Apple and the EU are now at war, as Spotify case results in $2 billion fine

The fine follows a nearly four-year Commission investigation into Apple’s tactic of forbidding its music-streaming rivals from telling people who signed up in their iOS apps that they can get cheaper subscriptions outside the iOS ecosystem. Those services can offer lower subscription prices to people signing up directly on their websites because that lets the companies avoid having to pay Apple a 30% cut of in-app subscriptions. Spotify was the complainant in this case, and you can expect the Swedish streamer to keep featuring in the war between Apple and the Commission that is now clearly breaking out.

Let’s just quickly recap some key moments in the last six weeks of Apple’s interactions with the EU executive body:

Jan. 25—Apple says it will comply with the DMA’s demand to allow third-party iPhone app stores, but in doing so it will start levying a new “core technology fee” on developers who dare to distribute their apps via these new channels. This is widely seen as an attempt to offset the fact that Apple can’t collect a cut on any in-app transactions for apps distributed outside its own App Store. Affected companies, including Microsoft, Meta, Epic Games, and Spotify, complain loudly about malicious compliance, saying this will effectively kill the alt-app-store idea.

Feb. 16—Apple confirms that a change in the iOS Beta 17.4, which breaks users’ ability to install web apps on their iPhone home screens, is no bug, but rather a deliberate tweak that it blames on the DMA. The incoming law requires Apple to allow iOS browsers to be built on alternatives to Apple’s WebKit browser engine, and Apple claims this means home screen web apps would also have to be built on third-party browser engines. Therefore, for the sake of security, those icons will in the future only open the web apps in European users’ chosen browsers. This cuts off another route for developers to escape Apple’s 30% commission, and open-web advocates flip out.

Feb. 26—The Commission’s DMA team sends questionnaires to Apple and anyone affected by its web-app decision, which typically means a formal investigation is coming.

Mar. 1—Apple has a sudden change of heart about web apps, reverting to the status quo of home screen web apps being forced to use WebKit. Open-web advocates celebrate, while still complaining that Apple applies unreasonable restrictions on the functionality of web apps.

Today—The Commission whacks Apple with a €1.84 billion fine for that streaming-subscriptions-information thing, of which only €40 million is the actual core fine—the maximum allowed by the EU’s existing antitrust law. EU antitrust chief Margrethe Vestager says the extra $1.8 billion is intended to “account for the non-monetary harm caused to consumers and to achieve deterrence,” both for Apple and other Big Tech firms. Apple also must remove the so-called anti-steering provisions at the heart of the case. Apple says it will appeal, and issues a statement attacking Spotify for “coordinating with the European Commission,” while also complaining that the Commission is trying to “enforce the DMA before the DMA becomes law.”

It’s not like Apple and Vestager haven’t clashed before—she’s still appealing against the reversal of an earlier decision that would have put Apple on the hook for over $14 billion in Irish back taxes. But as for what we’re now witnessing, yes, it’s war. So what happens next?

After the DMA takes effect on Thursday, the Commission will probably start paving the way for charges against Apple over its new “core technology fee.” I think there’s a strong likelihood of this given that the DMA demands “fair, reasonable, and nondiscriminatory general conditions of access” for businesses offering their services on iPhones, and some of the biggest names in tech are urging the Commission to reject Apple’s idea of DMA compliance. In her comments on today’s Spotify case decision, Vestager said her team would “carefully look” into the matter.

As for why the Commission jumped the gun on the issue of web apps, I suspect there were two reasons. First, while home screen web apps are pretty small fry, Apple’s planned iOS 17.4 changes would have immediately hammered developers who have chosen that route. The core technology fee, on the other hand, is only preventing developers from adopting new models in the future, so the Commission can afford to take its time. Second, starting the process early sent a message to Apple: We know you’re throwing a hissy fit over our new antitrust rules, and we’re not going to let you cause further harm in the name of compliance.

Bring on Thursday! More news below.

David Meyer

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NEWSWORTHY

MacBook Air upgrade. In less contentious Apple news, the company has finally upgraded its best-selling MacBook Air laptops with its latest M3 chips, which are manufactured on a 3-nanometer process and therefore offer better power efficiency. As The Verge reports, the M3 upgrade also brings improvements to the laptop’s AI-focused Neural Engine.

Meta rebuffed Google. According to The Information, Google last year invited Meta to partner on its new Android XR augmented-reality platform. The move may have given Meta access to the full range of Google apps on its already-Android-based Quest VR headsets, but it seems the Facebook parent said no. Responding to the story, Meta CTO Andrew Bosworth thundered on social media service Threads: "After years of not focusing on VR or doing anything to support our work in the space, Google has been pitching Android XR to partners and suggesting, incredibly, that WE are the ones threatening to fragment the ecosystem when they are the ones who plan to do exactly that."

India demands AI approval. The Indian government has demanded that AI companies seek its approval before locally releasing “untested AI platforms.” As TechCrunch reports, the demand—which is not actually legally binding—only targets big AI players, rather than startups. This comes after Google outraged the Indian government when its Gemini AI model said Prime Minister Narendra Modi had been accused of implementing fascist policies.

ON OUR FEED

“OpenAI must be immediately nationalized.”

—Marc Andreessen compares OpenAI with “atomic technology in 1943” and says its current setup doesn’t provide enough security against Chinese penetration. His call for nationalization was hyperbolic (Andreessen is a noted libertarian) and needs to be read in the context of a longer discussion he was having on X with OpenAI investor Vinod Khosla, but it's certainly eye-catching.

IN CASE YOU MISSED IT

Amazon collects $140 billion in annual fees from sellers. Now many are fuming over ‘crazy’ new fees they say tighten Amazon’s grip on their businesses, by Jason Del Rey

OpenAI ‘categorically disagrees’ with Elon Musk’s lawsuit against it, suggests Tesla CEO has ‘regrets’, by Bloomberg

Apple buying Rivian? Nissan with Fisker? Tesla rivals’ woes spark speculation as EV growth slows, by Steve Mollman

Polestar CEO says rivals like Mercedes, Ford and Aston Martin that are delaying EV production to wait for consumers to catch up are falling into ‘an incredible trap’, by Prarthana Prakash

Waymo hails ‘vote of confidence’ as California regulators authorize it to expand robotaxi fleet beyond San Francisco, by the Associated Press

Hong Kong is seeing growing internet censorship, and some American companies are using burner phones when visiting, says a top US diplomat, by Bloomberg

BEFORE YOU GO

Digital trade decision. If you’re wondering what happened with that World Trade Organization drama around the moratorium on “digital customs charges” last week, well, nothing’s changed. With Indonesia, South Africa, and India threatening to veto the extension of the longstanding moratorium—an event that might have suddenly seen tariffs added to cross-border Zoom calls and e-book downloads—it was one of the issues that saw the WTO’s latest talks run into extra time. But in the end, the WTO issued a statement saying there would be no customs duties after all, at least until the next big meeting.