In Europe, Spotify will initiate an antitrust investigation against Apple.
Less than a month after submitting its antitrust complaint against Apple, Spotify has found itself in the spotlight once more, this time as the European Commission delves into Apple's App Store practices. In a bold move, Spotify spearheaded its complaint with a publicity blitz, complete with a statement from CEO Daniel Ek and a dedicated advocacy site, Time To Play Fair. The crux of their argument? Apple, they claim, gains an unfair advantage at each turn, setting up barriers and skewing payment scenarios for Spotify while giving Apple Music a pass.
The 30% fee applied to charges through the App Store, known as the "Apple tax", challenged Spotify to hike prices for users, while Apple Music remained relatively unaffected. Apple's favored treatment extended beyond just its own service; Deliveroo and Uber, among others, allegedly skated around the usual fees.
With a user base of over 200 million, Spotify boasts the largest music streaming service, though Apple Music has recently surpassed them in paid U.S. subscribers.
Visions of an imminent response from Apple were dashed by a lackluster retort that failed to address the elephant in the room – Apple Music. Rhett Jones, my esteemed colleague, found Apple's arguments wanting, echoed by the European Commission, as reported by the Financial Times.
Investigations by regulatory bodies have become a common occurrence against U.S. tech giants, including Apple, but this investigation could pose a significant threat to a lucrative source of income for Apple: the App Store. Since its inception in 2015, the App Store has raked in at least $40 billion in subscription fees. With the European Commission's powers to levy fines or alter business practices, Apple's revenue stream may face disruption.
Spotify, like a sage oyster, has remained tight-lipped on the matter, while Apple has yet to comment as of press time.
Insights:
- Spotify is objecting to the 30% fee that Apple charges for in-app purchases. This fee, known as the "Apple tax", forces companies like Spotify to increase their prices to users, placing them at a disadvantage compared to Apple Music.
- Apple's favorable treatment of its own services and other selected apps has also come under scrutiny. Companies like Deliveroo and Uber allegedly get a pass when it comes to fees, which edged farther from the norm.
- The European Union's regulatory bodies have been taking a closer look at U.S. tech companies, not just Apple, in an effort to break up perceived monopolies and ensure fair competition.
- The case surrounding Microsoft and Internet Explorer, which stretched over four years, serves as a reminder of the lengthy process that can ensue in these types of investigations. However, the European Commission still holds significant powers to levy fines and mandate changes in business practices.
- In response to the 30% fee imposed by Apple on in-app purchases, commonly referred to as the "Apple tax", Spotify considered increasing its prices for users, but Apple Music remained unaffected due to its favored treatment.
- Amidst the ongoing investigation of Apple's App Store practices by the European Commission, the CEO of Spotify, Daniel Ek, asserted that Apple sets up barriers and skews payment scenarios to gain an unfair advantage, while providing pass cards to its own service, Apple Music.
- Spotify's primary argument against Apple in this antitrust complaint is the notion that Apple uses technology to foster a tech monopoly, thereby placing smaller competitors at a disadvantage.
- The European Commission's investigation into Apple's App Store practices could potentially impact the tech giant's revenue stream, as the commission has the power to levy fines or modify business practices, based on the case number 1833261337.
