The EU is all set to look into the complaint filed by Spotify against Apple accusing the latter of using its own eco-system to its advantage to promote Apple Music. The EU competition commissioners said they decided to pursue the case after taking view inputs from rival companies, the end users and such, all which warranted a closer look into the case.
This is also going to be a keenly watched court battle as a lot is at stake for both Apple and Spotify. Several rival music streaming firms will also be watching the proceedings closely as the outcome will also have a direct bearing on the way it conducts its business as well.
The case centres around the way Apple take a cut of 30 percent from all subscription fees made via its Apple Store. Spotify said this is quite unjustified given that this puts them in a disadvantage vis-a-vis Apple’s own music streaming service. Spotify also argued the fees levied on digital content is unjust given that the same isn’t applicable on apps such as Uber.
As per Apple App Store rules currently applicable, developers have to pay 30 percent of the fees for subscriptions made via the App Store for the first year. From the next year onwards, the fee is halved to 15 percent. This, Spotify claims has a direct bearing on their profit margins, thereby leaving them a lesser amount to invest on R&D efforts or other innovations.
With the above pay structure not applicable to Apple homegrown service, Apple Music, the company has a lot to gain monetarily from it all. Plus, Apple also has the chance to integrate its streaming service deeper into its own ecosystem on the software level, something that happens to be another charge Spotify accuses it with.
Naturally, a ruling in favour of Spotify will have a huge impact on Apple and its earnings. That precisely should also be the reason the company would like to see a victory here at all costs. That said, cases such as this can drag on for years, which means it could be some time we get to see the bottom of it all. Also, with the fast-changing tech landscape, it remains to be seen how a verdict here will impact the industry at large.