Apple Music

The EU is preparing to launch a formal antitrust investigation against Apple following Spotify’s official complaint, reports the Financial Times. Spotify claims that Apple uses its App Store to stifle innovation and limit consumer choice in favor of its own Apple Music service.

Following Spotify’s complaint in March, the EU surveyed customers, rivals, and others before deciding to launch a formal investigation “in the next few weeks,” reports the FT.

Spotify CEO Daniel Ek is particularly concerned with the “Apple tax,” whereby Apple takes a 30-percent cut on every Spotify subscription signed up via the App Store during the first year, and then 15 percent each year thereafter. “If we pay this tax, it would force us to artificially inflate the price of our Premium membership well above the price of Apple Music,” said Ek in a March blog post. Conversely, not paying the tax results in “a series of technical and experience-limiting restrictions on Spotify,” complains Ek, such as limiting communications with Spotify customers. Spotify’s complaint says that Apple unfairly targets music subscriptions with the tax but not apps like Uber or Deliveroo, for example.

Ek also accused Apple of blocking Spotify from implementing “experience-enhancing upgrades” related to Siri, HomePod, and Apple Watch to the advantage of Apple Music.

”Spotify wouldn’t be the business they are today without the App Store ecosystem,” said Apple in response. “Apple connects Spotify to our users. We provide the platform by which users download and update their app. We share critical software development tools to support Spotify’s app building. And we built a secure payment system — no small undertaking — which allows users to have faith in in-app transactions. Spotify is asking to keep all those benefits while also retaining 100 percent of the revenue.”

The investigation is likely to take years to resolve. If Apple is found to have acted unlawfully, the EU could fine the company up to 10 percent of its global revenue. Google’s EU antitrust bill now stands at €8.2 billion ($9.3 billion), for example. Apple could also end the probe early by changing its behavior.

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