Apple was unsurprisingly scathing yesterday about the European Union's conclusion that its App Store rules breach competition law, a conclusion that has prompted a €1.8 billion fine. Regulators at the European Commission announced their conclusion and fine - Apple says - despite being unable to "uncover any credible evidence of consumer harm". Their ruling, it adds, "ignores the realities of a market that is thriving, competitive and growing fast".
Spotify, which instigated the EC investigation when it formally complained about the App Store rules regarding in-app payments, says "this decision sends a powerful message - no company, not even a monopoly like Apple, can wield power abusively to control how other companies interact with their customers". Although, it adds, the devil is in the detail and the impact of the EC's order for Apple to change its rules will depend on how that change is implemented.
Apple's statement disses Spotify the most, though still finds time to diss the EC too. It also complains about how friendly the streaming service and EC officials became after Spotify first complained about the App Store rules back in 2015, possibly implying that the Europeans love nothing more than ganging up against American corporations.
"The primary advocate for this decision - and the biggest beneficiary - is Spotify, a company based in Stockholm, Sweden", Apple's statement declares. "Spotify has the largest music streaming app in the world and has met with the European Commission more than 65 times during this investigation".
It actually references the number of meetings that have taken place between Spotify and the EC since 2015 twice. Over those eight years, it writes, "and more than 65 meetings with Spotify, the European Commission has tried to build three different cases. With every pivot, they’ve narrowed the scope of their claims - but each theory has had a couple of features in common: no evidence of consumer harm [and] no evidence of anti-competitive behaviour".
You'd be forgiven for thinking that Apple execs aren't welcome in Brussels. But Apple, like all the tech giants, has a significant lobbying presence within the European Union. According to the EU transparency register, it has eleven accredited lobbyists and uses ten intermediary lobbying firms, including Brunswick Group, Hanover Communications and APCO - spending in excess of €500,000 with each.
It also has 32 staff members who spend at least some of their time on lobbying activities within the EU and previously declared that it spent between €7 million and €8 million on EU lobbying in the twelve months between October 2021 to September 2022. By contrast, Spotify says it has three people lobbying in the EU, albeit on a full time basis, and it spent between €800,000 and €900,000 on lobbying in 2022.
In terms of meetings, according to the website Integrity Watch - which aggregates data from various EU lobbying transparency sources - Spotify has met with EU Commissioners 21 times since January 2020, while Apple held 49 meetings over the same period. During the same timeframe, Apple held 127 meetings with individual MEPs, while Spotify held just 34. Obviously, Apple has many more issues to lobby on than Spotify, but the point is, it's not as if the tech giant isn't well connected with politicians and officials in Europe.
But, alas, it has failed to convince EC officials that Spotify's complaints about Apple's allegedly anti-competitive behaviour are bogus. "European consumers have more choices than ever in a digital music market that’s grown exponentially", Apple declares. "In just eight years, it’s gone from 25 million subscribers to almost 160 million - with more than 300 million active listeners - and Spotify has been the biggest winner".
So, whatever Spotify says, there is "no evidence of consumer harm" caused by its App Store rules. Meanwhile, it adds, "eight years of investigations have never yielded a viable theory explaining how Apple has thwarted competition in a market that is so clearly thriving". That means that there is also "no evidence of anti-competitive behaviour".
When not summarising its core competition law arguments, Apple uses much of the rest of its statement to go over old ground. It insists that Spotify has benefited big time from its massive and ongoing investment into the App Store, and that the streaming service is simply ungrateful for all the support it has received, much of it provided free of charge.
Spotify wants to "rewrite the rules of the App Store in a way that advantages them even more", Apple says, adding, "they want to use Apple’s tools and technologies, distribute on the App Store, and benefit from the trust we’ve built with users - and to pay Apple nothing for it".
It is true that Spotify has majorly benefited from the infrastructure Apple has built to power apps on iOS devices. Although, at the same time, Apple benefits in a big way from companies like Spotify offering such compelling app experiences. Having made apps and the App Store such a central part of its mobile products, Apple needs other companies to really embrace that platform to make its devices a market leader.
The App Store rules that Spotify opposes relate to in-app payments. Specifically, the rules that say that in-app payments must be processed using Apple's commission-charging transactions system and that alternative payment options cannot be signposted. It's the latter rule - called the anti-steering provision - that the EC investigation ultimately focused on and which Apple has now been ordered to change.
In theory, this should be good news for Spotify. Though Apple could as yet attempt to find a way to comply with the EC order that imposes new conditions on app developers, meaning Spotify is no better off. The new EU Digital Markets Act already impacts the anti-steering provision, but Apple is complying with those new regulations in a way which, Spotify says, means it sees no benefit.
It's with that in mind that Spotify's statement on the big EC ruling yesterday included some caution. "While we appreciate the EC addressing this important case, we also know that the details matter", it writes. "Apple has routinely defied laws and court decisions in other markets. So we’re looking forward to the next steps that will hopefully clearly and conclusively address Apple’s long-standing unfair practices".