In a potentially game-changing move, EU regulators are reportedly set to compel Apple to allow competing music services, including Spotify, to guide users to alternative payment methods outside the App Store’s in-app purchase system.
Failure to comply could result in fines of up to 10% of Apple’s annual sales, with an official decision expected in early 2024, according to Bloomberg.
Apple currently enforces an “anti-steering” rule, preventing apps from informing users about payment options beyond the App Store’s in-app purchase system within the apps themselves. Although developers can communicate alternative methods via email, the EU’s directive, if implemented, would require Apple to abandon this rule. The specific details of whether Spotify can incorporate direct payments in its app or simply advertise alternative methods remain unclear.
The ongoing dispute revolves around Spotify’s reluctance to allow users to subscribe to its streaming service at its standard $10.99 monthly rate through its iPhone app, as Apple imposes a 15% to 30% commission on in-app purchases.
Spotify contends that the inability to inform iPhone users about alternative payment options is anticompetitive. Don Harrison, Google’s Head of Partnerships, revealed during the legal saga between Google and Epic Games that Spotify enjoys a distinctive arrangement that affords the company flexibility in managing Play Store fees. Whether Spotify independently handles payment processing or opts for Google’s services, reports suggest the streaming service faces either minimal fees or an unusual 4% charge.
While this EU ruling focuses on anti-steering rules affecting music streaming services, the imminent Digital Markets Act in the EU could trigger more extensive changes, potentially compelling Apple to open the iPhone to third-party app stores and allow sideloading.