Spotify#039;s App Store icon (left), Apple Music (right)
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In an interview on Monday, the head of the European Union's competition agency said that the $2 billion fine imposed on Apple Music was due to obvious harm to consumers, which led to problems with information disclosure — despite Spotify having more than twice the market share.
European Commission Executive Vice President Margrethe Vestager defended the EU's $2 billion fine, saying it was specifically intended to punish past actions and ensure Apple doesn't block developers who offer customers cheaper alternatives.
“[The fine] is equivalent to 0.5% of global turnover, so obviously this fine cannot shake Apple as such,” she told CNBC. “It punishes past behavior… and in the future it won't be able to tell its app developers: look, you can't tell your customers there's a cheaper offer.”
“I think it's pretty clear that there will be harm to the consumer if consumers don't have the choice to find a cheaper offering for their favorite music streaming services,” she continued. “There are music streaming apps on the Apple App Store, and of course you can pay a 30% fee, but it would be nice if you also knew you could go to the service's own website and get a cheaper deal . and that’s what we’re challenging.”
“[If] you look at the price difference, because these app developers have no choice but to pass Apple's commission on to their consumers,” Vestager said. “You see, the price has increased by 30% compared to the price increase, and I think most people would agree that such price increases compared to cheaper offerings are causing real harm to consumers.”
CNBC asked whether Apple backed up its claim that the EU met with Spotify's top backer 65 times during the investigation.
“Well, obviously not personally, since I have a lot of other things to do,” Vestager said. “But it is true that in every case we work with market participants, which means we have a very, very, very good track record of figuring out what is real evidence and what is just self-interest, and that, of course, is is absolutely key.”
“This will also depend on compliance with markets law, which we would like to hear from third parties about,” she continued. “Are they getting what the DMA should give them, which is an open market in which they can compete?”
Apple Music and the open market
It's true that Apple has previously refused to allow iOS app developers to communicate directly with their users, or especially to show them links to alternative, cheaper prices. This anti-regulatory measure was certainly not in the best interests of customers, but Apple was forced to change it in the US.
As for whether companies like Spotify get “an open market in which they can compete”, the EU appears to have failed to understand “what is real evidence and what is just self-interest” . While Apple Music aims to be a competitor to Spotify, it simply fails.
Different market analyzes vary, but Apple Music generally ranks as the third or fourth most popular streaming music service. However, the number one choice in every analysis is Spotify, and it's not that close.
However, even despite its unstoppable position as number one in the world, Spotify regularly reports losses in its quarterly earnings reports. Spotify therefore needs to cut costs and grow its business, both of which it could do if it could convince the EU to stop Apple from charging it for in-app subscriptions.
“Essentially, their complaint is about an attempt to gain unlimited access to all of Apple's tools without paying anything for the value that Apple provides,” an Apple spokesperson said in a statement to AppleInsider in February 2024.
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