As the European Commission's ruling on Spotify's complaint focused on competition in the music streaming market approaches, there are signs that the ruling will not favor Apple. This week, in Financial Times reported that the EC will impose its first fine against the tech giant for allegedly violating EU law on competition in the streaming music market. The fine is expected to amount to about 500 million euros (about $539 million).
Instead of attributing the fine to the cost of doing business, as a company that made history like the first valued at 3 billion dollars, the tech giant is taking the fight to the public.
In a statement shared with the media, Apple argued against the idea that Spotify has been harmed by any anti-competitive practices on its part. The statement was not issued by a single spokesperson, but rather comes from Apple itself. In it he says:
“We are pleased to support the success of all developers, including Spotify, which is the largest music streaming app in the world. Spotify pays Apple nothing for the services that have helped them create, update, and share their app with Apple users in 160 countries around the world. Fundamentally, your complaint is about your claim to get unlimited access to all of Apple's tools without paying anything for the value that Apple offers.
Apple also noted that Spotify has a 56% market share, compared to 20% for Amazon Music and 11% for Apple Music, per year according to the MIDiA 2022 report in the subscription music market.
Additionally, Apple shared a number of non-public details about Spotify's business, as it relates to Apple's platforms, including, for example, that Spotify uses thousands of Apple APIs across 60 frameworks; that Spotify uses Apple's beta testing platform, TestFlight; that Spotify has submitted more than 420 versions of its application to App Review, all of which were approved; and even that Apple engineers have helped Spotify solve several challenges, such as those affecting hardware-accelerated media playback and battery optimization.
And, for those watching the numbers, Apple also said that the Spotify app had been downloaded, redownloaded or updated more than 119 billion times on Apple devices, a statistic that we had never heard of before.
The fact that Apple is preempting the EC's decision with its own comment is notable, in itself.
You're addressing a company that believes so strongly that it's doing what's best for its own customers and developer partners that any kind of decision to the contrary is so absurd that it demands comment and reaction. Apple believes that its in-app purchasing system for things like music subscriptions saves consumers not only the headache and inconvenience of having to visit external websites on the iPhone's small screen (they can simply click the side button) but also protects against fraud and overage. data collection, consumer confusion over cancellations, and mistaken purchases by children. Of course, apple is acquainted with esto last themselves.
Apple believes that Spotify only wants to increase its profits by taking advantage of regulations in its favor. In the case of the EU complaint, the concern is that Apple's App Store distorts completion in the streaming music market. In other words, this isn't just a complaint that Spotify has been hurt, but that the nature of the App Store may have frustrated other rivals.
“Spotify is a big player in the music streaming market, but we don't know what the conditions would have been without these options from Apple,” executive vice president and head of competition Margrethe Vestager said of the EC investigation in 2021. “ There are other rivals to Apple Music, such as Deezer or Soundcloud, and smaller competitors and these are real concerns about its development. “This is not a Spotify case, it is a music streaming case,” she noted.
Spotify, however, has been the loudest of Apple Music's rivals and has fought the company on other issues, for example calling Apple's way of enforcing new DMA rules "extortion" and a "complete and total farce." .
To protect its interests (and, according to Apple, consumers), Apple's response to the EU's DMA (Digital Markets Act) regulation is to introduce a new system that requires developers to pay for their services beyond from simple App Store payment processing. It now separates payment processing from other services by imposing a “core technology fee” on those developers who want to do business under the new DMA rules. In other words, it wants developers to pay Apple for the work it does to create and maintain its iOS platform, where apps can run, rather than recognizing that access to consumers' favorite apps helps sell their iPhones.
For the record, Apple disputes Spotify's claims that it has been harmed by anti-competitive practices. This speaks to the success that Spotify has had over the years, having grown its streaming app in 8 years from 25 million to 160 million subscribers, an average growth rate of 27%. It notes that Spotify users regularly subscribe to the service outside of its app, in its "web environment" on the web, which exempts it from applying Apple's rules, which allows it to link directly to its website for account creation. and payment, similar to Netflix.
However, Apple seems to ignore the fact that Spotify is making quarterly profits is still making headlines, that it just laid off 17% of its workforce and that, you know, Spotify is facing competition on iOS globally from Apple Music, which is pre-installed on iPhones, iPads and other Apple devices. In addition to being offered as a standalone service, Apple's music streaming app is sold to customers as part of Apple One packages that combine multiple Apple services, such as iCloud+, News+, Apple TV+ and others, under one roof.
Apple also highlights how closely Spotify has worked with the Commission on its complaint, having met with regulators more than 65 times since the investigation began. The investigation, however, has been ongoing for years.
An EC representative declined to comment on news related to the Spotify complaint or any pending fines. The Financial Times had reported that the fine is expected to be announced early next March.
Spotify was asked for comment but did not have an immediate response.
