It should be almost time: the European Commission should decide by this weekend on the legal battle between Apple and Spotify. And for the Cupertino company, according to the Financial Times, the EU’s decision could result in a fine of 500 million euros.
The battle
Spotify has filed a complaint with the EU arguing that App Store rules limit choice and competition because Apple charges a 30% commission on purchases made through the store, including music streaming subscriptions. For the music streaming platform, this is an unfair “tax” that unfairly benefits Apple Music. The Swedish company also argued that Apple’s rules do not allow it to inform users about the cheapest ways to subscribe outside of the App Store. The investigation was first triggered by a Spotify complaint formally filed with EU regulators in 2019, but had already begun six years earlier. The EU reached a preliminary conclusion in 2021, ruling that the App Store unfairly favored Apple Music over Spotify and other music streaming services.
Fifteen years ago songs were downloaded one by one from iTunes, today Spotify is the most popular music service in the world, with over 602 million users, of which 236 million are paid subscribers. According to Apple, this achievement would not have been possible without the App Store. “We are thrilled to support the success of all developers, including Spotify, which is the largest music streaming app in the world. Spotify pays Apple nothing for the services that helped it create, update and share its app with Apple users in 160 countries around the world. Basically, their claim is about trying to get unlimited access to all of Apple’s tools without paying anything for the value that Apple provides.”
Apple refers, for example, to software libraries of all kinds available to all developers for notifications, background operations, integrations with Siri, AirPlay and CarPlay, Widgets and much more. Spotify has used TestFlight, the iOS testing tool, for over 500 versions of its app; of these 420 arrived on the App Store, where they were downloaded 119 billion times on various Apple devices. And all, according to Apple, by paying just 99 dollars a year, the amount needed to sign up for the developer program.
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The answer
“Spotify’s success has come despite Apple’s best efforts to gain an artificial advantage by favoring its own music service at all times, placing blocks and imposing unfair restrictions on ours. Under current rules, Apple controls Spotify’s access to its customers and gives Spotify one of two unsustainable options: either we have to offer a poor user experience where we can’t directly communicate how to purchase or subscribe to Spotify on iPhone or we have to accept a 30% cost disadvantage compared to our largest competitor. This is not a level playing field. We support the European Commission and trust that it will act soon to create a fair ecosystem for all parties involved.”
Both Apple and Google currently charge a 30% commission (first year, then 15%) for purchases of digital goods on their platforms. According to Apple, 88% of developers active in the European Union pay no commission, 9% pay a 15% commission and only 3% pay the full commission. Spotify would therefore not pay a single cent to Cupertino, since today it is not possible to subscribe within the app, but it can be done by replying to an email where you are directed to a link with the various payment options. For a couple of years, the new App Store rules have allowed you to insert a payment link in the app, however the Swedish company has decided not to do so.
Changes
Last year there were 165 million paying users of music streaming services in EU countries, a rapidly growing market. In which Spotify has a share of 56%, followed by Amazon Music (16%), YouTube Music (9%), with Apple Music still in fourth place and 8% of the total; followed by Tidal, Deezer, Qobuz and others. The accusation of unfair competition, therefore, would be unfounded according to Cupertino, while that of imposing a tax on purchases would be dropped with the changes to the App Store arriving in March. In fact, to comply with the rules of the Digital Markets Act, Apple will introduce the possibility of installing apps on iOS from alternative stores and using payment systems other than those of the Store for in-app purchases. “The DMA means that we will finally be able to share information about the best offers, promotions and payment options in the EU. (…) All this can now be done without the burden of a mandatory 30% commission imposed by Apple, which is prohibited by the DMA”, reads a note from Spotify. In reality the situation is more complex: the commissions don’t disappear, but they change, and it doesn’t mean that it’s always an improvement for all developers. However, the insistence of the Swedish company and the others that have moved against Apple has at least opened a breach in Apple’s walled garden .
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