In a scathing critique, music streaming giant Spotify has expressed its strong opposition to Apple’s recent plan to comply with the European Union’s tech regulations, deeming it as nothing more than “a complete and total farce.” The contentious issue at hand is Apple’s implementation of an app installation fee, which Spotify criticizes as extortionary and an attempt to retain developers within its ecosystem. The fee, designated as the Core Technology Fee, requires developers on third-party app stores to pay €0.50 for each annual app install after reaching 1 million downloads. Additionally, Spotify is appalled by Apple’s decision to continue charging a 17 percent commission on transactions made through third-party payment processors. With these burdensome financial obligations, Spotify finds itself trapped, making it difficult to switch to alternative options that are financially sustainable. The article delves into the implications of these new rules and highlights the widespread criticism Apple is currently facing.
Spotify asserts that Apple’s new plan will impose significant financial hardships on developers, particularly those offering free apps. The company argues that even if a user downloads an app but never uses it or forgets to delete it, the developer will still be required to pay the app installation fee. This approach seems unreasonable to Spotify, contributing to their belief that Apple is employing tactics to prevent developers from migrating away from the App Store. Moreover, Spotify calls attention to the 17 percent commission that Apple will retain from developers utilizing third-party payment processors. This aspect adds another layer of complexity to developers’ decision-making processes, making it as challenging as possible for them to choose an alternative payment option outside of Apple’s ecosystem.
Spotify CEO Daniel Ek highlights the predicament that the company currently faces. With an Apple install base in the European Union exceeding 100 million, the new tax on downloads and updates could significantly inflate Spotify’s customer acquisition costs, possibly increasing them by tenfold. Consequently, adhering to the new terms would render it financially unviable for Spotify to operate as a profitable company. In light of this untenable situation, the company finds itself with no choice but to maintain the status quo for now. Although Spotify had intended to introduce its own in-app payment system in the EU, its plans seem impracticable given Apple’s latest move.
Apple’s new rules have triggered wide-ranging criticism from developers, both large and small, who are dismayed at the potential financial burden they may face as they consider moving their apps outside of the App Store or incorporating alternative payment options. This wave of dissatisfaction has caught the attention of the EU Commission, which has pledged to respond to Apple’s changes when the new regulations officially go into effect in March. The commission’s response will provide a clearer picture of the impact and implications of Apple’s actions, allowing developers ample time to evaluate and challenge the new rules.
Spotify’s scathing criticism of Apple’s new app installation fee as an “extortionate” and “total farce” demonstrates the mounting discontent among developers and industry players alike. The additional financial obligations that stem from the Core Technology Fee, coupled with the continued commission on third-party payment processors, place significant financial burdens on developers. Spotify’s standalone status within the streaming market, as well as its large EU Apple install base, underscores the insurmountable challenges it faces under these new rules. The impending response from the EU Commission promises to shed light on the potential repercussions of these changes, providing developers with an opportunity to voice their concerns and seek alternate solutions that are financially viable.
Leave a Reply