Spotify to begin in-app sales on iPhone in Europe after new EU law requires Apple to allow it

Daniel Ek, CEO of Swedish music streaming service Spotify, gestures as he makes a speech at a press convention in Tokyo on September 29, 2016.

Toru Yamanaka | AFP | Getty Images

Spotify stated Wednesday it will replace its iPhone app in Europe to allow customers to purchase in-app subscriptions and audiobooks.

In most areas, Apple’s App Store guidelines prohibit firms akin to Spotify from billing customers straight inside the app. Apple says app makers ought to as an alternative use Apple’s App Store billing service, which takes a reduce of up to 30%.

But a new law in Europe, known as the Digital Markets Act, goes into impact in March, and would require firms it calls “gatekeepers,” akin to Apple, to open up their on-line companies to allow smaller rivals entry. In Apple’s case, it requires the corporate to allow third-party builders to distribute iPhone apps exterior the App Store, in addition to invoice their prospects straight.

Apple hasn’t but revealed how it will change its software program and insurance policies to adjust to the DMA, though it stated it would accomplish that in SEC filings. In 2021, Apple CEO Tim Cook criticized the law while it was being debated, saying that it would “not be in the very best curiosity of customers.”

The adjustments Spotify introduced Wednesday may be seen as a stake in the bottom displaying how it interprets the DMA earlier than Apple reveals its implementation. Spotify was closely concerned in lobbying European Union antitrust regulators in favor of this final result. It is the primary main instance of how a well-liked app plans to benefit from the DMA.

“For years, even in our personal app, Apple had these guidelines the place we could not let you know about provides, how
a lot one thing prices, and even the place or how to purchase it. We know, fairly nuts,” Spotify wrote in a weblog put up. “The DMA signifies that we’ll lastly give you the option to share particulars about offers, promotions, and better-value fee choices in the EU.”

Spotify stated it will use the new regulation to allow customers to subscribe to Spotify Premium, allow customers to purchase audiobooks, and run promotional campaigns, all inside the app. The firm can even allow iPhone customers to straight obtain different Spotify apps from its web site, akin to Spotify for Artists, it stated.

The transfer is unlikely to instantly threaten Apple’s companies enterprise, which incorporates the charges from the App Store and totaled $85 billion in sales in the 2023 fiscal yr. Europe is a comparatively small market, and Apple believes that its App Store can compete by way of safety and comfort. But it is an indication that Apple’s margins on software program distribution proceed to be below fireplace from regulators world wide.

“However, EU is simply ~7% of App Store spend, and our survey work reveals Apple stays well-positioned to compete, with customers overwhelmingly preferring App Store’s unmatched privateness, ease of use, and seamless OS integration,” Morgan Stanley analyst Erik Woodring wrote in a be aware in December.

Spotify had already shifted away from utilizing Apple’s billing for subscriptions years in the past, with lower than 1% of customers paying Apple as an alternative of subscribing straight. But adjustments from the DMA in Europe may assist it increase margins and join new subscribers extra simply.

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