Note that this fine is made up of 0.04bn of fine and 1.8bn of deterrent against future anti-competitive behaviour [1]. The the 2006 fine-setting guidelines allow the Commission to do that [2].
We should read the 1.8bn lump sum (roughly 0.5% of Apple's revenue) as partially being about music streaming and app stores, but mainly a warning to all large firms which are currently jockeying for a dominant position in emerging tech like generative AI and visual computing.
The warning: play fair and compete on the merits, or see you in court.
I thought the function of fines WAS the deterrent effect? or is some aspect of this restitution? I thought this was payable to the EU itself, not spotify.
> I thought the function of fines WAS the deterrent effect? or is some aspect of this restitution? I thought this was payable to the EU itself, not spotify.
Maybe it's something akin to punative damages (https://en.wikipedia.org/wiki/Punitive_damages), where the "fine" component is assessed according to the actual harm measured and the "deterrent" amount is meant to make it sting as a punishment.
The law always needs a little something extra to deal with people like the guy who parks in handicap spaces because he can afford the fines.
In most cases, the Commission sets a fine which is based on the harm caused by some anti-competitive conduct, with relatively small adjustments for extenuating or attenuating circumstances. In this instance it's the opposite; the economic harm was small but the adjustment was huge.
You're right that the logic - deterrence - is the same in both cases. But what's different (at least in my view), is the object of the deterrence.
Ordinary fines are designed to make anti-competitive behaviour unattractive in terms of the costs and benefits. Maybe some underhanded conduct generates €40m extra profit, but the risk of a €40m fine plus legal costs and adjustments makes it not worth it.
The trouble is that these fines might are essentially just rounding errors for large firms. In this case, a €40m fine would be tiny in relation to Apple's revenue stream (~€350bn euros a year), thus not an effective deterrent. That's for two reasons. First, the 40m figure is too low since a "significant part of the harm caused by the infringement consists of non-monetary harm, which cannot be properly accounted for under the revenue-based methodology as set out in the [Commission's guidelines]"[1]. Second, the fine is trying to to "deter [Apple and] other companies of a similar size and with similar resources from committing the same or a similar infringement"[1] even when they could absorb the ordinary (small) fine as essentially a rounding error on their cost of doing business. In that case, large conglomerates could basically just ignore competition law.
So here, the Commission is deterring all firms which have a "particularly large turnover" [2] (e.g. Big Tech firms) from using their power in one market to gain an advantage in another market, as in this case where Apple used its control over its App Store to gain an advantage in the music streaming market. The fining guidelines allow for fines to be much larger (~50x in this case) for tech giants, even if the actual infringement didn't cause that much quantifiable harm.
You're right, there's no restitution here. As you say, the fine is payable to the EU and would be paid into the EU budget.
Honestly, these multibillion dollar fines from the EU against US tech companies always have an air of 'Since we don't really have a domestic tech industry, these judgements don't really set a precedence for domestic companies, therefore let's just systematically use fines to collect cash'. An extra tax for big US tech companies doing business in Europe. Is there some truth to this?
> Any person or company affected by anti-competitive behaviour as described in this case may bring the matter before the courts of the Member States and seek damages. The case law of the Court of Justice of the European Union and Regulation 1/2003 both confirm that in cases before national courts, a Commission decision constitutes binding proof that the behaviour took place and was illegal. Even though the Commission has fined the company concerned, damages may be awarded by national courts without being reduced on account of the Commission fine.
Uff. Spotify can ask for damage compensation on top of those 1.8 B€, huh?! Apart from music streaming services, I don't see why the situation isn't fundamentally the same with video streaming and Apple TV, and maybe even things like VPN, or cloud services, where Apple has its own competing products now.
So... this ultimately may get really, really nasty and expensive for Apple. I am so here for it :)
Looking from the perspective of Apple, the whole situation is really annoying. Let me play the devil's advocate here. They built the iPhone, iOS and all its frameworks and the App Store. Now they are forced to act as essentially a public service provider. Philosophically, the amount of users they have shouldn't necessiate them to be treated as one. But you know, everyone wants a piece of the cake Apple thought they baked under their own terms. It's quite telling that this regulation comes from EU which are not getting nearly the tax and revenue US gets from Apple.
If they continue the fine amount will be increased on the next one. That's how the EU plays, you get a warning, then a deterrent, if that doesn't stop the behaviour fines will continue to be levied in increasing amounts.
GDPR rules follow the same structure and are a pretty good deterrent.
For whom was in tech during 90s and now in 2020s, what are the differences between Microsoft back then and Apple now in terms of why the regulators are so "soft" against an actor that is overplaying it's hand for consumers?
I was not in tech in that time, but I was cognizant about the fact that entire segments of media and policy makers just dunked on Microsoft due to anti-competitive practices back then, and I recall congressmen and congresswomen, members of DoJ and so on openly talking about break Microsoft in pieces and I wonder why we do not have those conversations today in the biggest markets (China, US and EU)?
I think you have to appreciate just how egregious the behaviour of Microsoft was in the 90s. We're talking about systematic attempts to use their absolutely dominant market advantage to move into new areas and kill rival technologies, plus quite deliberate sabotage of open standards process to prevent the web taking off. (I knew a few people involved in W3C then and Microsoft's behaviour was breathtaking)
Personally I'd avoid comparisons since you're looking at one of the worst situations imaginable, so anything else is bound to seem less harmful.
Apple is predatory on a level that 1990s Microsoft could not have dreamed of, which is all enabled by Windows being an open platform while iOS is locked down with strict technical measures.
Microsoft would make competition harder by bundling "good enough" versions of competing software into Windows, with business deals restricting pre-installs of competing operating systems (if you pre-install Windows on 100% of machines, you'll get a massively better deal than when installing on it on 95%), and (arguably) by making interoperability harder by not having stable documented interfaces and having the interfaces change with new releases every few years.
That was bad. But Apple... Apple hasn't been just making competing harder, but outright impossible. It's one thing to compete against a free pre-installed product. It's another thing to try to compete when the platform owner straight out forbids you from shipping a product that competes with them, or applies draconian business terms to the competition that their own business units get to ignore. They weren't just making interoperability harder by not documenting interfaces, but (in the case of iMessage) by actively breaking any attempt to interoperate.
