The Memo: Apple fined £1.5 billion by EU for breaking competition law

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Apple fined £1.5 billion by EU for breaking competition law

Taiwo Oshodi - 12 March 2024

In a first for the EU, the European Commission (EC) has dished out a hefty £1.5 billion fine to Apple for breaking antitrust rules under the Digital Markets Act, an EU regulation aimed at making the digital economy fairer and more competitive. The conflict kicked off when Spotify filed a complaint against Apple, arguing that the company’s App Store incorporated practices that disadvantaged competitors. Apple currently charges a 30% fee for transactions in the App Store, which itself isn’t heinously anti-competitive. However, it seems to have crossed the line with its anti-steering provisions which stop applications from showing customers different purchasing options from the store. The EC agreed, concluding that the App Store’s anti-steering provisions might have led to users paying higher prices for music streaming services while also degrading the customer experience.

But why can’t Apple do what it wants with its own platform? Well, like most antitrust frameworks, the Digital Markets Act prevents significant platforms from acting unfairly. So, because of Apple’s dominant position in the market, it has a responsibility to not restrict competition. According to Article 102 of the Treaty of the Functioning of the European Union (TFEU), “any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between member states.” This abuse includes “directly or indirectly imposing unfair purchase or selling prices or other unfair conditions,” among other factors which may cause “a competitive disadvantage.” The EC found that this was the case with Apple’s anti-steering provisions which were “neither necessary nor proportionate.” Ouch!

Of course, Apple has no intention of taking this sitting down and has made its intentions to appeal the ruling clear. While the EC have said the provisions were uncompetitive as they increased prices and limited choice, Apple has clapped back saying that the Commission failed to “uncover any credible evidence of consumer harm.” It’s a pretty spicy case and there could be more to come while the EC also investigates Apple’s restriction of iPhone’s NFC to Apple Pay. So, if you want to stay up to date and learn a little more about competition law, check out our handy little guide right here.