The European Commission has fined Apple over €1.8 billion for abusing its dominant position on the market for the distribution of music streaming apps to iPhone and iPad users (‘iOS users’) through its App Store. In particular, the Commission found that Apple applied restrictions on app developers preventing them from informing iOS users about alternative and cheaper music subscription services available outside of the app (‘anti-steering provisions’). This is illegal under EU antitrust rules.
MS and Google are also continously fined billions by the EU over anti competitve and anti trust practices and, so they don’t get particularly preferential treatment.
The issue here is that Apple only allows devs to let users sign up for their service through Apple. Apple also demands 30% of the subscription fee when doing this. They don’t allow a developer to have a button in the app that allows to sign up through their website, or to mention that you can sign up through a website.
So the devs only have two options aside from not having an iOS app: Eat the cost and lose 30% of income to Apple, for who it’s basically free money. Or charge the extra cost over the normal price to the user.
The EU has rules against this and to do business there you need to comply with those rules. Multi billion companies basically ignore those rules until they get fined, which in most cases is just considered cost of operation. After which they may or may not continue the practice if the fine is lower than what they’d lose by stopping.
The issue here is that Apple only allows devs to let users sign up for their service through Apple. Apple also demands 30% of the subscription fee when doing this. They don’t allow a developer to have a button in the app that allows to sign up through their website, or to mention that you can sign up through a website.
“Reader” apps like Spotify can have a link to sign up on their website. There are more rules around than there maybe should be, but it’s allowed, and Apple’s letter says Spotify chooses not to do it.
Which is why it’s better for fines to be expressed as percentages of revenue of the company. Not raw amounts. That way it truly hurts their bottom line and makes them listen and comply.
I mean, that is what happened here – they looked at market cap and yearly revenue to determine the fine amount. I agree with you for like speeding tickets which need to have their fines pre-listed, but for stuff like this a commission deciding the fine is exactly what you want. They could have gone higher ofc but the higher you make the punitive damages the higher the chances of an appeal working.
After which they may or may not continue the practice if the fine is lower than what they’d lose by stopping.
No they’re definitely stopping no company can tank 10% of yearly world revenue, every year.
The question isn’t whether the fines curb behaviour once imposed, but if they’re sufficient deterrence. Dunno whether starting to jail people is actually the best option, easy to get fall guys if you buy them golden parachutes. How about forced share dilution to the benefit of the EU budget: Offend often and hard enough and you’ll get right-out expropriated. That’s how you hurt shareholders, they all have a joint interest in it not happening (whether small fish or big shark) and I don’t think Apple is in the mood to get in trouble with Vanguard Group.
The stock impact is there, but most of it seems to be due to cessation of illegal behaviour (less ROI), not the impact on assets. It’s indeed priced in.
