[TechWeb] reported on March 5 that a few days ago, the European Union imposed a fine of about 14 billion yuan on Apple on the grounds that the App Store was an obstacle to competition in the digital market.
The EU argues that Apple has unlawfully prevented app developers from providing users with information about subscription services that are cheaper outside of the App Store.
Following the ruling, Spotify posted on its blog endorsing the European Commission's decision, adding that Apple often flouts the law and court decisions in other markets, so we look forward to the next process to definitively address Apple's long-standing unfair practices.
It is understood that Spotify, Sweden's **streaming** service platform, filed a complaint against Apple in 2019, involving Apple's 30% commission on the App Store.
Yesterday evening, Apple issued a statement on its official website, expressing its dissatisfaction with the fine. Apple said the European Commission failed to find any substantial evidence of harm to consumer interests and ignored the reality of a thriving, competitive and rapidly growing market.
Apple believes that much of Spotify's success is due to the App Store, that Spotify has never paid Apple anything, that Spotify is subscribed on its own **on **, and that Apple does not charge commissions on these transactions. Spotify not only does not pay commissions to Apple, but has repeatedly tried to file charges against Apple, hoping to reap more benefits from changing the rules of the App Store. Apple said it would appeal the penalty.
On the same day, Apple's stock price was **254%, the latest market capitalization is US$2,703.9 billion, and the market value has evaporated by US$70.4 billion (equivalent to RMB 506.9 billion). In addition, just the day before, Goldman Sachs removed Apple from its list of the best** due to the company's poor performance and concerns about weak demand for its main products.
The following is the full text of Apple's statement
The European Commission today announced a decision claiming that the App Store is an obstacle to competition in the digital** market. The European Commission failed to find any substantial evidence of harm to consumer interests and ignored the reality of a thriving, competitive and rapidly growing market.
Stockholm, Sweden-based Spotify is a major proponent of this decision and the biggest beneficiary. Spotify has the world's largest streaming app and met with the European Commission at least 65 times during the investigation.
Spotify currently has a 56% share of the European streaming market, more than twice as much as its closest competitor, and has never paid Apple anything for the services it received to help it become a globally recognized brand. Much of Spotify's success is due to the App Store and the tools and technologies Spotify uses to build, update, and share its apps with Apple users around the world.
We're proud to play a key supporting role in Spotify's success—just as we've worked tirelessly to support developers of all sizes since the early days of the App Store.
Contribution from the App Store.
Since the launch of the App Store more than 15 years ago, Apple has had two simple goals: to create a safe and secure marketplace for our users; Extraordinary business opportunities for developers. This principle may seem simple, but the app economy it has fueled has driven growth rarely seen in the history of technology.
Today, developers compete on the level playing field provided by the App Store. Apps are subject to well-established rules designed to protect the safety of users. Adhering to these rules means that developers of all sizes can reach more than 1 billion devices worldwide.
In the long run, the App Store provides more value to developers. But the vast majority of developers (about 86%) never have to pay Apple.
Currently, App Store developers only need to pay Apple in two scenarios. This is when a user purchases a paid app from the App Store, or purchases an in-app digital product or service, such as a subscription or in-game item.
Developers who inform** physical items within their apps, provide ads, or share apps for free do not need to pay Apple. Similarly, if a developer has a web** subscription for purchase by a user, the user will then use the subscription service through the app on the device, and the developer will not be charged to Apple. App developers can also inform users of purchases outside of the app and provide links to direct users to external accounts to create and manage accounts.
The App Store has a long history of helping developers of all sizes build successful businesses and reach people around the world. Spotify is an outstanding representative of this good story.
Spotify has a dominant share in the market.
Spotify has grown from a small startup in Stockholm, Sweden to the largest giant in the global digital** industry. The company has a more than 50% share of the European market and a higher share on iOS devices than on Android devices.
At the same time, the European digital** market has seen explosive growth. Companies compete to win new customers, and customers have a wealth of choices. Last year, the number of subscribers has reached nearly 1600 million, compared to 25 million in 2015 – an average annual growth rate of 27%.
Companies like Google, Amazon, Deezer, SoundCloud, and Apple are struggling to get more customers every day — and Spotify is the leader in this race.
Spotify has never paid anything to Apple.
Despite its success, and the fact that this success is inextricably linked to the role of the App Store, Spotify has never paid Apple anything. That's because Spotify, like many developers on the App Store, made a choice. Instead of going through the app, they subscribe on their own. Apple does not charge commissions on these transactions.
