CUPERTINO The European Commission ruled today that the Apple App Store hinders digital music competition. Despite the Commission’s failure to find credible consumer harm evidence, the decision ignores a thriving, competitive, and growing market.
Spotify, based in Stockholm, Sweden, is the biggest beneficiary of this decision. Spotify, the world’s largest music streaming app, has met with the European Commission over 65 times during this investigation.
Spotify has 56% of Europe’s music streaming market, more than double their closest competitor, and pays Apple nothing for the services that have made them a global brand. The Apple App Store and Spotify’s tools and technology to build, update, and share their app with Apple users worldwide are key to their success.
Apple App Store Journey
Since the App Store launched over 15 years ago, Apple has had two simple goals: a safe and trusted marketplace for users and a great business opportunity for developers. This simple approach inspired the app economy, which became one of the fastest-growing technology sectors.
Developers compete fairly on the Apple App Store today. A comprehensive set of rules protects our users when reviewing apps. Meeting those rules lets developers of all sizes reach over a billion devices worldwide.
The App Store has grown in value for developers. However, 86% of developers never pay Apple a commission.
Just two Apple App Store developers pay Apple a commission today. Users buy paid apps from the Apple App Store or in-app digital goods or services like subscriptions or game power-ups.
Apple doesn’t charge developers who sell physical goods, serve ads, or share apps for free. If a developer sells a subscription online, users must buy it before using it in an app. Music app developers can also include links to other offers and a website to create and manage accounts.
Developers of all sizes have built successful businesses and reached global audiences on the Apple App Store . Few companies tell that story better than Spotify.
Spotify’s Market Dominance
Spotify, founded in Stockholm, Sweden, is now the world’s largest digital music company. They have over 50% of the European market, and Spotify has a higher share on iOS than Android.
European digital music has exploded, so that’s just part of the picture. Companies vie for customers. Consumers have many choices. There were nearly 160 million subscribers last year, up from 25 million in 2015, a staggering 27% annual growth rate.
Google, Amazon, Deezer, SoundCloud, and Apple compete for customers daily, but Spotify dominates.
Spotify pays Apple Nothing
Despite its success and the App Store’s help, Spotify pays Apple nothing. Spotify chose, like many App Store developers. They sell subscriptions online, not in their app. These purchases don’t earn Apple a commission.
Spotify has been downloaded, redownloaded, or updated over 119 billion times on Apple devices. It’s on the App Store in 160+ countries. Apple creates value for Spotify in many other ways without costing them:
Their engineering makes Spotify’s apps compatible with Siri, CarPlay, Apple Watch, AirPlay, Widgets, and more.
Spotify can use Apple’s more than 250,000 APIs and 60 frameworks to connect with Bluetooth, send notifications, play audio in the background, and more, like every developer.
For nearly 500 app versions, Spotify has tested new features and capabilities using TestFlight.
Apple’s App Review team has approved 421 Spotify app versions, usually same-day, and often expedites reviews at Spotify’s request.
Apple invests heavily in tools, technology, and the marketplace Spotify uses daily. We flew our engineers to Stockholm to help Spotify’s teams. Everything works when a user opens Spotify, listens to music on their commute, or asks Siri to play a song from their library. Once again, Spotify pays Apple nothing.
Not everyone agrees on the best business deal. But free is hard to beat.
Spotify Wants More
Spotify needs more than free. They also want to rewrite App Store rules to benefit them more.
Spotify advertises via email, social media, text, web ads, and other channels like many other companies. Spotify can link their app to a page where users can create or manage accounts under the App Store’s reader rule.
Apple team added the reader rule years ago after Spotify developers gave us feedback. This option is used by many reader apps, from e-readers to video streaming services, to link users to websites. Spotify could, but they didn’t.
Spotify wants to circumvent the App Store’s In-App Purchase system by embedding subscription prices in their app. They want to use Apple’s tools and technologies, distribute on the Apple App Store , and benefit from user trust without paying Apple.
Simply put, Spotify wants more.
Spotify-EC Coordination
Spotify began an unrealistic investigation with the European Commission in 2015. They claimed Apple was slowing competitors and stalling the digital music market. Unfortunately, Spotify grew and outperformed all other digital music companies, thanks in part to the App Store.
The European Commission met with Spotify over 65 times over eight years to build three cases. They’ve narrowed their claims with each pivot, but each theory has had two things in common:
No consumer harm seen
European consumers have more options than ever in a booming digital music market. Spotify was the biggest winner as it went from 25 million subscribers to almost 160 million with over 300 million active listeners in eight years.
No anti-competitive behavior recorded: Eight years of research have failed to explain how Apple has thwarted competition in a booming market.
The Digital Markets Act (DMA) takes effect shortly after the European Commission issues this decision. Apple will comply with the DMA in days and plan to change the challenged rules. Clearly, this decision is not based on competition law. The Commission wants to enforce the DMA before it becomes law.
European consumers have more options than ever. Despite the name of competition, today’s decision strengthens the digital music market’s runaway leader, a successful European company.
What Next?
Apple supports over 2.5 million European jobs after 40 years in the region. The Apple App Store is part of our success in fostering competition and innovation in markets. We respect the European Commission, but the facts don’t support this decision. Apple will appeal.
The app economy is evident in the digital music market. Over the App Store’s 15 years, “there’s an app for that” has become a universal truth. Every app today is powered by a successful company or a dreamer entrepreneur.
Apple teams pursue that dream daily. They make the Apple App Store the safest and best for users. They enable developers to create amazing apps. They do it mostly because apps can inspire life-changing innovations.
