The European Commission is about to make a decision on Spotify’s protest about competition in the market for streaming music. There are signs that the decision will not go in Apple’s favor. The Financial Times said this week that the EC will fine the tech giant for the first time ever for supposedly breaking EU law about competition in the streaming music market. The fine is likely to be around ā¬500 million, which is about $539 million USD.
The tech giant is not going to see the fine as just part of doing business, as a company that became the first to be worth $3 trillion would naturally be able to. Instead, it is taking the fight to the public.
While talking to the media today, Apple said that it doesn’t agree with the idea that it has hurt Spotify by doing things that hurt competition. The message didn’t come from a single spokesperson; it came from Apple itself. This is what it says:
That includes Spotify, which is the biggest music streaming app in the world. We’re happy to help all makers do well. They don’t charge Apple anything for the services that helped them make, update, and share their app with Apple users in 160 different countries. Their main issue is that they are trying to get free access to all of Apple’s tools without paying for the value Apple offers.
According to MIDiA’s 2022 study on the subscription music market, Apple also said that Spotify has a 56% share of the market, while Amazon Music has a 20% share and Apple Music has an 11% share.
Besides that, Apple shared some private information about Spotify’s business that involves Apple’s platforms. For example, they said that Spotify uses thousands of Apple’s APIs across 60 frameworks, uses Apple’s beta testing platform TestFlight, has submitted over 420 versions of its app to App Review and been approved, and Apple engineers have helped Spotify solve problems like those affecting hardware-acceler
Apple also said that Spotify’s app had been downloaded, re-downloaded, or updated more than 119 billion times across all Apple devices. This is a number we had not heard before, so we thought it was interesting.
It’s interesting enough that Apple is adding its own comments before the EC makes its ruling.
It shows that the company is so sure that it’s doing what’s best for its customers and developer partners that any decision that says otherwise is so ridiculous that it needs to be criticized and discussed. Apple thinks that its system of in-app purchases for things like music subscriptions saves customers the trouble and stress of having to visit external websites on the iPhone’s small screen. Instead, they can just click the side button, and Apple thinks that this system also protects against fraud, collecting too much data, customers getting confused about cancellations, and children making purchases without meaning to. Apple is, of course, familiar with the second one.
Apple thinks that Spotify only wants to make more money by doing things that are against the law. It is feared that Apple’s App Store messes up the music streaming market, which is what the EU protest is about. In other words, the issue isn’t just that Spotify has been hurt; it’s also that the App Store may have stopped other competitors.
In 2021, EVP and competition chief Margrethe Vestager said of the EC’s review, “Spotify is a big player in the music streaming market, but we don’t know what would have been the case without this.” “Deezer and Soundcloud are two other services that compete with Apple Music. We are really worried about the growth of our smaller competition in this area. She also said, “This is not a Spotify case; this is a music streaming case.”
But Spotify has been the biggest competitor to Apple Music and has fought against the company in other ways, like calling Apple’s new DMA rules “extortion” and a “complete and total farce.”
Apple’s reaction to the EU’s DMA (Digital Markets Act) regulation is a new system that makes developers pay for more than just App Store payment processing. This is to protect its own interests (and, Apple says, those of consumers). Instead, it now separates payment processing from other services by charging developers a “Core Technology Fee” if they want to do business under the new DMA terms. To put it another way, Apple doesn’t want developers to pay it for the work it puts into making and maintaining the iOS platform, which apps run on. Instead, it doesn’t want to acknowledge that letting customers use their favorite apps helps sell iPhones.
For the record, Apple doesn’t agree with Spotify that it’s been hurt by tactics that hurt competition. It shows how successful Spotify has been over the years. In eight years, the streaming app went from having 25 million users to having 160 million subscribers, which is an average growth rate of 27%. In this case, it says that Spotify users regularly subscribe to the service outside of the app and that Spotify meets Apple’s “Reader app” exception, which lets it link directly to its website for account setup and payment, like Netflix.
Apple, on the other hand, doesn’t seem to care that Spotify made a quarterly profit, that it just fired 17% of its staff, or that Apple Music, which comes loaded on iPhones, iPads, and other Apple devices, gives Spotify competition on iOS around the world. Customers can get Apple’s music streaming app on its own, but they can also buy it as part of an Apple One deal, which includes iCloud+, News+, Apple TV+, and other Apple services all in one package.
Apple also talks about how closely Spotify worked with the Commission on its complaint. Since the probe began, Spotify has met with the regulators more than 65 times. But the probe has been going on for years.
The EC’s representative wouldn’t say anything about the news about Spotify’s protest or any fines that were about to be given. According to the FT, the fine should be made public early next month.
In response to Apple’s comment, Spotify made its own, which read:
Even though Apple has tried hard to get an unfair edge by favoring their own music service over ours and putting up roadblocks and unfair restrictions on ours, Spotify has been successful. According to Apple’s current rules, Spotify can’t reach its own customers. This leaves Spotify with only two unacceptable choices: either provide a bad user experience by not being able to clearly explain how to purchase or subscribe to Spotify on iPhones, or accept a 30% cost disadvantage compared to our biggest competitor. There are not any fair games going on here. We agree with the European Commission and believe they will move quickly to make the ecosystem fair for everyone.
Natalie Lomas added to the story, and it was updated at 5:54 p.m. on 2/22/24 with a comment from Spotify.
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