Apple doesn’t comply with DMA

Spotify’s app in the EU

Spotify by far has the largest music streaming share in the EU and has now enlisted smaller services to go in with it on a complaint saying that Apple is defying the Digital Markets Act.

Digital Music Europe is a trade group that contains the EU’s streaming powerhouse Spotify, alongside smaller services Deezer, Qobuz, Soundcloud, Soundcharts, and Hamendo. According to its own mandate it aims to “support policies that promote fair competition and innovation for digital music services.”

Another goal it claims to have is to “encourage a ‘light touch’ approach to regulation that reflects the complexity of the music industry and the challenges faced by innovators.”

Perhaps belying the second point, the group has written a letter to the European Union, decrying what it sees as Apple’s lack of compliance with the Digital Markets Act (DMA). The DMA can’t be considered a “light touch” in the sector in regulation in any way — as it applies to companies outside the EU.

In the letter, the group takes issue with Apple’s new Entitlement that would allow these services to link to alternative payments outside the App Store inside apps. In the letter seen by AppleInsider, the group says that “Apple’s new entitlement for music streaming services is a discriminatory program that forces competitors to opt into a new regime run by Apple.”

The letter comes after Spotify tried to have its cake and eat it too with its latest app update. Spotify put in the outbound link and discussion that users should subscribe on Spotify’s website without agreeing to the new Entitlement that Apple has offered up to comply with the EU’s Digital Markets Act.

What is Apple’s music streaming service entitlement?

According to the letter of the law as it stands on May 9, 2024, the Entitlement does conform. After the EU asked for comment on compliance steps that Apple and Google have taken, the Digital Music Europe group has declared that it does not.

Rather than paying the typical 30% App Store transaction fee, or none for reader apps like the streamers use now, services agreeing to the Entitlement must pay Apple a commission of 27% on purchases made through outbound links. This figure can drop to 12% for Small Business Program participants or the renewal of an auto-renewing subscription beyond its first year.

In order to link out to an external website to direct users to subscribe there, streamers must agree to the new Entitlement. As it stands now, Apple isn’t “forcing” anybody to opt-in to the new plan. Spotify and the rest of the Digital Music Europe consortium pay nothing to Apple if they don’t allow subscriptions through the App Store if they don’t accept the new terms — but they also aren’t allowed to link to an external website.

At this point, Spotify pays extremely little to Apple — and perhaps nothing at all. It removed the ability to purchase a subscription out of the app years ago. Yet, Spotify’s CEO keeps complaining about an Apple tax that it does not pay much of.

Back in 2019, it was reported that 680,000 users of Spotify were paying 15% of the subscription fee to Apple, and none paid 30% at all. Since Apple’s charges for subscriptions cuts in half for the second year and beyond, this meant all Spotify subscribers paying through Apple at the time were long-time users, and that no new subscribers were added in the previous year.

In March, following a European Commission’s ruling that Apple had illegal power over the streaming market, Apple said Spotify had a 56% share of Europe’s music streaming market, and that it had paid Apple “nothing for the services that have helped make them one of the most recognizable brands in the world.”

“A large part of their success is due to the App Store, along with all the tools and technology that Spotify uses to build, update, and share their app with Apple users around the world,” the statement continued, adding that Apple was “proud to play a key role supporting Spotify’s success.”

Apple has about 25% of the streaming music market in the EU, and iOS does not hold the majority smartphone share in the region. So, Spotify alone holds more than double Apple Music’s market share.

Spotify has no extra responsibilities to consumers under the DMA as it stands today.

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