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Apple fined 1.8 Billion Euro for anti-competitive practices with music streaming subscriptions

Spotty

Summary

Apple has been ordered by the European Commission to pay a 1.8 Billion Euro fine (approximately 2 Billion USD) after Spotify launched a complaint over Apple's 30% tax on subscriptions purchased through iOS apps and Apple's developer rules preventing app developers from informing customers that subscriptions can be purchased at a cheaper price outside of the app [such as subscribing directly through the website]. Apple takes a 30% cut on subscriptions made through iOS apps and their developer agreement prevents developers from informing customers of alternative purchase methods. Apple has been ordered to stop preventing app developers from informing customers of cheaper subscription options. Apple has announced they intend to appeal the decision.

 

 

Quotes

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Apple has been fined €1.8bn (£1.5bn) by the EU for breaking competition laws over music streaming.

The firm had prevented streaming services from informing users of payment options outside the Apple app store, the European Commission said.

Competition commissioner Margrethe Vestager said Apple abused its dominant position in the market for a decade.

She ordered the US tech giant to remove all the restrictions. Apple has said it will appeal against the decision.
The European Commission's decision was triggered by a complaint by Swedish music streaming service Spotify, which was unhappy about the restriction and Apple's 30% fee..

Ms Vestager said Apple had restricted "developers from informing consumers about alternative, cheaper music services available outside of the Apple ecosystem".

"This is illegal under EU antitrust rules," she said.

 

Statement from the European Commission:

Quote

The European Commission has fined Apple over €1.8 billion for abusing its dominant position on the market for the distribution of music streaming apps to iPhone and iPad users (‘iOS users') through its App Store. In particular, the Commission found that Apple applied restrictions on app developers preventing them from informing iOS users about alternative and cheaper music subscription services available outside of the app (‘anti-steering provisions'). This is illegal under EU antitrust rules.
 

The Commission's investigation found that Apple bans music streaming app developers from fully informing iOS users about alternative and cheaper music subscription services available outside of the app and from providing any instructions about how to subscribe to such offers. In particular, the anti-steering provisions ban app developers from:

  • Informing iOS users within their apps about the prices of subscription offers available on the internet outside of the app.
  • Informing iOS users within their apps about the price differences between in-app subscriptions sold through Apple's in-app purchase mechanism and those available elsewhere.
  • Including links in their apps leading iOS users to the app developer's website on which alternative subscriptions can be bought. App developers were also prevented from contacting their own newly acquired users, for instance by email, to inform them about alternative pricing options after they set up an account.

Today's decision concludes that Apple's anti-steering provisions amount to unfair trading conditions, in breach of Article 102(a) of the Treaty on the Functioning of the European Union (‘TFEU'). These anti-steering provisions are neither necessary nor proportionate for the protection of Apple's commercial interests in relation to the App Store on Apple's smart mobile devices and negatively affect the interests of iOS users, who cannot make informed and effective decisions on where and how to purchase music streaming subscriptions for use on their device

[Continued... https://ec.europa.eu/commission/presscorner/detail/en/ip_24_1161]

 

 

My thoughts

There was recently a post on this forum asking why it was more expensive for them to subscribe to Youtube Premium through an iPhone than it was for them to subscribe on their PC. I don't think many people realise that Apple's takes a 30% cut from subscriptions made through iOS apps which will often make subscribing to those services more expensive as services pass that extra cost on to consumers.

I think 30% is excessive but I actually don't mind if Apple takes a cut of purchases made through the Apple App store. Google (Android Play Store) and Steam to name some similar software marketplaces also take a cut from sales made through their store and taking a cut of sales is required for those marketplaces to remain feasible. The restriction Apple places on developers preventing them from informing customers about cheaper subscription methods is purely designed as an anti-competitive measure to prevent people from subscribing outside of the Apple system. I'm glad that the European Commission has recognised it as such and fined Apple over it.

