February 24, 2024

Spotify Blasts Apple For An “Outrageous” 27% Commission Fee

Launching an outspoken criticism against Apple, music streaming service provider Spotify called out the tech giant for its new 27% commission fee on transactions.

Following its defeat in its legal battle with Epic Games, Apple announced on Wednesday that it will begin to allow developers to sell their products through channels apart from its official App Store.

However, it comes with a catch – the developers would still have to pay Apple a 27% commission on transactions.

Calling the levying of the commission fee “outrageous”, Spotify said that Apple would stop at nothing to protect its profits. The former has also urged the UK government to prevent Apple from implementing similar fees in the UK.

Apple’s New Commission Fees Explained

Apple’s decision to allow sales via third-party platforms and payment methods while still charging a hefty commission comes soon after its loss in a long-running court battle with Epic Games.

While smaller developers are charged a 15% fee on sales via Apple’s own payment system, bigger developers have to pay a hefty 30% commission.

Epic had brought Apple to court over its anti-steering policy, which barred developers from telling users about alternative methods of payment that would bypass the App Store payment system.

Though the court was in favor of Apple on several issues, it ultimately ruled Apple’s practice of not allowing developers to promote alternative payment methods as unlawful.

Following the ruling, Apple introduced a revised set of rules in the US. While it will now allow users to purchase or subscribe to services without using the official App Store payment system, developers will be charged a costly commission on such transactions.

Sales from auto-renewal of subscriptions and smaller developers have been levied with a 12% fee, while bigger app developers such as Spotify will have to shell out a 27% commission.

Hence, while developers are now allowed to redirect customers to alternate payment methods using external links, the new commission will likely deter them from doing so.

A Spotify representative called Apple’s new charge “flies in the face” of the court’s attempts to introduce more competition in the market

Spotify’s Long-Drawn Fight with Apple

This isn’t the first time that Apple has drawn criticism from Spotify. The two companies have been fighting for years on the same grounds, with Spotify and its CEO Daniel Ek repeatedly calling out Apple for its charges on subscriptions purchased via the App Store.

According to Spotify, the charges help Apple gain an unfair advantage with its own music streaming platform Apple Music – which lags behind Spotify in popularity.

However, as Apple disclosed the change in its policy in a court filing, it claimed that all developers publishing apps on Apple’s store enjoy the benefits of the tech giant’s proprietary technology and tools alongside access to its vast user base.

In 2020, the European Commission initiated an antitrust probe into Apple following Spotify’s complaints regarding the 30% fee it has to pay Apple.

However, the EU later narrowed the investigation by excluding Spotify’s request to remove the charge on the sale of goods and services.

Claiming that the App Store played a role in helping Spotify become the top music streaming service across Europe, Apple expressed its hope that the European Commission would stop pursuing a complaint “that has no merit”.

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