U.S. court ruling on alternative payment options, and The Wall Street Journal reported last month that the Justice Department had ramped up work on drafting a potential antitrust complaint against the company.

In Asia, South Korea’s telecom regulator said last year that it planned to fine Apple and Alphabet’s Google for breaching rules that require the companies to allow alternative payment methods for app developers.

In Europe, Monday’s fine comes days before a new EU law targeting the world’s biggest tech companies is set to require Apple to make changes to its App Store practices, including by allowing developers to communicate with users about payment options.

The EU’s new Digital Markets Act, which takes effect this week, aims to make it easier for smaller rivals to compete against big tech companies such as Apple, Meta Platforms and Google, and is pushing the companies to make sweeping changes to some of their business practices.

Under the new rules, Apple will be required to allow alternative app stores to operate on its iOS system, and it will have to make it possible for developers to accept payments through alternative processing services. Apple will also have to allow developers to direct customers to other ways to sign up for their services.

Google will be subject to the same rules for its Play Store.

Apple laid out a plan for complying with the EU’s new rules earlier this year, which it said would make it possible for users to download apps outside of the App Store. But the plan included new fees and restrictions that many developers have derided as unworkable. The European Commission hasn’t yet weighed in on whether it thinks the company’s plan aligns with the new rules.

The company’s new terms “not only disregard both the spirit and letter of the law, but if left unchanged, make a mockery,” of the EU’s new competition law, a group of developers and associations wrote in a recent letter to EU officials. The letter was posted on Spotify’s website.

Apple has long kept a tight grip on its iOS ecosystem. It has said its policy of controlling downloads through the App Store helps keep the iPhone safe and largely free from viruses. The App Store was launched to create “a safe and trusted marketplace for our users, and an incredible business opportunity for developers,” the company said Monday.

Apple has been in the EU’s crosshairs for several years. The company recently offered to give third-party mobile wallet and payment services access to the technology behind its Apple Pay app in response to a separate antitrust investigation.

The App Store fine announced Monday comes after a lengthy investigation. The EU initially alleged in 2021 that Apple was squeezing rival music-streaming apps by requiring them to use Apple’s in-app payment system and by limiting their ability to inform users about other ways to subscribe to their services. The bloc later narrowed its charges to focus on the second argument.

Write to Kim Mackrael at [email protected]