According to The Financial Times, Spotify, the well-known music streamer, made several complaints against Apple that finally lead to an investigation lead by the official EU commission. Spotify’s complaints focused on Apple’s 30% cut it charges anyone who uses their App Store payment system. Spotify called this Apple Tax and pointed out that it gives Apple Music streamer services, direct competitors of Spotify and the rest, an unfair advantage because there is no point in Apple taking the cut out of its own business. So, plainly put, Apple charges Spotify and the likes 30% on all subscriptions who use its payment method, while Uber, for instance, is at an unfair advantage.
If EU commission favors Spotify’s complaint, it would result in Apple changing its business model entirely and be fined none the less with a fine worth 10% of its global revenue, meaning around $26.6 billion. However, in reality, things will not go in such a severe fashion and Apple and the EU commission will make a settlement deal with Apple having to reduce the now called “Apple Tax”.
Spotify and Apple Music have similar subscription monthly rates. They charge $9.99 per month for individuals and $14.99 for a family deal, which includes up to six members. Verified students get a discounted price of $4.99 per month.
But, and here is where the issue Spotify spotted gets really clear, because of the 30% Apple Tax, Spotify prices in the App Store go up at $12.99 individuals, $16.99 families, and $7.99 students.
Other music streaming providers have backed up Spotify on this, while the entire case was put together by Thomas Vinje, a lawyer working for the Clifford Chance practice firm. Other streamers that support Spotify are also in on the complaint and are mutually filing the case. Thomas even went so far as to say other smaller streamers are “too afraid to take on Apple”.
Apple’s official response to Spotify’s complaints and to the charges with a remark that the App Store helped Spotify grow through the years and that it did so without asking any contributions in return.
Apple’s official response to the Spotify rhetoric was this:
“After using the App Store for years to dramatically grow their business, Spotify seeks to keep all the benefits of the App Store ecosystem — including the substantial revenue that they draw from the App Store’s customers — without making any contributions to that marketplace. At the same time, they distribute the music you love while making ever-smaller contributions to the artists, musicians, and songwriters who create it — even going so far as to take these creators to court.
Spotify has every right to determine their own business model, but we feel an obligation to respond when Spotify wraps its financial motivations in misleading rhetoric about who we are, what we’ve built and what we do to support independent developers, musicians, songwriters and creators of all stripes.”