Apple's EU App Store changes are extortion, says Spotify

Posted:
in iOS edited January 27

Spotify CEO Daniel Ek is unhappy with Apple's new App Store changes affecting the European Union, declaring elements of the plan "extortion, plain and simple."

Spotify logo
Spotify logo



The outspoken CEO of the music streaming service wrote in a Friday blog post objecting to Apple's introduction of changes in iOS 17.4 that will introduce new rules as well as fees applying to developers offering apps inside the European Union.

Declaring Apple to have "behaved badly for years," Ek claims Apple's move "takes the level of arrogance to an entirely new place." In complying with the EU Digital Markets Act in offering elements such as the sideloading of alternative app stores, Ek calls it a "false pretence of compliance and concessions" and a plan "that is a complete and total farce."

Rather than abiding with the EMA, Apple's "formulated an undesirable alternative to the status quo," Ek continues. "This is why many of the most popular developers will never be able to choose it. And for the developers who feel like they have no other alternative, it's a path that will punish their success."

In reference to a 50 cent Euro fee per download every year, the move "is extortion, plain and simple," the CEO believes. "If Apple's already charging a commission of 17% (and 10% for recurring payments) on digital goods purchased, why would they also need to charge an annual flat fee for every user?"

Ek also ponders whether it would affect developers of free apps, if they have to then pay the fee even if a user downloads the app and forget to delete it. "How will a developer pay Apple back if its free app goes viral - multiple millions of accounts install that free app, and then that developer owes Apple millions?"

There's also the possibility of price rises, with Ek musing "There's nothing in the law prohibiting Apple from increasing that 0.50 cent Euro to 1 or 10 Euro over time.

17% rent



Ek also takes aim at Apple charging a "17% rent on developers for existing in the App Store if they offer alternative payment methods or link out to their own website." He complains that, even if the payment is taken elsewhere, developers will still have to pay a 17% commission and the flat annual fee.

"This combination of fees means that, in most instances, if your app is popular, you would pay the same or even more to Apple than under the prior rules," Ek offers. "Apple is making the DMA hurt even more for developers, throwing them an unworkable alternative that will stifle their businesses immediately."

There is also a thought that the fee structure puts Spotify and others in "an untenable situation." With the commission fee and annual fee per install and year, it "equates for us to being the same or worse as under the old rules."

If Spotify managed to remove its app from the App Store and existed only in an alternative app storefront, it wouldn't work since the tax on Spotify's EU Apple install base of around 100 million users could "skyrocket our customer acquisition costs, potentially increasing them tenfold."

Ek therefore believes that Apple "is forcing developers to stay with the status quo," as an "alternative that offers no alternative at all completely negates the goal of the DMA."

"Essentially, Apple is rendering the DMA's goals of offering more choice and more control to consumers useless."

The commentary from the Spotify CEO follows after a similar statement made by Epic Games CEO Tim Sweeney, who referred to Apple's announcement as "hot garbage" and a "devious new instance of Malicious Compliance."



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Comments

  • Reply 1 of 29
                                 AppleInsider said:

    There is also a thought that the fee structure puts Spotify and others in "an untenable situation." With the commission fee and annual fee per install and year, it "equates for us to being the same or worse as under the old rules." 

    Reality: Spotify has never had any problems competing with Apple under the prior App Store rules. 99% of their iOS subscribers paid outside the App Store (without any links or communications inside the app) and the remaining 1% were subject to the 15% commission for recurring subscriptions. Spotify's global market share is around 30% while Apple is basically tied with Tencent and Amazon at around 13%.

    As for Sweeney, Fortnite wasn't originally developed for iOS. It was developed for consoles and PC. That's where Epic made 85% of its revenue. Releasing the game for iOS/Android was to maximize revenues only. If iOS/Android didn't exist as sales platforms, Fortnite would have still been considered wildly successful. And the reality is that the vast majority of wildly successful games that are developed for console and PC are NEVER released on iOS/Android. 



    edited January 27 Nikon8macxpressthtwilliamlondonbyronltmayJaiOh81watto_cobra
  • Reply 2 of 29
    Spotify is trying to blame Apple for their failed business. If I remember correctly, have they made money on their platform yet even with most subscribers that bypass the store. 
    macxpressteejay2012williamlondonstrongytmaychasmJaiOh81tdknoxwatto_cobra
  • Reply 3 of 29
    thrangthrang Posts: 1,012member
    Here's another insincere idiot wanting free access to someone else's decades long and ongoing investments.

    How many third-party companies does Spotify give free access their user bases and services to leverage for their own external benefit?

