The European Commission is set to rule on Spotify's claims focused on competition in the streaming music market, suggesting the ruling may not favor Apple. This week, the Financial Times reported that the EC will impose its first-ever fine against the tech giant for alleged breaches of EU law on competition in the streaming music market. According to the report, the fine is expected to be approximately 500 million euros (approximately 539 million U.S. dollars).
Rather than pass off fines as a cost of doing business, like the company that made history as the first company to be valued at $3 trillion, the tech giant is taking its fight to the public.
In a statement shared with the media today, Apple pushed back against the idea that Spotify has been harmed by anti-competitive conduct on its part. (This statement was not issued by a single spokesperson, but rather from Apple itself). It is written like this.
“We're excited to support the success of all developers, including Spotify, the world's largest music streaming app. Spotify is the world's largest music streaming app, where Apple builds, updates, and shares apps with Apple users in 160 countries around the world. They're not paying Apple anything for the services that helped them. Basically, their complaint is that they have unlimited access to all of Apple's tools without paying anything for the value that Apple provides. That's what you're trying to access.”
Apple also noted that according to MIDiA's 2022 report on the subscription music market, Spotify has a 56% market share, compared to Amazon Music's 20% and Apple Music's 11%.
Additionally, Apple shared a number of non-public details about Spotify's business as it relates to Apple's platform. For example, Spotify uses thousands of Apple's APIs across 60 frameworks. Spotify uses Apple's beta testing platform TestFlight. Spotify has submitted and approved over 420 versions of its app to App Review. Additionally, Apple engineers have helped Spotify resolve various challenges, including issues impacting hardware-accelerated media playback and battery optimization.
And for those keeping an eye on the numbers, Apple also announced that the Spotify app has been downloaded, re-downloaded, or updated more than 119 billion times across Apple devices. It's worth noting that this is a statistic we've never heard of before.
The fact that Apple is leading the EC's decision with its own comments is noteworthy in itself.
This speaks to a company that firmly believes it is doing what is best for its customers and development partners, so any ruling that deems it otherwise is so unreasonable that it demands comment and backlash. are doing. Apple believes that in-app purchase systems such as music subscriptions not only save consumers the headache and inconvenience of having to access external websites on their iPhone's small screen (they can also use the side buttons instead). (just a click away), we believe in protecting you from fraud and overreach. Data collection, consumer confusion about cancellations, children's mistaken purchases, and more. (Of course, Apple itself knows a lot about the latter.)
The company believes that Spotify just wants to use the regulations to its advantage to increase its profits. The EU complaint alleges that Apple's App Store distorts the perfection of the music streaming market. So the complaint isn't just that Spotify suffered, but that the nature of the App Store may have thwarted other rivals.
“Spotify is a big player in the music streaming market, and I don't know where we would be without it,” said Margrethe Vestager, EVP and Head of Competition, about the EC's 2021 survey. “Apple Music has other competitors” — there's Deezer, there's Soundcloud. Our competitors are small and we have great concerns about their development. “This is not a Spotify case, this is a music streaming case,” she said.
But Spotify has been the most vocal of Apple Music's rivals, and has fought the company on other issues, such as calling Apple's new DMA rules a “robbery” and a “complete and utter travesty.” .
To protect its interests (and consumers, too), 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 own services, not just App Store payment processing. This is an introduction. Rather, it now separates payment processing from other services by imposing a “core technology fee” on developers who wish to do business under the new DMA rules. In other words, rather than acknowledging that access to consumers' favorite apps helps sell iPhones, the company is paying developers to pay Apple for the work it takes to develop and maintain the iOS platform on which their apps can run. That's what I'm hoping for.
For the record, Apple disputes Spotify's claims that it was harmed by anti-competitive conduct. This speaks to the success Spotify has seen over the years, growing the streaming app from 25 million subscribers to 160 million in its eight years, an average growth rate of 27%. I've let it happen. The report notes that Spotify users regularly subscribe to the service outside of the app, and that Spotify falls under the “leader app” exception to Apple's rules, similar to Netflix. , you are allowed to link directly to the website for account creation and payment.
But Apple is still making headlines for Spotify making quarterly profits, it just laid off 17% of its employees, you know, Spotify is still making headlines on iOS. It seems to ignore the fact that it actually faces competition from installed Apple Music. iPhone, iPad, and other Apple devices. Apple's music streaming app is not only offered as a standalone service, but also upsold to customers as part of the Apple One bundle, which combines multiple Apple services under one roof, including iCloud+, News+, and Apple TV+. will be done.
Apple also highlighted how Spotify has met with regulators more than 65 times since the investigation began and has worked closely with the European Commission regarding the complaint. But the investigation has been going on for years.
Representatives from the EC declined to comment on news related to Spotify's complaint or pending fine. The FT reported that the fine is expected to be announced early next month.
Spotify did not immediately respond to a request for comment. However, it is expected to be released in the future and will be updated as it becomes available.
Additional reporting: Natasha Lomas