So I guess apple learned how to be slightly more subtle, and to let their rabid fanbase do some of their work for them. It's still wild to me how they managed to get people to argue against the freedom to install whatever they want on their device.
> deliberate sabotage of open standards process to prevent the web taking off
Whether Safari is this way deliberately or by chance, is something to be found on a court. But Apple's behavior here isn't different from the Microsoft one with IE.
Microsoft's market share was well over 90% in the 90s. The iPhone's market share is 60%. Very different market dynamics.
It was a lot easier to see how Microsoft was being mean-spirited for consumers versus Apple. I'd argue that Apple's policies are consumer agnostic, and the only people really up in arms about Apple are developers and some of its partners.
Also the US is no longer in a position to be punching it's own companies, given the onslaught of Chinese companies that are seeking to undercut in even auto manufacturing now.
>Microsoft's market share was well over 90% in the 90s. The iPhone's market share is 60%. Very different market dynamics.
Couldn't be more wrong. It's not even remotely comparable.
Yes Microsoft had a 90% OS market share but it was an open OS running on open HW platform wich had many players, so users had the freedom to install whatever non-Microsoft SW and HW they wanted on it and SW developers could develop software for it without needing Microsoft's permission for sales or distribution on their OS, or giving them a 30% cut of their profits (other than buying a MS Visual C++ license maybe).
While Apple might have an "only" 60% market share now (though it's currently 87% amongst US teens today[1] so it's only a matter of time till it reaches 90s' Microsoft levels of monopoly amongst US gen-pop) but it's a closed OS running on closed HW with attestation, so costumers and SW developers have absolutely no choice but to run only Apple approved content on them. Vastly more restrictive than what Microsoft of the 90's could even dream of.
>It was a lot easier to see how Microsoft was being mean-spirited for consumers versus Apple.
How? Just like Apple, Microsoft was only being mean spirited to SW and HW vendors and competitors, not to consumers.
Apple was nearly dead. Microsoft literally gave them a big investment to keep them alive [1] , in part to avoid monopoly-related issues [2].
Microsoft was doing everything in its power to kill the only other serious browser at the time, Netscape, and it basically had "won" the desktop and server market. It's pretty astounding that Apple was ever able to do as well as it did in the server, laptop, and desktop market.
It might be hard to imagine in a world where open source mostly won, but in the 90s Microsoft essentially had a de facto monopoly over the computer industry.
Mac OS was a thing, but it was different and expensive enough that it was not really a viable alternative to Windows 95 for most people. Solaris and HPUX existed, but were not accessible to home users. The alternative platforms of the late 80s (Atari, Amiga, Acorn) had pretty much died out by the mid 90s. Linux was very much a thing, but without a viable web browser it was really tricky to use on a day to day basis... and the only really viable web browser was Internet Explorer, so you ended up dual booting to Windows. If you (I) wanted to use a computer, that's how it was.
In short, the kind of monopoly that Apple has with its App Stores affects some consumers in some ways, but the kind of monopoly that Microsoft had in the 90s affected almost every computer user in almost every way.
At the end of the 90s, the internet was also not everywhere. Many people had 56k modems, smartphones did not exist ( and mobile phones weren’t exactly ubiquitous) so there was no way out, ie your apps were tied to your operating system, which meant windows to most people.
The difference is that Microsoft was targeting general purpose computing with policy-based restrictions, and Apple is selling mobile phones that are not general purpose computing devices and later on a service ecosystem to go with it.
We could re-qualify mobile phones as general purpose devices (which technically they could be but in reality they are not), that would make the parallels much closer, and we could also have the service ecosystem made non-optional (it still is optional) to make it a bundled requirement, that would make the parallels even closer.
Other than that, the landscape and context have drastically changed, especially when it comes to presence, attention, personal attachment and the abuse of all of that (addition, mass media consumption, personal information that gets stolen or mined, attacks on devices that have a real world impact). So even if we were to make it just a browser war it wouldn't really be the same.
It's a shame Palm, RIM, Microsoft and Nokia are no longer playing the same game, it would have been interesting to see what their take on the market would be. Considering all of their hardware and software had the exact same model (release it as an appliance, all software and in some cases all traffic goes through them), it would have allowed more people to have some perspective.
> Apple is selling mobile phones that are not general purpose computing devices
I would argue this is 100% false. They are general-purpose computing devices! The only reason why people think they're not is because they're locked down.
Apple got away with it so Google did the same. Yet there's really no reason why these devices should be locked down the way they are. It should be much easier to take control of our phones than it currently is and I'd argue that with the recent EU decisions regarding app stores we're about to get just a tiny little taste of what these general-purpose computers in our pockets could be.
> It's a shame Palm, RIM, Microsoft and Nokia are no longer playing the same game
They tried, but completely failed competing with the jaws that were a) Apple taking all the profits at the top and b) Android taking the rest of the market
These smartphone providers had to compete on both fronts and it was too much for them (even for Microsoft).
The iPhone in 2007 was like alien technology compared to anything released before then (and I was a skeptic).
Only Microsoft tried to follow Apple in lockstep with Windows Phone 7: no USB mass storage, homegrown browser engine with no alternative, and no exposed filesystem.
Blackberry phones were sort of similar, but as enterprise-first devices they always had a reputation of being mostly a work email device, not personal.
They still had filesystem access and microSD expandability though.
Despite all the talk Microsoft wasn't broken in pieces and never paid a significant penalty. The loudness of the congressmen was to compensate for that.
Now the Overton window has moved and people no longer believe a company can be broken up.
I recall reading that Microsoft basically had government oversight personnel on site. I also recall learning somewhere that the thing that basically saved MS from having the book thrown at them was that George W Bush was elected in 2000, and the DOJ switched hands - and didn't care much about pushing the issue.
Why do people always assume there's only two ways to deal with a monopoly? All you ever hear about in terms of dealing with monopolies are:
1) Break them up
2) Fine them
From history we know that #1 is really friggin hard to get right (see: AT&T). We also know that #2 is usually ineffective and can harm consumers that are still locked into the monopoly.
There's other options!
* End the company (corporate death penalty). Auction off all their assets and force all their intellectual property into the public domain.
* Force FRAND-style licensing of all their products and services. Make it so that if they want to make money they *require* 3rd parties to sell customized versions of their stuff.
* A combination of forced public domain on their intellectual property and FRAND-style licensing. Possibly with forced selling of assets. Basically, just force the company out of whatever market they were abusing.
