Apple faces a €1.8bn EU fine for alleged competition stifling in the music streaming sector, marking just the beginning of regulatory hurdles. While the fine represents a small fraction of Apple’s global sales, it has triggered a 2.5% drop in share prices. The EU’s Digital Markets Act, set to take full effect soon, adds more pressure, requiring tech companies to enhance competition. Apple has already made concessions, allowing users in Europe to sideload rival app stores and payment systems, but violations could lead to fines of 10-20% of global revenue, amounting to $77bn for Apple.
This regulatory challenge doesn’t conclude Apple’s troubles, as global efforts intensify to limit tech company power. The EU fine signals a broader trend, with antitrust scrutiny increasing worldwide. In the US, Apple faces an investigation by the Justice Department, potentially leading to an antitrust lawsuit. Unlike previous regulatory actions, the volume of challenges on various fronts coincides with a period of slowing growth, threatening Apple’s high-margin services revenue model.
While Apple’s past concessions haven’t visibly impacted services revenue, which has surged 78% since 2019, the current regulatory landscape poses a more significant threat. Apple’s effective tax rate fell after a 2016 European Commission order to pay back billions in taxes. Now, the combined challenges jeopardize the company’s business model, particularly as slowing smartphone sales impact overall growth. The €1.8bn EU fine is just the starting point in a multi-front regulatory battle that could reshape how Apple operates.
