EU's antitrust head is ignoring Spotify's dominance and wants to punish Apple instead
Antitrust chief Margrethe Vestager still wants to favor the dominant music streaming service in the EU, and says that Apple must allow Spotify's latest iOS antisteering update immediately.
The European Union suspects Big Tech firms are avoiding their responsibilities to the publc
Central to Spotify's iOS app is the addition of a link to its website, and details showing EU users the different pricing there. Previously not allowed by Apple, this is now permitted under EU regulations, but Spotify has been complaining that Apple is blocking the update.
Speaking to CNBC the EU's Margrethe Vestager said her office was continuing to investigate Spotify's complaint that it is being prevented from reaching its audience. Spotify is currently the leading music streaming service in the world, while Apple Music is variously in fourth or fifth place.
"This is absolutely top priority because it's about our choice as consumers," she said. "You can choose to pay within the Apple system and pay a 30% surcharge in order for that, but it should also be possible for you just to have a direct relationship with your service provider and pay the price that they're asking without the 30% Apple service fee."
Spotify doesn't pay 30% for all customers it holds, and not even close to a majority of them. That 30% applies to the first year of a maintained subscription, and it pays 15% on subscribers that it has held for over a year.
How many customers Spotify holds at each tier in April 2024 is unclear. However, in a 2019 regulatory filing, Apple said it collected 15% on 680,000 customers out of more than 100 million Premium subscribers worldwide.
Spotify itself hasn't ever disclosed this information. The company also keeps hammering on this 30% fee in blog posts and court filings, and Vestager continues to repeat it.
"So it's really high priority for us to get Apple to comply with this," she continued, "and we're investigating this as a very high priority."
Vestager is the Executive Vice President of the European Commission for A Europe Fit for the Digital Age, and said that the EU was concerned with all Big Tech firms. "We have the suspicion that these companies are not living up to their obligations," she said of Apple, Google, Meta and more.
"They play a very important role in the digital markets," she continued, "and if they close the market, then no other business literally has a fair chance of getting to their customers."
Smartphone monopolies and AI
CNBC asked Vestager whether she considers that Apple has a monopoly on smartphones. It has been accused of this nonsensically by the Department of Justice (DOJ) and politicians, despite the iPhone reaching only 51% of the US population.
Vestager stressed that she is not involved in the US DOJ case. But she did have a better answer than the most recent proponent of breaking up Apple's non-existent monopoly, Senator Elizabeth Warren.
"I think what we see is that there are indeed very different and very separate markets when it comes to smartphones," said Vestager, "and [a] very high end, very expensive phone is not in the same market as a very, you know, affordable, cheaper phone."
"So one should be very nuanced when it comes to comparing phones," she continued. "Because those in the market for very high end are not in the market for any number of other phones."
Vestager was also asked about AI and called it an "existential risk for each and every one of us," especially in an election year.
"We have brought our European house in order [and] now have an AI act that kicks in full within six, 18, 24 months," she said. "But right here and now, you know, we're also asking AI providers to be very prudent."
"This is an enormous election year," she continued. "We need for service providers to make sure that when AI sort of enters into that space, that artificial content can be recognized, that deep fakes can be dealt with, because if not, well, then the integrity of our election is put at risk."
Separately, the EU launched a series of mass Digital Markets Act violation probes against Apple, Google, and Meta, in March 2024.
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Comments
"Vestager stressed that she is not involved in the US DOJ case. But she did have a better answer than the most recent proponent of breaking up Apple's non-existent monopoly, Senator Elizabeth Warren.
"I think what we see is that there are indeed very different and very separate markets when it comes to smartphones," said Vestager, "and [a] very high end, very expensive phone is not in the same market as a very, you know, affordable, cheaper phone."
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LOL...Vestager's "better answer" is parroting the DOJ approach to its lawsuit, i.e., claiming Apple's monopoly is in a pricing segment of the market and not the overall market.
"Spotify doesn't pay 30% for all customers it holds, and not even close to a majority of them. That 30% applies to the first year of a maintained subscription, and it pays 15% on subscribers that it has held for over a year."
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There's no mystery about Spotify and 30% commissions. Their own timetoplayfair web site states that they only used IAP on iOS for two years out of the fifteen that they've offered the app on the App Store. So they were only subject to Apple's commission for two years. It is a FACT that Spotify's preferred method for customer payments for subscriptions on iOS was to have them pay on the internet and entirely avoid Apple's commission.
It is not against monopolies… just against those not rooted on Europe!
You don't see developers complaining as vocally about the *same* 30% cuts happening on the Sony PS / MS XBox stores because they know the alternative -- distribution, packaging, marketing, collecting from the stores, lower wholesale vs. the 30% (or 43%) "tax" -- is way worse.
I'm guessing that is relative to gatekeeper status and all that implies. That is something that Spotify doesn't have so its dominance is less of an issue.
Nothing is being ignored as all it would take is a formal complaint of abuse of dominant position by someone.
Has that happened? Has Apple or anyone else placed a complaint?
Actually, Spotify hasn't paid 30% for any customers it holds in at least seven years. It stopped accepting in-app subscriptions in 2016, which means that by the end of 2017, it was only paying 15% for those customers who were still signed up through Apple.
However, last summer, Spotify began telling the few customers who were still paying through Apple that they'd have to resubscribe to Premium directly or be switched to a free account. That was in July, which means by the end of last year, Spotify should have been paying Apple nothing at all.
The 30% mantra is the most disingenuous thing that Spotify has ever said.
Apple will win as the software tools to create an App are not free and $99 is a token amount that assumes they will make money off of the App Store.
It is safe to assume if Apple added a setting to block 3rd party app stores the vast majority of users would select it. The EU is catering to a bunch of grifters with Spotify being the largest. Were I Apple I would drop the price of Apple Music to $0 and choke Spotify out of business.
Apple paying more (it definitely has the coffers to do that) is competition and that is good.
That said, if 'how little' is so low, I suppose three times 'how little' isn't much to write home about either. I can only imagine that something else is going on for Spotify to remain popular. Exposure? And what about ownership? Surely it's the labels that pay most artists if they are the owners of most content.
Even in the old days, the music industry was screwed up. All those advances for major stars with multi album deals left the vast majority of smaller artists without decent funding from labels.
At least now there is more control for artists in terms of distribution.
The industry may still not be healthy for almost anyone making music but Spotify is just one player among many.