Monopolists are always difficult to break up and there's always going to be negative consequences. Whole towns could go bankrupt as a result of ending a company! Thousands of workers could suddenly be jobless. The list of possible negative outcomes goes on and on.
It behooves society to look past these short-term consequences though and look towards the future. The longer a monopoly goes on the more it stifles the future. It may feel like you're cutting off an arm when you end a really big, powerful company but it's more like cutting off a tree branch. More and better branches will grow in its place and younger, nearby trees will now have access to more sunlight.
Unpopular opinion (here on VC-funded HN): The way capitalism is supposed to work is that large, old companies are meant to be overtaken by newer, more nimble ones. It shouldn't be so easy for large companies to acquire smaller ones. That's a big reason why tech monopolies persist! SO many of Microsoft's "staple" products wouldn't be part of their portfolio today if it weren't for acquisitions.
In the US at least, I tend to think that was the last gasp of an old anti-trust regime that had basically run out of gas by then. The 80's saw a conservative revolution that extinguished a lot of worker and consumer protections.
> For whom was in tech during 90s and now in 2020s, what are the differences between Microsoft back then and Apple now in terms of why the regulators are so "soft" against an actor that is overplaying it's hand for consumers?
Microsoft had a monopoly with the ambition to capture the whole market: “A microcomputer on every desk and in every home running Microsoft software.”
It is impossible for Apple to do that, it is against their DNA. They only sell limited product categories, all their hardware products would fit on a desk in their Apple Store if the merchandize wouldn't be so spaced apart. Their products are targeting a higher price point and if a product spirals to a race to the bottom (mp3 players, wifi routers) they leave the market. They dislike to partner with other companies. They are targeting consumers/prosumers, not business market. This all means there will always be very large gaps in the market which Apple won't cater too.
Probably a host of reasons. MS had 90%+ of the OS marketshare (Excel had ~90% of the spreadsheet market). I think it's hard for people to understand just how dominant MS was at the time - closest might be peak Google with search. Bill G while likable today because of his philanthropy, was really painted then as a ruthless businessman. MS ignored DC and politics for the most part. At the time, the west coast was even more of a different world than what was going on in DC.
All the companies today learned from MS. They have armies of lobbyists and court politicians. They are all ruthless business people, but come across as more human and cuddly. They have become key parts of the US economy. I think there's also some fear that if they do go after big tech they could inadvertently make things worse for constituents. Remember, the only thing a politician thinks about is getting re-elected.
From Felix Richter: "The information technology and communication services sectors, i.e. most things tech, were responsible for more than 70 percent of the S&P 500’s total return of 26.3 percent last year. Excluding companies from these two sectors, the index would have returned just 7.6 percent in 2023. The “Magnificent Seven” – Apple, Microsoft, Nvidia, Amazon, Meta, Tesla and Alphabet – accounted for roughly 60 percent of the index’s total return, illustrating how top heavy last year's rally has been."
In short, nobody wants to be perceived as the one that cooked the golden goose.
Could be wrong but Microsoft also had a policy back then to not spend much on lobbying before the trial. They now spend quite a bit. In the US, Apple spent a measly ~6 million a year before bumping it up to 9 a year in 2023. https://www.statista.com/statistics/1043061/lobbying-expense...
Could it be a coincidence? Obviously. But it does seem like if you play the game, you’re less likely to get burned. Of course, that’s a very US centric approach and it makes sense that the EU is the one bringing on these challenges.
All the sibling comments trying to compare exactly how alike or different MS vs Apple behavior is, like a compare and contrast high school essay, are missing the mark. Some are very insightful and bring up information I wasn't aware of. They aren't low value comments but I just don't understand why you would think it's even possible to compare two of the largest, most profitable companies (depending on the time we're talking about) 30 years apart. I mean, it's informative to discuss for sure but the markets, tech, laws and public opinion have all changed since then. Apple doesn't have to be as bad, in the same way, with the same motives as Microsoft, for it to be bad, anti-competitive behavior. The markets are both bigger, and more segmented as well.
I don't think we're going come up with a universal measuring stick to apply here though I'm sure some tech reporting outlets will try.
FWIW Microsoft software and generic hardware of the time were way more open for anyone.
Competing with MS was hard or even impossible, but they didn't try to control what you code or run on your machine, didn't try to interfere with software vendors' revenue streams and didn't even go after piracy the way they could.
Those was right calls that made Windows so ubiquitous.
In the past few years Apple's faced significant regulatory and legal action over it's App Store in the US, South Korea, Japan, United Kingtom, Australia, and the EU.
The EU has just forced Apple to open up to alternative App Stores and enforce browser ballots when you first open Safari.
> what are the differences between Microsoft back then and Apple now in terms of why the regulators are so "soft" against an actor that is overplaying it's hand for consumers?
The monetary proportion that big-tech contributes to US GDP. It would be silly to assume the US would ever kneecap it's most profitabile and rising industry. After killing its manufacturing industry, tech and finance is all ti has.
i.e. the quantities of goods produced is growing about as fast as the economy. The reason manufacturing is dropping as a percentage of nominal GDP is that inflation for manufactured goods has been lower than for other goods.
Generally speaking, what changed was the value in the tech sector skyrocketing (enabling political lobbying as well as propaganda - the latter of which Apple is extremely good at, just look at the amount of HN comments mindlessly repeating their propaganda about how opening their platform is such a massive security problem. Meanwhile the App Store has been rife with spam and fake apps for the past decade; you literally can't easily find government apps here because shady app companies buy adspace on the searches and put up apps with similar sounding names but with aggressive monetization) combined with ~20 years of US regulators just not really enforcing much in the way of antitrust cases whilst the EU was still on the boat of "maybe we should ask nicely" since that usually works for local enforcement.
Things are finally changing on that end (far moreso in the EU because big tech basically keeps pretending it's just the backyard rather than to be taken seriously and it's pissing off regulators), but it's still somewhat of an oddly prescient fact that Silicon Valley/US tech companies broadly more or less "invent" old corporate crimes that take a decade to get enforced because regulators don't get that the difference between a physical form of fraud and a digital form of fraud isn't really that big.
EU is catching on and has been passing landmark regulations specifically to attack this crap, while the FTC is doing what it can in spite of the GOP having been pulling it's teeth for the past 20 years.
