Hold onto your iPhones, music lovers! The long-standing battle between Apple and Spotify has taken a surprising turn. After years of tension over Apple’s control over in-app payments, Spotify has finally secured a major victory. Apple has approved an update to the Spotify app that allows users to bypass Apple’s notoriously high commission fees and subscribe directly through external payment methods. This move could shake up the app ecosystem, with ripples extending far beyond just music streaming.
The Spotify-Apple Saga
Morningpicker readers are no strangers to the ongoing battle between Spotify and Apple. The music streaming giant has been locked in a years-long legal battle with the tech giant, and the latest update is a significant development in this saga.
The Background: A Years-Long Legal Battle
The roots of this conflict can be traced back to an antitrust complaint Spotify raised in 2019 over the 30 percent “Apple Tax” on subscriptions made through the App Store. This investigation, which spanned four years, found that Apple had “abused its dominant position in the market” by preventing developers from telling their customers about cheaper alternative services.
The Latest Update: EU iPhone Users to See In-App Pricing Information
In a development that is being hailed as a significant victory for Spotify, EU iPhone users will now see in-app pricing information for each subscription tier, including how much a plan costs once a promotion ends. This update is a direct result of the EU ruling, which fined Apple €1.84 billion (about $2 billion) for “abusing its dominant position” in music streaming.
Apple’s Conditions
However, Apple’s compliance with the EU ruling comes with certain conditions. The tech giant has introduced the “music streaming services entitlement,” which allows developers to include external purchase links in their apps. However, this entitlement comes with a catch – Apple will still take a commission from these purchases, a move that Spotify has termed “illegal and predatory taxes.”
The Music Streaming Services Entitlement: A Complicated Solution
In essence, the music streaming services entitlement is a complicated solution that allows them to skirt the 30 percent cut that Apple takes on subscriptions made via the App Store. However, this solution comes with its own set of problems, including the need for developers to accept Apple’s terms and conditions, which Spotify has termed “complicated” and “predatory.”
Apple’s Cut from External Purchases: “Illegal and Predatory Taxes” for Spotify
Spotify has been vocal in its criticism of Apple’s move, saying that the tech giant is demanding “illegal and predatory taxes” from developers. The music streaming giant has said that it will not accept the music streaming services entitlement, opting to show in-app pricing information to EU users instead.
The Implications of the EU Ruling
The implications of the EU ruling are far-reaching, and could have significant consequences for both Apple and Spotify. The ruling means that Apple will need to let music streaming developers freely communicate with their own users, a move that could potentially lead to a loss of revenue for the tech giant.
Apple’s Disregard for Consumers and Developers: The Law vs. Apple’s Terms
Spotify’s latest app update, which includes in-app pricing information for EU users, has been approved by Apple. However, this update does not include a direct link to subscription plans, a workaround that Spotify had hoped would allow it to skirt the 30 percent cut Apple takes on subscriptions made via the App Store.
Instead, EU users will be directed to manually visit Spotify’s website via a web browser in order to purchase cheaper subscription plans. This move is seen as a workaround by Spotify, which has been critical of Apple’s App Store rules.
The EU’s ruling, which fined Apple €1.84 billion (about $2 billion) for “abusing its dominant position” in music streaming, found that Apple had “abused its dominant position in the market” by preventing them from telling their customers about cheaper alternative services.
The ruling means Apple needs to let music streaming developers freely communicate with their own users. However, Spotify says Apple is still not complying with the ruling, instead demanding that Spotify accept the Music Streaming Services Entitlement and pay Apple the commission it takes from purchases made from external links.
The EU’s Antitrust Case: Forcing Apple to Change its App Store Rules
The EU’s antitrust case against Apple is separate from the Digital Markets Act (DMA) regulations, but Apple has lashed out against both decisions, saying it would appeal the $2 billion fine.
The EU’s antitrust case was sparked by an antitrust complaint Spotify raised in 2019 over the 30 percent “Apple Tax.”
The EU’s ruling followed a four-year investigation into App Store rules that prevented music services from advertising cheaper subscription deals outside of the iOS platform.
The ruling means Apple needs to let music streaming developers freely communicate with their own users.
Practical Aspects and Analysis
No Direct Link to Subscription Plans: A Workaround for EU Users
Spotify’s latest app update, which includes in-app pricing information for EU users, does not include a direct link to subscription plans on Spotify’s website.
Instead, EU users will be directed to manually visit Spotify’s website via a web browser in order to purchase cheaper subscription plans.
This move is seen as a workaround by Spotify, which had hoped to skirt the 30 percent cut Apple takes on subscriptions made via the App Store.
Spotify’s Refusal to Adopt Apple’s Optional DMA Changes: “Extortion, Plain and Simple”?
Spotify has refused to adopt Apple’s optional DMA changes, calling the company’s alternative Core Technology Fee “extortion, plain and simple.”
Apple’s compliance with the DMA has been described as “malicious,” with Spotify saying it won’t be adopting Apple’s optional DMA changes.
The Bigger Picture
The EU’s Digital Markets Act (DMA): Forcing Apple to Make Changes
The EU’s Digital Markets Act (DMA) forced Apple to make changes to its App Store that introduced third-party app marketplaces and alternative fees for developers.
Apple’s compliance has been described as “malicious,” with Spotify calling the company’s alternative Core Technology Fee “extortion, plain and simple.”
Apple’s Appeal: Lashing Out Against the EU’s Antitrust Case
Apple has lashed out against the EU’s antitrust case, saying it would appeal the $2 billion fine.
The European Commission has also had to intervene in getting Apple to reverse its decision to revoke Epic Games’ developer license after Epic CEO and longtime Apple critic Tim Sweeney called the company’s DMA compliance plans “hot garbage.”
Conclusion
Apple’s approval of Spotify’s app update, allowing external payment methods, marks a significant shift in the tech giant’s walled garden approach. After years of clashing with developers over its stringent 30% commission on in-app purchases, Apple has finally conceded, albeit under pressure from regulatory scrutiny and growing developer discontent. This move not only empowers Spotify to directly connect with its users and potentially offer more competitive pricing, but also sets a precedent for other app developers who have long chafed against Apple’s control over their revenue streams. The implications of this change ripple far beyond Spotify and Apple. It challenges the very foundation of Apple’s App Store ecosystem, potentially leading to a more fragmented and competitive landscape for mobile app distribution. This could ultimately benefit consumers with greater choice and potentially lower prices, but it also raises questions about the future of Apple’s control over its platform and the potential for a less curated user experience. As the dust settles on this pivotal moment, one thing is clear: the future of mobile app development is poised for significant transformation, and the lines between platforms and their creators are being redrawn.