The EU plans to open a formal antitrust investigation into Apple in the next few weeks after Spotify accused the tech giant of "tilting the playing field to disadvantage competitors", the Financial Times first reported.
Spotify complained to the EU’s antitrust agency earlier this year that Apple’s 30 per cent cut of subscription revenue from apps was effectively a tax on competitors. The confrontation came amid Apple's efforts in new business areas that compete with third-parties on its platform, such as music streaming services.
Apple has said it doesn’t charge for distributing free apps and only takes the 30 per cent from paid subscriptions on its platform. It also said that rate drops to 15 per cent for subscriptions of more than a year. In the case of Spotify, Apple company has said that the majority of customers of the music streaming service use the free, ad-supported product, and only “a tiny fraction” of the subscriptions fall under Apple’s revenue-sharing model.
The EU has studied the complaint and surveyed customers, rivals and others in the industry, which prompted the formal investigation, the FT said, citing three people familiar with the probe it didn’t identify. The authorities haven’t set deadlines for the investigation and it could take years to reach a resolution, it said.
EU enforcers have been able to push companies to alter business practises they consider unlawful, and fines could be as high as a 10th of global sales, the FT said.
Daniel Ek, Spotify’s chief executive officer, said its battle with Apple has become “untenable”, which would drive him to raise prices, the FT reported.
Apple earlier fired back at the Stockholm-based company’s complaint, saying the music streaming giant wants all the benefits of its app store without contributing to the marketplace. Spotify said at the time that Apple “routinely blocks” some of its product upgrades, such as integration with the Siri digital assistant and the Apple Watch.
Last month, Spotify said it has reached 100 million paid subscribers, a first for any online music service, adding more customers in the latest quarter than analysts expected and boosting confidence the company has room to grow, Bloomberg reported. Its subscribers are up 32 per cent on the year and almost twice the latest figures for Apple Music.
