As the European Commission prepares to rule on Spotify’s complaint focused on competition in the music streaming market, there are signs that the ruling will not go in Apple’s favor. This week, the the Financial Times reported the EC will impose its first fine against the tech giant for allegedly breaching EU competition law in the music streaming market. The fine is expected to be around 500 million euros (about 539 million US dollars), the report noted.
Instead of pointing to the fine as the cost of doing business, as a company that made history as the first to be valued at $3 trillion sure it could, the tech giant is taking the battle to the public.
In a statement released to the media today, Apple disputed the idea that Spotify has been harmed by any anti-competitive practices on its part. (The statement wasn’t issued by a single spokesperson, but came from Apple itself). Reads:
We’re happy to support the success of all developers — including Spotify, which is the world’s largest music streaming app. Spotify doesn’t pay Apple anything for services that helped them build, update and share their app with Apple users in 160 countries around the world. Basically, their complaint is that they are trying to get unlimited access to all of Apple’s tools without paying anything for the value that Apple provides.
Apple also pointed out that Spotify has a 56% market share, compared to Amazon Music’s 20% and Apple Music’s 11% per MIDiA Exhibition for 2022 in the subscription music market.
In addition, Apple shared a number of non-public details about Spotify’s business as it relates to Apple’s platforms, such as Spotify using thousands of Apple APIs across 60 frameworks. that Spotify uses Apple’s beta testing platform, TestFlight, that Spotify has submitted more than 420 versions of its app to App Review, which have been approved; even that Apple engineers have helped Spotify solve various challenges, such as that affect hardware-accelerated media playback and battery optimization.
And, for those number-trackers out there, Apple also said that Spotify’s app had been downloaded, replayed or updated more than 119 billion times on Apple devices — a statistic we hadn’t heard before, we should note.
The fact that Apple is leading the EC’s decision with its own commentary is remarkable in itself.
It speaks to a company that believes so strongly in doing what’s best for its own customers and developer partners that any kind of decision deemed otherwise is so absurd that it demands comments and pushback. Apple believes its system for in-app purchases for things like music subscriptions saves consumers not only the headache and hassle of having to visit external websites on the iPhone’s small screen — they can just click the side button — but also protects against fraud, overuse data collection, consumer confusion about cancellations and mistaken purchases by children. (Of course, apple is intimate with The last himself.)
Apple believes that Spotify only wants to increase its profits by using the regulations to its advantage. In the case of the EU complaint, the concern is that Apple’s App Store distorts integration in the music streaming market. It’s not just a complaint that Spotify is damaged, in other words, but that the nature of the App Store may have hindered other competitors.
“Spotify is a big player in the music streaming market, but we don’t know what it would be like without it,” EVP and head of competition Margrethe Vestager said of EC’s 2021 survey. “There are other rivals to Apple Music — there’s Deezer, there’s Soundcloud. Smaller competitors and here we have real concerns about their developments. This is not a Spotify case – this is a music streaming case,” he noted.
Spotify, however, has been the most vocal of Apple Music’s opponents and has fought back against the company on other issues, for example calling Apple’s new DMA rules “extortion” and a “complete and utter farce.”
To protect its interests (and, Apple argues, consumers’), Apple’s response to the EU’s DMA (Digital Markets Act) regulation is to introduce a new system that requires developers to pay for its services beyond from simply processing payments in the App Store. Instead, it now separates payment processing from other services by imposing a “Basic Technology Fee” for those developers who want to operate under the new DMA rules. In other words, it wants developers to pay Apple for the work it does to build and maintain the iOS platform on which apps can run, instead of recognizing that access to consumers’ favorite apps helps sell its iPhones. .
For the record, Apple disputes Spotify’s claims that it has been harmed by any anti-competitive practices. He talks about the success Spotify has had over the years, having grown its streaming app over eight years from 25 million to 160 million subscribers — an average growth rate of 27 percent. He points out that Spotify users regularly sign up for the service outside of its app, and that Spotify qualifies for the “reader app” exception to Apple’s rules, which allows it to link directly to its website for account creation and payment , similar to Netflix.
However, Apple seems to ignore the fact that Spotify making quarterly profits is still making headlines, that it just laid off 17% of its workforce, and that, you know, Spotify is facing competition on iOS globally from Apple Music, which comes pre-installed on iPhones, iPads and other Apple devices. In addition to being offered as a standalone service, Apple’s music streaming app is sold to customers as a part from the Apple One bundlesthat combine multiple Apple services, such as iCloud+, News+, Apple TV+ and more, under one roof.
Apple also emphasizes how closely Spotify has cooperated with the Commission on its complaint, having met with regulators more than 65 times since the investigation began. The research, however, has been going on for years.
An EC spokesman declined to comment on news related to Spotify’s complaint or any pending fines. The FT had reported that the fine was expected to be announced early next month.
Spotify responded to Apple’s statement with one of its own, saying:
Spotify’s success has happened despite Apple’s best efforts to gain an artificial advantage by favoring its own music service at every turn, while putting up roadblocks and unfair restrictions on ours. Under its current rules, Apple controls Spotify’s access to its own customers and gives Spotify one of two untenable options: either we have to deliver a poor user experience where we can’t directly communicate how to buy or subscribe to Spotify on iPhone or you have to accept a 30% cost disadvantage to our biggest competitor. This is not a level playing field. We support the European Commission and believe that it will take action soon to create a fair ecosystem for all involved.
Additional references: Natasha Lomas; Updated 2/22/24 5:54 PM with a Spotify statement.