    How many major artists does Spotify give 100% of the revenues to, keeping nothing for themselves?


    macxpresswilliamlondonstrongychasmJaiOh81tdknoxwatto_cobra
  • Reply 4 of 29
    macxpressmacxpress Posts: 5,840member
    Translation...our business model sucks and we can't make money. We just blame Apple for this because we have no other solution for our failed business model. 
    teejay2012williamlondonstrongytmayJaiOh81watto_cobra
  • Reply 5 of 29
    Spotify CEO is the European Sweeny LOL Gues his many year slobbying in Brussels and maybe bribing EU commissioners did not pay off. If IOS did not exists maybe Spotify did not exists at all. I great full MF..
    williamlondonstrongyJaiOh81watto_cobra
  • Reply 6 of 29
    thttht Posts: 5,529member
    Spotify must really want those in-app impulse buyers. What is there to impulse buy from Spotify? I don't know. The application business is near zero margin just like the music streaming business or the video streaming business.

    They have been paying zero fees to Apple for the past 6 to 7 years or so, save for the $100 per year App Store fee. The platform cost for being on iOS has effectively been zero for a long time now. Spotify has 2x the marketshare as Apple Music worldwide, and in the EU, Spotify is probably 3x to 4x the marketshare as Apple Music.

    Apple only has 25% or so of smartphone share in Europe, and Spotify market penetration onto iPhones in Europe has to be pretty close to saturation now. Not sure where there is left to go in the music streaming business. They need to increase their subscription prices to actually make a profit, so Spotify subscribers should be prepared for that.

    Their brand may be strong enough to sell their own phones and music players. That's an option. Uh, merchandise? Concerts? They obviously are trying to go the route of having the EU try to drive down Apple Music, Amazon Music, Tencent Music marketshare, but I don't think that will make them profitable.
    teejay2012williamlondonwatto_cobra
  • Reply 7 of 29
    sirdirsirdir Posts: 189member
    While I don’t have too much sympathy for Spotify, Apple is really the bad guy here. The EU will eventually come down hard on them. We should be allowed to get the Apps WE want on our phones and not let Apple decide. There are so many great apps that will never come to be because Apple is the bully watchdog. At least they finally had to give in regarding the game streaming apps, but imagine for example parallels running on iPad OS. It might really be a full grown computer. 
    avon b7williamlondongrandact73
  • Reply 8 of 29
    According to J.P. Morgan, Europe accounts for only 6% of Apple's total App Store sales. Profitable true, but hardly the size that justifies 'doomsday for Apple' comments. IMO, EU legislators think that penalizing huge US tech companies with DMA will be of benefit to struggling EU companies and EU developers, under the guise of protecting users. I don't buy it. The DMA really does little for 'us'. This just increases security risk dealing with smaller developers we care about, should they migrate to alternate marketplaces.
    strongywatto_cobra
  • Reply 9 of 29
    eightzeroeightzero Posts: 3,093member
    I like the part where I don't use or buy anything from "Spotify."
    tmaywilliamlondonchasmwatto_cobra
  • Reply 10 of 29
    eightzeroeightzero Posts: 3,093member
    sirdir said:
    While I don’t have too much sympathy for Spotify, Apple is really the bad guy here. The EU will eventually come down hard on them. We should be allowed to get the Apps WE want on our phones and not let Apple decide. There are so many great apps that will never come to be because Apple is the bully watchdog. At least they finally had to give in regarding the game streaming apps, but imagine for example parallels running on iPad OS. It might really be a full grown computer. 
    This is already available: it is called Android and a full grown computer is a PC. These are widely available worldwide. Spotify is welcome to design, produce, market, and sell a competing product. I currently have the computer *I* want from Apple, and don't want it to change in the way you describe.

    Yes, I understand the concept of anti-trust law, and the concept of using one's market power is very much on display here. A good initial analysis is (as is usual) over at DaringFireball / John Gruber.

    danoxtmaywilliamlondontdknoxwatto_cobra
  • Reply 11 of 29
    saareksaarek Posts: 1,540member
    Long story short the companies that are complaining thought, rather naively, that the DMA would force Apple to lower or remove their fees and remove roadblocks.

    Apple has no intention of making it easy for companies like this. They’ve made it very clear that they, for whatever reason, feel fully justified in their fee structure and so, yes, they’ve worked out how to make the ruling effectively pointless.

    Personally I think Apple should have lowered their fees years ago. They’d have avoided years of negative press over it and could have demonstrated that they are reasonable.

    Still, my personal feeling is irrelevant. Apple will continue to fight this tooth and nail.
    eightzerowilliamlondonmuthuk_vanalingamtdknoxwatto_cobra
  • Reply 12 of 29
    macxpressmacxpress Posts: 5,840member
    I think what these companies were thinking is they were gonna get a 3rd party Android type store where it's a free for all and they got quite the opposite so now they're pissing and moaning about it. I hope they never get that type of store. If they want that type of store then only develop for Android. Of course they won't do that because they don't make any money off Android apps compared to iOS apps. 
    edited January 27 danoxwilliamlondontdknoxwatto_cobra
  • Reply 13 of 29
    davidwdavidw Posts: 2,073member
                                 AppleInsider said:

    There is also a thought that the fee structure puts Spotify and others in "an untenable situation." With the commission fee and annual fee per install and year, it "equates for us to being the same or worse as under the old rules." 

