Apple's EU App Store changes are extortion, says Spotify
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."
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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
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.
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?
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.
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.
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.
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.
As the old Knight said to Indiana Jones: "he chose...poorly..."
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?
Billionaires, man. Sumpin’ wrong with them.