“Financial Times”: Apple faces 500 million fine from the EU

The London Business Paper reports that the decision will be officially announced in early March. Last year, the EU Commission accused Apple of distorting the music streaming market – because of requirements in Apple's App Store that prevent developers from informing users about cheaper music subscriptions outside the App Store. The investigation was prompted by a complaint from rival Spotify in 2019. Neither the EU Commission nor Apple declined to comment on the “FT” report when asked by Reuters.

The Commission will accuse Apple of abusing its market position and using anti-competitive practices against competitors. According to “FT”, the sentence in question is one of the highest against large IT companies. A series of fines imposed on Google, totaling around eight billion euros, are currently pending in court. Europe's largest fine against Apple in 2020 was imposed in France. In the appeals process, Apple was reduced from the original 1.1 billion euros to 732 million.

New rules, new battles for market share

Relations between the EU and major US IT companies remain tense. They must now implement the rules for the Digital Markets Regulation, which will come into effect in March. Here too, there is a dispute not only with the Commission but also between various competitors.

It was only in late January that Spotify boss Daniel Ek complained about Apple's plans to restructure the app business. The proposal is a “total travesty” and should be rejected by the EU Commission. Ek called a new annual usage fee of 50 cents “blackmail.”

More options for iPhone owners

The new EU Digital Markets Act (DMA) requires operators of major platforms to allow downloading of applications from external sources. It is also stipulated that app developers can use external payment methods instead of the platform's own payment services. Previously not possible on Apple iPhones. DMA norms come into effect from March 7.

See also  Belt ideas: Vienna ÖVP proposes "Central Park" in Margareten

Apple therefore offered suitable alternatives for app business in the EU. This includes tax reduction on the sale of digital goods and subscriptions through the in-house app store. The previous 30 per cent and 15 per cent subscriptions from the second year will become 17 and ten per cent respectively. However, Apple insists that this share must be collected regardless of which payment service the app developer uses. If an app uses Apple's payment method, an additional three percent will be charged.

Apple's new business model

A new “core technology fee” will hit the most frequently installed apps. Taxes are charged after an app gets one million initial installs within a twelve-month period. After reaching the million, 50 euro cents will be charged for each additional initial installation of the application until the end of twelve months. Payments are due again when the next twelve-month period begins.

Spotify insisted that because it has around 100 million users on Apple devices in the EU, they should pay more. People who don't use the service and only have the app on their iPhones will also have to pay tax.

Spotify will lock iPhone-User

Instead, Spotify is trying to use the new DMA rules to its own commercial advantage and has announced that it wants to sell subscriptions and audiobooks to iPhone users, bypassing Apple. When it goes into effect on March 7, interested users in the EU will be redirected from the app to a page where they can enter their credit card information. However, the company left open the extent to which Spotify will pass its own savings on to its users.

See also  A rare celestial sight in Germany can be seen in the sky until mid-April

Leave a Reply

Your email address will not be published. Required fields are marked *