Apple has been fined a penalty of over £1.5bn by Brussels as a result of breaching competition laws. The fine has come following an investigation which found that Apple had purposely limited competition from music streaming services such as Spotify. Originally, the penalty was forecasted to be four times less than the final figure, leading people to believe that the EU have chosen to make an example out of Apples breach of competition law.
The EU competition commission found that the tech company disadvantaged consumers by restricting app developers from openly promoting cheaper music subscription services available outside the Apple “ecosystem”. This meant that music streaming developers were not allowed to inform the users inside their own apps of cheaper prices for the same subscription on the internet. Instead, the only option for consumers when making in-app purchases on platforms such as Spotify was to pay the charges which included a 30% fee to Apple.
Margrethe Vestager, the European competition commissioner has said on the matter:
“I think it is important to see that if you are a company who is dominant and you do something illegal, it will be punished. We want to show our resolve that we will go into these cases.”
The Digital Markets Act was introduced with the intention of forcing tech companies to allow fair competition from its rivals. The tech companies were given six months from August last year to comply with a full list of requirements under the new legislation, or face a fine of up to 10% of their annual turnover. The law has already led Apple to propose a series of changes to its IOS software.
Apple has stated that they intend to appeal, on the grounds that the decision was reached despite the commissioners failure to uncover any credible evidence of consumer harm.
Comment from Berry Smith
Apple’s anti-steering rules made consumers pay more for such services because of the high commission fee imposed on developers and passed on to consumers. Although it may not be illegal to be a dominant company within an industry, it is certainly illegal to abuse dominant positions of power and companies which do so are likely face high penalties. Apple’s fine is the third-biggest antitrust fine the commission has imposed, and is a sign of the commissions intention to crack-down on cases of abuse by companies in dominant positions.
If you are a tech company and unsure on how the Digital Markets Act may apply to you, or if you have any general queries or need any assistance relating to commercial law, please do not hesitate to contact us at commercial@berrysmith.com or on 029 2034 5511.