    Reality: Spotify has never had any problems competing with Apple under the prior App Store rules. 99% of their iOS subscribers paid outside the App Store (without any links or communications inside the app) and the remaining 1% were subject to the 15% commission for recurring subscriptions. Spotify's global market share is around 30% while Apple is basically tied with Tencent and Amazon at around 13%.

    As for Sweeney, Fortnite wasn't originally developed for iOS. It was developed for consoles and PC. That's where Epic made 85% of its revenue. Releasing the game for iOS/Android was to maximize revenues only. If iOS/Android didn't exist as sales platforms, Fortnite would have still been considered wildly successful. And the reality is that the vast majority of wildly successful games that are developed for console and PC are NEVER released on iOS/Android. 




    No, reality is that Spotify pays Apple ZERO in commission as they no longer allow subscribers to pay with their Apple account since the middle of last year. ALL subscription payments must be done through their website now. Which they can now link to in their free iOS app.


    And even when Spotify was paying Apple a commission (15% because they were all iOS subscriptions were reoccurring by then), Spotify jacked up their subscription price for iOS users paying with their Apple account by 30%, to cover the 15% commission. And still constantly cry to the media and every government, about how Spofity can't fairly compete with Apple Music because Apple don't have to pay the 30% commission.

    And now, how is this idiot of a CEO, complaining about being able use Apple IP for free, if he chooses to stay in the Apple App Store? What? He thinks Apple should be paying him, to keep Spotify free app in the Apple App Store? This because of what? He's offering iOS users  a "choice" (of music streaming service) and having more choices is good for iOS consumers. Is he thinking Spotify free iOS app increases iPhone sales? Increases "foot traffic" for the Apple App Store, like an Apple Store in a shopping mall?  

    From this article ....

    >In reference to a 50 cent Euro fee per download every year, the move "is extortion, plain and simple," the CEO believes. "If Apple's already charging a commission of 17% (and 10% for recurring payments) on digital goods purchased, why would they also need to charge an annual flat fee for every user?"<

    Plus, the choice is either to remain in the Apple App Store and pay a commission (10/13% or 17/20% depending on payment method) or leave the Apple App Store and pay the annual install fee (per user account after 1M). It is not both. If you leave the Apple App Store one only pays the install fee (after 1M) to cover the use of Apple IP to profit from. There is no commission on the sale or any IAP using the app. Does this idiot of a CEO also think that Spotify shouldn't have to pay the artist and songwriters any royalties, for the use of their IP, to profit from?




    strongytmaywatto_cobra
  • Reply 14 of 29
    Ek’s comment about Apple’s EU App Store changes is distortion, says me.

    What did he think was going to happen?  I said early on that this wasn’t going to end up the way these companies thought.  I thought Apple would start charging for API use, and that could still happen.  What they got was a more complex, just as costly if not more system.  How is this good for the consumer?  The EU [regulators/legislators] seems to have such a distorted view of what consumers want — they think they want more choices when in fact they just want things to work well.
    edited January 27 danoxwilliamlondonmigselvwatto_cobra
  • Reply 15 of 29
    sirdirsirdir Posts: 189member
    eightzero said:
    sirdir said:
    While I don’t have too much sympathy for Spotify, Apple is really the bad guy here. The EU will eventually come down hard on them. We should be allowed to get the Apps WE want on our phones and not let Apple decide. There are so many great apps that will never come to be because Apple is the bully watchdog. At least they finally had to give in regarding the game streaming apps, but imagine for example parallels running on iPad OS. It might really be a full grown computer. 
    This is already available: it is called Android and a full grown computer is a PC. These are widely available worldwide. Spotify is welcome to design, produce, market, and sell a competing product. I currently have the computer *I* want from Apple, and don't want it to change in the way you describe.

    Yes, I understand the concept of anti-trust law, and the concept of using one's market power is very much on display here. A good initial analysis is (as is usual) over at DaringFireball / John Gruber.

