By Dan Moren

March 7, 2024 12:17 PM PT

Europe gives Apple a chance to change its tune…but will it?

Note: This story has not been updated since 2024.

Here’s a ruling that isn’t music to Apple’s ears: the European Commission this week levied a fine of $2 billion against the company for violating antitrust regulations in the EU, specifically in terms of the distribution of music streaming apps.

Apple, unsurprisingly, was not happy, issuing a scathing rebuke of the kind rarely seen since the days of former CEO Steve Jobs. That missive insists that the EU found “no evidence of consumer harm” and “no evidence of anti-competitive behavior,” arguing that the digital music market in Europe is stronger than its ever been, in large part thanks to the App Store.

Arguments about this will be continuing ad infinitum, not least of all because the company is appealing the decision. But it’s worth taking a look at Apple’s response from a couple different viewpoints.

Just business

Ultimately, there may be only one real perspective that matters: this is business. Apple does not want to pay $2 billion in fines. Spotify doesn’t want to pay Apple’s 30-percent App Store fee (or, really, any commission at all).

The thing about pure business is that it’s simple. Your worth is judged purely on, well, your worth. More money coming in is better; more money going out is bad. Everybody wants a bigger piece of the pie, and they’re going to do whatever they have to ensure it.

But there’s a scale-tipper there: how companies accomplish getting that bigger slice does matter. And while it might not connect as clearly to the profit and loss statements in black and white, you can see its effect no more clearly than in the fact that Apple published a 1500-word essay on its website about why the EU’s contentions are so wrong. Because the question its existence prompts is: who exactly is the intended audience?

Optic blast

So let’s talk about the other part of the equation: public image. Optics, in the colloquial—how a company is perceived. Were Ambrose Bierce still around today, he might define optics as “the art of making people feel good about giving you money.”

Apple is often very good at optics, especially on a product front. But the company’s had its challenges in recent years, especially when it comes to the App Store. A large part of that is because the App Store makes so much money: Apple has found a business with amazing margins that continues to generate money hand over fist without much in the way of additional costs. So, no surprise, it wants to protect that business as much as possible (see “business,” above).

That’s where optics comes into play. Apple’s not publishing a 1500-word piece about why it disagrees with the EC’s ruling in order to convince the EC to change its mind. Presumably it made all of these arguments in its discussions with the regulator, and if it did not, then its army of lawyers is not doing its job.

No, this piece is for the public and the press (who will relay said arguments to the broad swath of the public that hasn’t consumed them firsthand). It’s there to point out all the great things that Apple does and cast it as the one being targeted unfairly by Europe. Apple’s just here making the world a better place! Fundamentally, Apple wants you to be party to its point of view here: that it’s the one being taken advantage of.

But that argument falls a bit flat when you boil the argument down to its essence.

Let’s work backwards here. Apple made $33.9 billion in net income last quarter. I’m going to repeat that because it’s worth letting it sink in: $33.9 billion in pure profit. In its 2023 fiscal year, the company made $97 billion in profit. That’s more than $3000 of profit every single second.¹

And, to drive that home, again, I’m talking about profit. Not simply all the revenue the company generated; this is income after costs and expenses.

So it’s fair to say that, as a company, Apple’s doing pretty well. And I’m not here to begrudge it that accomplishment: it’s mostly accomplished that by making great products that people want to buy. But that $2 billion fine amounts to about a week worth of its 2023 profits—not insubstantial, but ultimately by no means make or break for the company.

Look, we live in a capitalistic society. Apple wants to make more money. Spotify wants to make more money. But, as a rule, be suspicious of any for-profit corporation that wants you to believe it’s on the side of what’s good or right, except insofar as what’s good and right aligns with maximizing shareholder value.

Companies want you to give them your money. That’s fine. But that doesn’t mean they deserve your love. If a company is asking you to be on their side, it’s probably worth asking why.

Let’s get competitive

I find it ironic that this story is, at root, about digital music. Apple was, after all, the company that turned digital music from a curiosity into a fact of daily life when it launched the iPod and, a couple years later, the iTunes Music Store. But it missed out on the chance to be as dominant a player on streaming—albeit not quite as badly as Microsoft missed the boat on mobile—and it often seems resentful of that fact.

