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Spotify: we can’t survive Apple’s outrageous new App Store tax

Apple accused of trying to make costs "impossibly difficult" for devs who want payment choices, with Spotify saying new fees could crush its business.

By
Shubham Sawarkar
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ByShubham Sawarkar
Editor-in-Chief
Shubham Sawarkar is a technology journalist at GadgetBond, covering Apple, AI, consumer technology, software, gadgets, and product launches. His work explores emerging technologies, industry developments, product...
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Jan 26, 2024, 5:35 PM EST
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Spotify CEO says company can't survive "extortion" from Apple's fees
Spotify founder Daniel Ek speaks at the 19th International Conference on Competition at Steigenberger Hotel am Kanzleramt on March 14, 2019 in Berlin, Germany. Ek discussed how fair competition enables consumers and innovators to win. (Photo by Sebastian Reuter / Getty Images for Spotify)
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Music streaming service Spotify, one of the App Store‘s most vocal critics, is once again going after Apple for unfair practices that it says will hurt small developers. This time, the company says Apple’s newly proposed method of complying with looming EU regulations is a “complete and total farce” designed to squeeze more money out of developers.

Specifically, Spotify takes issue with Apple’s plan to charge a “Core Technology Fee” of €0.50 for every app installed through a third-party app store after the first million. Calling this new tax “extortion, plain and simple,” Spotify argues Apple is trying to make it impossibly difficult for developers to avoid the 30% commission Apple takes on App Store purchases.

“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,” Spotify said. On top of this, Apple will still take a 17% cut when developers use alternative payment systems, per new EU rules going into effect in March.

For Spotify itself, which has over 100 million European iOS users, this new tax “could skyrocket our customer acquisition costs, potentially increasing them tenfold,” wrote CEO Daniel Ek in a blog post. “Under the new terms, we cannot afford these fees if we want to be a profitable company.”

In response, Apple spokesperson Fred Sainz touted the “choice” afforded by the changes, saying over 99% of developers would pay less or equal amounts under the new model. But Spotify and others argue the core problems with Apple’s fees and control over apps on iPhones remain unchanged.

With EU regulators closely monitoring the rollout of these new App Store rules, Apple finds itself under heightened scrutiny even as it makes concessions to appease critics. Whether these latest changes go far enough in promoting competition and fair practices remains an open question. In the meantime, Spotify looks poised to continue leading the fight.


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