 

I really hope that Apple is forced to allow all app developers to inform customers about alternative subscription methods - not just music streaming services. Apple is a direct competitor to Spotify and other streaming services with their Apple Music service which is likely why they were hit so hard in this complaint from Spotify but I would like other apps like video streaming (Youtube, Twitch, Floatplane?) to be able to inform customers within the app about cheaper subscription methods. Hopefully this is just the first domino to fall in allowing all apps on the Apple App store to inform customers about alternative subscription methods.

 

Sources

https://www.bbc.com/news/technology-68467752

https://ec.europa.eu/commission/presscorner/detail/en/ip_24_1161

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30 minutes ago, Spotty said:

Summary

Apple has been ordered by the European Commission to pay a 1.8 Billion Euro fine (approximately 2 Billion USD) after Spotify launched a complaint over Apple's 30% tax on subscriptions purchased through iOS apps and Apple's developer rules preventing app developers from informing customers that subscriptions can be purchased at a cheaper price outside of the app [such as subscribing directly through the website]. Apple takes a 30% cut on subscriptions made through iOS apps and their developer agreement prevents developers from informing customers of alternative purchase methods. Apple has been ordered to stop preventing app developers from informing customers of cheaper subscription options. Apple has announced they intend to appeal the decision.

 

 

Quotes

 

Statement from the European Commission:

[Continued... https://ec.europa.eu/commission/presscorner/detail/en/ip_24_1161]

 

 

My thoughts

There was recently a post on this forum asking why it was more expensive for them to subscribe to Youtube Premium through an iPhone than it was for them to subscribe on their PC. I don't think many people realise that Apple's takes a 30% cut from subscriptions made through iOS apps which will often make subscribing to those services more expensive as services pass that extra cost on to consumers.

I think 30% is excessive but I actually don't mind if Apple takes a cut of purchases made through the Apple App store. Google (Android Play Store) and Steam to name some similar software marketplaces also take a cut from sales made through their store and taking a cut of sales is required for those marketplaces to remain feasible. The restriction Apple places on developers preventing them from informing customers about cheaper subscription methods is purely designed as an anti-competitive measure to prevent people from subscribing outside of the Apple system. I'm glad that the European Commission has recognised it as such and fined Apple over it.

 

I really hope that Apple is forced to allow all app developers to inform customers about alternative subscription methods - not just music streaming services. Apple is a direct competitor to Spotify and other streaming services with their Apple Music service which is likely why they were hit so hard in this complaint from Spotify but I would like other apps like video streaming (Youtube, Twitch, Floatplane?) to be able to inform customers within the app about cheaper subscription methods. Hopefully this is just the first domino to fall in allowing all apps on the Apple App store to inform customers about alternative subscription methods.

 

Sources

https://www.bbc.com/news/technology-68467752

https://ec.europa.eu/commission/presscorner/detail/en/ip_24_1161

thank goodness the fine is actually big enough to not be a "cost of business" and is actually something that will make them actually fucking change something for once. More companies could use a 1.8 billion dollar fine to change their minds

please tag me for a response, It's really hard to keep tabs on every thread I reply to. thanks!!

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Just now, Dillpickle23422 said:

thank goodness the fine is actually big enough to not be a "cost of business" and is actually something that will make them actually fucking change something for once. More companies could use a 1.8 billion dollar fine to change their minds

I didn't mention it in my post, but the original fine was only 40 Million Euro. They added 1.8 Billion Euro on top of the original fine as a fuck you deterrent to Apple.

 

Quote

A basic penalty of 40 million euros was inflated by a huge lump sum included as a deterrent - a first for the European Union's antitrust authorities.
[...]
It comprised a basic element of 40 million euros - described by European Competition Commissioner Margarethe Vestager as a "parking ticket" for the U.S. tech giant - plus 1.8 billion euros slapped on top as a deterrent. The 1.84 billion euros total is equal to 0.5% of Apple's global turnover, she said.

https://www.reuters.com/technology/apple-hit-with-over-18-bln-euro-eu-antitrust-fine-spotify-case-2024-03-04/

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(I've only read the headline and it reminded me of this) I wish they would do something similar to Amazon. If you already pay for a Prime subscription you can't really listen to music much anymore. Click on a song or album and it "plays something similar" with those songs you actually wanted to here eventually mixed in the pile. Sure you can pay more money to "unlock" those "features" but it's so irritating to essentially lose a feature you already paid for (and still technically pay for). First world problems I guess. 

