Apple faces a fine as large as $26.6 billion in antitrust probe

Apple faces a fine as large as $26.6 billion in antitrust probe
The Financial Times reports today that complaints made by music streamer Spotify against Apple will be investigated by the EU competition commission. The issue is the 30% cut of revenue that Apple charges apps in the App Store for using its payment system. Spotify calls this the "Apple Tax" and complains that it gives rival streamer Apple Music an unfair advantage. The complaint was originally lodged in March. While Apple takes 30% from Spotify and other music subscription services, it doesn't charge other apps like Uber.

If the EU rules in favor of Spotify, it can force Apple to change its business practices on the continent and fine Apple up to 10% of the company's global revenue. In Apple's case, the fine could total as much as $26.6 billion. Most likely, Apple and the EU competition committee will work out a settlement with the company promising to lower or end the so-called "Apple Tax."

Both Apple Music and Spotify have similar monthly subscription rates, with both charging $9.99 a month for an individual subscription, $14.99 a month for families with up to six members, and $4.99 a month for verified students. However, because of Apple's 30% cut, in the App Store Spotify charges $12.99 a month for individuals, $16.99 a month for families and $7.99 a month for verified students. Unlike Apple, Spotify does have a free tier of service that is ad-supported, although it doesn't allow users to download music or select individual songs. 

Just last week, Spotify announced that it grew the number of its paying Premium tier subscribers by 32% year-over-year during the first quarter. The company now has 100 million paying subscribers and 117 million who use the free ad-supported service. At last count, Apple Music had 56 million paying subscribers worldwide. However, in the states, it is Apple Music on top-barely. Just recently, the Wall Street Journal said that in the U.S., Apple Music has 28 million paying subscribers compared to 26 million for Spotify. 

Other music streamers agree with Spotify but are afraid of challenging Apple

A lawyer at Clifford Chance that helped Spotify file its complaint, Thomas Vinje, said that there are other music streamers that agree with Spotify's position. However, Vinje says that these other companies are "too afraid to take on Apple." Back in March, Apple responded to the charges by pointing out that Spotify used the App Store to grow its business over the years without making any contributions to it in return.

Apple has been fined before by the EU’s competition commission. In 2017, commissioner Margrethe Vestager ruled that Apple had to pay 13 billion Euros ($14.6 billion USD) in back taxes. The commission found that a tax deal Apple had with Ireland was actually considered to be illegal state-aid from the country.



1. iloveapps

Posts: 867; Member since: Mar 21, 2019

Just pull off your spotify app on app store and optimized your spotify app on android.

2. vgking9699

Posts: 194; Member since: Mar 01, 2019

Google gets the same 30% from Spotify and google actually makes 45% from YouTubers videos

3. IT-Engineer

Posts: 566; Member since: Feb 26, 2015

Once Apple gets sanctioned, Google is next. As much as I don't like the fruit company, I hope Spotify gets smacked in the face. The AppStore needs maintenance, servers, developers, and so on. If you make money out of it, you have to contribute to it.

28. oldskool50 unregistered

No they won't. because on Android you don't ever have to install ANY app via the playstore.

9. Back_from_beyond

Posts: 1440; Member since: Sep 04, 2015

But unlike with the App Store you can just sign up through the Spotify app without the Play Store to set up your account. Apple has banned apps from linking to websites for signing up, forcing new users to pay through the App Store or set up the account through the website. Google doesn't try to force the payments through the Play Store to get their cut, Apple does enforce it through the App Store to take 30%. Apple tries to restrict the ability to pay for subscriptions outside of the App Store to maximize profits, unfairly making developers settle for earning 30% less or forcing them to increase prices to compensate. It's unfair competition practices by Apple.

12. AdamChew

Posts: 1; Member since: Nov 05, 2011

"Just last week, Spotify announced that it grew the number of its paying Premium tier subscribers by 32% year-over-year during the first quarter. The company now has 100 million paying subscribers and 117 million who use the free ad-supported service." If the EU practise the rule of law Spotufy has no case because whatever Apple is doing certainly did not harm their business.

15. Back_from_beyond

Posts: 1440; Member since: Sep 04, 2015

Good thing you're not a lawyer.

27. oldskool50 unregistered

But you can install Spotify on your phone on Android, without going through the Play Store. You can't on iOS. Which is the issue. And how many servers does it take to host millions of videos vs millions of just apps? How much bandwidth is needed for those videos to be played by MILLIONS at the same time vs apps. Hosting more videos has far and away more cost than apps do.

5. pogba

Posts: 112; Member since: Jun 13, 2018

Whats up with these companies who sue each other after agreeing to terms? unfair advantage? its their platform, of course they have an advantage. I'm not an apple fan or a music streamer but this is just ridiculous. Hope the judges shove the complaint up spotify's ass.

6. mootu

Posts: 1530; Member since: Mar 16, 2017

If they charge one company 30% they should charge all 30%, they don't. That is the reason new Netflix subscribers cannot subscribe through the app store anymore.

7. Ashoaib

Posts: 3298; Member since: Nov 15, 2013

It is unfair advantage for Apple and must be fined. Because Apple doesn't allow to install apps on iPhone from 3rd source. Developers are forced to use app store. Then Apple charge ridiculously high charges while giving unfair advantage to apple music. Either app store must be shutdown or applications should be allowed from other sources. Then there will be fair competition. Apple must find other ways to increase the security of apps downloaded from other sources. Not by forcing to use only app store.

24. vgking9699

Posts: 194; Member since: Mar 01, 2019

If Apple allowed apps to be download from outside sources then iOS would be just as bogged down with malware and buggy apps as android cuz Apple couldn’t regulate weather or not those apps were even legal or full of issues just like so many apps on android that aren’t from google play

11. Plutonium239

Posts: 1232; Member since: Mar 17, 2015

30% is very steep. If every app had to contribute 3% of profit towards maintenance of the app store, that would be much more fair.

25. vgking9699

Posts: 194; Member since: Mar 01, 2019

Then you must really hate googles 45% they charge YouTubers for their money they get for making videos that bring in money

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