Apple has released a statement acknowledging a €1.8 billion fine imposed by the European Commission due to an investigation into a complaint filed against Apple’s App Store.
The App Store Journey
Since its inception over 15 years ago, the App Store aimed to create a safe marketplace for users and a lucrative opportunity for developers. The platform’s strict rules ensure user protection and fair competition among developers.
Currently, about 86% of developers do not pay Apple any commission. Apple only receives a commission when a user purchases a paid app or in-app digital goods or services.
Spotify’s Dominant Share of the Market
Despite starting as a small startup, Spotify has grown into the largest digital music business globally, with over 50% market share in Europe. The European digital music market has seen rapid growth, with nearly 160 million subscribers in 2023, up from 25 million in 2015.
Spotify, like many developers, chooses not to sell subscriptions within its app, avoiding Apple’s commission. However, Apple has pointed out that despite this, Spotify’s app has been downloaded, redownloaded, or updated over 119 billion times on Apple devices.
Apple provides various tools and technologies to enhance Spotify’s app experience, including engineering support, access to APIs, and assistance through platforms like TestFlight. Despite these contributions, Spotify pays Apple “nothing” for these services.
Spotify Wants More
Apple claims that Spotify wants to rewrite the App Store rules in their favor, despite having various avenues to reach customers through emails, social media, and web ads.
The “reader rule” allows Spotify to link users to a webpage to manage their accounts, but Spotify prefers embedding subscription prices in their app without using Apple’s In-App Purchase system. Apple asserts that Spotify essentially “wants more.”
Apple states that Spotify initiated collaboration with the European Commission in 2015, alleging that Apple hindered competition in the digital music market.
Despite Spotify’s growth, the Commission pursued multiple cases over eight years, none of which demonstrated consumer harm or anticompetitive behavior.
The decision coincides with the upcoming Digital Markets Act, which Apple plans to comply with, but believes the decision lacks grounding in existing competition law.
Apple will appeal
Apple, a long-standing presence in Europe, supports over 2.5 million jobs across the continent.
While they respect the European Commission, they assert that the facts do not support the decision and will appeal — highlights digital music market as evidence of the app economy’s success.
Regarding this, Apple posted:
Every day, teams at Apple strive to keep that vision alive. We accomplish this by ensuring that the App Store remains the safest and most exceptional experience for our users.
We empower developers with the tools to create remarkable apps. Above all, we are driven by the realization that apps possess an extraordinary potential to foster innovations that empower individuals and enhance their lives.