Last week Spotify triumphantly announced a number of proposed revamps to its iOS app in Europe. Those revamps would only be possible under Spotify’s interpretation of the EU Digital Markets Act, which is forcing Apple to change the rules it enforces against app developers. However, Apple has now announced the changes it is actually going to be making, and Spotify really isn’t happy.
Spotify’s unhappiness comes from the way Apple is interpreting what it needs to do to comply with the DMA. It says Apple’s proposals won’t address the issues it has raised, and won’t allow its planned revamps to take place. Spotify desperately wants - and needs - those revamps to be possible in order to drive additional revenue.
"Will the European Commission follow through with its intent to right-size Apple’s abuse of power?" Spotify asks in a new blog post responding to the rule changes Apple is now proposing to make in Europe. "Or will the DMA be nice in theory, but in practice, have no substantive meaning for most developers?" To ensure the DMA has substance in practice, it adds, "all that is required is enforcing the very law many worked so hard to accomplish".
Spotify has, like many app developers, long criticised Apple's App Store rules, and especially those around in-app payments on iOS devices.
Apple requires many developers to use its payment processing system to take in-app payments, and charges a commission on those payments. It also bans the sign-posting of alternative payment options outside the app - so, for example, Spotify can’t say to its iOS app users “Go to the Spotify website to enter your payment details”.
This means app developers have to pay up to 30% of any in-app transactions to Apple - what is often referred to as the ‘Apple tax’.
In Europe, Spotify urged the European Commission to force a change to Apple's rules on the basis they were anticompetitive. The EU has been investigating those claims ever since, along the way indicating that it shared Spotify’s concerns. Meanwhile, the new EU Digital Markets Act introduces new regulations for tech giants like Apple, and Spotify hoped that would provide the flexibility it needs to add new promotional and monetisation tools.
In a jubilant post last week, Spotify announced that, once the DMA comes into effect and Apple changes its rule, it will be able to "communicate clearly with you in the Spotify app about new products for sale, promotional campaigns, superfan clubs, and upcoming events, including when items like audiobooks are going on sale”.
This basically means more spam - sorry, promotional communications - for users, and more opportunities for Spotify to upsell extra products within its app. New in-app monetisation tools would be welcomed by a lot of people in the music industry, but are particularly important for podcasts and audiobooks. And generating money from podcasts and audiobooks is also important for Spotify, which needs to find ways to generate revenue beyond music.
However, Spotify’s plans were reliant on a number of assumptions about how Apple might change its rules in order to comply with the DMA. Apple then sent an update to app developers outlining how it will actually change its rules in the EU. Spotify is angry about the approach Apple is taking and the impact it will have on its own plans for new products and tools.
It seems unlikely that Spotify was actually surprised by the approach Apple is taking. Not least because it is similar to the approach Apple is taking in the US where a court ruling has also forced a change to the App Store rules. Spotify was very critical of that too, to the point it would seem strange if it had not anticipated Apple’s latest announcement.
Indeed, Spotify may well have published its upbeat summary of all the great things that the DMA would mean to anticipate the announcement from Apple, so that it could then contrast its first blog post with the second.
That second blog post from Spotify is certainly more sombre - but just as outspoken as its first, with repeated swipes at Apple. "Under the false pretence of compliance and concessions”, it says, Apple has “put forward a new plan that is a complete and total farce. Essentially, the old tax was rendered unacceptable under the DMA, so they created a new one masquerading as compliance with the law".
What it comes down to, says Spotify's summary of Apple's plans, is that app developers will have other options for taking payments, but will still have to share any income from in-app transactions with the tech giant. So, Spotify’s main complaint isn’t addressed.
"Apple is still 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", Spotify explains. Plus there is "a completely new €0.50 fee per download, every year, in perpetuity, to Apple for just allowing developers to exist on iOS".
"Thanks to the clear language in the DMA,” it goes on, “we [previously] shared how we plan to offer customers in the EU more choice, more control and better experiences. Today, that future is less clear".
The concluding demand? In order to ensure that Spotify's EU users can be spammed to high heaven - I mean, offered ever more compelling content and fan experiences - the DMA must be fully enforced. "The ball is in your court, European Commissioners", it says, "and once and for all you must reject this blatant disregard of the very principles you worked so hard to establish".