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It\u2019s been a good month for Spotify. While the music streaming giant hasn\u2019t had many of those in recent years, it looks to be righting the ship since layoffs in December as the group celebrated strong earnings and toasted an EU ruling against one of its biggest nemeses: Apple.\u00a0<\/p>\n
Last Monday, the European Union slapped Apple with a \u20ac1.8 billion<\/a> ($1.95 billion) fine for preventing streaming platforms from informing users of cheaper offers away from the app.<\/p>\n As a new EU competition act comes into law, Spotify\u2019s five-year battle with Apple is increasingly looking like a David vs Goliath contest, and a look at the companies\u2019 respective share prices would suggest Apple is wobbling.\u00a0<\/p>\n If you\u2019re an iPhone owner among Spotify\u2019s 236 million subscribers, you might be able to cast your mind back to paying for your first Spotify subscription, thanks mostly to its time-consuming nature.<\/p>\n You were likely sitting on your phone ready to sign up, before you were asked to search for Spotify on a browser to make your purchase. You would eventually return to the app to log back in and start listening. Because of Apple\u2019s tight controls, you couldn\u2019t simply sign up there and then in the app.<\/p>\n If you\u2019re an Apple Music subscriber, the sign-up process was so simple you\u2019re probably unlikely to recall the routine \u201cdouble-tap\u201d you used to start paying Apple a subscription<\/p>\n This has been the crux of the streamer\u2019s ongoing gripe with Apple.\u00a0<\/p>\n Apple charges large developers a 30% commission on purchases and in-app purchases, including subscriptions, made through the company\u2019s famous iOS platform, while charging some smaller developers a reduced rate<\/a>. <\/p>\n About 85% of developers of free apps don\u2019t pay Apple anything<\/a> because they don\u2019t make any revenue from their apps. <\/p>\n Spotify has, in turn, limited its iOS app to avoid paying those commission fees. It\u2019s an anti-competitive move that\u2019s affected numerous other content apps, including Audible and Amazon\u2019s Kindle app.<\/p>\n Apple said in a press release<\/a> that Spotify pays the platform nothing. The<\/em> Guardian<\/em><\/a> <\/em>pointed out that Spotify does at least pay a nominal $99 annual developer fee to the company.<\/p>\n Spotify\u2019s bigger point, though, is that Apple actively deters consumers from buying competitors\u2019 products, which is worsened by the fact that it already runs its own rival service to Spotify, Apple Music.\u00a0<\/p>\n The EU\u2019s investigation excluded the 30% commission charged by Apple in its investigation. However, this charge will go with the introduction of the upcoming Digital Markets Act (DMA).\u00a0<\/p>\n Since Spotify launched its complaint with the EU about these practices, the group hasn\u2019t minced its words in a coordinated lobbying effort stretching across Europe, the U.K., and the U.S.<\/p>\n Traditionally press-shy CEO Daniel Ek published an op-ed in the Daily Mail last year, in which he claimed the company couldn\u2019t survive if it were founded today, thanks to Apple\u2019s commission rules.\u00a0<\/p>\n Earlier in February, Spotify rented out ads on bus stops across London criticizing Apple\u2019s App Store rules.<\/p>\n Apple defended itself by claiming that 85% of app developers pay no fees to distribute through the app store, as free apps don\u2019t pay any commission. It argued that developers with paid apps should have to pay to access the App Store\u2019s billions of users.\u00a0<\/p>\n Those arguments are likely little consolation to Spotify, which has been forced to get around that 30% fine.<\/p>\n The back and forth presented itself as a David vs Goliath battle between the two tech companies.\u00a0<\/p>\n While Spotify might go toe to toe with Apple in terms of name recognition, it is about a fifth of the size of the tech giant in terms of market value.\u00a0<\/p>\n And despite Spotify also\u2014as Apple points out\u2014sitting atop the music streaming industry, the role of David is one the group appears keen to have played up to.<\/p>\n It\u2019s difficult to know how Europe\u2019s move to try and force Apple to open up its App Store will impact Spotify financially, mainly because there is no real comparison to what it means.\u00a0<\/p>\n The group will change its app in Europe<\/a> following the rollout of the EU\u2019s DMA on March 7, which will make it easier for users to pay in the app and receive in-app promotions.\u00a0<\/p>\n To get a simple idea of how investors think Spotify\u2019s coup might play out, you just need a glance at the streamer\u2019s share price.<\/p>\nWhy Spotify and Apple are fighting<\/strong><\/h2>\n
David vs Goliath<\/strong><\/h2>\n
The year of Spotify?<\/strong><\/h2>\n