Legislation has always been extremely slow when it concerns major corporations. Partly because there isn’t a great public incentive to really care about Apple vs Spotify, which means there is less political focus and in term less allocated resources. But mostly because EU law is complicated and large companies have a gazillion lawyers to poke at its holes.
Different times. The corporate propaganda machine that resulted from the Powell Memo hadn't yet infected the majority of minds (even with Reagan's heavy push) so there were still more people willing to hold companies accountable.
MS was a bigger chunk of the market, and it was, well, a lot more _blatant_. And already had a history of dubious behaviour by the late 90s (eg see https://en.wikipedia.org/wiki/AARD_code). As someone else mentioned, MS in the 90s to early noughties was probably the most egregious case of tech misbehaviour ever (though some of Intel's stuff also wasn't great), so you're kind of grading on a curve here.
One absolutely key factor is that tech dominates a far higher fraction of life today than it did in the past. So these companies will be increasingly powerful entities, which makes it hard to litigate against them.
Through the late 90s and yearly 2000s I needed to purchase an expensive and slow emulator plus a Windows license just to do banking, taxes or accurately open some Office files. That's a monopoly.
If you buy an Android phone, you can use Uber, Instagram, Spotify, banking, maps, accurately render web pages, taxes, etc. There's nothing essential to modern mobile that's iOS only.
MS had ≈ 95% global market share back then, Apple has ≈ 30% of mobile market share now.
You may not like Apple's attitudes, but claiming they have a monopoly on mobile is comical.
There's a big geo-political component now at play, at least when it comes to Europe (I live in Europe). Meaning that the Europeans can try and upset the big American corporations up to a point (almost 2 billion euros as in this case), but not any further, because at the end of it all the security of the continent depends on American hegemony, on American guns and ultimately on American money.
From that point of view the situation back in the '90s was a lot more fluid, as at some point there were even talks of an Europe that would have extended "from Lisbon to Vladivostok" (so leaving the Americans out of it altogether).
The other element at play is that if the EU fines become so egregious that US companies pull out of offering certain products in the EU, then what would fill the vacuum? Answer: Chinese tech companies with CCP control - essentially building a direct pipeline of EU personal data that CCP can weaponize.
> the security of the continent depends on American hegemony, on American guns and ultimately on American money.
And the security of the American chip industry depends on ASML machines, and American airline passengers depend on EU made airplanes. What's your point? Every post-WW2 economy is dependent on the other economies nowadays. There's no fully independent economy that can survive on its own anymore.
US (and other including EU) companies get fined because they break EU laws, it's not done out of spite. If they dont wanna get fined they should stop breaking the laws. Simple.
Apple is nowhere near as bad as Microsoft. Microsoft was so bad that Bill Gates had to eradicate deceases from the surface of the planet to redeem himself.
Apple still has great customer experience and they still sell their products to willing customers and their damage is essentially to their competitors and the users might be losing out on even better service or can be overpaying.
Microsoft was considered the Devils incarnation. Awful lot of people still hold grunge towards Microsoft due to the suff they had to face because of the Microsoft's abuse of their market position. People who are really really angry with Apple are not that many, it's mostly people who get sherlocked or were denied the ability to publish their idea on the AppStore. Also, there a few who think they could make more money if Apple didn't take a cut or didn't stop them from collecting data.
If Microsoft was Saddam, Apple would have been Lee Kuan Yew - Singapore's dictator.
SaaS has given corparations so much more power over users and devs, that anything good ol' M$ did (remember that abbreviation?) could not be nearly as bad as a dominating company could do today.
Worth pointing out that when this complaint was filed Spotify was publicly complaining about the lack of equal access to the HomePod and Apple Watch.[0]
Apple addressed this with API’s at WWDC the following year.[1] Yet here we are, almost 4 years later and Spotify have yet to implement support whereas competing services have.[2]
The APIs don't allow applications quite the same access as Apple Music has. I imagine that using them would weaken Spotify's complaints, while also resulting in a sub-par user experience. Users lose out in the short run, but I wouldn't necessarily blame Spotify for this.
It would result in a significantly improved user experience… I really have no sympathy for Spotify intentionally refusing to improve their HomePod experience in order to avoid “weakening their complaint.”
Right: complainants can argue they should have access to all of Apple’s hardware devices for free while they themselves are an Apple-level monopoly in their market. I wonder how many billions of dollars in exclusive podcast deals for formerly openly distributed content consumers are missing out on because of these anti-steering rules.
Drives me nuts. Apple even added this weird sort of work around where if you ask for it on Spotify, it connects to your phone and the phone airplays Spotify to the HomePod.
Spotify does not get that money. The general EU budget does.
> Fines imposed on undertakings found in breach of EU antitrust rules are paid into the general EU budget. This money is not earmarked for particular expenses, but Member States' contributions to the EU budget for the following year are reduced accordingly. The fines therefore help to finance the EU and reduce the burden for taxpayers.
This isn't about music streaming but about the payment restrictions Apple forces on Appstore devs. The court decided that Apple's practices destroy competition, which is obviously true. Also it's in line with the new gatekeeping laws that are coming this month.
This was about music streaming and no court was involved with this. This is a decision from an executive branch. The courts will come into play once Apple has filed their announced appeal.
It's actully a 15 year old law (in it's current name, originally from 1958). From the article:
> Today's decision concludes that Apple's anti-steering provisions amount to unfair trading conditions, in breach of Article 102(a) of the Treaty on the Functioning of the European Union (‘TFEU')
This argumentation is probably being based on generic anti trust law ... and the DMA is a new specialization below it. Does not mean that you violated past law just because new law is also applicable to you.
- A weird callout to the nationality of the company right out of the gate
- Spotify will be nothing without us (insert crazy ex memes)
- "Our engineering helps ensure that Spotify’s apps can work seamlessly with Siri, CarPlay, Apple Watch, AirPlay, Widgets, and more." -- yeah, because those are your products, Apple. You make your money on those products being tightly integrated
- A bizarre quantization of the apple ecosystem by total number of "APIs" Apple gives them access to (250k)
- A claim of insider coercion between Spotify and the EU Commission that made it difficult for Apple to win
You should get your nuts checked, that nutshell is a bit rotten.
