According to a report by Reuters, Apple is preparing to defend itself against accusations made by Spotify this Friday. Spotify alleges that Apple restricts music streaming companies from informing users about alternative purchasing options, claiming that Apple deliberately limits choice and hampers innovation, ultimately compromising the user experience. These accusations have evolved since Spotify initially filed a complaint with the European Commission in 2019.
The European Commission initiated an investigation in 2020 and subsequently issued an initial “statement of objections” against Apple in 2021. At that time, the Commission’s preliminary findings suggested that Apple’s policies distorted competition in the music streaming services market by increasing costs for competing app developers. As a result, consumers purchasing in-app music subscriptions on iOS devices face higher prices. The Commission’s announcement also highlighted that Apple became the exclusive intermediary for all in-app purchase transactions, assuming control over billing relationships and communication channels with competitors.
In response, Apple has stated that Spotify holds the leading position in most European countries’ streaming service market, whereas Apple Music typically ranks third or fourth. Furthermore, in 2022, Apple revised its rules to accommodate reader apps such as Spotify and Netflix, allowing them to include links to their websites for user sign-ups and payments.
Although third-party developers are still prohibited from explicitly mentioning lower subscription prices on their apps, they are now permitted to provide links to their web pages instead. It’s worth noting that many apps offer different pricing options on their websites compared to their iOS/Android counterparts, as the latter includes a 30% fee in the final price. For instance, Twitter Blue costs $8 per month on the web, whereas on iOS/Android, it is priced at $11 per month.
The upcoming hearing carries significant implications for Apple, as the company could potentially face fines amounting to 10% of its annual revenue, potentially reaching billions of dollars.
Moreover, later this year, Apple will need to comply with the Digital Market Act, which requires support for sideloading apps and/or alternative app stores. The manner in which Apple intends to implement these changes for its European users remains unclear. According to Bloomberg, Apple was expected to announce its plans during WWDC 2023 but ultimately decided against it.