In its preliminary conclusion, the EU Commission has found Apple guilty of breaching the competition law. The commission found that while Apple Music competes against other music streaming services, Apple has an unfair advantage over its rivals by charging them high commission fees and forbidding them from using alternative subscription methods.
The findings are a result of Spotify filing an anti-trust complaint against Apple in 2019. It alleged that Apple was using its dominant position to promote Apple Music over other music streaming services.
Our preliminary conclusion: @Apple is in breach of EU competition law. @AppleMusic compete with other music streaming services. But @Apple charges high commission fees on rivals in the App store & forbids them to inform of alternative subscription options. Consumers losing out.
— Margrethe Vestager (@vestager) April 30, 2021
Apple charges other music streaming apps on the App Store a 30% cut of any transaction. It also prohibits them from using any alternative subscription service. This gives the company’s own Apple Music an unfair advantage over the competition as the likes of Spotify end up passing the additional fees to customers, which ends up making it more expensive than Apple Music.
Spotify’s monthly Premium plan is priced at $9.99, but the company charges customers $12.99/month if they subscribe directly from within the App Store.
Apple has already issued a statement about the ruling to The Verge:
Spotify has become the largest music subscription service in the world, and we’re proud for the role we played in that. Spotify does not pay Apple any commission on over 99% of their subscribers, and only pays a 15% commission on those remaining subscribers that they acquired through the App Store. At the core of this case is Spotify’s demand they should be able to advertise alternative deals on their iOS app, a practice that no store in the world allows. Once again, they want all the benefits of the App Store but don’t think they should have to pay anything for that. The Commission’s argument on Spotify’s behalf is the opposite of fair competition.
Spotify is not the only one that has to pay this Apple tax. Netflix and other streaming services on the App Store also have to pay this Apple Tax, which ends up giving Apple’s own streaming services an advantage.
Since this is the result of the EU’s preliminary investigation, Apple will have a chance to respond to all the allegations levied against it. If the company is indeed found guilty, it will have to pay up to 10% of its annual revenue as a fine. It could also be forced to change its business model to level the playing field.[Via European Commission]