Daniel Ek, the CEO of Spotify, Disapproves of Apple’s Adjustments to the App Ecosystem in the European Union
Spotify CEO Daniel Ek recently voiced his dissatisfaction with the changes made by Apple to the app ecosystem in the European Union (EU) under the Digital Markets Act. In a blog post, Ek criticized Apple for introducing a new plan that he perceives as a mere facade, inaccurately portrayed as compliance and concessions. He contended that Apple believes it is exempt from rules that are applicable to others, creating hurdles for most app developers to adhere to the new terms. This article will delve into Ek’s critique, highlighting how these alterations impact app developers and the potential ramifications for users.
Apple’s New Conditions: High Fees and Lower Commission
Ek raised concerns about some of the key aspects of Apple’s new terms in the blog post. He particularly highlighted the 0.50 euro Core Technology Fee charged for each installation per year, which he deemed excessive. Additionally, while the reduced commission rates of 10-20% may appear favorable at first glance, Ek argued that developers of popular apps could end up paying more to Apple than they did previously. These conditions present challenges for Spotify, such as having to pay 0.50 euros per user in addition to a 17% commission, making it challenging for the company to function within Apple’s guidelines.
After sitting with our legal team to parse through the fine print of Apple's DMA announcement (that took a while), which is, at best vague and misleading, I wanted to share my thoughts.
While Apple has behaved badly for years, what they did yesterday represents a new low, even…
— Daniel Ek (@eldsjal) January 26, 2024
Impact on Customer Acquisition Costs and Alternative App Store
The implications of Apple’s new terms on customer acquisition costs are a significant concern for Spotify. As Ek pointed out, the availability of an alternative app store could lead to a substantial increase in these costs, with developers having to pay the 0.50 euro fee even for non-subscribers. Even if Spotify were to withdraw its app from the App Store and solely exist in an alternative app store, the expenses related to downloads and updates could surge due to the substantial user base in the EU. This situation effectively coerces developers to adhere to the status quo, contradicting the objectives of the Digital Markets Act.
Consequences for App Developers
Ek asserts that Apple’s alterations to the app ecosystem will have extensive repercussions for app developers. These adjustments impede the envisioned enhancement of user experience in the EU, as previously outlined by Spotify. Developers are left with restricted options, unable to seek alternatives or explore different pathways due to Apple’s terms, leading to escalated costs that could impede their progress and prosperity. Ek urges European Commissioners to oppose Apple’s dismissal of the DMA and advocate for a more inclusive app market that caters to the interests of developers and users alike.
Epic Games’ Criticism and Apple’s Counterargument
Epic Games CEO Tim Sweeney echoes similar concerns regarding Apple’s changes to the App Store, denouncing it as a cunning form of malicious compliance. While Fortnite intends to operate through an Epic Games app marketplace on iOS, Sweeney continues to push for legal intervention against Apple. In response, Apple asserts its support for the success of all developers, including Spotify, emphasizing that the new business terms ensure that over 99% of developers pay an equal or lower amount. Nonetheless, critics argue that these modifications restrict developers’ choices and might impede innovation within the app market.
The alterations in Apple’s app ecosystem within the EU have sparked controversy and criticism from Spotify CEO Daniel Ek and Epic Games CEO Tim Sweeney. The challenges associated with steep fees, reduced commission rates, and customer acquisition expenses undercut the anticipated benefits of the Digital Markets Act. Spotify and other developers find themselves constrained by the existing situation, potentially impacting their advancement and prosperity. As discussions persist, the response to the concerns raised by Ek and Sweeney by regulators and courts remains uncertain, as does the potential impact on the app marketplace in the EU.
