Less than a month after Spotify filed a formal complaint against Apple for its app store practices, a European Commission probe is moving forward, potentially threatening one of the Cupertino giant’s cash cows.
Spotify went on a publicity tear last month, coordinated with its antitrust complaint, that included a statement from CEO Daniel Ek and a single-serve advocacy website called Time To Play Fair. The thrust of both was the same: Accusing that Apple received “an unfair advantage at every turn,” by setting up barriers and frustrating payment scenarios for the music streaming service while its own competing service, Apple Music, was not subject to the same hurdles.
The standard “Apple tax” — a 30-per cent fee applied to charges through the App Store — forced Spotify to raise its prices for users above what Apple Music was able to charge. And gallingly, Apple not only favoured its own product but played favourites with other apps, according to Spotify, which noted Deliveroo and Uber both skirted the usual fees.
With over 200 million users, Spotify remains the largest music streaming service bar none, though Apple Music recently surpassed the Swedes in paid U.S. subscribers.
After a decade of worsening relations with Apple, Swedish music streaming giant Spotify took the extraordinary step today of filing a formal antitrust complaint with the European Commission, 'after trying unsuccessfully to resolve the issues directly with Apple,' according to CEO Daniel Ek.Read more
Apple’s retort pushed back on some of Spotify’s more strident claims but failed to mention Apple Music whatsoever. Overall, my colleague Rhett Jones found its counter-arguments unconvincing—and seemingly so did the European Commission, according to the Financial Times.
A formal European Commission investigation can be a lengthy process. For example, it began prodding at Microsoft’s bundling of Internet Explorer on its PCs in 2009, and fines did not emerge until around four years later. Still, the commission has broad power to levy fines or demand changes in business practices, which, in this case, could undermine a major revenue engine in Apple’s portfolio. (The App Store has generated at least $57 billion in subscription fees for Apple since its inception in 2015.)
Europe’s law-making bodies have been on a regulatory tear against U.S. tech firms recently, but Apple App Store’s potential monopoly position is under scrutiny domestically as well. The U.S. Supreme Court continues to wrangle with Apple v. Pepper, a similar antitrust suit aimed at the App Store’s practices.
Spotify declined to comment specifically on the probe and Apple was not available to comment by the time of publication.