Apple is under pressure from antitrust regulators on both sides of the Atlantic.
As the tech giant prepares for a sweeping lawsuit from the U.S. Department of Justice, it was hit Monday with a $2 billion fine by the European Commission (EC) for allegedly violating competition laws abroad.
Apple intends to oppose the decision of the European Union antitrust regulator. He also tried to convince Justice Department officials not to file a lawsuit, according to media reports.
The company and its lawyers even met with Deputy Attorney General Jonathan Kanter in late February to make a last-ditch argumentaccording to these reports.
Apple (AAPL) has long avoided the government-induced antitrust headaches that now plague big tech rivals like Amazon (AMZN), Google (GOOG, GOOGLE), and meta (META). But this is changing.
Apple shares were down nearly 3% in morning trading, following the European Commission’s decision.
The EC’s action was very concrete: it fined the company for having exercised its dominant position to the detriment of its competitors in the market for the distribution of music streaming applications.
These practices were first investigated in the European Union in 2019 after Swedish music streaming giant Spotify (PLACE) filed an official complaint regarding the store’s rules.
The EC concluded that Apple had driven up music streaming costs for iOS users for nearly a decade by prohibiting app developers from fully informing them about other ways to access and pay for streaming services outside of Apple’s proprietary app store.
Through provisions in Apple’s contracts, the EC said Apple illegally directed app purchases primarily through the App Store, where Apple collects a 30% fee.
“Apple’s behavior, which lasted nearly a decade, may have led many iOS users to pay significantly higher prices for music streaming subscriptions due to the high commissions Apple charged developers and passed on to consumers in the form of higher subscription prices for the same service on the Apple App Store,” the commission said in a summary of its findings.
In response, Apple criticized the EC, saying its decision revealed no credible evidence of consumer harm and ignored the fact that the music streaming market was thriving, competitive and rapidly growing.
“The primary advocate of this decision – and biggest beneficiary – is Spotify,” Apple said in a blog post. He then pointed out that Spotify had become the largest music streaming app in the world without paying Apple anything for its services.
“Today, Spotify has 56% of the European music streaming market, more than double that of its nearest competitor,” Apple said, attributing much of that success to the App Store.
Apple has already characterized Spotify’s complaint to the EC as an attempt to gain “unlimited access” to Apple’s tools, for free.
The American antitrust investigation seems to be even more radical, according to media reports. Investigators are looking into whether integration between the company’s suite of products, including iPhones, the App Store, Apple Watch, iMessage and AirTags, is blocking competition.
Any DOJ legal action aimed at dismantling Apple’s “walled garden” ecosystem would pose a major threat to the company’s various revenue streams.
Apple generates most of its cash from sales of its wildly popular iPhone, which accounted for $200.6 billion of the company’s $383.3 billion in total revenue in 2023. But Apple’s iPhone-related services and hardware are also incredibly lucrative.
The company’s wearables, home and accessories business, which includes its Apple Watch and AirPods sales, generated $39.8 billion last year, while its growing services business, which includes subscriptions for things like Apple Music+ and App Store sales, brought in $85.2 billion.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
Click here to know the latest technology news that will impact the stock market.
Read the latest financial and business news from Yahoo Finance
