Financial Times reported on Sunday that the European Commission is considering imposing a €500 million ($539 million) fine on Apple. This action stems from allegations that Apple prioritized its own Apple Music over competing platforms like Spotify within the App Store.
Spotify, a Swedish audio streaming service, complained in 2019 alleging that Apple Music wasn’t paying royalties to its parent company and was enjoying preferential treatment compared to third-party services.
Apple responded with a rebuttal to deny the accusations, but its defense was met with skepticism.
Initially, the European Union aimed to impose fines on Apple amounting to as much as 10% of its worldwide revenue, potentially reaching around $40 billion and causing significant upheaval in the technology sector.
The primary concern revolves around Spotify being subjected to the “Apple tax,” comprising 30% of all transactions (in this scenario, equating to $3 for each $10 Premium subscription). Despite Cupertino’s assertion that this rate applies solely during the initial year of subscriptions, after that reducing to 15%, it fails to address its impact on returning customers who unsubscribe and later re-subscribe.
Furthermore, Apple contends that Spotify’s success is attributable, in part, to its availability as a “free” app on the App Store. However, developers are still required to remit fees for utilizing the developer account, contradicting the notion of “free” access.
Spotify addressed its EU customers in January this year saying:
You’re about to experience a new Spotify if you live in the EU. One where you can see all subscription pricing, promotions or deals, and even make purchases, all seamlessly within the app.
The standoff has also prevented Spotify from introducing in-app purchases. Should Apple adhere to the Digital Markets Act (DMA), European users could be the first to access this new feature. However, this presents yet another battleground in the ongoing conflict between the two companies.
