Spotify in-app subscriptions previewed – but Apple fighting back

Spotify in-app subscriptions aren’t currently possible, thanks to Apple’s 30% cut – but the company has today previewed the experience it hopes to offer to European customers from March.

The streaming music company shows animations comparing the current in-app experience with the one it hopes to be able to offer once Europe’s Digital Markets Act (DMA) antitrust law comes into force on March 7 …

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Apple’s anti-competive behavior

The DMA is intended to prevent large tech companies from using their market dominance to distort competition. It lists a number of large platforms which will need to ensure a level playing field for competitors, and the App Store is one of these.

As things stand, Apple Music has an unfair advantage over Spotify in two ways. First, the app comes preinstalled on iPhones. Second, you can subscribe within the app.

Spotify users can’t do this because Apple would want 30% of the first year’s subscription, and that’s a margin which simply doesn’t exist in the streaming music business, where most of the subscription goes straight to music labels. Apple’s rules don’t allow Spotify to link to an external subscription page, placing a barrier in the way of customers who want to sign-up.

That has been ruled to be anti-competitive, and Apple has until March 7 to comply with the law in the European Union.

The company has been making preparations, but it’s still not clear exactly how it will comply. One route would be to permit third-party app stores, another would be to allow side-loading of apps.

Spotify in-app subscriptions preview

Spotify appears to be planning to go the sideloading route, where you would download the iPhone app directly from the Spotify website, and the company will then be able to allow in-app purchases without Apple taking a cut.

The company begins by describing the problem, which has forced it to display an unhelpful message in the app for anyone who taps on the Spotify Premium link: “You can’t buy Premium here. We know it’s not ideal.”

For years, even in our own app, Apple had these rules where we couldn’t tell you about offers, how much something costs, or even where or how to buy it. We know, pretty nuts. The DMA means that we’ll finally be able to share details about deals, promotions, and better-value payment options in the EU. And an easier experience for you means good things for artists, authors, and creators looking to build their audiences of listeners, concert-goers, and audiobook-loving fans. What’s more? All of this can now come without the burden of a mandatory ~30% tax imposed by Apple, which is prohibited under the DMA. 

It then provides animations showing the planned flow, which would be a simple tap to see pricing, another to choose your plan, and then a payment screen.

But Apple appears to plan to block this

However, Spotify’s preview may well prove optimistic – and the company likely knows this.

In the US, where a Supreme Court decision forced Apple to allow developers to sell their apps directly, the company responded by demanding 27% commission anyway. A new report today suggests that Apple may be planning something similar in Europe – though it might charge a fixed app review fee, rather than a percentage.

Although apps will be available outside of the App Store for the first time, the Journal says Apple still plans to charge fees and conduct app review processes for sideloaded apps. It isn’t clear whether the fees would be a commission based on revenue, just like its In-App Purchase fees.

9to5Mac’s Take

It seems likely Spotify knows Apple will try to get away with as much as it can, and it’s sharing an ideal user experience so that it can complain if the iPhone maker effectively makes it impossible.

As for how far Apple will take its fight, that remains to be seen. It seems unthinkable that European antitrust regulators would allow the 27% commission tack, and they are likely to be unimpressed even by a fixed fee or smaller percentage, as this runs counter to the spirit of the DMA.

So far, though, Apple is maintaining an exceedingly aggressive stance, so it wouldn’t be in the least bit surprising if this issue had to be settled in court.

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