Apple Responds to EU's Decision to Narrow Antitrust Case Prompted by Spotify

[MacRumors]

The European Commission today announced it has narrowed its antitrust investigation into Apple's rules for streaming music apps. In a revised Statement of Objections sent to Apple, the Commission said it will no longer challenge Apple's requirement for apps to use the App Store's in-app purchase system for digital goods and services. The investigation began in 2019 after Spotify filed an antitrust complaint against Apple.

The investigation will now focus entirely on Apple preventing streaming music apps from informing iPhone and iPad users within the app that lower subscription prices are available when signing up outside of the App Store. Subscriptions can sometimes cost extra when initiated through the App Store compared to directly on an app's website, as developers look to offset Apple's 15% to 30% fee on in-app subscriptions.

The Commission's preliminary view is that Apple's rules equate to "anti-steering" and "unfair trading conditions," in breach of EU antitrust law. The Commission added that the rules are "detrimental to users of music streaming services on Apple's mobile devices" given they may end up paying more and "negatively affect the interests of music streaming app developers by limiting effective consumer choice."

In a statement shared with MacRumors, an Apple spokesperson said the company is "pleased" that the Commission has narrowed its case:

Apple will continue to work with the European Commission to understand and respond to their concerns, all the while promoting competition and choice for European consumers. We're pleased that the Commission has narrowed its case and is no longer challenging Apple's right to collect a commission for digital goods and require the use of the In-App Payment systems users trust. The App Store has helped Spotify become the top music streaming service across Europe and we hope the European Commission will end its pursuit of a complaint that has no merit.

Spotify no longer allows customers to subscribe through its iPhone app. A message in the Premium tab of the app informs customers that they "can't upgrade to Premium in the app" and says "we know, it's not ideal." The tab does not provide any information or external links related to subscribing on Spotify's website.

Apple's App Store Review Guidelines allow developers to inform users about alternative purchasing methods with communication outside of the app, such as email. "Reader" apps such as Spotify can also include an in-app link to their website for users to set up or manage their accounts. Ultimately, though, Spotify still cannot advertise the lower subscription prices available through its website within its iPhone app.

As part of its response, Apple said it always promotes competition, is only one of many competitors in the streaming music market in Europe, and that the iOS app economy supports 2.2 million European jobs. Apple also cited reports finding that Spotify is among the most successful apps on the App Store and a dominant business.

Article Link: Apple Responds to EU's Decision to Narrow Antitrust Case Prompted by Spotify

 

[Apple Knowledge Navigator]

Apple will continue to work with the European Commission to understand and respond to their concerns, all the while promoting competition and choice for European consumers.

Eh? I must have missed the HomePod marketing that says 'Compatible and works seamlessly with Spotify and Amazon Music'.

 

[hacky]

Well, let's be honest 30% fee on in-app subscriptions is just quite big. You won't necessarily use your (Spotify) subscription just on your iPhone device to justify that much of a fee going to the Apple.

 

[Metrosey]

*Apple opens up wallet* one million euros, two million euros, three million euros

 

[Coochie Boogs]

No one, and I mean no one is stopping these companies from creating their own platforms and hardware. Feel free as a company to make moves as you see fit. The entitlement to someone else's work just baffles me.

 

[Spock]

Well, let's be honest 30% fee on in-app subscriptions is just quite big. You won't necessarily use your (Spotify) subscription just on your iPhone device to justify that much of a fee going to the Apple.

I agree, that is a pretty big percentage and what is Apple providing to a service as large as Spotify? I could see a smaller company taking advantage of the hosting and transactions etc. but I am pretty sure that Spotify has it covered.

 

[Realityck]

The investigation will now focus entirely on Apple preventing streaming music apps from informing iPhone and iPad users within the app that lower subscription prices are available when signing up outside of the App Store. Subscriptions can sometimes cost extra when initiated through the App Store compared to directly on an app's website, as developers look to offset Apple's 15% to 30% fee on in-app subscriptions.

Apple's App Store Review Guidelines allow developers to inform users about alternative purchasing methods with communication outside of the app, such as email. "Reader" apps such as Spotify can also include an in-app link to their website for users to set up or manage their accounts. Ultimately, though, Spotify still cannot advertise the lower subscription prices available through its website within its iPhone app.

As part of its response, Apple said it always promotes competition, is only one of many competitors in the streaming music market in Europe, and that the iOS app economy supports 2.2 million European jobs. Apple also cited reports finding that Spotify is among the most successful apps on the App Store and a dominant business.

If a consumer has access to a better price outside the store, I don't see why Apple can't provide a means of bypassing the App Store price? In other words if you have the transaction occur externally via a email directing you to complete the transaction via the web, why can't a code be entered similar to iTunes streaming content redeem (movies/TV shows) and the user gets the app via the Apple Store free?

 

[cocky jeremy]

Well, let's be honest 30% fee on in-app subscriptions is just quite big. You won't necessarily use your (Spotify) subscription just on your iPhone device to justify that much of a fee going to the Apple.

30% is pretty standard. Where I work, we won't touch anything under 30% margin.

 

[falainber]

30% is pretty standard. Where I work, we won't touch anything under 30% margin.

And credit card companies take just one percent or a little more. In-app purchase fee should probably be lower than that for it offers way less benefits than credit card companies.

 

[Attirex]

30% is pretty standard. Where I work, we won't touch anything under 30% margin.

That's pretty cocky, jeremy.

 

[cocky jeremy]

That's pretty cocky, jeremy.

Nah. It's trying to be profitable and not wasting time on something that doesn't make us money. There's a reason my retirement fund has gone up over $30k a year for years now.