My nutshell contains something else:
- Apple lamp-shading that EU companies seem to get a pass
- Apple refuting Spotify’s claims that Apple’s acts somehow have harmed and stifled Spotify, by highlighting how successful Spotify is
- Highlighting how Spotify has benefited from Apple’s work without paying a dime, refuting the implied notion that Spotify is on the hook for 30% and refuting the implied notion that no benefit is provided in exchange for the commission by Spotify consistently calling it a “tax”
- Lamp-shading the fact that the scope of the EC’s investigation has changed more often than your average brothel’s bed occupant during the ten years of the investigation due to the EC not being able to make the case on all the other stuff they tried, from consumer harms to harm to competitors, eventually landing on a anti steering provision but only in the music streaming service market and only after that anti steering was already abolished, hinting that Spotify has been the driving force behind this indefatigable mindset to find something that sticks
- They think it’s BS and are going to appeal, according to them because no harm was proven, but I think in part because the actual fine is only $4m, because that’s how shitty the EC’s case was even after shifting the goal post so often, so the EC decided to add a bogus “deterrence” fine. That and of course because this is merely a decision by an executive branch, in that regard it’s not unlike, say, Trump’s executive orders, in that they’re not worth much more than the paper they’re written on until a judge has adjudicated it.
Apple's response makes me almost put my iPhone in the trash. What a trash article with trash arguments. It's like reading a kids writeup how they stole their candy that wasn't even theirs.
They also explained why my App Reviews sometimes take weeks, they treat their customers not with integrity. Sad stuff really.
Why don't we all do that already? Would people that have well knowledge about all the shit Apple has been pulling recently, still buy products of them if they weren't already so vendor locked in?
Spotify really has the short end of the stick here. Apple does themselves no favors by participating from a privileged position at every point in the market. Apple App Store sets rules that disadvantages Apple Music's competitors.
To offer subscriptions on iOS, Spotify must give away 30% of it's revenue to Apple. Yet Apple compete with them with Apple Music. Do you think Apple is giving away 30% of it's Apple Music revenue? This means that in order for Spotify to compete head-to-head with Apple Music, it must either charge 30% more, or maybe 30% less money than it's next competitor.[0]
This is on top of Apple's blatently unfair rules that prevent developers actually explaining any of them to it's users, or informing users how to actually sign up or get a cheaper option. If Apple believes these rules are so correct, why does it ban communicating them to it's users?
[0] Indeed, for Apple Music on Android Apple bypasses Google Play payments, it's 30% cut, and bills itself via credit card.
> To offer subscriptions on iOS, Spotify must give away 30% of it's revenue to Apple
Spotify haven't paid revenue to Apple in years. This finding is because Spotify aren't permitted to "[inform] users of payment options outside its App Store" due to Apple's anti-steering rules.
Spotify hasn't paid revenue to Apple in years... because Apple does not offer reasonable terms for Spotify to comply.
The 30% fee + no way to redirect users to better offers is kind of extreme, especially when Apple has a first party offering which doesn't need to go through the same hoops.
What's the point of defending a multi-trillion-dollar company? Apple is abusing its market position. Let's not pretend that they are strapping for money because getting a working phone platform is expensive. Apple doesn't provide 30% of the value of a company to deserve 30% of their profit. If they wanted to make it fair, they would charge a fair usage cost of the app store. Charge for hosting apps, delivering updates, appearing in featured apps, etc. Heck, companies already spend money on marketing, let them opt-out from appearing in search results if they want.
> Why not include all the dollars required to get a working phone platform to billions of people on the planet?
> Spotify wants to have all the positive aspects of the global Apple ecosystem but is not willing to pay a price for it.
But this assumes that by creating something Apple has right to all the profits from it. For consumers, it's likely better if they didn't. And consumers are voters while corporations aren't.
> To offer subscriptions on iOS, Spotify must give away 30% of its revenue to Apple. Yet Apple compete with them with Apple Music. Do you think Apple is giving away 30% of its Apple Music revenue?
This isn't the right read on the situation — Apple pays the 30% in opportunity cost. Now Spotify doesn't actually pay the 30% but let's pretend they did. Every Spotify user they have paying $10/mo nets Apple $3/mo. So if Apple Music wants to enter the market every user they get that would have otherwise been a Spotify user loses them $3/mo. So the cost of the Apple Music subscription has to make Apple $3/mo in profit to break even with the cost of doing nothing. So if Apple's costs are the same as Spotify's for actually providing the service and Spotify charges $10/mo and Apple charges $7/mo Apple is losing money.
This is why across different industries and long before Apple existed this practice was ruled not anti-competitive.
I like Spotify and I like Apple. But Apple do treat Spotify badly - I assume it's nothing personal but just sheer abuse of power to push their own product - Apple Music. Thanks to this I as a end user get a worse product - buggy Apple Watch App, connectivity issues, reduced functionality
Readit News
We should read the 1.8bn lump sum (roughly 0.5% of Apple's revenue) as partially being about music streaming and app stores, but mainly a warning to all large firms which are currently jockeying for a dominant position in emerging tech like generative AI and visual computing.
The warning: play fair and compete on the merits, or see you in court.
[1] "the Commission decided to add to the basic amount of the fine an additional lump sum of €1.8 billion to ensure that the overall fine imposed on Apple is sufficiently deterrent" https://ec.europa.eu/commission/presscorner/detail/en/ip_24_... [2] See paras 30 and 31. https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A...
I thought the function of fines WAS the deterrent effect? or is some aspect of this restitution? I thought this was payable to the EU itself, not spotify.
Maybe it's something akin to punative damages (https://en.wikipedia.org/wiki/Punitive_damages), where the "fine" component is assessed according to the actual harm measured and the "deterrent" amount is meant to make it sting as a punishment.
The law always needs a little something extra to deal with people like the guy who parks in handicap spaces because he can afford the fines.
In most cases, the Commission sets a fine which is based on the harm caused by some anti-competitive conduct, with relatively small adjustments for extenuating or attenuating circumstances. In this instance it's the opposite; the economic harm was small but the adjustment was huge.
You're right that the logic - deterrence - is the same in both cases. But what's different (at least in my view), is the object of the deterrence.
Ordinary fines are designed to make anti-competitive behaviour unattractive in terms of the costs and benefits. Maybe some underhanded conduct generates €40m extra profit, but the risk of a €40m fine plus legal costs and adjustments makes it not worth it.