Spotify has cumulatively been remade, rebuilt, and updated on Apple devices more than 119 billion times. The app is available on the App Store in more than 160 countries and territories around the world.** Apple also provides value to Spotify in many other ways without the company having to pay anything:
Our design helps ensure that Spotify's apps work seamlessly with devices and features like Siri, CarPlay, Apple Watch, Air**, widgets, and more.
Like all developers, Spotify has access to more than 250,000 APIs from Apple and 60 frameworks that enable its apps to connect to Bluetooth, send notifications, watch audio in the background of a user's device, and more.
Spotify uses our beta testing tool, TestFlight, for nearly 500 versions of its app to test new features and functionality.
Our app review team reviewed and approved 421 versions of the Spotify app, typically within a day, and often expedited the review process at Spotify's request.
Apple has made a sustained effort and significant investment in building the tools, technologies, and marketplaces that Spotify uses every day. We've even sent engineers to Stockholm to help the Spotify team on the spot. The result is that when you open the Spotify app, listen to it on your commute, or request a song from Siri's library, everything works without a hitch. Again, Spotify hasn't paid Apple anything for this.
In business, people have a different understanding of the best deals. But obviously, it's hard to have a more cost-effective business than "free".
Spotify wants to get more.
However, free doesn't satisfy Spotify. They also intend to rewrite the rules of the App Store to reap more benefits.
Like many companies, Spotify uses a variety of methods to reach potential customers, including email, social**, text messaging, and online advertising. In accordance with the App Store's reader rules, Spotify may also provide a link within the app that directs customers to an external web page to create or manage an account.
We introduced the Reader Rules a few years ago in response to feedback from developers like Spotify. Many reader apps, such as eReader and Streaming, use this option to direct users to their web pages. Spotify can do the same – but they don't.
Spotify wants to tamper with the rules to satisfy its interests by embedding subscriptions** in its apps instead of using the App Store's in-app purchasing system. They want to use Apple's tools and technology, distribute their products on the App Store, monetize the user trust we've built, and they don't want to pay Apple anything for it.
In short, Spotify wants to get more.
Spotify's partnership with the European Commission.
Since 2015, Spotify has partnered with the European Commission to conduct an investigation with little to no basis in reality. They claim that the digital market has come to a standstill and that Apple is limiting the growth of its competitors. In contrast to their allegations, Spotify itself continues to evolve and outperform all other digital** services around the world, fueled by the App Store.
Over the next eight years, the European Commission and Spotify met more than 65 times and tried to bring charges against Apple three times. Each time they narrowed down the allegations, but each theory had two things in common:
There is no evidence that consumer interests are compromised: In a digital** market that is growing exponentially, European consumers have more choices than ever before. In just eight years, the number of subscribers has grown from 25 million to nearly 1600 million, and more than 300 million active users, and Spotify is the biggest winner of this growth.
There is no evidence of anti-competitive practices: The investigation lasted eight years and never came up with a defensible theory that could explain how Apple thwarted competition in an apparently thriving market.
The European Commission published the decision on the eve of the entry into force of its new rule, the Digital Markets Act (DMA). Apple will begin complying with DMA in a few days, and we plan to change the challenged rules mentioned in this article. It is clear that the European Commission's decision cannot be supported by existing competition law. The Commission's move is to enforce the DMA before it becomes law.
The reality is that EU consumers have more choices than ever before. Ironically, the decision announced today cements the position of a successful European company as a frontrunner in the digital** market in the name of competition.
What happens next?
Apple has been in Europe for more than 40 years. Today, we support more than 2.5 million jobs on the continent. We help markets thrive, fostering competition and innovation, and the App Store plays an important role in that. Therefore, while we respect the Council of Europe, it is important to note that this decision is not supported by reality. As a result, Apple will appeal.
The digital** marketplace is a great example of how the app economy can work. In the 15 years since the App Store was introduced, the simple phrase "there's an app that can do it" has become a well-established fact. Today, behind every app is a company that has been successful, or a group of ambitious dreamers.
Every day, the Apple team works hard to bring this dream to life. We've made the App Store the most secure and great experience for our users. We offer ways for developers to make great apps. Most importantly, we believe in the unparalleled power of apps to foster innovation, unleash human potential, and enrich people's lives.