The essentials The IT giant Apple was arrested again this Friday, April 30th, by the European Commission. Spotify accuses the company of using its influence on the App Store to create unfair competition between Apple Music and other streaming platforms.
Streaming giant Spotify filed a complaint against computer giant Apple and its music streaming service Apple Music in 2019 for abuse of dominance. Digital Technology and European Competition Commissioner Margrethe Vestager has just tweeted the first conclusions of the investigation carried out by her teams. This news suggests that Spotify should win its case against multinational Apple. Indeed, this tweet indicates that “Apple is violating European competition law”.
Our preliminary conclusion: @Apple violates EU competition law. @AppleMusic compete with other music streaming services. However, @Apple charges high commission fees for competitors in the App Store and forbids them to inform about alternative subscription options. Lose consumers.
– Margrethe Vestager (@vestager) April 30, 2021
“Apple Music competes with other music streaming services. However, Apple charges its competitors high commissions in the App Store and forbids them to find out about alternative subscription options. Consumers are the losers ”.
The European Commission accuses Apple:
Force the use of in-app purchases to distribute paid digital content, for which streaming services are required to pay a commission equal to 30% of the revenue generated by Apple. Prevent developers from notifying users of other payment methods available outside of in-app purchases.
A practical example
To explain this, we can start from a practical example. An iPhone owner who does not subscribe to a streaming service decides to download a dedicated application like Spotify to listen to music. He decides to sign up and will most likely do so through the application he just downloaded on his iPhone. This subscription is considered an “in-app” purchase for which Apple earns a 30% commission. Apple therefore pays 30% of the price for this Spotify subscription. If it’s a monthly subscription, Apple charges this commission every month. This is not a loss of money for the consumer, but for the streaming service.
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On the contrary, if you do not have a Spotify subscription and wish to use one through their website or computer software, the full price of your subscription will go to Spotify. However, Spotify cannot promote this subscription system in its iPhone application and is forced to create a subscription system through “in-app” purchases which must be made through the App Store.
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Both sides are preparing their defense
The legal process between Apple and the European Commission has just begun. The Apple giant has a right to answer and can request a hearing from the commission to defend its case. Apple’s main lines of defense would be ready: “Spotify is the world’s first streaming service and we’re proud of the role we’ve played […] Spotify pays Apple no commission on 99% of its subscriptions and only 15% commission on all remaining subscriptions purchased in the App Store. An Apple representative told Ars Technica.
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For its part, Spotify explains that the 30% commission charged by the App Store caused the music streaming service to increase its prices and thus become more expensive than Apple Music on the iPhone. The head of the Swedish music streaming service also recalled that services that did not compete with Apple, such as Uber and Deliveroo, could bypass the 30% commission charged by the App Store.
Also Read: Expect Your Spotify Subscription Price To Go Up
In addition, Apple prefers its own services on the iPhone to the detriment of its competitors. For € 14.95 per month, Apple iPhone users can get an Apple One subscription with unrestricted access to Apple Music, Apple TV + (a video streaming service), Apple Arcade (a video game platform) and 50 GB of Cloud. A full-price Spotify subscription costs € 12.99 per month.