Apple faces $ 26 billion fine due to Spotify complaint

File Reuters

UNITED STATES (VOP TODAY NEWS) — The European Union will begin an antitrust investigation against Apple after a complaint from the music service Spotify, writes The Wall Street Journal, citing sources. Spotify blamed Apple for unequal treatment of its and third-party services from the App Store.

The developers said that Apple did not allow Siri and HomePod to run their applications, threatened to remove Spotify from the App Store and did not approve of the update.

Spotify filed a complaint with the European Commission about Apple’s actions in mid-March. According to the CEO of the platform, Daniela Eka, the company specifically creates advantages for Apple Music: it has established rules in the App Store that restrict free competition and destroy innovation. So, the corporation takes a commission of 30% from purchases within the application, which causes Spotify and other platforms to raise prices.

March 15, Apple responded to the allegations: the company said that Spotify “covers its financial motives with false rhetoric.” “Spotify is committed to preserving all the benefits of the App Store ecosystem, including the revenue they receive from App Store customers, without making any contribution to this market,” Apple said in a statement.

In Cupertino, they believe that the true goal of the service is to earn more money at the work of others, using pressure on the App Store and on artists, musicians and songwriters. The latter refers to the decision of the US Copyright Council, which demanded that Spotify increase the amount of royalties, after which the company sued the creators of the music.

According to Apple representatives, for all the time the moderators missed over 200 updates in the App Store and only a few of them were delayed due to violations. In addition, the amount of commission from each transaction performed is 30% only in the first year, and from the second it drops to 15%. Cancel the same commission at all in Cupertino can not, because such rules apply only to taxi services and online stores.

If EU regulators recognize the company’s business practices as illegal, they can impose a fine of up to 10% of annual revenue. Investigations do not have specific dates, and they can last for years, reminds WSJ. In this case, the participant of the investigation can meet the authorities and avoid a fine by solving the problem.

Until recently, Spotify dominated the music streaming segment, but Apple Music managed to beat the Swedish competitor in one of the indicators and gain a foothold as the main player. In February, Apple Music outpaced Spotify in the number of paid users from the US, the WSJ reported.

Official services did not disclose this data. The figures cited by the publication take into account only paid subscriptions, excluding users who use free or trial versions of Apple Music and Spotify applications, the publication notes.

The number of paid subscribers to Apple’s streaming music service reached 28 million, while the Swedish competitor has 26 million paid accounts from the United States. However, Spotify is almost twice as fast as Apple Music in the number of paid account holders worldwide.

As of December 2018, Spotify has 98 million, while Apple’s music service has 50 million. This gap can be significantly increased by the owners of free accounts. Thus, the total number of Spotify users will exceed 200 million.

This article is written and prepared by our foreign editors writing for VOP from different countries around the world – edited and published by VOP staff in our newsroom.

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