Spotify welcomes the European Commission’s decision to hold Apple responsible for anti-competitive practices in the music streaming market with a whopping €1.84 billion fine, announced today. The streamer called the fine a “strong message” that sends a message that even “a monopoly like Apple” is not able to “abusively exercise power” to control how other companies interact with their customers .
“Today’s decision marks an important moment in the fight for a more open internet for consumers. The European Commission (EC) has made its conclusion clear: Apple’s conduct that restricts communications with consumers is illegal,” Spotify said in a statement. corporate blog.
Despite the EC ruling favoring Spotify and other streamers over Apple, the company was still cautious about how Apple would proceed. The Cupertino tech giant has already promised it appeal the decision, and Spotify adds that in cases like this, “the details matter.”
“Apple routinely defies laws and court rulings in other markets. We therefore look forward to the next steps which we hope will clearly and definitively address Apple’s longstanding unfair practices,” Spotify wrote.
Apple, in particular, has cleverly worked around the requirements of the EC Digital Market Act to foster new competition in the app store market by allowing developers to launch independent app stores and manage their own payments. But Apple’s solution was to charge iOS developers who accepted its new DMA rules a new, additional fee, the basic technology fee, as a means of recouping its lost revenue.
Spotify is likely worried that Apple will again find a way around any new requirements, too, if it’s not worded carefully.
The The Financial Times had earlier reported that the fine would be about 500 million euros (about 539 million US dollars). As it turns out, they had the right decision, but not the price.
The decision follows years of complaints led by Spotify and other smaller streamers such as Deezer about the App Store’s business model and related rules. In 2019, Spotify first filed its complaint against the tech giant, which later led to the official EU investigation into Apple’s App Store announced in 2020. In April of the following year, the EU issued a statement of objections, accusing Apple of distorting competition in the streaming services market.
Spotify says Apple’s rules “blocked” it and other music streaming services from communicating with their customers in their apps about how to upgrade subscriptions, access offers, discounts and other benefits. Apple countered that Spotify doesn’t pay Apple anything, but still wants “unrestricted access to all Apple tools.”
Part of the issue here is the nature of Apple’s App Store commission structure, which charges developers a 15% to 30% commission for subscriptions to digital services, such as music streaming, that iOS developers offer their customers. (In the second year, memberships drop from 30% to 15%). Spotify argued that Apple’s “30% tax” was unfair and that Apple’s rules harmed consumers by preventing developers from informing users of their app about alternative – and sometimes cheaper – payment methods. In other words, Spotify wanted the opportunity to drive customers to its website where they could arguably pay for the subscription directly, which would not involve a commission.
“Spotify does not pay Apple anything for the services that helped them build, update and share their app with Apple users in 160 countries around the world,” Apple said last month. He also pointed out that despite offering subscriptions through its website, Spotify had never lowered its prices. And he noted that Spotify had a 56% share of the music streaming market in Europe, compared to Apple Music’s 11% share.
Of course, that’s not a fair comparison, given that Spotify offers a free ad-supported service as well as a paid plan like Apple’s, allowing it to funnel a number of free users into the paid product over time . And, as Apple has repeatedly pointed out, 85% of App Store developers don’t pay Apple a fee because they don’t offer “digital goods and services” — a distinction that loses its punch when you consider how services like Uber, Airbnb and others rely on Apple’s platform to acquire and sell their offerings to customers.
After the EC fine was announced, Spotify said the fight was not over.
“Our work won’t be done until we can secure a truly fair digital market everywhere, and our commitment to helping make that a reality remains unwavering.” he wrote. Spotify CEO Daniel Ek also echoed this sentiment in a video post on X, where he added that “Apple has a history of violating these rules,” referring to other cases, such as the antitrust injunction in the Netherlands, where Apple ignored the penalty and allowed the fine to grow for half a year before addressing its concerns.
The Coalition for App Fairness, a lobbying group whose members include Spotify, Deezer, Epic Games and other app developers, also issued a statement in response to the fines.
“Today the European Commission sent a clear message that Apple’s anti-steering policies, which prevent developers from communicating directly with consumers, are anti-competitive and illegal,” said CAF Executive Director Rick VanMeter. “Apple’s restrictions on app developers have stifled innovation, driven up prices and limited consumer choice for far too long. We applaud the Commission for taking this essential first step towards promoting competition in iOS devices. However, more needs to be done to truly create a fair and open mobile app ecosystem that benefits consumers and developers. In less than 48 hours the Digital Markets Act will be implemented and consumers and developers across Europe are counting on the Commission to demand real compliance from Apple and Google to ensure the entire app store ecosystem benefits from the promises of the law,” he said. .
Updated, 3/4/24, 11 am. ET with a CAF statement
