“Spotify is trying to get unlimited access to all of Apple’s tools without paying for the value we provide.”
After the leak published Bloomberg And Financial Timesthat the European Union plans to fine Apple 500 million euros as a result of Spotify’s lawsuit over monopolistic practices, Apple sent a statement Hypertext explaining your position in detail.
“We are excited to support the success of all developers, including Spotify, the largest music streaming app in the world. “Spotify pays Apple nothing for the services that help it create, update, and share its app with Apple users in 160 countries,” they explain.
But in addition, Apple believes that Spotify is trying to get as many resources from the company as possible without investing a dime in return. “Essentially, their argument is about trying to get unlimited access to all of Apple’s tools without paying anything for the value Apple provides.”
Apple’s position is that the success of the iPhone has made Spotify the largest and most important digital music business in the world, with virtually no 60% market share in Europemuch higher 8% who currently have Apple Music.
For the company, this is fundamentally inconsistent with Spotify’s claim of monopolistic practices. In fact, they currently have a larger market share on music streaming platforms on iOS than on Android.
Conflict between companies that does not affect the consumer
According to Apple, all of Spotify’s claims against the European Union are related to resources that the company can access without paying. These include access to hundreds of other API within 60 framework, such as notifications, background sound, Bluetooth and many others. Access to TestFlight to beta test apps and future features and functionality. Access to its engineers, who the company says have helped optimize the app across various areas or resources to get 420 versions of the app approved in the App Store.
According to Apple, the Spotify app has been downloaded. 119 billion times from the App Store. Global distribution, thanks to which the online music platform is currently streaming You didn’t have to pay anything, since subscriptions are not sold through the app itself.
According to Apple, Spotify now wants to gain access to more resources and additional features in the iOS ecosystem and continue to operate without paying. Therefore, they believe that this is a conflict between companies, which does not have any negative impact on the end consumer.
Consumers who download music streaming apps don’t know how to subscribe to their services outside of the apps themselves, according to the European Commission and Spotify. According to Apple, this is not entirely true. In fact, this is currently the main conflict between both companies and the European Union.
While it’s true that Spotify puts a huge marketing effort into getting people who download the iPhone app from the App Store to subscribe, it’s also true that there’s a fairly high level of friction and many potential subscribers are lost along the way.
But in return Spotify is unwilling to pay the 30% fee that Apple requires for using the App Store payment gateway. to be able to attract subscribers directly from the application.
However, Apple believes the evidence supports its position that consumers do know how to subscribe to music platforms, with numbers growing 27% annually, rising from 25 million subscribers to 160 million subscribers in eight years.
At the same time, Spotify announces record numbers
In parallel with this battle between both companies, Spotify announced record numbers for the fourth quarter of 2023: 600 million monthly unique users – up 23% year-over-year – and 236 million subscribers – a positive 15%. growth year on year. A fact that, frankly speaking, supports Apple’s positionwhich argues that the European Commission should recognize that the dominant player here is Spotify.
But even with 600 million monthly unique users and 236 million paid subscribers, Spotify has cut its audience three times in recent months. The latest occurred in December, when the company laid off 1,500 employees.
The fourth quarter of 2023 for Spotify also saw a return to more favorable revenue and earnings than previous quarters. $3.671 million in revenue and $980 million in gross profit, a margin of 26.7%.
Spotify not only cut human resources, but also closed some studios of companies it acquired in previous years and canceled high-quality original productions due to its high production costs, including the legendary podcast. Heavy weightinherited from the acquisition of Gimlet Media.
A regulatory framework designed to benefit startups and benefited by the dominant player.
Apple is facing significant changes in Europe to comply with DMA requirements (Digital Markets Act), which aims to benefit small startups by opening up their ecosystem, including the ability to use third-party app stores, lower App Store usage fees, and the ability to install alternative browser engines. All this will appear in iOS 17.4 in the coming days.
But while Spotify may benefit from these changes in Europe, it also means that they will – right now – be forced to pay to use Apple technology in exchange for stopping distribution of their app on the App Store. Something that Spotify doesn’t want either.
Yes, Apple is one of the largest companies in the world with a fairly significant level of dominance. But there’s no denying that Spotify is a dominant player in the digital music market. DMA was designed to benefit startups, thanks to more room to grow without so many – perceived – restrictions imposed by the Apple ecosystem and other players. But it seems that the mission did not end there.
Moreover, the greatest benefits seem to accrue to companies that dominate their fields, rather than to companies in the process of growth.