Apple on Monday was fined 1.8 billion euros ($1.95 billion) by European Union regulators for thwarting competition among music streaming rivals, a severe punishment levied against the tech giant in a long-simmering battle over the powerful role it plays as gatekeeper of the App Store.
The penalty, announced by the E.U. antitrust regulator, is the culmination of a five-year investigation set in motion by one of its biggest rivals, Spotify. Regulators said Apple illegally used its App Store dominance to box out rivals.
“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 European Commission executive vice president who oversees competition policy.
“From now on,” she said in a news conference, “Apple will have to allow music streaming 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 E.U. executive branch, is the latest in a series of regulations and penalties to target the App Store. Most of the disputes are because Apple requires that apps use its in-app payment service for sales. It takes as much as a 30 percent commission on each transaction, a fee that many developers say is excessive.
Regulators in the Netherlands and South Korea have passed laws or orders to force Apple to allow alternative payment services, but Apple has largely disregarded the regulators’ challenges. In those countries it is allowing alternatives but charging a 27 percent commission, a solution that regulators in the countries are contesting.
Apple said it would appeal the ruling. “While we respect the European Commission, the facts simply don’t support this decision,” Apple said in a statement on Monday.
In a briefing last month, Apple said that European regulators had been searching for a legal theory for the case for nearly a decade, in fits and starts. Apple challenged the idea that Spotify users haven’t been able to subscribe to music services through other means, saying that Spotify has added more than 100 million subscribers outside its app over the past eight years.
Apple also accused Spotify of being a monopolist because it has more than a 50 percent share of Europe’s music streaming business. It said that Spotify has benefited from the software tools that Apple provides, as well as more than 119 billion downloads and updates of its app. It’s done so while not paying Apple any money in commissions.
Spotify, in a statement, said Monday’s penalty “sends a powerful message — no company, not even a monopoly like Apple, can wield power abusively to control how other companies interact with their customers.”
