Apple has hit out at Spotify over competition complaints. The Digital Markets Act, which comes into force in the EU in early March, is concerned with “ensuring fair and open digital markets”, to quote the European Commission.
Apple takes a sharp stance against Spotify.
Following recent reports that the EU may issue a €500 million fine against Apple after concluding its investigation into Spotify’s claims of anti-competitive behaviour by Apple over its App Store rules, the Cupertino giant has taken a defiant stance and issued a statement.
To conform with the DMA, Apple is introducing big changes to the iPhone’s iOS software, including permitting alternative marketplaces.
When Apple announced the changes, some companies were disdainful, not least because the updated iOS rules introduced required app developers in rival marketplaces to pay something called the Core Technology Fee of $0.54 (0.5€) for each download after the first million to have access to security and other functions.
Apple’s argument is that if it is providing an infrastructure for apps to work safely and in a protected, maintained environment, it seems fair that some costs should be passed on.
However, when you have 236 million paid subscribers, as Spotify does, then iOS download costs can add up.
Spotify, in a blog post in late January, said that Apple’s changes “reject the goals of the DMA” and that the company had “put forward a new plan that is a complete and total farce.”
Apple has now made a statement which references Spotify, saying, “We’re happy 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 have helped them build, update, and share their app with Apple users in 160 countries spanning the globe. Fundamentally, their complaint is about trying to get limitless access to all of Apple’s tools without paying anything for the value Apple provides.”
One of the reasons Spotify complained about the App Store in the first place is that it didn’t want to pay commission to Apple when someone signed up to its paid service in the iOS app—it pays no commission when people sign up elsewhere.
Apple created different rules for what it calls “Reader apps” which means they can link to their websites, in this case Spotify.com, to create accounts and to manage them. But Spotify, like other apps, can’t sign people up to paid accounts within iOS without paying commission, which is one of the issues Spotify has highlighted.
There’s no doubt Spotify has gained considerable benefits from being in the App Store. Its app has been downloaded or redownloaded or updated over 119 billion times on Apple devices, Apple says. And Spotify pays nothing for that convenience and reach. App Store review team members have reviewed and approved 420 versions of the Spotify app, often turning around reviews on the same day. This is another feature which is cost-free to Spotify and all other app developers.
On the other hand, Spotify, which has more than 56% of the EU streaming market against Apple Music’s 11%, brings benefits to the iPhone, too. How many people, if Spotify wasn’t available on the iPhone, might consider switching to Android when they are looking for their next phone?
In the end, Apple seems to feel that its response to the DMA is fair and comprehensive. And it looks like the differences of opinion between Apple and Spotify are not over yet.