Apple has been fined $2 billion by the EU for using the App Store to thwart competition

Apple was fined 1.8 billion euros ($1.95 billion) by European Union regulators on Monday for thwarting competition among music streaming rivals, a stiff penalty imposed on the tech giant in a long-simmering crackdown battle for the powerful role it plays as the gatekeeper of the App Store.

The punishment, announced by the European antitrust regulator, is the result of a five-year investigation initiated by one of its biggest rivals, Spotify. Regulators said Apple was illegally using its dominance of the App Store to exclude rivals.

“For a decade, Apple has abused its dominant position in the market for the distribution of music streaming apps through the App Store,” said Margrethe Vestager, the European Commission’s executive vice president who oversees competition policy.

The action by the European Commission, the EU’s executive branch, is the latest in a series of regulations and sanctions against the App Store. Most disputes stem from Apple requiring apps to use its in-app payment service for sales. As much as 30 percent commission is required for each transaction, a fee that many developers say is excessive.

Regulators in the The Netherlandss and South Korea have passed laws or orders to force Apple to allow alternative payment services, but Apple has largely ignored challenges from regulators. In those countries it allows alternatives but charges a 27 percent commission, a solution that regulators in the countries dispute.

Apple said it would appeal the ruling. “While we respect the European Commission, the facts simply do not support this decision,” Apple said in a statement on Monday.

In a briefing last month, Apple said European regulators had been searching for a legal theory for the case in fits and starts for nearly a decade. Apple disputed the idea that Spotify users couldn’t subscribe to music services in other ways, saying Spotify has added more than 100 million subscribers outside its app over the past eight years.

Apple also accused Spotify of being a monopolist because it controls more than 50 percent of Europe’s music streaming business. It said Spotify has benefited from the software tools Apple provides, as well as more than 119 billion downloads and updates to its app. This happens while Apple pays no commissions.

“At its core, their complaint is about trying to get unlimited access to all of Apple’s tools without paying anything for the value Apple provides,” a spokesperson said in a statement.

The fine strengthens the European Union’s position as the world’s most aggressive regulator of the technology sector. In recent years, the bloc has passed laws on data privacy, industry competition, content moderation of online content and artificial intelligence. Antitrust regulators have now investigated or fined Google, Amazon, Microsoft and Meta.

In 2022, the 27-nation bloc largely sided with developers in writing the Digital Markets Act, which requires Apple to open the iPhone to competing app stores and allow app makers to accept payments directly. The rules come into effect on Thursday.

Last month, Apple said it would comply with the new law by giving developers three options. They could stick with the status quo App Store system and continue paying a commission of up to 30 percent on sales. Or they could accept alternative payments and reduce their commission to 17 percent, while charging a new 50 cents fee for every download over a million. Finally, they could avoid Apple’s commission and distribute through competing stores, while still paying Apple’s download fees.

Under Apple’s plan, Spotify and other apps would be able to tell customers in their app about cheaper subscription prices online.

Apple’s proposal for the App Store in Europe has sparked an outcry from developers large and small, who say it is not following the letter and spirit of the law.

Apple has said its plan complies with the law while minimizing the risk of iPhone users encountering malware, spam or fraud.

Spotify is one of Apple’s most outspoken critics. The music streaming service has complained for years that the App Store’s in-app payment system and 30 percent commission have put it at a disadvantage compared to Apple Music, which can sell subscriptions directly without a similar fee.

The rules have also hampered Spotify’s efforts to expand its business into audiobooks and other services. Instead of charging for a book in the app, the company has tried to avoid Apple’s fees by charging customers outside the app, a process it calls cumbersome and difficult.

Apple says Spotify’s decision to link to its website means it won’t pay for many of the services that benefit the music streaming service, including software tools and hardware enhancements such as advanced media playback. It also complained that Spotify spoke to European regulators more than 60 times over the course of the investigation.

Spotify CEO Daniel Ek has complained for years about the slow pace of European research. Throughout the process, he pointed out ways in which Apple’s control of the App Store hurt competition.

‘Without policymakers taking action, nothing will change’ Mr. Ek wrote on X in 2022, the site formerly known as Twitter. “I can’t be the only one who sees the absurdity.”