Report cites sources stating that the EU will fine Apple $539 million next month
Apple might have to dig deep into its pockets to pay off a fine being imposed on it by-who else-the EU. The fine, which could total 500 million EUR ($539 million), would be accompanied by a ban on certain App Store rules related to music streaming apps. The Financial Times (via Bloomberg) says that it has been told by five unnamed sources that claim to have knowledge of the matter, that the European Commission (EC) will announce the fines in a ruling to be released early next month.
Spotify squealed to the EU by filing an antitrust complaint against Apple in 2019; the music streamer complained about App Store rules then in place that prevented developers from sending customers links to alternative payment options. The alternative in-app payment platforms would have allowed Spotify to avoid having to pay Apple the 15%-30% cut it receives on in-app payments processed using the tech giant's own in-app payment platform.
The Financial Times report states that the EC will say that Apple violated EU Anti-trust law creating "unfair trading conditions" for its rivals. Apple could consider itself lucky if the fine is limited to 500 million EUR since the penalty could have been as high as 10% of the company's revenue for the most recent fiscal year. For the fiscal year 2023, Apple grossed $383 billion which means that the fine could have reached $38.3 billion.
Apple changed App Store rules in 2021 and the new App Store policy launched in 2022. It allowed developers of "Reader apps," apps that provide content such as music, video, digital magazines, newspapers, books, and audio, to direct subscribers to the web to make payments and bypass the "Apple Tax." But Spotify said this past summer that the changes made by Apple "were just for show."
Spotify filed a complaint against Apple to the EU in 2019
Next month, with the release of iOS 17.4, iPhone users in the 27 EU states will be allowed to sideload apps from third-party app stores, use a mobile browser that runs on a different browser engine than Apple's WebKit, and make in-app payments through alternative in-app purchasing platforms.
In-app purchases made through the EU App Store and processed through Apple's platform will give the company a commission of 10%-17% of the transaction amount, down from the 15%-30% it collects in other parts of the world. Apple will not take any cut of in-app purchases processed through third-party platforms. But don't start passing around a hat for Apple because it is adding a new Core Technology Fee for certain apps that are successful in the EU.
Apple states, "For developers who choose to agree to the new business terms in the EU, membership in the Apple Developer Program includes one million first annual installs per year for free for apps distributed from the App Store and/or alternative marketplaces. Developers who achieve exceptional scale on iOS in the EU will pay a Core Technology Fee of €0.50 (54 U.S. cents) for each first annual install over one million in the past 12 months.
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