July 16, 2024

Spotify notes that the next steps are crucial, but describes Apple's €1.84 billion antitrust penalties as a "powerful message."

March 04, 2024
4Min Reads
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Spotify is applauding the European Commission's decision to punish Apple a whopping €1.84 billion for engaging in anticompetitive behavior in the streaming music industry. The judgment was made today.

The fine, according to the streamer, is a "powerful message" that implies that not even "a monopoly like Apple" may "wield power abusively" to dictate how other businesses deal with their clientele.

"The verdict made today is a turning point in the struggle for consumer internet freedom. Spotify posted a comment on its corporate blog stating that "the European Commission (EC) has made its conclusion clear: Apple's behavior limiting communications to consumers is unlawful."

The business remained apprehensive about Apple's future actions even after the European Court of Justice's decision to favor Spotify and other streamers over Apple. The Silicon Valley behemoth has already declared its intention to appeal the decision, and Spotify notes that in situations such as this, "the details matter."

In other markets, Apple has consistently disregarded legal rulings and legislation. Therefore, we're excited for the next actions, which should finally and decisively confront Apple's long-standing unfair business practices, commented Spotify.

Notably, Apple deftly circumvented the Digital Market Act regulations set forth by the European Commission in an effort to promote fresh competition in the app store industry by permitting developers to establish separate app stores and handle their own revenue collection. To make up for the lost revenue, Apple decided to impose a new cost called the Core Technology cost on iOS developers who agreed to the new DMA regulations.

Spotify probably worries that if the rules aren't clearly stated, Apple will figure out a method to get around them as well.

The fine would be approximately €500 million (about $539 million USD), according to an earlier story from the Financial Times. It turns out that they were correct in their decision, but incorrect in the amount.

The decision comes after years of complaints about the App Store's business practices and related regulations brought forth by Spotify and other smaller streamers, such as Deezer. The EU formally opened an investigation into Apple's App Store in 2020 after Spotify submitted its initial antitrust complaint against the tech titan in 2019. The EU published a statement of complaints in April of the following year, charging Apple with stifling competition in the streaming service sector.

According to Spotify, Apple's regulations "muzzled" it and other streaming music providers, preventing them from informing users of their own applications about how to obtain discounts, promotions, and other benefits, as well as how to upgrade subscriptions. Spotify doesn't pay Apple, Apple retorted, but Spotify still demands "limitless access to all of Apple's tools."

The commission system of Apple's App Store, which levies a 15% to 30% fee on subscriptions for digital services like music streaming that iOS developers provide to their clients, is partially the problem at hand. (Subscriptions decrease to 15% in the second year from 30%). Spotify contended that Apple's "30% tax" was unjust and that Apple's regulations harmed users by preventing developers from telling users of their apps about alternate, sometimes less expensive, ways to make payments. Stated differently, Spotify sought to direct users to its website so they could potentially make direct, commission-free monthly payments.

Apple declared last month that Spotify does not pay them for the services that have assisted in the development, maintenance, and distribution of their software among Apple customers in 160 countries worldwide. Additionally, it emphasized that Spotify has never reduced its fees, even if it offers memberships through its website. Furthermore, it was reported that Apple Music held an 11% market share in Europe while Spotify held a 56% share.Naturally, that isn't a fair comparison considering that Spotify provides both a premium plan, similar to Apple's, and a free, ad-supported one. Furthermore, as Apple has made clear time and time again, 85% of App Store developers do not pay Apple a fee because they do not provide "digital goods and services"; however, this distinction becomes less significant when you consider how platforms such as Uber, Airbnb, and others rely on Apple to acquire and market their products to consumers.

Spotify declared that the battle was far from finished after the EC's fine was made public.

It stated, "Our dedication to assisting in the realization of a truly fair digital marketplace remains unwavering, and our work will not be done until we succeed in securing one everywhere."
 

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