Earlier this year, the European Union fined Apple almost $2 billion for not allowing Spotify and other music streaming services that operate on the iPhone to communicate with their subscribers directly within their app, an unfair trading practice.
“Apple's conduct … may have led many iOS users to pay significantly higher prices for music streaming subscriptions,” the EU said at the time. Apple called the action misguided and said it would appeal.
“While we respect the European Commission, the facts simply don’t support this decision,” the company said.
Maybe it shouldn’t bother. Although the fine would be one of the largest the EU has ever imposed on a company, it’s an amount that Apple earns in fewer than two days, according to an analysis by financial news service Trading Pedia.
“The Commission said the size of the fine reflects Apple’s global revenues and the harm of the company’s actions,” Michael Fisher, a financial analyst, said in the report. But does it?
The company earned more than $383 billion last year, or more than $1 billion a day, making the penalty manageable if it ends up paying the $1.9 billion after appeals are exhausted.
Slaps on the wrist
For many large companies hit with a penalty so far this year, the amount can seem like a rounding error. The textbook case is a $35 million fine that a French regulator slapped on Amazon for monitoring the productivity of warehouse employees too closely in violation of a provision in the General Data Protection Regulation.
The company allegedly used scanners to monitor how quickly workers performed certain tasks, such as removing items from shelves and packing, which the regulator called excessively intrusive. Amazon said it’s reserving the right to appeal.
Should it bother? The company earned $575 billion last year, almost $1.6 billion a day, enabling it to pay the fine with just 32 minutes’ worth of income.
“Are the penalties hefty enough to deter [Amazon and other] corporate giants from breaking the law again?” Fisher said in an email announcing the report findings.
Of 15 big companies hit with sizable fines this year, only three would be forced to devote considerable resources to pay what they owe.
Endo International, a bankrupt American pharmaceutical company based in Ireland, would have to use almost 85 days’ worth of income to settle a $465 million fine for its role in the proliferation of opioids in the United States, and City National Bank, the 30th largest bank in the United States, according to Federal Reserve data, would have to use 100 days’ worth of income to pay a $65 million fine for inadequate controls imposed on it by the Office of the Comptroller of the Currency.
Endo made a little more than $2 billion last year, or about $5.5 million a day, and City National Bank made $237 million, or about $649,000 a day.
Cummins, the big engine manufacturer, also faces a hefty fine. It would need 21 days’ worth of earnings to pay a $2 billion fine for violating emission rules under the Clean Air Act. It earned almost $35 billion last year, or about $93 million a day.
Access the Trading Pedia report.
