Apple's Proposed Changes Reject The Goals of The DMA - Spotify

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T I M E TO P L AY FA I R
Apple’s Proposed Changes

Reject the Goals of the DMA
JANUARY 26, 2024
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For almost five years (https://newsroom.spotify.com/2019-03-13/consumers-and-

innovators-win-on-a-level-playing-field/) – 1,782 days – we have been asking the
European Commission to take action against Apple. In a world that values competition
and innovation, we found it unacceptable to stand by and allow gatekeepers like Apple to
go unchecked.
So you can imagine our excitement when the Digital Markets Act (DMA) was created and
passed into law to once and for all put an end to this unfair stifling of innovation disguised
by Apple as security protections. We were proud of Europe for leading the way and
assumed that Apple would have no choice but to comply with the letter and the spirit of
the law.
But as Apple has just shown the world, they don’t think the rules apply to them.
Apple is nothing if not consistent. While they have behaved badly for years
2023 Wrapped
(https://www.nytimes.com/2022/10/25/business/spotify-apple-audiobooks-app.html),
this takes the level of arrogancewrapped/)
to an entirely new place. Under the false pretense of
compliance and concessions, they put forward a new plan that is a complete and total
farce. Essentially, the old tax was rendered unacceptable under the DMA, so they created
a new one masquerading as compliance with the law.
From the beginning, Apple has been clear that they didn’t like the idea of abiding by the
DMA. So they’ve formulated anAudiobooks
undesirable alternative to the status quo. 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. Let’s
explore a few elements of Apple’s new demands: Communities
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1. A completely new 0.50 cent Euro fee per download, every year, in perpetuity, to
Apple for just allowing developers to exist on iOS – This is extortion, plain and simple.
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? For any developer wondering if this might work for you, you need to have
less than a million customers and essentially sign up for not growing in the long run.
From our read of Apple’s proposal, a developer would have to pay this fee even if a user
downloaded the app, never used it and forgot to delete it. This will hurt developers,
potential start-ups and those offering free apps most: 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? And this would be just the beginning,
because Apple changes its rules all the time. There’s nothing in the law prohibiting
Apple from increasing that 0.50 cent Euro to 1 or 10 Euro over time.
2. Apple is still 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– Apple is making
a developer’s choice between the status quo and this new program as difficult as
possible. Apple is now saying, ‘sure, we’ll let you link out or offer your own payment
methods… but you still owe us a commission for even doing that (plus that new flat
0.50 cent Euro 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.
Apple is making the DMA hurt even more for developers, throwing them an unworkable
alternative that will stifle their businesses immediately.
3. Apple is offering alternative app stores – but are they really? Spotify, like so many
other developers, now faces an untenable situation. Under the new terms, if we stay in
the App Store and want to offer our own in-app payment, we will pay a 17% commission
and a 0.50 cent Euro Core Technology Fee per install and year. This equates for us to
2023 Wrapped
being the same or worse as under the old rules. And if we managed to remove our app
from the App Store and only wrapped/)
existed in the Alternative App Store, that would still not
work. With our EU Apple install base in the 100 million user range, this new tax on
downloads and updates could skyrocket our customer acquisition costs, potentially
increasing them tenfold. This,News
as we(https://newsroom.spotify.com/news/)
have to pay on every install or update to our free or
paid app, even for those who no longer use the service.
The only conclusion is: Apple isAudiobooks
forcing developers to stay with the status quo – This
alternative that offers no alternative at all completely negates the goal of the DMA. The
European Commission designated Apple as a gatekeeper because of their excessive fees
and anti-competitive terms. Apple has proposed an Communities
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unworkable alternative that
developers would have to be locked into until the end of their businesses. Essentially,
Apple is rendering the DMA’s goals of offering more choice and more control to
consumers useless.
In the hours since Apple dropped this update, developers have frantically plugged in their
businesses’ numbers into Apple’s online ‘fee calculator’ only to see their worst fears
confirmed. Apple has the control and they are confident that the European Commission
will let them keep it.
Earlier this week, thanks to the clear language in the DMA, we shared how we plan to
offer customers in the EU more choice (https://newsroom.spotify.com/2024-01-24/the-
dma-means-a-better-spotify-for-artists-creators-and-you/), more control and better
experiences. Today, that future is less clear. And it comes down to a fundamental
question: Will the European Commission follow through with its intent to right-size
Apple’s abuse of power? Or will the DMA be nice in theory, but in practice, have no
substantive meaning for most developers?
All that is required is enforcing the very law many worked so hard to accomplish. The ball
is in your court, European Commissioners, and once and for all you must reject this blatant
disregard of the very principles you worked so hard to establish.
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Apple’s Proposed Changes

For almost five years (https://newsroom.spotify.com/2019-03-13/consumers-and-

The DMA Means a

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