The thing is, the company’s launch of the iTunes Music Store was an example of one of the best philosophical points about entering the market (or perhaps any technology market), as Steve Jobs himself pointed out:

“Who iTunes really competes with is piracy,” [Jobs] said. “Piracy is a really big market, and this is our competitor. To compete with piracy, you have to understand it and offer a better product.”

Piracy isn’t the opposition here, but I think the big idea holds true to when it comes to the App Store. With the iTunes Store, Apple believed that its solution was so good—literally so good—that it could convince customers to pay for something that they would otherwise pay nothing for.² And it was largely right!

The App Store has proved successful at revolutionizing software sales, especially on mobile, and Apple has every right to be confident in its product. But if it really were confident in its product—that the App Store truly provides a better experience for developers selling apps and consumers being able to find and purchase software than anywhere else—then you could argue it doesn’t need the restrictions that it’s put in place to prevent customers from going elsewhere.

Apple’s policies on preventing or heavily restricting companies from linking to their sites sure feels a lot less like competition and a lot more like protectionism.³ More than a few courts in different countries around the world have come to a similar conclusion—including the U.S., where it was the sole contention that Apple lost in its fight against Epic.

And nowhere are these anti-steering clauses more questionable than when they intersect with things like digital books and, yes, streaming music—markets in which Apple itself is a competitor. To drag optics into this once again, it certainly doesn’t look good when your competitors in a space are subjected to restrictions because they’re doing business on one of your platforms—restrictions your own competing offering doesn’t have.

Moreover, users—the people whose money all these huge companies are fighting for a bigger chunk of—are the ones who get caught in the middle. We’d all prefer it if we could buy ebooks in the Kindle app, or easily sign up for Spotify or Netflix without having to jump into a web browser. Because we want what Apple was promising to deliver: an easy and seamless experience.

The cure is better than the disease

The EC’s ruling comes not only with a monetary fine, but an edict for Apple:

The Commission has also ordered Apple to remove the anti-steering provisions and to refrain from repeating the infringement or from adopting practices with an equivalent object or effect in the future.

While the full effect of this won’t be felt until all appeals are dealt with, it does raise the question of what such changes will look like—especially on the eve of huge changes Apple is already implementing to comply with another far-reaching piece of European legislation, the Digital Markets Act.

Based on the fact that courts have largely come down hard on Apple’s restrictions on external linking and the EU’s generally tight regulatory market, it seems unlikely that the EC’s ruling will be overturned. And so, like it or not, further change is coming to the App Store.

Is this a threat for Apple? For its constantly increasing Services revenue (and profit), certainly. But it’s also an opportunity for the company to make a big change, one that could benefit it from an optics perspective. And if you have to make a change, why not capitalize on it?

By welcoming competition with open arms, and leveling the App Store playing field, Apple has the chance to ameliorate one of the biggest sources of dissatisfaction for its customers and critics.

Nor would this be the first time the company reversed itself either. For example, Apple’s gone from fighting against right-to-repair laws to being a vocal supporter. It’s not to say this isn’t at least partially driven by sheer pragmatism: the company saw which way the wind was blowing, and when the conversation’s about you it’s better to be part of the conversation.

It’s been emotional

The App Store has always been a frustration for many consumers of Apple’s products, the place where the naked realities of business shine through the company’s anodized, chamfered veneer. Where people have raised eyebrows at practices that may not have been illegal, but often felt distasteful.

If it were another other company, people might not care so much. It’s just business, right? And from the outside, it often seems as if Apple doesn’t understand why people are so upset: surely any other corporation would do the same.

Frankly, though, this is a bed that Apple’s made for itself. For years, the company has extolled that it thinks different. That it cares not just about its bottom line, or even about making great products that users love, but about issues that affect us all, from the environment to social justice. And it’s been very effective at that argument, in part because people want to believe the best of a company that makes things they like.⁴

In other words, good optics have paid off handsomely for Apple. But live by the optics, die by the optics. If you ask people to buy into the idea that you’re working toward the good, be prepared for the moment when they pull off the mask and are shocked to discover that you were a for-profit company all along.

[Dan Moren is the East Coast Bureau Chief of Six Colors, as well as an author, podcaster, and two-time Jeopardy! champion. You can find him on Mastodon at @dmoren@zeppelin.flights or reach him by email at dan@sixcolors.com. His next novel, the sci-fi adventure Eternity's Tomb, will be released in November 2026.]

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