Spotify bashes Apple's new App Store policies in the EU, calls them "extortion"

[DragonSlayer101]

What just happened? Spotify CEO Daniel Ek has strongly criticized the recent changes to Apple's App Store policies in Europe and accused the company of descending to a "new low." The streaming giant described Apple's new charges as "extortion," and said that it would punish developers for trying to grow their business. The criticism comes days after the tech giant announced a number of changes to its App Store policies in Europe to comply with the EU's Digital Markets Act (DMA).

In a strongly-worded X thread, Ek described Apple's response to the DMA as a "masterclass in distortion," and accused the iPhone-maker of "twisting the situation" to pad its own bottom-line, rather than complying with the new regulation in letter and spirit. He also claimed that Apple's new policies could lead to inordinately high fees for developers, and even free apps with minimal revenues could face massive charges if they have a large number of users in the EU.

Ek also said that the charges could even spell trouble for well-monetized apps like Spotify. According to him, the Swedish music streaming service has around 100 million EU users on Apple devices, which could make Apple's new charges "untenable" for the company in the long run. Ek believes that the new charges could potentially increase Spotify's customer acquisition costs tenfold, as it will have to pay Apple for every app install and update, even for people who no longer use the service.

After sitting with our legal team to parse through the fine print of Apple's DMA announcement (that took a while), which is, at best vague and misleading, I wanted to share my thoughts.

While Apple has behaved badly for years, what they did yesterday represents a new low, even…

– Daniel Ek (@eldsjal) January 26, 2024

Ek's allegations come just days after Apple announced a host of changes to its App Store policies, ostensibly to comply with the DMA in the EU. As part of the changes, Apple introduced a controversial 'core technology fee' of €0.50 annually for each app install over the 1 million threshold, irrespective of whether it is being distributed through the App Store or a third-party marketplace. In addition, developers will also have to pay a 3 percent payment processing fee for using Apple's in-app payments service.

Apple's new policies have come in for criticism from various quarters, with many developers expressing concerns about how they might affect their bottom-line. Epic Games CEO Tim Sweeney also lambasted the new App Store policies, calling them "malicious compliance." He also derided the new "junk fees" that could hurt developers, big and small.

While the DMA was designed to prevent large tech companies from abusing their market power, Apple's new policies will seemingly do just the opposite. The new system has clearly been designed to prevent developers from using alternative app stores to distribute their apps, thereby helping Apple maintain the App Store's monopoly. It remains to be seen if the changes will get the EU's approval, or if it will force Apple to truly comply with the DMA's provisions and open up iOS to third-party app distributors without imposing a massive Apple tax.

Permalink to story.

https://www.techspot.com/news/101706-spotify-lambasts-apple-new-app-store-policies-eu.html

 

[ShadowDeath]

The problem is that, in the end, people will just pay it because they want their app to be available on the Apple App store. If their app isn't odds are their competitor's app will be.

Apple knows they can get away with it because they have a cult following.

 

[maxxcool7421]

Soptify doesn't get it ... apple hates you, and hates everyone who has a competing ''service'' ... this is all good for them (apple).

You pay to stay on the platform .. apple wins
You quit the platform and the revenue you were getting now goes to apples streaming service .. apple wins

 

[dangh]

I can only hope EU will sit down again, shorter this time, and will put tighter rules against Apple anti-competitive approach.

 

[waclark]

have to pay a 3 percent payment processing fee for using Apple's in-app payments service.

I don't see this as being all that controversial. Most payment services charge a processing fee, somewhere around 3%. Why should Apple or any business have to pay fees you are incurring by using the service? When the courts are dictating what you can charge, then you're forcing businesses to separate out every little expense and charge for that. But as a consumer, at least you know what you are paying for. I'm pretty sure Spotify is collecting the 3% credit card charge I am incurring when I auto pay with a CC every month.

 

[m4a4]

I don't see this as being all that controversial. Most payment services charge a processing fee, somewhere around 3%. Why should Apple or any business have to pay fees you are incurring by using the service? When the courts are dictating what you can charge, then you're forcing businesses to separate out every little expense and charge for that. But as a consumer, at least you know what you are paying for. I'm pretty sure Spotify is collecting the 3% credit card charge I am incurring when I auto pay with a CC every month.

...No one was implying that was controversial. It was just an "also, there's this to keep in mind"...

 

[waclark]

...No one was implying that was controversial. It was just an "also, there's this to keep in mind"...

I don't know, the whole article is about Apple's fees and such. You have this statement:

In addition, developers will also have to pay a 3 percent payment processing fee for using Apple's in-app payments service.

