Insiders claim that regulators have new evidence of Apple’s market abuse in the European Union. The tech giant risks a fine of 10 percent of its global turnover. The amount could ramp up to €35 billion.
Apple has been under investigation by European regulators since 2021. Apple allegedly tries to hinder music streaming services by charging extra high service fees on the App Store. As a result, organizations like Spotify cannot fairly compete with Apple Music.
The investigation is ongoing. No fines have been imposed yet, but according to Reuters, the moment is closing in. Insiders told Reuters that regulators have new evidence. The information is confidential. The sources are anonymous to avoid sanctions. According to the sources, regulators will soon share the evidence with Apple. If Apple neglects the allegations, the organization risks a €35 billion fine.
The problem
The App Store forces developers to use Apple’s payment system for in-app purchases. Developers pay a service fee for each payment. Spotify, for instance, forks over 15 to 30 percent of the proceedings whenever a free user buys a paid subscription. It’s impossible to use an alternative payment system. Every provider on the App Store has to play along.
According to regulators, service costs are usually passed on to users, making music streaming services unnaturally expensive. Apple allegedly holds Apple Music to different standards to make its own service more attractive. That’s is prohibited in the EU. Large companies are not allowed to freely thwart competition, as competition ensures innovation.
The rules are enforced by the European Commission (EC). The EC warned Apple of the violation last year. Since then, the tech giant has been under investigation. The Dutch ACM recently threatened to issue a €50 million penalty after Apple refused to change the local App Store.
€35 billion
That amount is incomparable to the €35 billion currently at stake. Earlier this month, Brussels voted in favour of the Digital Markets Act (DMA). The DMA introduces new rules and fines for the world’s largest organizations. The DMA mandates alternative payment systems on major app store. Fines go up to 10 percent of an organization’s worldwide turnover. That’s €35 billion for Apple.
The rules take effect around February 2023. In the meantime, the investigation into Apple continues. According to Reuters’ sources, the EC has new evidence of violations. The sources expect the EC to present the evidence to Apple soon.
Undecided
The evidence doesn’t guarantee a conviction. The tech giant is innocent until proven guilty. Apple has every right to defend itself. Yet, we expect the organizations to bury the hatchet. The App Store’s current policies are a clear violation of the Digital Markets Act. The mega-fine becomes a serious risk. No one is prepared to hand over €35 billion.
7 hours ago
