The European Commission is on the verge of making a decision regarding Spotify’s complaint about the competitive landscape in the music streaming sector, with indications suggesting that Apple may face a significant setback. Reports from the Financial Times this week suggest that the EC is preparing to levy its first fine against Apple, accusing the company of violating EU competition laws within the music streaming domain. The anticipated fine is around €500 million, approximately $539 million USD.
Apple, a company that reached a historic $3 trillion valuation, is opting not to dismiss this fine as a mere operational expense. In a statement distributed to the press, Apple defended itself against claims that it has engaged in anti-competitive behaviour detrimental to Spotify. The statement highlighted Apple’s role in supporting developers, including Spotify, which holds the title of the world’s largest music streaming app. Apple emphasized that Spotify has benefitted from Apple’s services and tools across 160 countries without incurring any costs to Apple.
Further defending its position, Apple pointed to market share statistics from MIDiA’s 2022 subscription music market report, noting Spotify’s dominant 56% market share compared to Amazon Music’s 20% and Apple Music’s 11%. Apple also disclosed details about Spotify’s reliance on Apple’s technology, such as the use of thousands of Apple’s APIs, the TestFlight beta testing platform, and assistance from Apple engineers in overcoming technical challenges.
Apple’s proactive release of this information ahead of the EC’s ruling underscores the company’s firm belief in the fairness and benefits of its ecosystem for customers and developers alike. Apple argues that its in-app purchase system not only streamlines transactions but also offers protection against fraud and enhances user convenience.
Despite these arguments, the core of the EU’s investigation, as stated by EVP and competition chief Margrethe Vestager in 2021, is not solely about Spotify’s grievances but concerns the broader impact of Apple’s App Store policies on the music streaming market’s competition, including potential effects on smaller competitors like Deezer and Soundcloud.
In response to the EU’s Digital Markets Act (DMA) regulation, Apple has introduced a “Core Technology Fee” for developers wishing to utilize its platform under the new rules, separating payment processing from its suite of services. This move is seen as an effort to ensure developers contribute to the maintenance of the iOS ecosystem, which benefits from the availability of popular apps.
Apple counters Spotify’s claims of anti-competitive harm by highlighting Spotify’s growth to 160 million subscribers over eight years and the availability of a “Reader app” exception, which allows direct linking to Spotify’s website for account management.
However, Apple’s stance overlooks Spotify’s financial challenges, including recent workforce reductions and the inherent competition from Apple Music, which comes pre-installed on Apple devices and is part of the Apple One bundles.
As the EC’s decision looms, Spotify has reiterated its stance, accusing Apple of creating artificial advantages for its own service while imposing restrictions and roadblocks on competitors like Spotify. Spotify supports the European Commission’s efforts to foster a fair and competitive ecosystem for all participants. The EC has yet to comment on the matter, with the fine’s announcement expected soon.
