Spotify accuses Apple of blackmailing them over new core technology fee

Apple wants to overhaul its App Store due to new EU regulations. The company recently presented its new plans, which also include the “core technology fee”. The music streaming service Spotify criticizes the plan and hopes that the EU will intervene. We can count Spotify among those not thrilled with how Apple has chosen to comply with the EU’s Digital Markets Act (DMA), which sets the stage for sideloading apps, alternative app stores, browser choice, and more.

Last Friday the streaming music company issued its response to Apple’s new DMA rules, calling the new fees imposed on developers nothing less than “extortion” and Apple’s compliance plan “a complete and total farce,” that demonstrated the tech giant believes that the rules don’t apply to them. Spotify boss Daniel Ek has sharply criticized Apple’s plans to reorganize its app business due to new EU regulations. “The plan is a total farce and should be rejected by the EU Commission”, the Swedish music streaming market leader said in a blog post. Spotify specifically attacked a new annual app fee of 50 cents: “This is blackmail.”

The new EU Digital Markets Act (DMA) stipulates that operators of major platforms must allow apps to be downloaded from third-party sources. It also stipulates that app developers can use third-party payment systems instead of the platform’s own payment services. Neither was previously possible on Apple’s iPhones. The DMA rules come into effect on March 7.

Apple therefore presented corresponding alternatives for the app business in the EU on Thursday. These include a reduction in taxes on the sale of digital items and subscriptions through its own App Store. The previous 30 percent and 15 percent for subscriptions from the second year onwards will become 17 and 10 percent respectively. However, Apple emphasizes that this percentage is collected regardless of which payment service an app developer uses. If an app uses Apple’s payment system, an additional three percent is due.

Spotify: Apple plan is “an unacceptable alternative”

The new “core technology fee” applies to apps that are frequently installed. The fee is due after an app reaches one million initial installs within a twelve-month period – consecutive updates in the same account are not covered by this period. Once the one million mark is reached, you will be charged 50 cents for each additional initial installation of the app until the end of the twelve month period. Once the next twelve month period starts, you will have to pay again.

This “core technology fee” also applies if an app is downloaded via another provider’s platform, at no further cost to Apple. Spotify emphasized that with a base of around 100 million users on Apple devices in the EU, it would have to pay a hefty fee. They will also have to pay the levy for people who do not use the service at all, but only have the app on their iPhone.

Apple is also allowing developers to remain on the App Store under the old app terms. Spotify criticized the iPhone company for coming up with an unacceptable alternative for developers so that they would prefer to stay with the old system. In response to Spotify’s criticism, Apple stated that with the new rules, 99 percent of developers would have to pay the company the same amount as before or less. The changes would give them more choice.

Spotify is not the only company to publicly express their negative opinion about Apple. Epic Games’ CEO Tim Sweeney, whose company sued Apple over antitrust concerns, already condemned Apple’s plan, saying it was a case of “malicious compliance” and full of “junk fees,” and now Spotify is essentially saying the same. Both Epic and Spotify have been longtime critics of the tech giant and have pushed for increased regulation.

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