In March, music streaming service Spotify announced that it would be filing an antitrust complaint with the European Union (EU) regarding Apple’s business practices. On May 6, it was reported the EU’s regulatory body, the European Commission will investigate the complaint.
The organization’s inquiry into Apple’s practices comes at a pivotal moment for the Silicon Valley corporation. The iPhone maker is currently working to move away from mobile electronics to become a services company.
The Monopoly Complaint
Spotify asked the European Commission to step in because it argues Apple exerts undue influence over its application developer partners. The Swedish tech concern claims the American conglomerate uses its reach to impede innovation and stifle competition. The music streamer notes it does this by controlling the flow of information between users and developers and by charging exorbitant hosting fees.
In addition to filing a complaint with the EU, Spotify set up a website outlining its case against Apple. The page outlines Apple’s policy of demanding 30 percent of all purchases made in the iOS store. It also alleges the firm doesn’t let developers add buttons to direct users to make payments outside the app store.
The website also states Apple pressured Spotify into using its in-app payment system which forced the company to raise prices. The company explains going from $9.99 to $12.99 for its premium service on iOS hurt its business. The music service also criticized the iPhone maker for denying it Siri support and permission to make an iWatch app.
Most seriously, Spotify alleges the Big Tech concern engaged in anticompetitive behavior when it launched Apple Music. As a native application, Apple Music isn’t subject to the 30 percent surcharge and can offer lower subscription rates. The company also claims after launching its own music app, Apple began regularly rejecting updates to Spotify’s app.
Can Spotify Prevail Against Apple?
Right now, it’s hard to judge the viability of Spotify’s complaint against Apple. The company laid out a thorough and compelling case against its partner on its Time to Play Fair site. But Apple’s responses to the developer’s charges aren’t listed, so its account is one-sided.
Plus, Apple has a wealth of resources at its command. Its current market capitalization is $974.27 billion, so it can afford to mount a strenuous legal defense. Also, the corporation has faced numerous high-profile lawsuits in the past without incurring much financial or reputational damage.
On the other hand, the firm is at a precarious moment in its history. Facing a slowdown in the mobile electronics market, the company is pivoting toward a services-centric business model. Last month, it introduced new banking, gaming, and movie and TV streaming segments. The EU’s investigation into its business practices might scare off high profile developers and studios.
The history of the regulator involved will also factor in how the case is decided. The EU has a reputation of bringing the hammer down on tech corporations that engage in anticompetitive behavior. Since 2017, the European Commission has hit Google with $9.3 billion in anti-monopoly sanctions. Additionally, it’s worth noting Google’s Play Store doesn’t place the same restrictions and demands on its developers that Apple does.
Even if EU regulators decide against issuing a fine to Apple, Spotify may still challenge Apple’s practices in America. A Supreme Court case regarding the legality of the iOS marketplace is currently pending.