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After billion-euro fine against Apple: Spotify wants to capitalise on guilty verdict

5.3.2024

Translation: machine translated

The EU Commission has imposed a fine of 1.8 billion euros on Apple for abusing its market power. Streaming supplier Spotify now wants to capitalise on this and circumvent the levies on Apple with a trick that Apple has so far banned.

Update from 6 March

After the EU Commission's arbitration ruling Spotify is delighted - and wants to take advantage of the judgement right away. In the judgement, the Vice-President of the EU Commission, Margrethe Vestager, found Apple's so-called anti-steering rules to be "neither necessary nor appropriate". The rules state that an app supplier may not advertise and link to offers if they can be purchased outside of the app.

This is exactly what Spotify is now planning to do, as it announced to The Verge. With a forthcoming update, users will not only be able to see all price plans for Spotify subscriptions, but there will also be links under the suppliers. These will presumably lead directly to the Spotify website, where you can buy the subscriptions. The reason for this is simple: if the plan is purchased on Spotify's website and not in the app, the 30 per cent fee that Spotify has to pay to Apple is waived.

This is how Spotify wants to promote its products within the EU version of its app.
Source: Spotify

The launch of in-app purchases, which Spotify announced in January, is still on hold.
Of course, Apple will have to approve the streaming giant's update, which would have been unthinkable until recently. But now the Californians have the judgement of the EU Commission breathing down their necks. However, Apple has already announced that it intends to appeal against this judgement.

Original article

The hammer has fallen: The EU Commission finds Apple guilty. The Californians have violated antitrust law with their app store regulations for music streaming suppliers. Specifically: against Article 102a on the Functioning of the European Union (TFEU) (page 43). According to this, the app store's regulations fulfil the offence of unfair trading conditions. The tech company is being fined 1.8 billion euros for this - and the Commission is proving Spotify right.

What exactly did Apple do?

The Swedish streaming supplier Spotify in particular felt discriminated against by the app store regulations. For several reasons: Firstly, Apple's App Store is the only way for third-party providers to bring their services to the iPhone or iPad. Alternative app stores have been lacking until now. For better or worse, they had to comply with Apple's terms of use.

These state, for example, that the company is not allowed to advertise products that you can buy outside of the App Store. However, if you bought something via an app that came from the Apple App Store - such as a Spotify subscription - Apple took 30 per cent of the profit itself as a commission. Also tricky: Apple has its own streaming service, Apple Music, 100 per cent of whose revenue naturally went to Apple.

Direct and indirect financial damage

Apple has put the competition at a disadvantage, as EU Competition Commissioner Margrethe Vestager has stated. But customers have also suffered disadvantages as a result. On the one hand, they may have paid higher prices than necessary. On the other hand, they may have had to go to extra effort to find out about cheaper offers. This is because Spotify had to withhold this information from them due to Apple's regulations.

Margrethe Vestage is Vice-President of the EU Commission.
Source: ec.europa.eu

According to Vestager, these rules are "neither necessary nor appropriate". The level of these fines should have a deterrent effect. Large tech companies should be made aware that the Digital Markets Act is not a paper tiger, but is also applied in practice. This also applies to the Digital Services Act, as can be seen in the investigation into "X", formerly Twitter

While Spotify is understandably happy, Apple has announced an appeal. The tech company believes there is a lack of "credible evidence of harm to consumers(...)".

Will the next investigation come soon?

The regulations that Apple imposes on third parties in its App Store are not the only thorn in their side. The way Apple is now trying to undermine the DMA regulations is also a source of offence. The Digital Markets Act now forces Apple to allow app downloads and installations from other stores from 7 March 2024 - in order to prevent the abuse of market power.

Spotify CEO Daniel Ek should be happy about the judgement.
Source: Shutterstock

Apple will have to comply with these new requirements. However, Spotify, Microsoft and others accuse the Californians of making this as difficult as possible for app developers. As Apple can no longer make their browser engine Webkit mandatory in third-party stores, they charge a so-called core technology fee of 50 cents per app download. This means that it is not even worthwhile for Spotify, for example, to leave Apple's current system - and it is therefore only a sham alternative. The EU has not yet decided whether Apple will have to make any adjustments here.

Header image: Shutterstock

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Florian Bodoky

Editor

Florian.Bodoky@digitecgalaxus.ch

I've been tinkering with digital networks ever since I found out how to activate both telephone channels on the ISDN card for greater bandwidth. As for the analogue variety, I've been doing that since I learned to talk. Though Winterthur is my adoptive home city, my heart still bleeds red and blue.

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After billion-euro fine against Apple: Spotify wants to capitalise on guilty verdict

Original article

What exactly did Apple do?

Direct and indirect financial damage

Will the next investigation come soon?

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