The European Union’s Digital Markets Act will take effect in March, and that means the way certain big tech companies operate in the region is changing. The DMA gives the EU the authority to designate large companies as “gatekeepers.” Apple, as well as a few of its competitors, is designated as a gatekeeper. Then, the EU can designate a gatekeeper’s service as a “core platform service” if it is a crucial connector to businesses and customers in the region. Apple’s App Store was considered a core platform service, so the company released a DMA compliance plan last week. But according to Spotify, Apple’s DMA plan is a “complete and total farce.”
To sum it up, Apple’s plan to comply with the DMA appears to fit the letter of the law, but not the spirit of the law. The DMA requires that core platform service be open and cross-platform, so sideloading, third-party stores and payments, and third-party default browsers are coming to iOS users in the EU. However, Apple is retaining its historic level of control over iOS and the App Store, even with the changes. Apple will still take fees from developers who go outside the App Store, for example. Developers are also subject to app reviews still.
What Spotify is saying about Apple’s DMA plan
To say that app developers are unhappy with the result is an understatement. Many were hoping that the changes would allow an alternative to Apple’s fees. Additionally, the changes are limited to people within the EU.
“The European Commission designated Apple as a gatekeeper because of their excessive fees and anti-competitive terms. Apple has proposed an unworkable alternative that developers would have to be locked into until the end of their businesses,” Spotify said in its release. “Essentially, Apple is rendering the DMA’s goals of offering more choice and more control to consumers useless.”
Spotify calls out a few of Apple’s rules that it claims to be unfair. First, there’s the new fee for app downloads in the EU. After an app reaches one million downloads, the developer owes Apple €0.50 for each first annual install per year. Separately, developers will owe Apple a 10% or 17% commission on sales. The important thing to note here is that developers can either accept these new terms in the EU, or stick with the current App Store rules.
“Spotify itself faces an untenable situation. With our EU Apple install base in the 100 million range, this new tax on downloads and updates could skyrocket our customer acquisition costs, potentially increasing them tenfold,” said Spotify CEO Daniel Ek in a post on X. “Under the new terms, we cannot afford these fees if we want to be a profitable company, so our only option is to stick with the status quo.”
It remains to be seen whether Apple’s moves will appease EU regulators. Spotify, for one, thinks that Apple is skirting regulation with its DMA compliance plan.