The Financial Times reports that the European Union is set to act upon a complaint filed by Spotify against Apple. Formal investigation is expected to be opened against Apple in the next couple of weeks following claims by the streaming company that the later uses its App Store to stifle innovation and restrict consumer choice in favor of its Apple Music service.
The EU swung into action after the streaming service filed its complaint last March—Brussels surveyed customers, rivals and other interested parties in the process—and has now decided to launch a formal investigation into the matter.
Of particular interest to Spotify’s CEO Daniel Ek, is “Apple tax” where Apple takes a 30 percent cut on every Spotify subscription signed up via the Apple Store in the first year, and another 15 percent every year thereafter.
“If we pay this tax, it would force us to artificially inflate the price of our Premium membership well above the price of Apple Music,” Ek said back March. Penalty for not paying the tax would lead to “a series of technical and experience-limiting restrictions on Spotify,”
The tax issue it seems, is not the only area where Spotify feels aggrieved about—Ek is also accusing Apple of blocking it from implementing “experience-enhancing upgrades” related to Siri, HomePod, and Apple Watch to the advantage of its music service.
”Spotify wouldn’t be the business they are today without the App Store ecosystem,” Apple said in response to the claim per The Verge. “Apple connects Spotify to our users. We provide the platform by which users download and update their app. We share critical software development tools to support Spotify’s app building. And we built a secure payment system — no small undertaking — which allows users to have faith in in-app transactions. Spotify is asking to keep all those benefits while also retaining 100 percent of the revenue.”
The outcome of the EU’s investigation is not expected anytime soon if you are conversant with how long it took Brussels to arrive at a decision in the case of Google. that said, if the decision goes against Apple, the company is likely to pay about 10 percent of its global earnings. However, things could be brought to an end soon if Apple change its behavior.
Google and the European Commission both have a history that dates way back. In 2017, the Commission fined the search engine behemoth the sum of $2.7 billion for ranking its shopping services higher than its rivals in terms of search results.
Shortly after that fine, the European Commission urged rivals that may feel hurt by the company’s breaking of its anti-trust law to consider suing the search engine. The Commission through its Commissioner Margrethe Vestager, urged Google’s rivals to sue the search engine giant for abusing its anti-trust law.