Apple being investigated by EU over anti-competitive App Store practices

The Spotify vs Apple saga continues, but we still don't have a clear winner

The European Union’s competition commission has commenced a formal antitrust investigation into Apple and its alleged anti-competitive App Store practices regarding Spotify.

Typically it takes years for the Commission to complete an investigation and determine a course of action, reports MacRumors, unless the companies decide to settle, but that seems unlikely in this case based on Apple’s prior responses to the allegations.

Still, this is a win for the smaller company since it ideally means that change is likely on the horizon concerning how Apple operates the App Store.

Where it all started

On March 13th Spotify launched a campaign against Apple regarding alleged anti-competitive practices in the App Store. The streaming company claims that Apple is holding it back from utilizing tools like Siri on iOS, along with blocking the app from the HomePod smart speaker.

Spotify also alleged to the EU Commission that Apple changed the App Store developer guidelines to make signing up for Spotify Premium on iOS more complicated than it needs to be.

At the root of all these complaints, Spotify really wants to avoid paying Apple 30 percent of the transactions made through its app on Apple’s platforms. It argues this would allow it to compete fairly with Apple Music on the Cupertino company’s home turf. Notably, Netflix also doesn’t let users sign up for its subscription service inside Apple’s walled garden to avoid paying the 30 percent tax.

What’s happened since then?

Spotify isn’t the only company to take issue with Apple’s iron grip on the App Store. Russian developer Kaspersky Labs and numerous other screen time management apps that functioned similarly to Apple’s ‘Screen Time’ feature have also had issues with the tech giant over the last few months. Apple says it removed these apps over, what it says, are security concerns, according to a New York Times report.

Spotify is the most popular app to take shots at Apple, and it did so in a big way with a website called timetoplayfair.com. The site outlines all the ways Apple has wronged Spotify over the years, according to the music streaming service.

Apple then shot back at the streaming company with a blog post of its own that asserts Spotify’s claims are misleading and that Apple treats every app on its platform fairly. The company also made sure to take some digs at how little Spotify pays musicians on its platform. 

Spotify then fired back a few days later claiming that no matter what Apple says, it’s still being anti-competitive and that in general its practices “hurt competition and consumers.”

What are we missing and what might happen next

In the end, both companies are just trying to get as much money as possible from consumers. Since every other app pays Apple’s 30 percent fee, it makes sense that Spotify should as well. It’s also worth mentioning that in-app subscription apps like Spotify, only pay a 15 percent Apple tax if subscribers stick with the service for a year.

The true anti-competitiveness stems from Apple’s treatment of apps in its store. If the company is genuinely blocking Spotify updates and taking down screen time management apps because they compete with Apple’s services, that is clearly unfair.

In both of these cases, the developers of the apps argue that their app was in the App Store for years with no issues and then one day Apple decided to change the App Store Guidelines to force their platforms out of the store. Notably, Spotify was once able to tell iOS users to sign up for its service through its website, a workaround to avoid the Apple tax. Apple then changed the App Store’s guidelines to prevent the music streaming service from doing this. Now, Spotify can only include, “Spotify Premium can’t be purchased in this app” in its iOS app.

Spotify is the industry’s global streaming music leader with over 100 million paying subscribers, while Apple lags behind with somewhere around 50 million Apple Music subscribers.

Even though Spotify might have the most users, it’s still a much smaller company than Apple and has been struggling to turn a profit.

Since its launch in 2008, the company has only ever had one profitable quarter in Q4 2018. In the first quarter of 2019, Spotify once again failed to make a profit.

A new iOS leak claims that iOS 13 will include a new feature in Screen Time that allows parents to control their kids’ app and phone usage better. This may explain why Apple has been cracking down on screen time management apps lately.

The same leak also suggests that Apple is building its own software to let people use iPads as a second display for Mac. There are a few apps already available that do precisely this. It will be interesting to see what happens these apps once Apple’s baked-in take on the same concept is released.

Source: MacRumors