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Apple fined $2 billion by EU for using App Store to thwart competition| GuyWhoKnowsThings

Apple was fined 1.8 billion euros ($1.95 billion) by European Union regulators on Monday for thwarting competition between music streaming rivals, a harsh punishment imposed on the tech giant in a long-running battle for dominance. powerful role it plays as guardian of the App Store. .

The penalty, announced by the EU antitrust regulator, is the culmination of a five-year investigation launched by one of its biggest rivals, Spotify. Regulators said Apple illegally used its dominance in the App Store to outperform its rivals.

“For a decade, Apple abused its dominant position in the market for the distribution of streaming music applications through the App Store,” said Margrethe Vestager, executive vice president of the European Commission who oversees competition policy.

“From now on,” he said at a press conference, “Apple will have to allow streaming music developers to communicate freely with their own users.” The size of the fine, she added, “reflects both Apple's financial power and the harm that Apple's conduct inflicted on millions of European users.”

The action by the European Commission, the EU's executive branch, is the latest in a series of regulations and sanctions. to point to the App Store. Most disputes are because Apple requires apps to use its in-app payment service for sales. Up to 30 percent commission is required for each transaction, a fee many developers consider excessive.

regulators in the Hollandsand South Korea They have passed laws or orders to force Apple to allow alternative payment services, but Apple has largely ignored challenges from regulators. in those countries is allowing alternatives but charging a 27 percent commission, a solution that country regulators are questioning.

Apple said it would appeal the ruling. “While we respect the European Commission, the facts simply do not support this decision,” Apple said in a statement on Monday.

In a briefing last month, Apple said European regulators had been searching for a legal theory for the case for almost a decade, in fits and starts. Apple disputed the idea that Spotify users have not been able to subscribe to music services through other means, saying that Spotify has added more than 100 million subscribers outside of its app in the last eight years.

Apple also accused Spotify of being a monopolist because it has more than 50 percent of the music streaming business in Europe. He said Spotify has benefited from the software tools Apple provides, as well as more than 119 billion downloads and updates of its app. He has done it without paying Apple any money in commissions.

“Basically, your complaint is about trying to get unlimited access to all of Apple's tools without paying anything for the value that Apple offers,” a spokesperson said in a statement.

Spotify, in a statement, said Monday's sanction “sends a powerful message: No company, not even a monopoly like Apple, can abusively wield power to control how other companies interact with their customers.”

The sanction reinforces the position of the European Union as the most aggressive regulator of the technology sector in the world. In recent years, the bloc has passed laws on data privacy, industrial competition, online content moderation and artificial intelligence. Meanwhile, antitrust regulators have investigated or fined Google, Amazon, Microsoft and Meta.

The fine is the most severe sanction against Apple since 2016, when the European Commission ordered the company to hand over €13 billion in unpaid taxes to Ireland. In a sign of how long the appeals process can take, that case is still moving through EU courts.

In 2022, the 27-nation bloc sided with developers by drafting the Digital Markets Act that requires Apple to open the iPhone to competing app stores and allow app makers to accept payments directly. The rules will go into effect on Thursday.

In its last trimesterApple reported revenue of around $120 billion and a net profit of $34 billion.

Last month, Apple said it would comply with the new law by giving developers three options. They could continue with the status quo of the App Store system and continue paying up to a 30 percent commission on sales. Or they could accept alternative payments and reduce their commission to 17 percent, while taking on a new charge of 50 euro cents for every download over a million. Finally, they could avoid Apple's commission and distribute through competing stores, while still paying Apple's download fee.

Under Apple's plan, Spotify and other apps could inform customers in their app about cheaper subscription prices online.

Apple's proposal for the App Store in Europe has sparked protests from developers large and small, who say it fails to comply with either the letter or the spirit of the law.

Apple has said its plan complies with the law while minimizing the risk of iPhone users encountering malware, spam or fraud.

Spotify has been one of Apple's staunchest critics. For years, the music streaming service has complained that the App Store's in-app payment system and 30 percent commission have put it at a disadvantage compared to Apple Music, which can sell subscriptions directly without a similar rate.

The rules also have hampered Spotify's efforts to expand its business in audiobooks and other services. Instead of charging for a book in the app, it has tried to avoid Apple's fees by directing customers outside the app to pay, a process it has called cumbersome and difficult.

Apple says Spotify's decision to link to its website means it doesn't pay for many of the services that benefit the music streaming service, including software tools and hardware enhancements like advanced media playback. He also complained that Spotify met with European regulators more than 60 times during the course of the investigation.

Daniel Ek, CEO of Spotify, has complained for years about the slow pace of research in Europe. Throughout the process, he pointed out the ways in which Apple's control over the App Store hurt competitors.

“Without policymakers taking action, nothing will change” Mr. Ek wrote in 2022 in X, the site formerly known as Twitter. “I can't be the only one who sees the absurdity.”

Monika Pronczuk contributed reporting from Brussels.

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