Followed by this:

Epic Games CEO Tim Sweeney also lambasted the new App Store policies, calling them "malicious compliance." He also derided the new "junk fees" that could hurt developers, big and small.

It sure seems like the policy is considered controversial.

 

[m4a4]

I don't know, the whole article is about Apple's fees and such. You have this statement:

Followed by this:

It sure seems like the policy is considered controversial.

The policy as a whole, yes.
But you took issue with 1 specific additional detail (which was added just so you get a bigger picture of all that will have to be paid).

Anyways, my point is that no one that I've seen or heard (includes this article) has an issue with the 3% payment processing fee on it's own.

 

[yRaz]

I don't see this as being all that controversial. Most payment services charge a processing fee, somewhere around 3%. Why should Apple or any business have to pay fees you are incurring by using the service? When the courts are dictating what you can charge, then you're forcing businesses to separate out every little expense and charge for that. But as a consumer, at least you know what you are paying for. I'm pretty sure Spotify is collecting the 3% credit card charge I am incurring when I auto pay with a CC every month.

Well Apple charges 3% and then the card linked to your apple account charges anywhere from 2-5% so, realisticly, each developer is being charged anywhere between 5-8% in "processing fees." Spotify has to pay those fees to Visa, Mastercard or AMEX. I use to frequent a bar that refused to accept AMEX because of how high their fees were.

 

[waclark]

Well Apple charges 3% and then the card linked to your apple account charges anywhere from 2-5% so, realisticly, each developer is being charged anywhere between 5-8% in "processing fees." Spotify has to pay those fees to Visa, Mastercard or AMEX. I use to frequent a bar that refused to accept AMEX because of how high their fees were.

I think you're double dipping here. If I understand the charge, it comes from using Apple to process payment, so Spotify wouldn't have an additional charge from your credit card because that is being processed by Apple or Apple's CC processing company.

 

[waclark]

The policy as a whole, yes.
But you took issue with 1 specific additional detail (which was added just so you get a bigger picture of all that will have to be paid).

Anyways, my point is that no one that I've seen or heard (includes this article) has an issue with the 3% payment processing fee on it's own.

I think I just pointed to someone who does have an issue with the "junk" charges. That was in the quote by Tim Sweeny.

The thing about the "additional detail" is that it is lumped with the other, more controversial, charges. Since this fee is easily understood (assuming I am correct about CC processing charges) it should not be mentioned in the same paragraph about 50 cent install fees. Spotify and others were already paying this 3% fee, it was just bundled into whatever Apple's prior fee structure was. Now that the courts have prevented Apple from charging what they want to charge, I believe they are now making all fees a separate line item.

 

[m4a4]

I think I just pointed to someone who does have an issue with the "junk" charges. That was in the quote by Tim Sweeny.

I would assume whatever other fees (includes the junk core tech fee). But a CC payment processing fee isn't unusual.

The thing about the "additional detail" is that it is lumped with the other, more controversial, charges. Since this fee is easily understood (assuming I am correct about CC processing charges) it should not be mentioned in the same paragraph about 50 cent install fees. Spotify and others were already paying this 3% fee, it was just bundled into whatever Apple's prior fee structure was. Now that the courts have prevented Apple from charging what they want to charge, I believe they are now making all fees a separate line item.

I'm not sure what you're going on about anymore. I'm pretty sure a "I thought they were also talking about the payment processing fee, guess not" from you would've been enough.

 

[waclark]

I would assume whatever other fees (includes the junk core tech fee). But a CC payment processing fee isn't unusual.


I'm not sure what you're going on about anymore. I'm pretty sure a "I thought they were also talking about the payment processing fee, guess not" from you would've been enough.

All I'm saying is that if you're calling out Apple for unfair or controversial charges, there's little reason to mention 3% CC processing fees. It's not controversial nor unreasonable.

 

[Puiu]

While slow as per usual, I'm expecting the EU to strike down this blatant middle finger to both devs and consumers from Apple.

 

[OortCloud]

Brave of Spotify to call out Apple for the scum they are.

 

[Ben Myers]

So Spotify is calling out Apple's App Store policies while at the same time Spotify compensates owners of copyrighted recorded music an amount almost too small to measure each time the tune is played. Just ask anyone who has tunes on Spotify.

Sounds to me like one sleazy company complaining about another sleazy company.

 

[m4a4]

So Spotify is calling out Apple's App Store policies while at the same time Spotify compensates owners of copyrighted recorded music an amount almost too small to measure each time the tune is played. Just ask anyone who has tunes on Spotify.

Sounds to me like one sleazy company complaining about another sleazy company.

If Spotify was billions of dollars profitable, I could see the comparison work better.

But Apple is leagues worse in this sense.