The trouble is that these fines might are essentially just rounding errors for large firms. In this case, a €40m fine would be tiny in relation to Apple's revenue stream (~€350bn euros a year), thus not an effective deterrent. That's for two reasons. First, the 40m figure is too low since a "significant part of the harm caused by the infringement consists of non-monetary harm, which cannot be properly accounted for under the revenue-based methodology as set out in the [Commission's guidelines]"[1]. Second, the fine is trying to to "deter [Apple and] other companies of a similar size and with similar resources from committing the same or a similar infringement"[1] even when they could absorb the ordinary (small) fine as essentially a rounding error on their cost of doing business. In that case, large conglomerates could basically just ignore competition law.
So here, the Commission is deterring all firms which have a "particularly large turnover" [2] (e.g. Big Tech firms) from using their power in one market to gain an advantage in another market, as in this case where Apple used its control over its App Store to gain an advantage in the music streaming market. The fining guidelines allow for fines to be much larger (~50x in this case) for tech giants, even if the actual infringement didn't cause that much quantifiable harm.
You're right, there's no restitution here. As you say, the fine is payable to the EU and would be paid into the EU budget.
[1] https://ec.europa.eu/commission/presscorner/detail/en/ip_24_... [2] Para 30 https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A...
Uff. Spotify can ask for damage compensation on top of those 1.8 B€, huh?! Apart from music streaming services, I don't see why the situation isn't fundamentally the same with video streaming and Apple TV, and maybe even things like VPN, or cloud services, where Apple has its own competing products now.
So... this ultimately may get really, really nasty and expensive for Apple. I am so here for it :)
So it deters nothing, Apple pays it and continues to do what it's doing.
GDPR rules follow the same structure and are a pretty good deterrent.
I was not in tech in that time, but I was cognizant about the fact that entire segments of media and policy makers just dunked on Microsoft due to anti-competitive practices back then, and I recall congressmen and congresswomen, members of DoJ and so on openly talking about break Microsoft in pieces and I wonder why we do not have those conversations today in the biggest markets (China, US and EU)?
Personally I'd avoid comparisons since you're looking at one of the worst situations imaginable, so anything else is bound to seem less harmful.
Microsoft would make competition harder by bundling "good enough" versions of competing software into Windows, with business deals restricting pre-installs of competing operating systems (if you pre-install Windows on 100% of machines, you'll get a massively better deal than when installing on it on 95%), and (arguably) by making interoperability harder by not having stable documented interfaces and having the interfaces change with new releases every few years.
That was bad. But Apple... Apple hasn't been just making competing harder, but outright impossible. It's one thing to compete against a free pre-installed product. It's another thing to try to compete when the platform owner straight out forbids you from shipping a product that competes with them, or applies draconian business terms to the competition that their own business units get to ignore. They weren't just making interoperability harder by not documenting interfaces, but (in the case of iMessage) by actively breaking any attempt to interoperate.
Whether Safari is this way deliberately or by chance, is something to be found on a court. But Apple's behavior here isn't different from the Microsoft one with IE.
It was a lot easier to see how Microsoft was being mean-spirited for consumers versus Apple. I'd argue that Apple's policies are consumer agnostic, and the only people really up in arms about Apple are developers and some of its partners.
Also the US is no longer in a position to be punching it's own companies, given the onslaught of Chinese companies that are seeking to undercut in even auto manufacturing now.
Couldn't be more wrong. It's not even remotely comparable.
Yes Microsoft had a 90% OS market share but it was an open OS running on open HW platform wich had many players, so users had the freedom to install whatever non-Microsoft SW and HW they wanted on it and SW developers could develop software for it without needing Microsoft's permission for sales or distribution on their OS, or giving them a 30% cut of their profits (other than buying a MS Visual C++ license maybe).
While Apple might have an "only" 60% market share now (though it's currently 87% amongst US teens today[1] so it's only a matter of time till it reaches 90s' Microsoft levels of monopoly amongst US gen-pop) but it's a closed OS running on closed HW with attestation, so costumers and SW developers have absolutely no choice but to run only Apple approved content on them. Vastly more restrictive than what Microsoft of the 90's could even dream of.
>It was a lot easier to see how Microsoft was being mean-spirited for consumers versus Apple.
How? Just like Apple, Microsoft was only being mean spirited to SW and HW vendors and competitors, not to consumers.
[1] https://www.barrons.com/articles/apple-stock-teens-iphone-e5...
Apple was nearly dead. Microsoft literally gave them a big investment to keep them alive [1] , in part to avoid monopoly-related issues [2].
Microsoft was doing everything in its power to kill the only other serious browser at the time, Netscape, and it basically had "won" the desktop and server market. It's pretty astounding that Apple was ever able to do as well as it did in the server, laptop, and desktop market.
1. https://www.neowin.net/news/a-quick-look-back-at-when-micros... 2. https://www.engadget.com/2014-05-20-what-ever-became-of-micr...
Mac OS was a thing, but it was different and expensive enough that it was not really a viable alternative to Windows 95 for most people. Solaris and HPUX existed, but were not accessible to home users. The alternative platforms of the late 80s (Atari, Amiga, Acorn) had pretty much died out by the mid 90s. Linux was very much a thing, but without a viable web browser it was really tricky to use on a day to day basis... and the only really viable web browser was Internet Explorer, so you ended up dual booting to Windows. If you (I) wanted to use a computer, that's how it was.
In short, the kind of monopoly that Apple has with its App Stores affects some consumers in some ways, but the kind of monopoly that Microsoft had in the 90s affected almost every computer user in almost every way.
We could re-qualify mobile phones as general purpose devices (which technically they could be but in reality they are not), that would make the parallels much closer, and we could also have the service ecosystem made non-optional (it still is optional) to make it a bundled requirement, that would make the parallels even closer.
Other than that, the landscape and context have drastically changed, especially when it comes to presence, attention, personal attachment and the abuse of all of that (addition, mass media consumption, personal information that gets stolen or mined, attacks on devices that have a real world impact). So even if we were to make it just a browser war it wouldn't really be the same.
It's a shame Palm, RIM, Microsoft and Nokia are no longer playing the same game, it would have been interesting to see what their take on the market would be. Considering all of their hardware and software had the exact same model (release it as an appliance, all software and in some cases all traffic goes through them), it would have allowed more people to have some perspective.
I would argue this is 100% false. They are general-purpose computing devices! The only reason why people think they're not is because they're locked down.