 

[webkit]

No one, and I mean no one is stopping these companies from creating their own platforms and hardware. Feel free as a company to make moves as you see fit. The entitlement to someone else's work just baffles me.

No one was stopping other companies from making desktop operating systems, no one was stopping computer makers from installing other operating systems (instead of Windows) on their machines, etc. yet that didn't give Microsoft the right to engage in anticompetitive behavior back in the 1990s or other times.

Just because alternatives may exist or could exist does not give dominant companies (like Apple in mobile OS as part of a duopoly with Google/Android) the right to violate antitrust laws and regulations.

 

[lazyrighteye]

No App Store, no Spotify. You’re welcome?

 

[Realityck]

Just because alternatives may exist or could exist does not give dominant companies (like Apple in mobile OS as part of a duopoly with Google/Android) the right to violate antitrust laws and regulations.

I think it is more interesting that if Apple is dealing with a streaming subscription service of a major company such as Disney or Netflix, that you can just install the free app and the subscription is done externally from the App Store. There still needs to be a redeem free of an app that was paid for elsewhere online for smaller companies.

 

[Spaceboi Scaphandre]

No one, and I mean no one is stopping these companies from creating their own platforms and hardware. Feel free as a company to make moves as you see fit. The entitlement to someone else's work just baffles me.

You know Microsoft made the same argument in the 90s regarding web browsers during United States of America vs Microsoft and the DoJ shot that argument down quickly.

Now that the shoe is on the other foot I see we can't keep that same energy.

 

[rjp1]

30% is pretty standard. Where I work, we won't touch anything under 30% margin.

I don't think you realize how little is involved on Apple's part to get to skim 30% off someone else's work.

 

[Joe Rossignol]

Eh? I must have missed the HomePod marketing that says 'Compatible and works seamlessly with Spotify and Amazon Music'.

Spotify can support the HomePod. Apple made the API available in 2020. They haven't implemented it, probably because they're so salty about Apple.

 

[kognos]

No one, and I mean no one is stopping these companies from creating their own platforms and hardware. Feel free as a company to make moves as you see fit. The entitlement to someone else's work just baffles me.

That's such a myopic way of thinking. Sure that's true, but do all musicians need to build their own streaming platforms? Do all tire makers need to make cars? Do all cereal makers need to build grocery stores?

It's not entitlement when you expect fairness. Petrol/Gas stations have clear indicators for their costs and you can go where it is cheapest and most convenient for you. Apple was forcing blinders to any other option for payment.

Free and fair competition is only derived through the public advertising of price, cost, and available options. Apple forced customers to buy through the store AND forced the app to not list alternatives for cost. This is predatory at best, and encourages ignorant consumers to buy via Apple thus giving Apple free and perpetual money for something they fundamentally do not provide - bandwidth is through the carrier, spotify data is through Spotify, etc. They just are forcing the brokered sale. I hope you were referring to Apple when you said "entitlement" but I suspect you were not.

 

[sw1tcher]

And credit card companies take just one percent or a little more.

FYI: Swipe fees are between 2% and 4%

Swipe Fees

Credit and debit card swipe fees cost retailers and their customers more than $170 billion each year.

nrf.com

"For credit cards, the fees average about 2% of the transaction but can be as much as 4% for some premium rewards cards."

 

[sw1tcher]

No one, and I mean no one is stopping these companies from creating their own platforms

No point in creating another platform (i.e. alternative app store) when Apple prevents people from sideloading installing apps on their iDevices like they can on their Macs.

 

[Devyn89]

This should be an open and shut case. Either Apple must allow advertisement in app of the ability to pay externally for lower prices, or in areas where Apple directly competes (like video and music streaming) they should be required to remove their commission so developers can charge competitive prices. I don’t see how it’s not blatantly anti-competitive if they aren’t required to do at least one or the other. That or allow non-apple controlled app stores (which is the solution I’d be least happy with but seems the most likely outcome)

 

[deathcab]

Eh? I must have missed the HomePod marketing that says 'Compatible and works seamlessly with Spotify and Amazon Music'.

At least Spotify playback can be accomplished on Apple's music hardware (HomePod) whereas Spotify locks their music hardware (Car Thing) down so that it only works with its paid service - they completely lock Apple Music out.

I also believe Spotify's music hardware (Car Thing) also requires a paid Spotify Premium subscription to even use (thereby steering users of the hardware into a paid subscription), whereas Apple's music hardware (HomePod) does not require any subscriptions to work.

Regardless, Spotify is the one who has has made the decision not to enable HomePod support (which they could freely do if they choose to without paying a dime to Apple aside from the need for a developer account, which they already have for the iOS and iPad apps).

 

[cocky jeremy]

I don't think you realize how little is involved on Apple's part to get to skim 30% off someone else's work.

It doesn't matter. It exists because of Apple. They should make whatever they want off of it.

 

[bluecoast]

Let's all stop defending Apple here - they're as bad as Microsoft were with IE 20 or so ago and they're rapidly heading for an antitrust case. Their conduct here is appalling and it's going to be a huge stain on Tim Cook's legacy.

Let's remember that Standard oil did all the hard work in opening up oil fields, building distribution and then charging what they wanted.

Except the US federal gov realised that oil was going to be critical to the USA in 20th century and Standard oil's grip on the oil market was going to back the wider economy and thus broke them up.

It wouldn't take a genius to see the parallels between what Apple - and Google - are doing now with app stores and mobile.

 

[BuffaloTF]

Eh? I must have missed the HomePod marketing that says 'Compatible and works seamlessly with Spotify and Amazon Music'.

Obviously you did miss it. It’s been available for years. It’s on Spotify, and Spotify alone, to add support now.