Thursday, July 25, 2024

Apple’s EU App Store changes are extortion, says Spotify

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Spotify CEO Daniel Ek is unhappy with Apple’s new App Store changes affecting the European Union, declaring elements of the plan “extortion, plain and simple.”

The outspoken CEO of the music streaming service wrote in a Friday blog post objecting to Apple’s introduction of changes in iOS 17.4 that will introduce new rules as well as fees applying to developers offering apps inside the European Union.

Declaring Apple to have “behaved badly for years,” Ek claims Apple’s move “takes the level of arrogance to an entirely new place.” In complying with the EU Digital Markets Act in offering elements such as the sideloading of alternative app stores, Ek calls it a “false pretence of compliance and concessions” and a plan “that is a complete and total farce.”

Rather than abiding with the EMA, Apple’s “formulated an undesirable alternative to the status quo,” Ek continues. “This is why many of the most popular developers will never be able to choose it. And for the developers who feel like they have no other alternative, it’s a path that will punish their success.”

In reference to a 50 cent Euro fee per download every year, the move “is extortion, plain and simple,” the CEO believes. “If Apple’s already charging a commission of 17% (and 10% for recurring payments) on digital goods purchased, why would they also need to charge an annual flat fee for every user?”

Ek also ponders whether it would affect developers of free apps, if they have to then pay the fee even if a user downloads the app and forget to delete it. “How will a developer pay Apple back if its free app goes viral – multiple millions of accounts install that free app, and then that developer owes Apple millions?”

There’s also the possibility of price rises, with Ek musing “There’s nothing in the law prohibiting Apple from increasing that 0.50 cent Euro to 1 or 10 Euro over time.

17% rent

Ek also takes aim at Apple charging a “17% rent on developers for existing in the App Store if they offer alternative payment methods or link out to their own website.” He complains that, even if the payment is taken elsewhere, developers will still have to pay a 17% commission and the flat annual fee.

“This combination of fees means that, in most instances, if your app is popular, you would pay the same or even more to Apple than under the prior rules,” Ek offers. “Apple is making the DMA hurt even more for developers, throwing them an unworkable alternative that will stifle their businesses immediately.”

There is also a thought that the fee structure puts Spotify and others in “an untenable situation.” With the commission fee and annual fee per install and year, it “equates for us to being the same or worse as under the old rules.”

If Spotify managed to remove its app from the App Store and existed only in an alternative app storefront, it wouldn’t work since the tax on Spotify’s EU Apple install base of around 100 million users could “skyrocket our customer acquisition costs, potentially increasing them tenfold.”

Ek therefore believes that Apple “is forcing developers to stay with the status quo,” as an “alternative that offers no alternative at all completely negates the goal of the DMA.”

“Essentially, Apple is rendering the DMA’s goals of offering more choice and more control to consumers useless.”

The commentary from the Spotify CEO follows after a similar statement made by Epic Games CEO Tim Sweeney, who referred to Apple’s announcement as “hot garbage” and a “devious new instance of Malicious Compliance.”

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