What Europe’s Big Fine on Apple Means

Europe’s antitrust bureaucrats have fined U.S. tech firms so many times that another big penalty—this one for nearly $2 billion, levied at Apple over its App Store rules—might seem like just another day in Brussels. But this episode is a little different. For one thing, Europe’s targets don’t usually include  Apple. And, perhaps because CEO Tim Cook isn’t used to being on the receiving end of these fines, the European Commission’s decision prompted a lengthy response from Apple, in which the iPhone maker blamed the investigation and resulting fine on Spotify. Perhaps the inquiry got under Cook’s skin. Apple’s already-depressed stock fell 2.5% on Monday, while Spotify shares rose nearly as much, suggesting investors also were paying attention.

In the spotlight were Apple’s rules that prevent developers from steering users to places outside their apps, such as their websites, where customers can get better deals on their products and services. Yes, it’s eye-glazing stuff, but all you need to remember is these rules are in place because some companies, such as Spotify (and Amazon) don’t want to pay Apple 30% for every transaction that occurs within their apps. So they have devised complex workarounds that Apple tries to foil with these “anti-steering” rules. The result is a mess. Spotify subscribers, for instance, can’t modify their subscription plans within Spotify’s app on iOS. “We know it’s not ideal,” Spotify’s app says of that restriction. The app offers no suggestion on where or how to change plans. Spotify’s subscribers have had to figure out that they must go to Spotify’s website to subscribe or make changes.