Amazon and Apple Just Got Hit With a $218 Million Fine. Here’s Why

Apple and Amazon were fined a combined $218 million by Spain’s antitrust watchdog for anti-competitive practices. The penalty for Apple was $161 million, while Amazon’s was $56.7 million. The two tech giants have been accused of stifling competition for smaller businesses by restricting the ability of third-party sellers to offer Apple products on Amazon’s platform. The National Markets and Competition Commission (CNMC) of Spain found that some of the agreements reached in 2018 contained anti-competitive clauses that harmed competition in the Spanish online market for electronic devices.

The CNMC looked into two contracts between Apple and Amazon on October 31, 2018, which authorized Amazon as an Apple reseller. Third-party sellers who sell Apple products through Amazon’s platform for smaller retailers were hampered by anti-competitive clauses in these contracts. According to the CNMC, the clauses affected the Spanish online market for electronic devices.

The CNMC claimed that Apple and Amazon had struck a deal that restricted Amazon’s ability to advertise to Apple product buyers or offer them products from Amazon’s rivals in the electronics industry. The watchdog claimed that as a result, 90% of the independent sellers who had been offering Apple products on Amazon’s marketplace prior to the renewal of the Amazon-Apple distribution deal had to leave the site.

The CNMC claims that Amazon limited the ability of EU retailers based outside of Spain to reach Spanish customers and prohibited advertising from Apple’s competitors on its website in response to searches for Apple products. The price of Apple products sold online in Spain increased after the two tech giants made their deal.

Apple and Amazon have both stated that they intend to appeal the imposed fines. In response to the CNMC’s claim that Amazon profits from excluding sellers from its marketplace, an Amazon spokesperson said, “We disagree.” She continued by saying that shoppers for Apple products benefited from the bargain and that the number of sales on iPads and iPhones rose. Apple has stated that addressing counterfeiting and safety issues was a primary motivation for signing the agreement. It stated that hundreds of takedown notices for fraudulent products had been sent to Amazon before the agreement was reached.

The European Union and individual member states have led the way in launching antitrust investigations into large tech firms amid concerns that they are abusing their market dominance. In 2018, Italy fined Apple and Amazon over $200 million for breaking European Union antitrust laws by using the 2018 agreement to limit competition in the sale of Apple- and Beats-branded products.

In summary, Apple and Amazon were fined a combined $218 million by Spain’s antitrust watchdog for anti-competitive practices. Companies accused of working together to restrict Apple and rivals’ online sales in Spain. According to the CNMC’s investigation, the online market for electronic devices in Spain was negatively impacted by two contracts signed by Apple and Amazon in 2018. Europe has taken the lead in cracking down on big tech companies over allegations of abusing their dominant market positions, but both Apple and Amazon have said they plan to appeal the fines.

First reported on Reuters

Frequently Asked Questions

Q. What were the fines imposed on Apple and Amazon by Spain’s antitrust watchdog?

Spain’s antitrust watchdog, the National Markets and Competition Commission (CNMC), fined Apple and Amazon a combined total of $218 million for their alleged anti-competitive practices. Apple was fined $161 million, while Amazon’s penalty amounted to $56.7 million.

Q. What were Apple and Amazon accused of by the CNMC?

Apple and Amazon were accused of engaging in anti-competitive practices that stifled competition for smaller businesses. Specifically, they were accused of restricting the ability of third-party sellers to offer Apple products on Amazon’s platform. The CNMC found that certain agreements reached in 2018 contained anti-competitive clauses that harmed competition in the Spanish online market for electronic devices.

Q. What did the CNMC investigate regarding the contracts between Apple and Amazon?

The CNMC investigated two contracts between Apple and Amazon, which were authorized on October 31, 2018, designating Amazon as an Apple reseller. The investigation focused on how these contracts affected third-party sellers who sold Apple products through Amazon’s platform, particularly for smaller retailers. The CNMC found that anti-competitive clauses in these contracts negatively impacted the Spanish online market for electronic devices.

Q. What were the specific anti-competitive clauses identified by the CNMC?

The CNMC claimed that Apple and Amazon had a deal that restricted Amazon’s ability to advertise to Apple product buyers or offer them products from Amazon’s rivals in the electronics industry. This limitation led to a situation where 90% of independent sellers who were offering Apple products on Amazon’s marketplace prior to the renewal of the distribution deal had to leave the site. Additionally, Amazon limited the ability of EU retailers based outside of Spain to reach Spanish customers and prohibited advertising from Apple’s competitors on its website in response to searches for Apple products.

Q. What was the rationale given by Apple and Amazon for the contracts and their actions?

Apple stated that addressing counterfeiting and safety issues was a primary motivation for signing the agreement with Amazon. The company claimed that it had sent hundreds of takedown notices for fraudulent products to Amazon before reaching the deal. On the other hand, Amazon disagreed with the CNMC’s claim that it profited from excluding sellers from its marketplace. An Amazon spokesperson argued that shoppers for Apple products benefited from the agreement, and the number of sales on iPads and iPhones increased as a result.

Q. What is the current status of the fines and the response from Apple and Amazon?

Both Apple and Amazon have expressed their intent to appeal the imposed fines. As the situation unfolds, the fines may be subject to further review and potential adjustments based on the appeals process.

Q. How does this case fit into the broader context of antitrust investigations in Europe?

This case is part of a larger trend in Europe, where both the European Union and individual member states have been actively investigating large tech firms over concerns of potential market dominance abuse. Europe has taken a lead in cracking down on big tech companies, and this investigation against Apple and Amazon highlights the ongoing efforts to ensure fair competition and protect consumers in the digital marketplace.

Originally published on ReadWrite.