Apple is getting squeezed by antitrust regulators on both sides of the Atlantic.
Just as the tech giant braces for a sweeping lawsuit from the Justice Department in the US, it was hit Monday with a $2 billion European Commission (EC) fine for allegedly breaking competition laws overseas.
Apple intends to fight the decision from the European Union’s antitrust regulator. It also has been trying to convince Justice Department officials not to file their suit, according to media reports.
The company and its lawyers even met with Assistant Attorney General Jonathan Kanter in late February to make a last-ditch argument, according to those reports.
Apple (AAPL) has long avoided the government-induced antitrust headaches now plaguing Big Tech rivals like Amazon (AMZN), Google (GOOG, GOOGL), and Meta (META). But that is now changing.
Apple's stock closed down over 2.5% following the decision by the European Commission and is down more than 5% this year.
The EC’s action was very specific: It fined the company for wielding its dominance to the detriment of its rivals in the market for the distribution of music streaming apps.
Those practices first came under investigation in the European Union in 2019 after Swedish music streaming giant Spotify (SPOT) filed a formal complaint about the store's rules.
The EC concluded that Apple drove up music streaming costs for iOS users for nearly a decade by prohibiting app developers from fully informing them about alternative ways to access and pay for streaming services outside of Apple’s proprietary app store.
Through provisions in Apple’s contracts, the EC said Apple illegally steered app purchases predominantly through the App Store, where Apple collects a 30% fee.
"Apple's conduct, which lasted for almost ten years, may have led many iOS users to pay significantly higher prices for music streaming subscriptions because of the high commission fee imposed by Apple on developers and passed on to consumers in the form of higher subscription prices for the same service on the Apple App Store," the commission said in a summary of its findings.
In response, Apple criticized the EC, saying that its decision failed to uncover any credible evidence of consumer harm, and ignored that the music streaming market is thriving, competitive, and fast-growing.
"The primary advocate for this decision — and the biggest beneficiary — is Spotify," Apple said in a blog post. It went on to point out that Spotify had grown to become the largest music streaming app in the world while paying Apple nothing for its services.
"Today, Spotify has a 56 percent share of Europe’s music streaming market — more than double their closest competitor’s," Apple said, attributing a major part of that success to the App Store.
Apple has previously characterized Spotify's complaint with the EC as an attempt to get "limitless access" to Apple's tools, free of charge.
The US antitrust investigation appears to be even more sweeping, according to media reports. Investigators are looking into whether the integration between the company’s suite of products — including iPhones, the App Store, Apple Watch, iMessage, and AirTags — blocks competition.
Any DOJ lawsuit seeking to dismantle Apple’s "walled garden" ecosystem would pose a major threat to the company's various revenue streams.
Apple generates the bulk of its cash through the sale of its wildly popular iPhone, which accounted for $200.6 billion of the company's $383.3 billion in total revenue in 2023. But Apple's services and hardware that tie into the iPhone are also incredibly lucrative.
The company's wearables, home, and accessories business, which includes its Apple Watch and AirPods sales, generated $39.8 billion last year, while its growing services business, which includes subscriptions for things like Apple Music+ and App Store sales, brought in $85.2 billion.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
Click here for the latest technology news that will impact the stock market.
Read the latest financial and business news from Yahoo Finance
