European Union to Investigate Spotify's Apple Antitrust Claims (Report)

Daniel Ek  -  Code Conference - Publicity-H 2018
Asa Mathat for Vox Media

The music streamer claims Apple unfairly favors Apple Music over Spotify in its Apple App Store.

The European Commission, the regulatory body of the European Union, will start a formal investigation into Apple following an antitrust complaint filed by streaming music service Spotify, according to media reports.

Spotify filed a complaint with the EU in March, claiming Apple's business practices “limit choice and stifle innovation” by favoring the company's own Apple Music streaming service over competitors. 

The Financial Times, citing unnamed sources, said the EU Commission has begun preliminary investigations into Spotify's claims and will confirm the start of an official probe in the coming weeks. Responding to a request for comment from The Hollywood Reporter, a Commission representative would only say that “the Commission has received a complaint by Spotify, which we are assessing under our standard procedures.”

In the complaint, outlined in a blog post from Spotify CEO Daniel Ek, Spotify took aim at the fee Apple charges third-party developers that use Apple's App Store. Apple charges developers and content providers a fee of 30 percent of revenue the first year for distributing their products, and 15 percent every year thereafter.

Ek claims this “Apple tax” forces Spotify to “artificially inflate the price of our premium membership well above the price of Apple Music.” Not paying the fee, said Ek, can result in “a series of technical and experience-limiting restrictions on Spotify,” when accessed via the App Store. Taken together, Ek claims, Apple's setup could amount to unfair competition, as Apple does not, he says, apply the same conditions to apps such as those of Uber or Deliveroo.

Apple said in response that Spotify profits from the infrastructure of its App Store and from related services, such as App Store upgrades. It added it does not charge its sales commission for free-to-use Apps, such as Uber or Deliveroo, or the free version of Spotify's service.

”Spotify wouldn’t be the business they are today without the App Store ecosystem,” Apple said in a statement. “Spotify's aim is to make more money off others' work.”

Any investigation by the EU is likely to take years to resolve. If Apple is found to have broken European antitrust law, the fines could be steep. The EU has the right to fine violators up to 10 percent of their global revenue. Google, a repeat antitrust offender, has been fined more than $9 billion by the EU. Apple could also preempt a probe by changing its behavior.