“For a decade, Apple has abused its dominant position in the music streaming app distribution market,” European Competition Commissioner Margrethe Vestager said in a statement on Monday.
The fine comes at a strange time. From Thursday, March 7, major technology companies such as Apple in Europe will be subject to the Digital Markets Act (DMA). This legislation makes it much easier to call large technology companies to order. To comply with this new law, Apple has implemented drastic changes in recent weeks, such as allowing alternative app stores on the iPhone.
But this fine was imposed in the old way: through a procedure that lasted for years. This started after Spotify filed a complaint with the European Commission in 2019. Spotify was (and is) unhappy about the up to 30 percent fee that Apple charges for everything sold in the App Store. Google also charges 30 percent in its Play Store.
The big problem for Spotify is that it offers a streaming service that competes with Apple’s own Apple Music. Apple itself escapes the costs of the App Store and therefore has a huge price advantage. Moreover, Apple does not allow (or did not allow) Spotify to inform users in its app about the option to pay elsewhere and thus avoid App Store costs.
“Free not good enough”
Such practices are not permitted in the European Union, the Commission says. That is why she is fining Apple more than 1.8 billion euros. At her press conference, European Commissioner for Competition Policy Vestager gave some examples of what she called Apple’s unacceptable practices. For example, developers are not allowed to integrate hyperlinks to their own websites in their apps and they are not allowed to contact their own customers outside of Apple’s App Store, such as via email. “This leaves millions of users in the dark about all the options available to them,” Vestager said.
The costs that Apple charges to streaming developers result in higher subscription prices, Europe believes. Because Apple has a de facto market monopoly, developers only have the choice between accepting the imposed conditions or leaving the App Store – making it difficult for them to reach iOS users. Spotify opted for the latter: it no longer offers its service via the App Store. You can download the Spotify app for free, but you cannot take out a subscription via that app.
Spotify believes that the changes to the App Store that Apple proposed in January do not go far enough. Companies like Spotify now have a way to offer their apps outside the App Store, but Apple charges such high costs that, according to Spotify, it is hardly worthwhile. The Swedish company, together with other companies including game developer Epic, wrote a letter to the European Commission about this last week.
“Spotify pays nothing to Apple,” Apple responded in a press release on Monday. “But free is not good enough for Spotify. They also want to rewrite the rules of the App Store in a way that puts them at an even greater advantage.” Apple points out that bypassing App Store payments hasn’t prevented Spotify from becoming the market leader in music streaming. “And Spotify has an even higher market share on iOS than on Android,” Apple writes.
