Cupertino, California Today, the European Commission announced a decision arguing that the App Store has become a barrier to competition in the digital music market. This decision was made despite the Commission finding no credible evidence of consumer harm and ignores the reality of a thriving, competitive and rapidly growing market.
The main advocate and biggest beneficiary of this decision is Spotify, based in Stockholm, Sweden. Spotify has the world's largest music streaming app and met with the European Commission more than 65 times during the investigation.
Today, Spotify holds a 56% share of the European music streaming market. This is more than double that of its closest competitor. You won't pay Apple anything for the services that have helped make it one of the most recognizable brands in the world. A big part of their success is thanks to the App Store, along with all the tools and technologies Spotify uses to build, update, and share apps with Apple users around the world.
We're proud to play a key role in supporting Spotify's success, as we have been for developers of all sizes since the early days of the App Store.
The App Store Journey
Since the launch of the App Store 15 years ago, Apple has had two simple goals: create a safe and trusted marketplace for users and incredible business opportunities for developers. This approach may seem simple, but the app economy it inspired has helped drive one of the fastest growth curves in technology history.
Today, developers compete on a level playing field in the App Store. Apps are reviewed against a comprehensive set of rules designed to protect users. And meeting these rules means developers of all sizes can access more than a billion devices worldwide.
Over time, the App Store has provided more value to developers. However, the majority of developers (about 86%) do not pay any fees to Apple.
Today, there are only two instances in which developers on the App Store pay fees to Apple: This is when a user purchases a paid app from the App Store or a digital good or service within the app, such as an in-game subscription or power-up.
Developers don't pay Apple anything if they sell physical goods, run ads in their apps, or share their apps for free. The same is true if a developer sells a subscription on the web before the user can use the subscription in the app on the device. Music app developers may also include information about other offers available outside of the app, along with a link to a website where users can create and manage their accounts.
Over time, the App Store has helped developers of all sizes build successful businesses and reach people around the world. And few companies embody that story better than Spotify.
Spotify's market share
Spotify started as a small startup in Stockholm, Sweden, and has grown the company into the world's largest digital music business. Spotify has over 50% market share in Europe, and on iOS Spotify has a much higher share than on Android.
But this is only part of the picture. This is because the European digital music market has grown explosively. Businesses compete to acquire new customers. Consumers have many options to choose from. And last year, the number of subscribers reached nearly 160 million, up from 25 million in 2015, an impressive annual growth rate of 27%.
Companies like Google, Amazon, Deezer, SoundCloud, and Apple compete for customers every day, but Spotify is at the forefront.
Spotify pays Apple nothing
Despite this success, and the App Store's role in making it possible, Spotify pays Apple nothing. Because like many developers on the App Store, Spotify has made its choice. Instead of selling subscriptions in your app, you sell them on your website. And Apple doesn't collect any fees for these purchases.
Overall, the Spotify app has been downloaded, re-downloaded, or updated more times than ever. 119 billion times On Apple devices. Available for download from the App Store on 160 countries All over the world. And there are many ways for Apple to create value for Spotify without costing the company any money.
- Our engineering ensures that Spotify's apps work seamlessly with Siri, CarPlay, Apple Watch, AirPlay, widgets, and more.
- Like all developers, Spotify has access to Apple's 250,000+ APIs and uses more than 60 frameworks to allow its apps to connect to Bluetooth, send notifications, play audio in the background on the user's device, and more. It can be done.
- Spotify has been experimenting with new features using its beta testing tool, TestFlight, across nearly 500 app versions.
- Our app review team has reviewed and approved 421 versions of Spotify apps, typically processed the same day, and we often expedite reviews at Spotify's request.
It will take continued effort and significant investment for Apple to create the tools, technology, and marketplace that Spotify uses every day. We even sent engineers to Stockholm to directly assist the Spotify team. As a result, everything works fine whether you open the Spotify app, listen to music on your commute, or ask Siri to play a song from your library. And again, Spotify doesn't pay Apple anything.
When doing business, not everyone will agree on the best deal. But it's definitely hard to win for free.
Spotify wants more
But free isn't enough for Spotify. They also want to rewrite the App Store's rules in a way that gives them more advantages.
Like many companies, Spotify uses email, social media, text messaging, web advertising, and a variety of other methods to reach potential customers. In accordance with the App Store's leader rules, Spotify may also include a link in its app to a webpage where users can create or manage their account.
We introduced Reader Rules a few years ago, in response to feedback from developers like Spotify. And many reader apps use this option to connect users to web pages, from e-book readers to video streaming services. Spotify could do that too, but they decided not to.
Instead, Spotify wants to bend the rules in its favor by inserting subscription prices into its app rather than using the App Store's in-app purchase system. They want to use Apple's tools and technologies, deploy them on the App Store, and benefit from the trust we've built with our users, without paying Apple anything for it.
In other words, Spotify wants more.
Coordination between Spotify and the European Commission
In 2015, Spotify began cooperating with the European Commission on an investigation that had little basis in fact. They argued that the digital music market was stagnant and that Apple was holding competitors back. Unfortunately, Spotify continued to grow and eclipse every other digital music business in the world, thanks in part to the App Store.
Over the next eight years and over 65 meetings with Spotify, the European Commission sought to build three cases. With every turn, they narrow the scope of their claims, but each theory has some things in common.
- There is no evidence of consumer harm: European consumers have more choice than ever in the exponentially growing digital music market. In just eight years, we grew from 25 million subscribers to nearly 160 million and had over 300 million active listeners. Spotify was the big winner.
- If there is no evidence of anti-competitive conduct: Eight years of investigation have never produced a viable theory explaining how Apple disrupted competition in an apparently thriving market.
The European Commission announces this decision just before the new regulation, the Digital Markets Act (DMA), comes into force. Apple is expected to comply with the DMA in the coming days, and our plans include changes to the rules raised here. What is clear is that this decision is not based on existing competition laws. This is the Commission's effort to implement the DMA before it becomes law.
The reality is that European consumers have more choices than ever before. Ironically, in the name of competition, today's decision cements the dominant position of a successful European company as a leader in the digital music market.
What are your future plans?
Apple has been active in Europe for over 40 years and currently supports more than 2.5 million jobs across Europe. We've helped markets thrive and encouraged competition and innovation in every way, and the App Store is an important part of that story. So, while we respect the European Commission, the facts do not support this decision. As a result, Apple will appeal.
The digital music market is a good example of the app economy in action. After all, for 15 years on the App Store, a simple phrase has been — There's an app for that — has become a universal truth. And behind every app these days is either a hugely successful company or an ambitious entrepreneur chasing a dream.
Apple's teams work every day to keep that dream alive. We do this by making the App Store the safest and best experience for our users. We do this by giving developers the means to create amazing apps. Above all, we do it because apps have an incredible capacity to drive innovation that empowers people and enriches their lives.