Apple has a Spotify drawback—and it simply price the iPhone maker a $2 billion nice from the European Commission.

For years, the 2 firms have been at battle because the streaming service lured users away from Apple’s iTunes and accused the tech giant of exploiting its dominance to stifle innovation. In their long-running battle, every has made incursions into the opposite’s territory. When Apple launched its personal streaming service, Apple Music, in 2015, Spotify claimed Apple was capable of undercut the platform’s costs as a result of Apple didn’t need to pay the identical App Store charges as rivals. In 2019, Spotify started an formidable podcast spending spree, forking out on high-profile shows, in one other direct problem to Apple.

The feud’s early days have been civil, with few barbs traded in public. “We worry about the humanity being drained out of music,” mentioned Apple CEO Tim Cook in 2018, a cryptic remark extensively interpreted as a jibe at Spotify’s heavy use of algorithmic suggestions. But Spotify turned extra outspoken as EU politicians began to name for legal guidelines to reign in Big Tech. The €1.8 billion ($1.9 billion) nice on Apple introduced by the European Commission in the present day exhibits that its techniques are working.

The nice originates in a authorized grievance filed with the European Commission by Spotify in 2019, difficult the restrictions and costs Apple locations on builders itemizing their apps within the App Store. Today the European Commission agreed, saying that Apple’s App Store restrictions quantity to unfair buying and selling situations that will have led iOS customers to pay considerably greater costs for music streaming subscriptions.

“For a decade, Apple abused its dominant position in the market for the distribution of music streaming apps through the App Store,” said Margrethe Vestager, the EU’s competitors chief, in an announcement. “They did so by restricting developers from informing consumers about alternative, cheaper music services available outside of the Apple ecosystem.”

Apple’s App Store guidelines limit music streaming firms and different apps from informing their customers on Apple gadgets about the way to improve or join subscription provides exterior of the app. Instead, app customers can solely see sign-up choices for in-app subscriptions through Apple’s funds system, the place costs are more likely to be greater as a result of Apple takes a reduce. Some app makers, together with Spotify, don’t provide in-app purchases as a result of they don’t need to pay this fee. “Some consumers may have paid more because they were unaware they could pay less if they subscribed outside the app,” Vestager said. “This is illegal under EU antitrust rules.” Apple, which says the EU has failed to provide credible evidence of consumer harm, has pledged to appeal.

Big Number

The fine is far bigger than expected, prompting Apple’s stock to drop 3 percent on Monday. Media reports based on unnamed sources had predicted a penalty of around €500 million. It’s also one of the biggest fines the EU has ever issued against a tech company, ranking below only two Google fines of $5.1 billion and $2.4 billion. Vestager explained in a press conference that the scale of the fine is intended to prevent the company from breaking rules in the future. She added that the amount includes a “lump sum” to “achieve deterrence.” $1.9 billion amounts to 0.5 percent of Apple’s global turnover, she said.

Although Spotify CEO Daniel Ek has expressed disapproval of Apple’s business tactics, he’s also something of a reluctant figurehead in Europe’s fight against Apple. The self-described introvert has adopted the role of spokesperson for disgruntled European app developers who finally feel their complaints about Big Tech are being heard.

On Monday, Ek posted a video on X in which he described Apple as a threat to the open internet. “Apple has decided that they want to close down the internet and make it theirs, and they view every single person using an iPhone to be their user and that they should be able to dictate what that user experience should be,” he said. Ek also claimed Apple wants to effectively levy a tax on Spotify while exempting its own music service, Apple Music.