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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.– Daniel Ek (@eldsjal) January 26, 2024
While Apple has behaved badly for years, what they did yesterday represents a new low, even…
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.