Apple/Spotify battle could be resolved in Europe with Epic-style compromise [U]

Update: Apple comment added at end

Some four years after the Apple/Spotify battle began back in 2019, we may have the first indication of how the European Union will resolve the antitrust dispute.

Reading between the lines of a brief report today, it appears that the European Commission may be heading toward a compromise ruling, which would mirror that made in the Apple vs. Epic Games case in the US …

Background

Spotify filed a European antitrust complaint about Apple almost exactly four years ago, claiming that Apple was giving its own streaming music service an unfair advantage over Spotify.

It said that while Apple Music can offer subscriptions within the app without any penalty, Spotify would have to give Apple 30% (or 15% from year two) of its subscription revenue if it did the same. This would be impossible given the tiny margins on which streaming music services operate.

Additionally, Apple’s App Store rules didn’t even allow the Spotify app to tell users about other ways to subscribe to the service.

The commission reached a preliminary conclusion that Spotify was right, and that Apple was likely in breach of European competition law, but no ruling has yet been made.

In January of this year, Spotify ramped up the pressure with an open letter addressed to the European Commission’s executive vice-president Margrethe Vestager. It was signed by the CEOs and senior execs of digital organizations representing publishing, audio streaming, web software, communications, and marketplaces – including Basecamp, Deezer, and Proton.

Apple/Spotify battle may be resolved

Epic Games filed a similar US lawsuit against Apple back in 2020, after the iPhone maker removed Fortnite from the App Store when the games company added a direct payment option to the app. The court in that case gave a compromise ruling: that developers should be free to direct users to third-party payment options within their apps.

It now appears that the same compromise may be reached in Europe. The Financial Times reports that the investigation into Spotify’s complaint has been narrowed to the single issue of whether the app can include an external subscription link.

Brussels has narrowed its long-running antitrust probe against Apple, focusing on the way the tech giant restricts apps such as Spotify from telling users about alternative subscription options, according to three people with knowledge of the situation.

This will result in a new, more limited, antitrust charge against Apple. Namely, that it cannot stop apps letting users know about third-party payment options.

In this way, Apple can try to persuade users to make in-app purchases, while developers will be free to point them to other payment options.

Apple commented:

Apple will continue to work with the European Commission to understand and respond to their concerns, all the while promoting competition and choice for European consumers. We’re pleased that the Commission has narrowed its case and is no longer challenging Apple’s right to collect a commission for digital goods and require the use of the In-App Payment systems users trust. The App Store has helped Spotify become the top music streaming service across Europe and we hope the European Commission will end its pursuit of a complaint that has no merit.

Photo: Felipepelaquim/Unsplash