Apple has filed its response to Spotify’s antitrust complaint in Europe, and its answer is essentially that Spotify has greatly exaggerated how much money is being taken by the App Store. Apple says that it’s currently taking a 15 percent cut of subscription fees for around 680,000 Spotify subscribers, representing 0.5 percent of Spotify’s total subscribers, and that Spotify is not paying a 30 percent cut on anything. The details were first reported by Der Spiegel.
The takeaway message is supposed to be that Spotify is blowing its complaint way out of proportion, but those small numbers don’t tell the full story — they basically don’t matter, because Spotify gave up on App Store subscriptions years ago.
Spotify only offered subscriptions through the App Store between 2014 and 2016. That means subscription numbers have had years to dwindle. In 2016, Apple also reduced the cut it takes from subscriptions after they’ve been active for more than a year, bringing it down from 30 percent to 15 percent. That means Apple is only taking the lower number from Spotify, because Spotify hasn’t signed up any new subscribers in years.
Even though Apple isn’t taking a cut from a substantial portion of Spotify’s subscribers, Spotify’s criticisms of the App Store still largely hold up. In March, Spotify filed a complaint with the European Union’s antitrust arm saying that Apple requires it to “pay a 30 percent tax on purchases” made through iOS. That’s true, even if Spotify isn’t currently paying 30 percent because it stopped offering subscriptions through iOS in order to avoid the fee.
The EU is said to be launching an investigation into Spotify’s complaints around the App Store. If it doesn’t find Apple’s argument to be convincing here, then it’s possible we’ll end up learning a lot more about the dynamics between the two companies in the coming years as this spat plays out. Apple previously launched a website meant to show the ways that the App Store enables competition, but it really just showed how difficult it is to compete with Apple’s built-in apps.
It’s potentially a hugely consequential case for Apple: Apple is focused on boosting the revenue it receives from services right now, and the cut it takes from App Store purchases is a large part of that. Apple is being sued in the United States over similar issues, too. A major loss in either market would very likely result in a big hit to Apple’s revenue, but it could lead to terms that are a lot friendlier to developers trying to make money on Apple’s platform.