Count Spotify among those who are not impressed with how Apple has chosen to comply with the EU’s Digital Markets Act (DMA). This law aims to allow sideloading of apps, alternative app stores, and browser choice. However, on Friday, the streaming music company issued a firm response to Apple’s new DMA rules. Spotify, calling the newly imposed fees on developers “extortion” and Apple’s compliance plan “a complete and total farce.” The streaming company argues that this demonstrates Apple’s belief that the rules do not apply to them.
Apple recently announced a range of changes to comply with the EU law, but many believe they fall short of the spirit of the regulation. Although Apple stated that app developers in the EU would receive reduced commissions, they also introduced a new “core technology fee.” Under this fee, developers must pay €0.50 for each first annual install per year, regardless of the distribution channel. Furthermore, Apple will charge a 3% payment processing fee when developers use Apple’s in-app payments instead of their own.
Tim Sweeney, the CEO of Epic Games, which recently took legal action against Apple for violating antitrust laws, has already condemned Apple’s plan. Sweeney previously stated that it was a case of “malicious compliance” and full of “junk fees.” And now, Spotify is joining in on the criticism.
Spotify, along with companies like Epic, Match, and others, has long been a vocal critic of Apple, advocating for increased regulation, including through the DMA.
In a blog post and a series of posts on X (formerly Twitter), Spotify CEO Daniel Ek shared his thoughts on Apple’s DMA announcement after a review by the company’s lawyers. He begins by calling the announcement “vague and misleading” and a “new low for the company.”
After sitting with our legal team to parse through the fine print of Apple’s DMA announcement (that took a while), which is, at best vague and misleading, I wanted to share my thoughts. While Apple has behaved badly for years, what they did yesterday represents a new low, even… — Daniel Ek (@eldsjal) January 26, 2024
Ek criticizes Apple’s solution, calling it a “masterclass in distortion.” He notes that it presents app developers with a choice of sticking to the current terms or switching to a “convoluted new model.” While this new model may initially seem attractive, it ultimately may come with higher fees. In particular, any app with tens or hundreds of millions of EU users would now face a new tax on every new download and update annually. This tax would impact larger apps like WhatsApp, Duolingo, X, and Pinterest, as well as Spotify’s own app.
The system is clearly designed to discourage developers from using alternative distribution methods, such as sideloading or alternative app stores. However, without the larger apps available on these alternative channels, they will likely lose their appeal to consumers. As a result, Apple’s App Store will maintain its dominant position, according to Ek.
Additionally, due to the increased fees, Spotify doesn’t even have a choice in the matter. As Ek explains, the company is forced to stick with the current system.
Spotify itself faces an untenable situation. With our EU Apple install base in the 100 million range, this new tax on downloads and updates could skyrocket our customer acquisition costs, potentially increasing them tenfold. This is because we would have to pay on every install or update to our free or paid app, even for those who no longer use the service. So where does that leave us? Under the new terms, we cannot afford these fees if we want to be a profitable company. Our only option is to stick with the status quo. The very thing we’ve been fighting against for five years. — Daniel Ek (@eldsjal) January 26, 2024
Ek ends his statement with a challenge to lawmakers, hoping they will recognize what Apple is doing and stand firm. He states, “The world is watching.”
I hope lawmakers recognize what @Apple is doing and stand firm, & doesn’t let their work over the years all be for nothing. The world is watching. — Daniel Ek (@eldsjal) January 26, 2024
Ek’s statement comes after condemnation from both Epic Games and the Coalition for App Fairness (CAF), a lobbying group consisting of Epic, Spotify, Tile, Basecamp, Match, Deezer, and dozens of smaller developers. In a statement, the organization declared that Apple’s new fees on direct downloads and payments they do nothing to process violate the law, and do not promote competition or fairness in the digital market.
“Apple’s proposal forces developers to choose between two anticompetitive and illegal options,” said Rick VanMeter, Executive Director of CAF. “Either stick with the terrible status quo or opt into a new convoluted set of terms that are bad for developers and consumers alike. This is yet another attempt to circumvent regulation. We’ve seen similar tactics by Apple in the United States, the Netherlands, and South Korea. Their ‘plan’ is a shameless insult to the European Commission and the millions of European consumers they represent. It must not stand and should be rejected by the Commission.”
Mozilla has also spoken out against Apple’s new browser rules, calling them “as painful as possible.”