By charging up to 30% on Spotify’s transactions via the App Store, Apple has helped its Apple Music music service have a small advantage over its competitors.
According to Financial Times, Spotify’s complaints against Apple are being investigated by the European Union’s competition committee. In its complaint, Spotify accused Apple of forcing them by charging 30% of Spotify’s transactions through the App Store. Spotify calls this “Apple Tax” and thinks it gives Apple Music an advantage in an unfair way.
Spotify’s complaint was filed last March. Although Apple charges 30% from Spotify, it does not apply the same policy to other applications like Uber.
If the EU issues a ruling on Spotify, Apple may have to change its way of doing business across Europe and be fined up to 10% of its global revenue. In the worst case, the penalty that Apple has to pay can be up to 26.6 billion USD. It is likely that Apple and the EU competition committee will have working sessions to agree on lowering or eliminating the above “Apple Tax”.
Apple Music and Spotify are offering the same subscription fees for $ 9.99 for individuals, $ 14.99 for families (up to 6 members) and $ 4.99 for students. However, because Apple “cut off” 30%, the price of Spotify for iOS customers is increased to $ 12.99 for individuals, $ 16.99 for families and $ 7.99 for students. Unlike Apple Music, Spotify has a free use option that displays ads and restricts some features.
Last week, Spotify announced its paid subscriptions in the first quarter of the year increased by 32% over the same period last year. The company currently has 100 million paid subscribers and 117 million free users. Meanwhile, Apple Music has 56 million paid subscribers worldwide. But in the US alone, Apple outperformed Spotify with 28 million paid subscribers compared to 26 million.
Lawyer Thomas Vinje, who helps Spotify file a complaint, thinks there are many companies that offer stream services on Spotify. However, these companies are afraid to face Apple. In March, Apple explained that this fee was applied to Spotify because they used the App Store to grow their business for years without contributing anything.
“After using the App Store for many years to flourish, Spotify seeks to capture all the benefits of the App Store ecosystem, including the significant revenue they earn from App customers. Store, but it doesn’t contribute to this platform, and they distribute the music you love while making a small contribution to artists, musicians and composers who create them. Spotify also sued these artists to court.
Spotify has the right to shape their own business model, but we feel obligated to respond when Spotify finishes their financial statements with false statements about us, about what we build and what we do to support programmers, musicians and composers … “, Apple claims.
Apple was once fined by the EU competition committee. In 2017, commissioner Margrethe Vestager ruled that Apple had to pay EUR 13 billion in taxes after finding out that Apple and Ireland had illegal agreements.
