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Spotify and Deezer call for urgent action from the European Union over Apple’s App Store rules

By | Published on Friday 20 January 2023


Spotify and Deezer were among the signatories of a letter sent to the European Commission earlier this week urging the European Union to finally and urgently end the “abusive behaviours” of big bad Apple.

This relates, of course, to Apple’s App Store rules, and in particular the rules governing in-app payments on iOS devices. Such payments currently have to be taken via Apple’s own commission-charging transactions platform, and the rules have also traditionally banned app-makers from sign-posting alternative payment options available elsewhere online.

For services like Spotify and Deezer, it means if they sell subscriptions within their apps they have to pay a 15-30% commission to Apple. Given a streaming service’s profit margin is around 30%, that is only viable if they pass the commission onto the consumer. But that then makes their services look more expensive than Apple Music.

Instead most music streaming services just don’t allow in-app payments at all. But that makes it harder for Spotify to upsell premium subscriptions to its free tier users, which is a key part of its business model.

Spotify and Deezer, alongside many other app-makers, have been calling for some time for regulators and the courts to force a change to Apple’s rules, arguing that the enforcement of those rules by the tech giant constitutes anti-competitive conduct.

Those efforts have resulted in some regulator interventions in some countries, and some relaxation of Apple’s rules. But Spotify et al would like a more significant intervention, in particular a forced rule change to allow them to take in-app payments on iOS devices via their own transaction systems.

With that in mind, Spotify made a formal complaint to the EU’s competition regulator. That regulator began an investigation and, in May 2021, published a Statement Of Objections expressing concerns about Apple’s in-app payment rules.

Meanwhile, last year the EU passed its Digital Markets Act, which seeks to more widely address competition issues caused by major digital platforms exploiting their market dominance. That has led to rumours Apple will further relax its App Store rules, within the EU at least, in a way that could address some of Spotify’s complaints.

But, you know, while things are slowly moving in a direction that should please Spotify et al, the app makers would much prefer things to evolve in a much speedier fashion.

And so they demand urgent action from the European Commission via this open letter to Margrethe Vestager, the European Commissioner For Competition, who also has the job title of Executive Vice President of the European Commission For A Europe Fit For The Digital Age.

The letter sets out various gripes about Apple’s App Store rules – including those around in-app payments – and then states: “Apple has and continues to defy every effort from courts and regulators to address these unfair practices. While Apple continues to reap unfair rewards, the harm to developers and, more importantly, to consumers is immeasurable. The time has come for urgent action from the EU to end Apple’s abusive behaviours”.

“The EU has the opportunity to take the lead”, it adds, “but it must act fast as every day that passes is a loss for innovation and for the welfare of European consumers”.

To that end, the letter goes on, “we therefore call for a rapid decision in the competition case against Apple for its illegal, anti-competitive behaviour involving music streaming services. [The] Statement Of Objections is nearly two years old and the abuses and consumer harm will continue until a remedy is enforced”.

Not only that, but “the Commission should also swiftly enforce the Digital Markets Act, prioritising Apple’s designation as gatekeeper and ensuring that it complies with all the obligations related to app stores and mobile ecosystems”.

“The DMA is a much welcome and groundbreaking legislation”, the letter goes on. “Its effects are already being felt in other regions across the world, who are keen to follow the EU lead. However, its success will be measured by its enforcement”.

“Any attempts by Apple and other gatekeepers to circumvent the rules – including on misleading and vague grounds of privacy and security – should be resisted”, it concludes. “We are at your and your teams’ disposal to share our market experience and our views on what meaningful compliance should look like”.

As well as Spotify and Deezer, the letter was also signed by Basecamp, Proton and Schibsted, as well as trade bodies France Digitale, the European Publishers Council and News Media Europe.