Apple got away with it so Google did the same. Yet there's really no reason why these devices should be locked down the way they are. It should be much easier to take control of our phones than it currently is and I'd argue that with the recent EU decisions regarding app stores we're about to get just a tiny little taste of what these general-purpose computers in our pockets could be.
They tried, but completely failed competing with the jaws that were a) Apple taking all the profits at the top and b) Android taking the rest of the market
These smartphone providers had to compete on both fronts and it was too much for them (even for Microsoft).
The iPhone in 2007 was like alien technology compared to anything released before then (and I was a skeptic).
Blackberry phones were sort of similar, but as enterprise-first devices they always had a reputation of being mostly a work email device, not personal. They still had filesystem access and microSD expandability though.
Huh? Apple chips are not Turing-complete? Or are they "not general purpose computing devices" because Apple would like us to believe so?
Now the Overton window has moved and people no longer believe a company can be broken up.
[1]https://www.digitaltrends.com/computing/federal-antitrust-ov...
1) Break them up 2) Fine them
From history we know that #1 is really friggin hard to get right (see: AT&T). We also know that #2 is usually ineffective and can harm consumers that are still locked into the monopoly.
There's other options!
Monopolists are always difficult to break up and there's always going to be negative consequences. Whole towns could go bankrupt as a result of ending a company! Thousands of workers could suddenly be jobless. The list of possible negative outcomes goes on and on.It behooves society to look past these short-term consequences though and look towards the future. The longer a monopoly goes on the more it stifles the future. It may feel like you're cutting off an arm when you end a really big, powerful company but it's more like cutting off a tree branch. More and better branches will grow in its place and younger, nearby trees will now have access to more sunlight.
Unpopular opinion (here on VC-funded HN): The way capitalism is supposed to work is that large, old companies are meant to be overtaken by newer, more nimble ones. It shouldn't be so easy for large companies to acquire smaller ones. That's a big reason why tech monopolies persist! SO many of Microsoft's "staple" products wouldn't be part of their portfolio today if it weren't for acquisitions.
https://www.promarket.org/2019/09/05/how-robert-bork-fathere...
Microsoft had a monopoly with the ambition to capture the whole market: “A microcomputer on every desk and in every home running Microsoft software.”
It is impossible for Apple to do that, it is against their DNA. They only sell limited product categories, all their hardware products would fit on a desk in their Apple Store if the merchandize wouldn't be so spaced apart. Their products are targeting a higher price point and if a product spirals to a race to the bottom (mp3 players, wifi routers) they leave the market. They dislike to partner with other companies. They are targeting consumers/prosumers, not business market. This all means there will always be very large gaps in the market which Apple won't cater too.
Just wait until they've integrated their entire supply chain.
All the companies today learned from MS. They have armies of lobbyists and court politicians. They are all ruthless business people, but come across as more human and cuddly. They have become key parts of the US economy. I think there's also some fear that if they do go after big tech they could inadvertently make things worse for constituents. Remember, the only thing a politician thinks about is getting re-elected.
In short, nobody wants to be perceived as the one that cooked the golden goose.
And in 2022 tech was a big reason why the S&P 500 tanked, dropping 30% when the rest of the market dropped 20%.
Live by the sword die by the sword.
By contrast, microsoft has consistently spent 9-10 million a year. https://www.statista.com/statistics/1043105/lobbying-expense...
Could it be a coincidence? Obviously. But it does seem like if you play the game, you’re less likely to get burned. Of course, that’s a very US centric approach and it makes sense that the EU is the one bringing on these challenges.
Standard “my opinions are my own” post script.
I don't think we're going come up with a universal measuring stick to apply here though I'm sure some tech reporting outlets will try.
Competing with MS was hard or even impossible, but they didn't try to control what you code or run on your machine, didn't try to interfere with software vendors' revenue streams and didn't even go after piracy the way they could.
Those was right calls that made Windows so ubiquitous.
In the past few years Apple's faced significant regulatory and legal action over it's App Store in the US, South Korea, Japan, United Kingtom, Australia, and the EU.
The EU has just forced Apple to open up to alternative App Stores and enforce browser ballots when you first open Safari.
The monetary proportion that big-tech contributes to US GDP. It would be silly to assume the US would ever kneecap it's most profitabile and rising industry. After killing its manufacturing industry, tech and finance is all ti has.
Manufacturing's share of US real GDP has remained relatively stable over time: https://www.stlouisfed.org/on-the-economy/2017/april/us-manu...
i.e. the quantities of goods produced is growing about as fast as the economy. The reason manufacturing is dropping as a percentage of nominal GDP is that inflation for manufactured goods has been lower than for other goods.
Things are finally changing on that end (far moreso in the EU because big tech basically keeps pretending it's just the backyard rather than to be taken seriously and it's pissing off regulators), but it's still somewhat of an oddly prescient fact that Silicon Valley/US tech companies broadly more or less "invent" old corporate crimes that take a decade to get enforced because regulators don't get that the difference between a physical form of fraud and a digital form of fraud isn't really that big.
EU is catching on and has been passing landmark regulations specifically to attack this crap, while the FTC is doing what it can in spite of the GOP having been pulling it's teeth for the past 20 years.
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Microsoft at the time provided only software and put legal and technical restrictions on PC manufacturer’s ability to uninstall Internet Explorer.
Somehow, that is repeated so often as if it was the truth. Making both HW and SW makes it even worse, not better.
IMO there are good reasons for some regulation of platforms.
If you buy an Android phone, you can use Uber, Instagram, Spotify, banking, maps, accurately render web pages, taxes, etc. There's nothing essential to modern mobile that's iOS only.
MS had ≈ 95% global market share back then, Apple has ≈ 30% of mobile market share now.
You may not like Apple's attitudes, but claiming they have a monopoly on mobile is comical.
From that point of view the situation back in the '90s was a lot more fluid, as at some point there were even talks of an Europe that would have extended "from Lisbon to Vladivostok" (so leaving the Americans out of it altogether).
And the security of the American chip industry depends on ASML machines, and American airline passengers depend on EU made airplanes. What's your point? Every post-WW2 economy is dependent on the other economies nowadays. There's no fully independent economy that can survive on its own anymore.
US (and other including EU) companies get fined because they break EU laws, it's not done out of spite. If they dont wanna get fined they should stop breaking the laws. Simple.
