New million-dollar fine for tech giants: Apple and Amazon limited competition

The Spanish competition authority has found Amazon and Apple guilty of collusion with the aim of limiting the opportunities for competitors. The two companies signed two contracts on October 31, 2018, in which Amazon received the status of an approved Apple dealer. The deal included a number of clauses that effectively closed the market for electronic devices in Spain.

Over 90% of Apple sellers blocked

The deal, without any logic, limited who could sell Apple products on the platform. More than 90% of the sellers who sold Apple products on the Spanish Amazon page before the deal were suddenly blocked. It also limited the foreign supply Spanish Amazon users could turn to.

The deal also limited the extent to which competitors could advertise their Apple products on Amazon. After the deal went into effect, prices for Apple products on the Spanish Amazon skyrocketed.

Amazon is not aware of any harm

Naturally, Amazon thinks it’s all a bit exaggerated. In a statement, a spokesperson for the company said that Amazon could not have benefited at all from excluding the competition. “We reject the suggestion by the CNMC (Spanish Competition Authority) that Amazon benefits from excluding sellers from our platform. After all, our business model revolves around the success of companies selling products on Amazon.” The fact that Amazon itself also sells on its own platform and thus earns more than from third-party sales is of course marginal.

The spokesperson added to the statement that Amazon customers have certainly benefited from the deal. After all, the number of discounts on iPads and iPhones increased. According to Apple, the deal with Amazon was mainly aimed at reducing the number of illegal copies sold on the platform. The company indicates that it previously spent a lot of money on stopping such sales. Hundreds of thousands of requests have been sent to stop the sale of illegal copies.

Not the first time

The Spanish competition authority has imposed a fine of 143.6 million euros on Apple. Amazon has to cough up 50.5 million. Both companies are of course contesting the decision. This proved successful in a similar case in Italy. The Italian competition authority had fined both companies a combined amount of more than 200 million euros.

The authority believed that the companies had made an illegal deal to distort competition for the sale of Apple and Beats products. But the Italian administrative court thus brushed aside the judgment of the competition authority.

A case against the two companies is also pending in the United States. A federal judge in Seattle ruled last month that Amazon and Apple would face a lawsuit. This time, the charge is that both companies conspired to artificially inflate the prices of iPads and iPhones on Amazon.

Big Tech on the rack

The millions of fines have been flying around the tech giants lately. Competition authorities and privacy watchdogs are hot on the heels of the Silicon Valley guys. In 2021, Amazon received a huge fine of almost 750 million euros for violating the GDPR (General Data Protection Regulation). Again, this was a case in which Amazon had improved its own competitive position on its own platform at the expense of third parties. Amazon allegedly used data from third parties doing business on the site against them.

Apple, a company now worth $3 trillion, also doesn’t seem averse to cheating a bit. Once again it is the Italian competition authority that reprimands the company. Apple would hold third parties doing business on the (Apple’s) App store to a stricter privacy policy than itself. But when you’re a company with 3 trillion in market capitalization, I don’t think you’re surprised by a few million on your pants. It is therefore very questionable to what extent such fines deter such large companies.