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Spotify says Apple’s new EU rules are “extortion”

Apple’s new EU rules are “extortion” and a “complete and total farce” says Spotify

Spotify has called Apple’s new rules to comply with the European Union’s Digital Markets Act (DMA) a “complete and total farce” that “does not comply with the letter and the spirit of the law”.

The DMA’s aim is to identify ‘gatekeepers’ – large online platforms, and enforce a set of regulations that create what it calls a “fairer business environment” for all companies.

In Apple’s case, part of the requirements are that it must open up the App Store and iOS ecosystem to third-party marketplaces and payment options. In response, Apple’s new business terms propose a cut of its revenue share to 17% – rising a further 3% if publishers use Apple Pay.

Meanwhile, it has added a €0.50 fee (which it has called a Core Technology Fee, echoing Unity’s controversial Runtime Fee) for all downloads over a one million install threshold on an annual basis.

Should developers not wish to use alternative payments or marketplaces, they can stick with the existing terms. 

They don’t think the rules apply to them

Spotify has been campaigning nearly five years for changes to Apple’s App Store practices, and the company has now made a scathing attack on Apple’s new rules.

Apple is nothing if not consistent. While they have behaved badly for years, this takes the level of arrogance 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.

Spotify labelled the new €0.50 download fee “extortion”, claiming it believes developers would have to pay the fee even if users downloaded an app and never use it or never delete it.

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.  

“Don’t resist, just comply”

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, Spotify claim.

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.