    If you don’t want to install an emulator, don’t. I want to. On the device I bought, not on an android. 
    williamlondon
  • Reply 16 of 29
    eightzeroeightzero Posts: 3,093member
    sirdir said:
    eightzero said:
    sirdir said:
    While I don’t have too much sympathy for Spotify, Apple is really the bad guy here. The EU will eventually come down hard on them. We should be allowed to get the Apps WE want on our phones and not let Apple decide. There are so many great apps that will never come to be because Apple is the bully watchdog. At least they finally had to give in regarding the game streaming apps, but imagine for example parallels running on iPad OS. It might really be a full grown computer. 
    This is already available: it is called Android and a full grown computer is a PC. These are widely available worldwide. Spotify is welcome to design, produce, market, and sell a competing product. I currently have the computer *I* want from Apple, and don't want it to change in the way you describe.

    Yes, I understand the concept of anti-trust law, and the concept of using one's market power is very much on display here. A good initial analysis is (as is usual) over at DaringFireball / John Gruber.

    If you don’t want to install an emulator, don’t. I want to. On the device I bought, not on an android. 
    Right. That you bought, with full disclosure of its capabilities and limitations. I would like my ICE car to run on electricity. That's what I now *want*. Why can't Ford understand that, and set up a free store where I can get the option i now *want* (and that "everyone wants") ? 

    As the old Knight said to Indiana Jones: "he chose...poorly..."
    thtstrongywilliamlondonmuthuk_vanalingammigselvwatto_cobra
  • Reply 17 of 29
    eightzeroeightzero Posts: 3,093member

    Ek’s comment about Apple’s EU App Store changes is distortion, says me.

    What did he think was going to happen?  I said early on that this wasn’t going to end up the way these companies thought.  I thought Apple would start charging for API use, and that could still happen.  What they got was a more complex, just as costly if not more system.  How is this good for the consumer?  The EU seems to have such a distorted view of what consumers want — they think they want more choices when in fact they just want things to work well.
    Fairly, I think you are referring to the EU regulators/legislators that wrote this new law. FWIW, I am of the opinion that lawmakers do not write new laws or change existing ones because they think they are improving something...they first and foremost take such actions to get votes, gain popularity, acquire money, remain in power, and then forward their agenda that they are convinced "are good for everyone." Or to put it simply, things you don't want to be seen made: laws and sausage. This is the reality of the republican form of government that is common in the EU (and required here in the states by our Federal Constitution.)

    Also fairly, Apple wields economic power that outstrips many governments around the globe. And exactly who elected them? 
    Kierkegaardenwatto_cobra
  • Reply 18 of 29
    eightzero said:

    Ek’s comment about Apple’s EU App Store changes is distortion, says me.

    What did he think was going to happen?  I said early on that this wasn’t going to end up the way these companies thought.  I thought Apple would start charging for API use, and that could still happen.  What they got was a more complex, just as costly if not more system.  How is this good for the consumer?  The EU seems to have such a distorted view of what consumers want — they think they want more choices when in fact they just want things to work well.
    Fairly, I think you are referring to the EU regulators/legislators that wrote this new law. FWIW, I am of the opinion that lawmakers do not write new laws or change existing ones because they think they are improving something...they first and foremost take such actions to get votes, gain popularity, acquire money, remain in power, and then forward their agenda that they are convinced "are good for everyone." Or to put it simply, things you don't want to be seen made: laws and sausage. This is the reality of the republican form of government that is common in the EU (and required here in the states by our Federal Constitution.)

    Also fairly, Apple wields economic power that outstrips many governments around the globe. And exactly who elected them? 
    Good point — that was sloppy of me — corrected.
    watto_cobra
  • Reply 19 of 29
    saarek said:
    Long story short the companies that are complaining thought, rather naively, that the DMA would force Apple to lower or remove their fees and remove roadblocks.

    Apple has no intention of making it easy for companies like this. They’ve made it very clear that they, for whatever reason, feel fully justified in their fee structure and so, yes, they’ve worked out how to make the ruling effectively pointless.

    Personally I think Apple should have lowered their fees years ago. They’d have avoided years of negative press over it and could have demonstrated that they are reasonable.

    Still, my personal feeling is irrelevant. Apple will continue to fight this tooth and nail.
    Why should they lower their fees?  30% has been an industry standard.  Video game console stores charge developers 30% for downloads and no one is suing over that. It’s such a stupid argument to say any amount is “too high.”  It’s their business.  If you or any developer or end user believes their commission is too high then don’t use them and don’t develop for them. Why should anyone else decide what cut they get on their platform that is a minority of the market?
    williamlondonwatto_cobra
  • Reply 20 of 29
    chasmchasm Posts: 3,364member
    Man who pays the actual creators of the product he sells THE LEAST of the major streamers — Apple pays almost 3x as much, and if they go Spatial Audio it will be even higher — and yet still can’t reliably turn a profit even though he’s now a billionaire, hmmm how did that happen I wonder — wants Apple to give away their store for free so he doesn’t have to run his own store.

    Billionaires, man. Sumpin’ wrong with them. 
    tenthousandthingswilliamlondonwatto_cobra
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