U.S. tech giant Apple will soon be hit with a fine of up to 500 million euros ($540 million) from the European Union for breaking the law on access to music streaming services, marking a significant setback for the company.

The European Commission has been investigating whether Apple had distorted competition in the music streaming market by blocking certain apps from informing iPhone users about more cost-effective subscription options outside of its own platform.

The announcement of the fine, which would be the EU's first against Apple, is expected early next month, the Financial Times reported, which cited five people close to the investigation. In 2020, Apple faced a 1.1-billion-euro fine in France for purported anti-competitive practices.

The EU investigation was initiated after an official complaint from music streaming service Spotify in 2019 that claimed it had been forced to raise its monthly subscription fees to off set expenses linked to Apple's App Store regulations.

The probe explored whether Apple's "anti-steering" conditions violated the bloc's rules on abuse of dominance, potentially disadvantaging music consumers by leading to increased costs for apps.

Spotify alleged that Apple restricts choice and competition within its App Store by imposing a 30 percent fee on all transactions.

Additionally, Apple prohibited Spotify and other companies from notifying customers on their devices that they could bypass the commission and secure a more favorable deal by registering on Spotify's website.

Apple contends that its fee is warranted because of substantial investments in maintaining a secure app store and granting Spotify access to a vast customer base.

Anti-competitive fees

In contrast, Spotify asserts that Apple Music, Apple's in-house music streaming service, does not incur equivalent expenses, leading to an unfair advantage and characterizing the fees as anti-competitive.

The European Commission is expected to declare Apple's actions illegal because they run counter to the bloc's rules that uphold competition in the single market.

Apple and other major tech operations are facing continuing heightened scrutiny because of competition concerns. Google is currently appealing fines exceeding 8 billion euros imposed by the EU across three competition investigations.

In a bid to pacify Brussels, Apple revealed alterations to its iOS mobile software, App Store and Safari browser last month, enabling companies to indicate more affordable subscription alternatives outside their platforms. Apple claimed that these adjustments "give developers choice". Upon the disclosure, Spotify criticized the modifications as a "complete and total farce".

The imminent fine for Apple represents another move by the EU to curb the dominance of so-called Big Tech companies. Regulations set to come into effect next month will designate Apple, Amazon, Google, Meta and Microsoft as "digital gatekeepers", subjecting them to stringent new competition guidelines.