Apple still has great customer experience and they still sell their products to willing customers and their damage is essentially to their competitors and the users might be losing out on even better service or can be overpaying.
Microsoft was considered the Devils incarnation. Awful lot of people still hold grunge towards Microsoft due to the suff they had to face because of the Microsoft's abuse of their market position. People who are really really angry with Apple are not that many, it's mostly people who get sherlocked or were denied the ability to publish their idea on the AppStore. Also, there a few who think they could make more money if Apple didn't take a cut or didn't stop them from collecting data.
If Microsoft was Saddam, Apple would have been Lee Kuan Yew - Singapore's dictator.
Apple addressed this with API’s at WWDC the following year.[1] Yet here we are, almost 4 years later and Spotify have yet to implement support whereas competing services have.[2]
[0] https://newsroom.spotify.com/2019-03-13/consumers-and-innova...
[1] https://developer.apple.com/videos/play/wwdc2020/10061/
[2] https://www.macrumors.com/2021/05/06/deezer-announces-voice-...
* I mean Spotify.
> Fines imposed on undertakings found in breach of EU antitrust rules are paid into the general EU budget. This money is not earmarked for particular expenses, but Member States' contributions to the EU budget for the following year are reduced accordingly. The fines therefore help to finance the EU and reduce the burden for taxpayers.
https://competition-policy.ec.europa.eu/index/fines_en
This was about music streaming and no court was involved with this. This is a decision from an executive branch. The courts will come into play once Apple has filed their announced appeal.
> Today's decision concludes that Apple's anti-steering provisions amount to unfair trading conditions, in breach of Article 102(a) of the Treaty on the Functioning of the European Union (‘TFEU')
[1] https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A...
Spotifys response: https://newsroom.spotify.com/2024-03-04/the-european-commiss...
- A weird callout to the nationality of the company right out of the gate
- Spotify will be nothing without us (insert crazy ex memes)
- "Our engineering helps ensure that Spotify’s apps can work seamlessly with Siri, CarPlay, Apple Watch, AirPlay, Widgets, and more." -- yeah, because those are your products, Apple. You make your money on those products being tightly integrated
- A bizarre quantization of the apple ecosystem by total number of "APIs" Apple gives them access to (250k)
- A claim of insider coercion between Spotify and the EU Commission that made it difficult for Apple to win
- They are going to appeal
My nutshell contains something else:
- Apple lamp-shading that EU companies seem to get a pass
- Apple refuting Spotify’s claims that Apple’s acts somehow have harmed and stifled Spotify, by highlighting how successful Spotify is
- Highlighting how Spotify has benefited from Apple’s work without paying a dime, refuting the implied notion that Spotify is on the hook for 30% and refuting the implied notion that no benefit is provided in exchange for the commission by Spotify consistently calling it a “tax”
- Lamp-shading the fact that the scope of the EC’s investigation has changed more often than your average brothel’s bed occupant during the ten years of the investigation due to the EC not being able to make the case on all the other stuff they tried, from consumer harms to harm to competitors, eventually landing on a anti steering provision but only in the music streaming service market and only after that anti steering was already abolished, hinting that Spotify has been the driving force behind this indefatigable mindset to find something that sticks
- They think it’s BS and are going to appeal, according to them because no harm was proven, but I think in part because the actual fine is only $4m, because that’s how shitty the EC’s case was even after shifting the goal post so often, so the EC decided to add a bogus “deterrence” fine. That and of course because this is merely a decision by an executive branch, in that regard it’s not unlike, say, Trump’s executive orders, in that they’re not worth much more than the paper they’re written on until a judge has adjudicated it.
not particularly weird, it's a rhetorical implication that the EU favors a European company unfairly.
They also explained why my App Reviews sometimes take weeks, they treat their customers not with integrity. Sad stuff really.
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To offer subscriptions on iOS, Spotify must give away 30% of it's revenue to Apple. Yet Apple compete with them with Apple Music. Do you think Apple is giving away 30% of it's Apple Music revenue? This means that in order for Spotify to compete head-to-head with Apple Music, it must either charge 30% more, or maybe 30% less money than it's next competitor.[0]
This is on top of Apple's blatently unfair rules that prevent developers actually explaining any of them to it's users, or informing users how to actually sign up or get a cheaper option. If Apple believes these rules are so correct, why does it ban communicating them to it's users?
[0] Indeed, for Apple Music on Android Apple bypasses Google Play payments, it's 30% cut, and bills itself via credit card.
Spotify haven't paid revenue to Apple in years. This finding is because Spotify aren't permitted to "[inform] users of payment options outside its App Store" due to Apple's anti-steering rules.
- They make 30% less on iOS subscriptions compared to Apple Music
- They charge users 30% more compared to Apple Music
- They offer less functionality (don't accept subscriptions on iOS) compared to Apple Music.
Apple uses one area of it's business to disadvantage competitors to it's other areas.
The 30% fee + no way to redirect users to better offers is kind of extreme, especially when Apple has a first party offering which doesn't need to go through the same hoops.
Spotify haven't paid revenue to Apple in years... because they haven't offered payment from inside the iOS app.
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Why not include all the dollars required to get a working phone platform to billions of people on the planet?
Ask Jeff Bezos or Microsoft how easy that is.
Spotify wants to have all the positive aspects of the global Apple ecosystem but is not willing to pay a price for it.
Apple is not entitled to a cut of every transaction that happens on my device, despite however much their claim otherwise.
yea they do it not as a public service but to make their own platform more attractive with apps to ppl who buy iphones.
This is not a service like aws purely benefit of app creators like spotify. Apple does it for their own benefit.
But this assumes that by creating something Apple has right to all the profits from it. For consumers, it's likely better if they didn't. And consumers are voters while corporations aren't.
This isn't the right read on the situation — Apple pays the 30% in opportunity cost. Now Spotify doesn't actually pay the 30% but let's pretend they did. Every Spotify user they have paying $10/mo nets Apple $3/mo. So if Apple Music wants to enter the market every user they get that would have otherwise been a Spotify user loses them $3/mo. So the cost of the Apple Music subscription has to make Apple $3/mo in profit to break even with the cost of doing nothing. So if Apple's costs are the same as Spotify's for actually providing the service and Spotify charges $10/mo and Apple charges $7/mo Apple is losing money.
This is why across different industries and long before Apple existed this practice was ruled not anti-competitive.