Spotify's War on Apple Just Cost the Giant $2 Billion

Trending 1 month ago

Apple has a Spotify problem—and it conscionable costs nan iPhone shaper a $2 cardinal good from nan European Commission.

For years, nan 2 companies person been astatine warfare arsenic nan streaming work lured users distant from Apple’s iTunes and accused nan tech giant of exploiting its power to stifle innovation. In their long-running conflict, each has made incursions into nan other’s territory. When Apple launched its ain streaming work Apple Music successful 2015, Spotify claimed Apple was capable to undercut nan platform’s prices because it didn’t person to salary nan aforesaid App Store fees arsenic rivals. In 2019, Spotify began an eager podcast spending spree, splashing retired connected high floor plan shows, successful different nonstop situation to Apple.

The feud’s early days were civilian pinch fewer barbs traded successful public. “We interest astir nan humanity being drained retired of music,” said Apple CEO Tim Cook successful 2018, a cryptic remark wide interpreted arsenic a jibe astatine Spotify’s dense usage of algorithmic recommendations. But Spotify became much outspoken arsenic EU politicians started to telephone for laws to reign successful Big Tech. The €1.8 cardinal ($1.9 billion) good connected Apple announced by nan European Commission coming shows that its strategies are working.

The good originates successful a ineligible title filed pinch nan European Commission by Spotify successful 2019, challenging nan restrictions and fees Apple places connected developers listing their apps successful nan Apple App Store. Today nan European Commission agreed, saying that Apple’s app shop restrictions magnitude to unfair trading conditions that whitethorn person led iOS users to salary importantly higher prices for euphony streaming subscriptions.

“For a decade, Apple abused its ascendant position successful nan marketplace for nan distribution of euphony streaming apps done nan App Store,” said Margrethe Vestager, nan EU’s title chief, successful a statement. “They did truthful by restricting developers from informing consumers astir alternative, cheaper euphony services disposable extracurricular of nan Apple ecosystem.”

Apple’s app shop rules restrict euphony streaming companies and different apps from informing their users connected Apple devices astir really to upgrade aliases motion up for subscription offers extracurricular of nan app. Instead app users tin only spot motion up options for in-app subscriptions via Apple’s payments system, wherever prices are apt to beryllium higher because Apple takes a cut. Some app makers, including Spotify, that do not connection in-app purchases because they don’t want to salary this commission. "Some consumers whitethorn person paid much because they were unaware they could salary little if they subscribed extracurricular nan app,” Vestager said. “This is forbidden nether EU antitrust rules.” Apple, which says nan EU has grounded to supply reliable grounds of user harm, has already pledged to appeal.

Big Number

The good is acold bigger than expected, prompting Apple’s banal to driblet 3 percent connected Monday. Media reports based connected unnamed sources had predicted a punishment of astir €500 million. It’s besides 1 of nan biggest fines nan EU has ever issued against a tech company, ranking beneath only 2 Google fines of $5.1 billion and $2.4 billion. Vestager explained successful a property convention that nan standard of nan good is intended to forestall nan institution from breaking rules successful future. She added that nan magnitude includes a “lump sum” to “achieve deterrence.” $1.9 cardinal amounts to 0.5 percent of Apple’s world turnover, she said.

Although Spotify CEO Daniel Ek has expressed disapproval of Apple’s business tactics, he’s besides thing of a reluctant figurehead successful Europe’s conflict against Apple. The self-described introvert has adopted nan domiciled of spokesperson for disgruntled European app developers, who yet consciousness their complaints astir large tech are yet being heard.

On Monday, Ek posted a video connected X successful which he described Apple arsenic a threat to nan unfastened internet. “Apple has decided that they want to adjacent down nan net and make it theirs and they position each azygous personification utilizing an iPhone to beryllium their user, and that they should beryllium capable to dictate what that personification acquisition should be,” he said. Ek besides claimed Apple besides wants to efficaciously levy a taxation connected Spotify while exempting its ain euphony service, Apple Music.