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Spotify has voiced strong opposition to Apple’s new commissions and app payment rules within the EU, calling them a "new level of arrogance" and an affront to the Digital Markets Act (DMA).
Last week, Apple announced new changes to its iOS, Safari and App Store systems that will affect developers throughout the EU.
The rules introduce new ways for developers to distribute their apps and process payments, and are designed to bring Apple’s “core platforms” into compliance with the DMA.
The new rules are optional, however. If developers prefer to remain on the same terms as in place previously, they are free to do so, but they will not have access to the features described below.
The DMA, which is set to come into effect in March this year, aims to prevent digital “gatekeepers” such as Apple from imposing unfair conditions on businesses and end users.
One of the ways the DMA aims to achieve this is by opening up core platform services to greater competition and third-party access.
In addition to Apple, there are five other designated gatekeepers under the DMA, namely Alphabet, Amazon, ByteDance, Meta and Microsoft.
Source: European Commission
What’s new from Apple?
The main changes for developers and payments firms to be aware of are those related to app distribution, commissions and payment methods.
For the first time, Apple will allow developers to distribute iOS apps via alternative app marketplaces; however, Apple continues to argue that this comes with “unavoidable” privacy and security risks.
Next, Apple has slashed its commission on in-app payments from 30 to 17 percent (with a further reduction to 10 percent for recurring subscription payments).
Similarly, Apple has slashed its commission on in-app payments to qualifying small business apps from 15 to 10 percent.
Also for the first time, Apple will allow developers to take payments directly from users within the app using their own billing system, or to direct users to an external website or payment link for no additional fee to Apple.
However, if the app uses the App Store payment processing system, the developer will need to pay an additional 3 percent fee per transaction to Apple.
Finally, Apple has introduced a new “core technology fee” that will charge iOS apps €0.50 for each download or update per year over a 1m threshold.
This fee applies whether the app is distributed via the App Store or via an alternative marketplace.
Apple continues to 'abuse' its power, says Spotify
One day after Apple announced the new options, Spotify responded with its own statement accusing Apple of deliberately undermining the goals of the DMA.
“Under the false pretence of compliance and concessions, they put forward a new plan that is a complete and total farce,” said Spotify.
“Essentially, the old tax was rendered unacceptable under the DMA, so they created a new one masquerading as compliance with the law.
“From the beginning, Apple has been clear that they didn’t like the idea of abiding by the DMA. So they’ve formulated an undesirable alternative to the status quo.”
Number one in Spotify’s list of objections was Apple’s new €0.50 download fee.
Described by Spotfiy as “extortion, plain and simple”, the music streamer said the charge is a thinly veiled attempt to offset Apple’s losses from reduced commissions and to force developers to stay on the old rules.
Moreover, Spotify pointed out that developers will still have to pay the fee even in cases where a user downloads the app but never uses it.
Likewise, a developer of a free app that goes viral would owe millions to Apple in download fees, even if the app itself does not generate any revenue for the developer.
New commissions a 'new level of arrogance'
Although Apple has reduced its commissions significantly, Spotify continued to describe them as “rent” charged by Apple on developers.
Combined with the download fee described above, Spotify said that for most apps with a large user base, developers will end up paying the same or even more to Apple than under Apple’s previous rules.
For Spotify, with its user base of around 100m in the EU, the streaming service said the commission plus download fee equates to being “the same or worse” as under the old rules.
Spotify, therefore, concludes that Apple is “forcing” developers to stick with the status quo.
“Apple is making the DMA hurt even more for developers, throwing them an unworkable alternative that will stifle their businesses immediately,” it said.
“Essentially, Apple is rendering the DMA’s goals of offering more choice and more control to consumers useless.”
In response, an Apple spokesperson told Vixio: “We’re happy to support the success of all developers — including Spotify, which has the most successful music streaming app in the world.
“The changes we’re sharing for apps in the EU give developers choice — with new options to distribute iOS apps and process payments.
“Every developer can choose to stay on the same terms in place today. And under the new terms, more than 99 percent of developers would pay the same or less to Apple.”
