Apple is about to be hit with its first-ever fine from the EU commission, according to a report this morning from the Financial Times. The fine will be in the region of 500 million euros (about $538 million dollars). The fine will be part of a conclusion of the case that began in 2019 after Spotify filed a formal complaint.
Specifically, the EU believes Apple acted illegally in blocking music streaming apps like Spotify from telling customers about other ways to subscribe to their services, and thereby evade Apple’s commission on in-app purchases. These are usually referred to as the App Store’s anti-steering provisions.
Although anti-steering provisions apply more widely, this EU investigation is specifically about the impacts of the App Store policy on music streaming. Essentially, Apple’s mandatory commission plus the restrictions on services to tell users about alternative ways to pay mean that Apple Music is unfairly favored to its third-party rivals. That’s the EU’s argument, in a nutshell.
The forthcoming EU judgement will not force Apple to permit alternative in-app payment methods, but it will insist music streaming app developers can freely link out to their website to subscribe online (where the prices can arguably be lower as they wouldn’t be subject to Apple’s commission fees).
The EU ruling on the music streaming case is expected to be officially announced in the coming weeks, so we’ll know the full details then.
In 2022, Apple relaxed anti-steering provisions slightly for “reader apps”, such as content apps like Netflix or Kindle, allowing them to include a single link out to their own websites to perform account management. Spotify is considered a reader app, and therefore falls under this rule.
Naturally, Spotify wants free rein to link out to its website to promote its subscription tiers beyond the constraints of what the reader app rule allows. The EU investigation also considers the impact of Apple’s behavior before the rule changes were implemented.
Following the introduction of the Digital Market Act next month, Apple will also allow Spotify to use alternative payment methods in the EU, however the company would still collect 17% commission if Spotify remains listed in the App Store, and a base 50 euro cent ‘Core Technology Fee’ per app install per year. Spotify CEO Daniel Ek described the terms as an unworkable alternative.
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