Apple's Response to Spotify and the DMA: Changes, Controversy, and Consequences
Apple responds defiantly to Spotify's competition complaints amid the impending Digital Markets Act in the EU. Apple introduces changes to iOS software to comply with the DMA, including allowing alternative marketplaces. Spotify objects to paying commissions to Apple for sign-ups through the iOS app.
Apple has responded strongly to Spotify's complaints about competition, as the Digital Markets Act (DMA) is set to come into effect in the European Union in March. The DMA aims to ensure fair and open digital markets, according to the European Commission.
Recent reports suggest that the EU may impose a €500 million fine on Apple following an investigation into Spotify's allegations of anti-competitive behavior related to Apple's App Store rules. In response, Apple has taken a defiant stance and issued a statement. To comply with the DMA, Apple is implementing significant changes to its iPhone's iOS software, including allowing alternative marketplaces.
However, when Apple announced these changes, some companies expressed their disapproval, particularly because the updated iOS rules introduced a Core Technology Fee of US$0.54 (0.5€) for each download after the first million for app developers in rival marketplaces. This fee grants access to security and other functions.
Apple argues that if it provides a secure and protected environment for apps to operate, it is reasonable to pass on some costs. Nevertheless, for a company like Spotify, with 236 million paid subscribers, iOS download costs can quickly accumulate.
In a statement, Apple specifically mentioned Spotify, stating, "We're happy 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 build, update, and share their app with Apple users in 160 countries spanning the globe. Fundamentally, their complaint is about trying to get limitless access to all of Apple's tools without paying anything for the value Apple provides."
One of Spotify's main grievances with the App Store is its reluctance to pay commissions to Apple when users sign up for its paid service through the iOS app. However, Spotify does not pay any commission when users sign up elsewhere.
Apple has established different rules for "Reader apps," allowing them to link to their websites, such as Spotify.com, to create and manage accounts. However, Spotify, like other apps, cannot sign up users for paid accounts within iOS without paying a commission, which is one of the issues Spotify has raised.
Undoubtedly, Spotify has benefited greatly from being in the App Store. Apple reports that its app has been downloaded, redownloaded, or updated over 119 billion times on Apple devices. Yet, Spotify does not pay anything for this convenience and reach. Additionally, the App Store review team has reviewed and approved 420 versions of the Spotify app, often providing same-day feedback. This service is also cost-free for Spotify and other app developers.
On the other hand, Spotify, with over 56% of the streaming market in the EU compared to Apple Music's 11%, brings significant advantages to the iPhone. Without Spotify available on the iPhone, many users might consider switching to Android when looking for their next phone.
In conclusion, Apple believes that its response to the DMA is fair and comprehensive. However, it appears that the differences of opinion between Apple and Spotify are far from resolved.
Apple responds defiantly to Spotify's competition complaints amid the impending Digital Markets Act in the EU.
Apple introduces changes to iOS software to comply with the DMA, including allowing alternative marketplaces.
Spotify objects to paying commissions to Apple for sign-ups through the iOS app.
Source: FORBES