April 17, 2024
Spotify Says Apple's Plan for DMA Compliance is a 'Complete and Total Farce'

Spotify Says Apple's Plan for DMA Compliance is a 'Complete and Total Farce'

Posted January 26, 2024 at 10:20pm by iClarified
Spotify has issued a statement on Apple's plan to comply with the EU's Digital Markets App, calling it 'a complete and total farce'.

Apple is nothing if not consistent. While they have behaved badly for years, this takes the level of arrogance to an entirely new place. Under the false pretense of compliance and concessions, they put forward a new plan that is a complete and total farce. Essentially, the old tax was rendered unacceptable under the DMA, so they created a new one masquerading as compliance with the law. From the beginning, Apple has been clear that they didn't like the idea of abiding by the DMA. So they've formulated an undesirable alternative to the status quo. This is why many of the most popular developers will never be able to choose it. And for the developers who feel like they have no other alternative, it's a path that will punish their success.

The company highlights a few elements of Apple's plan...

1. A completely new 0.50 cent Euro fee per download, every year, in perpetuity, to Apple for just allowing developers to exist on iOS – This is extortion, plain and simple. If Apple's already charging a commission of 17% (and 10% for recurring payments) on digital goods purchased, why would they also need to charge an annual flat fee for every user? For any developer wondering if this might work for you, you need to have less than a million customers and essentially sign up for not growing in the long run. From our read of Apple's proposal, a developer would have to pay this fee even if a user downloaded the app, never used it and forgot to delete it. This will hurt developers, potential start-ups and those offering free apps most: How will a developer pay Apple back if its free app goes viral – multiple millions of accounts install that free app, and then that developer owes Apple millions? And this would be just the beginning, because Apple changes its rules all the time. There's nothing in the law prohibiting Apple from increasing that 0.50 cent Euro to 1 or 10 Euro over time.

2. Apple is still charging a 17% rent on developers for existing in the App Store if they offer alternative payment methods or link out to their own website– Apple is making a developer's choice between the status quo and this new program as difficult as possible. Apple is now saying, 'sure, we'll let you link out or offer your own payment methods… but you still owe us a commission for even doing that (plus that new flat 0.50 cent Euro fee).' This combination of fees means that, in most instances, if your app is popular, you would pay the same or even more to Apple than under the prior rules. Apple is making the DMA hurt even more for developers, throwing them an unworkable alternative that will stifle their businesses immediately.

3. Apple is offering alternative app stores – but are they really? Spotify, like so many other developers, now faces an untenable situation. Under the new terms, if we stay in the App Store and want to offer our own in-app payment, we will pay a 17% commission and a 0.50 cent Euro Core Technology Fee per install and year. This equates for us to being the same or worse as under the old rules. And if we managed to remove our app from the App Store and only existed in the Alternative App Store, that would still not work. With our EU Apple install base in the 100 million user range, this new tax on downloads and updates could skyrocket our customer acquisition costs, potentially increasing them tenfold. This, as we have to pay on every install or update to our free or paid app, even for those who no longer use the service.

Spotify concludes, as many other developers have, that Apple is forcing developers to stay with the status quo, negating the goal of the DMA. The company is urging the EU to "reject this blatant disregard of the very principles you worked so hard to establish."

We have yet to hear an official statement from the EU on Apple's plan. Even if they object to it, Apple may choose to fight the decision which could leave the rules in place for some time.

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Spotify Says Apple's Plan for DMA Compliance is a 'Complete and Total Farce'
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