In a seismic move aimed at reining in tech behemoths, the European Union has levied a historic fine of €1.84 billion (nearly $2 billion) against Apple, accusing the company of breaching antitrust regulations within the music streaming market on its iOS mobile platform.
This substantial penalty, announced by the EU Commission, marks one of the largest fines ever imposed in an antitrust case and signals a significant escalation in efforts to curb monopolistic practices in the digital sphere.
“The fine we impose today reflects both Apple’s financial power and the harm that Apple’s conduct inflicted on millions of European users,” said Margrethe Vestager, the EU’s Competition Chief, noting that the total penalty represents 0.5% of the iPhone maker’s worldwide turnover.
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From today, the Commission has also ordered Apple not to apply anti-steering provisions on music streaming apps. “From now on, Apple will have to allow music streaming developers to communicate freely with their own users — be that within the app, by email or any other ways of communicating,” said Vestager.
At the heart of the Commission’s decision lies Apple’s controversial anti-steering provisions, which have long been a point of contention among developers and competitors in the music streaming industry. These provisions effectively restrict music streaming apps, such as Spotify, from informing users about alternative subscription options outside of Apple’s App Store ecosystem. This, according to Vestager, has severely curtailed consumer choice and fostered an environment of unfair competition.
During a press conference unveiling the decision, Vestager minced no words in condemning Apple’s conduct, stating, “Apple’s rules ended up harming consumers. Critical information was withheld so that consumers could not effectively use or make informed choices.”
The Commission’s investigation was triggered by a formal complaint lodged by Spotify in March 2019, alleging that Apple’s stringent App Store policies stifled competition and innovation, thereby undermining user experience. Over the ensuing months, the Commission delved into the intricacies of Apple’s practices, honing in on the anti-steering provisions as a focal point of concern.
Despite Apple’s vigorous defense of its policies, citing a competitive marketplace and robust consumer choice, the EU Commission stood firm in its findings, underlining the need to safeguard consumer interests and foster a level playing field for all market participants.
“The Commission found that Apple’s rules result in withholding key information on prices and features of services from consumers. As such, they are neither necessary nor proportionate for the provision of the App Store on Apple’s mobile devices,” Vestager said, reiterating the Commission’s stance.
The monumental fine imposed on Apple comprises a base penalty of approximately €40 million for violating EU rules, supplemented by a substantial lump sum intended to redress the harm inflicted on consumers and serve as a deterrent against future transgressions. Notably, the fine represents a mere fraction of Apple’s global revenue, underscoring the severity of the violation.
In response to the Commission’s ruling, Apple issued a scathing rebuke, accusing EU enforcers of misconstruing the competitive landscape and failing to uphold the principles of fair competition. In a strongly worded blog post, the tech giant asserted, “What’s clear is that this decision is not grounded in existing competition law. It’s an effort by the Commission to enforce the DMA before the DMA becomes law.”
Apple further signaled its intention to challenge the decision, citing its longstanding commitment to fostering innovation and driving economic growth in the European market.
“While we respect the European Commission, the facts simply don’t support this decision. And as a result, Apple will appeal,” the company declared defiantly.
Meanwhile, the Commission wasted no time in implementing remedial measures, ordering Apple to immediately cease applying anti-steering provisions on music streaming apps. Additionally, under the Digital Markets Act (DMA), Apple will be subject to stringent regulations aimed at preventing the recurrence of anticompetitive behavior. Penalties for non-compliance under the DMA could potentially escalate to 10% of Apple’s annual turnover.
“From now on, Apple will have to allow music streaming developers to communicate freely with their own users — be that within the app, by email or any other ways of communicating,” Vestager stated.
Despite the Commission’s resolute stance, the decision has not been without its detractors. Critics argue that the case against Apple has been marred by shifting narratives and narrow interpretations of harm, with some questioning the proportionality of the remedies imposed.
Cristina Caffarra, an economics expert advising Apple, raised doubts about the coherence of the Commission’s case.
“They failed for years to craft a theory of harm that made any sense about the App Store,” she said.
Amidst the swirling controversy, the EU’s enforcement action represents a significant milestone in efforts to regulate the tech industry and safeguard competition in the digital marketplace. The impacts of this decision are likely to reverberate far beyond the confines of the music streaming market, shaping the future of digital commerce and consumer rights in the European Union and beyond.
Some Apple, car employees to be cut, many will shift to Artificial Intelligence
Meanwhile, Apple has announced that it will reduce its workforce in the car division, as part of a strategic shift to focus more on artificial intelligence and software development. The company did not disclose the exact number of employees affected, but sources familiar with the matter said that hundreds of engineers and managers will be laid off or reassigned to other projects.
The move comes as Apple faces increasing competition and challenges in the automotive industry, where rivals like Tesla, Google and Amazon are investing heavily in self-driving technology and electric vehicles. Apple has been working on its own car project, codenamed Titan, since 2014, but has struggled to define its vision and direction.
The company has also experienced several leadership changes and internal conflicts in the car division, which have hampered its progress and innovation.
Apple said that the decision to cut some car employees was not a sign of giving up on the car project, but rather a way to streamline its operations and prioritize its resources. The company said that it will continue to explore the potential of autonomous systems and software platforms for the future of mobility.
Many of the affected employees will be offered new roles in the artificial intelligence department, where Apple is developing Siri, Face ID, machine learning and other technologies that are core to its products and services.
Apple CEO Tim Cook has repeatedly expressed his interest and optimism about the car market, calling it “the mother of all AI projects”. He has also hinted that Apple has some “exciting things” in the works but has not revealed any details or timelines.
Analysts and investors have speculated that Apple could launch its own car, partner with an existing automaker, or provide software and hardware solutions for other car companies.
Apple is known for its secrecy and high standards of quality and innovation, which have made it one of the most valuable and influential companies in the world. However, some critics have argued that Apple has lost its edge and creativity in recent years and has failed to deliver breakthrough products that can match the success of the iPhone, iPad and Mac. The car project is seen by many as a test of Apple’s ability to reinvent itself and enter new markets.
Apple Inc. is reportedly winding down its electric car plans, ending a decade-long foray into the automotive industry, according to Bloomberg. The tech giant had been working on a self-driving vehicle project called Project Titan since 2014 but faced multiple challenges and leadership changes along the way. The company had scaled back its ambitions from building a full-fledged car to focusing on the software and hardware components of autonomous driving.
However, Bloomberg sources said that Apple has now decided to abandon the project altogether, as it did not see a clear path to profitability or market leadership. Apple has not officially confirmed or denied the report, but some analysts have speculated that the company may still be interested in partnering with existing carmakers or exploring other mobility services in the future.
Apple’s exit from the electric car race would leave more room for competitors like Tesla, Google’s Waymo, and Amazon’s Zoox, who have been investing heavily in the field and have made significant progress in developing and testing their vehicles. Apple’s stock price fell slightly after the news broke but recovered quickly as investors focused on the company’s core businesses of smartphones, tablets, computers, and services.