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At least.. Apple has Cyberpunk level of corpo greediness, anti competitveness and overall manipulation to grab money from consumers, it's long past due 

 

2 minutes ago, TempestCatto said:

(I've only read the headline and it reminded me of this) I wish they would do something similar to Amazon. If you already pay for a Prime subscription you can't really listen to music much anymore. Click on a song or album and it "plays something similar" with those songs you actually wanted to here eventually mixed in the pile. Sure you can pay more money to "unlock" those "features" but it's so irritating to essentially lose a feature you already paid for (and still technically pay for). First world problems I guess. 

Not really comparable, Amazon Prime is paid for the delivery service and gives you some movies and music "for free", you cant really complain

It's not like they charged you +300% for an USB cable (or an SSD..) because they put a sticker on it 😛 

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3 minutes ago, emosun said:

so thats like almost one whole couch cushion apple will have to move to afford that fine

Apple probably doesn't care too much about the fine. While it is substantial, 1.8 billion isn't that much for Apple. Apple is going to be hurt more long term by the requirement to allow app developers to inform consumers about alternative payment methods outside of Apple. Imagine going to subscribe to an app on iOS and seeing two prices listed; "Subscribe with Apple for $18.99/month or subscribe through our website for $13.99/month". How much money would Apple miss out on by people choosing the cheaper payment option cutting Apple out of their 30% tax? That's the money Apple is worried about.

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15 minutes ago, Spotty said:

I didn't mention it in my post, but the original fine was only 40 Million Euro. They added 1.8 Billion Euro on top of the original fine as a fuck you deterrent to Apple.

 

hell yeah

please tag me for a response, It's really hard to keep tabs on every thread I reply to. thanks!!

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8 minutes ago, Spotty said:

Apple probably doesn't care too much about the fine.

I hope a lot more countries learn that they can get a nice amount of money out of mega corps arseholery while at the same time giving citizens (in this particular case, that uses the device) a cheaper way to get something that lightens their daily life burden.

 

 

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GET WRECKT APOPLE 

 

 

 

sounds like the EU is really thinking different.

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I am currently in a law class and a lot of what is talked about on wan show is coming to light to me. The US needs to do more about companies taking advantage of people the way they do. How is it legal for companies to manipulate comsumers into paying more for nothing? 

Why can't we be more like the EU sometimes like c'mon wouldn't that be sick?

I'm usually as lost as you are

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Here's the response from Apple:

https://www.apple.com/newsroom/2024/03/the-app-store-spotify-and-europes-thriving-digital-music-market/

 

It's worth reading the full statement. Basically they say that Spotify is the dominant music streaming platform and that Spotify owes their success to Apple allowing their app on the app store. Apple argues Spotify is ripping off Apple by not selling subscriptions through the app and not giving Apple a cut of the money they make.

 

Quote
Today, Spotify has a 56 percent share of Europe’s music streaming market — more than double their closest competitor’s — and pays Apple nothing for the services that have helped make them one of the most recognizable brands in the world. A large part of their success is due to the App Store, along with all the tools and technology that Spotify uses to build, update, and share their app with Apple users around the world.
We’re proud to play a key role supporting Spotify’s success — as we have for developers of all sizes, from the App Store’s earliest days.
Quote

Spotify Pays Apple Nothing

Despite that success, and the App Store’s role in making it possible, Spotify pays Apple nothing. That’s because Spotify — like many developers on the App Store — made a choice. Instead of selling subscriptions in their app, they sell them on their website. And Apple doesn’t collect a commission on those purchases.

 

 

Some justification provided by Apple for why they deserve to get paid...

Quote
All told, the Spotify app has been downloaded, redownloaded, or updated more than 119 billion times on Apple devices. It’s available on the App Store in over 160 countries spanning the globe. And there are many more ways Apple creates value for Spotify, at no cost to their company:
  • Our engineering helps ensure that Spotify’s apps can work seamlessly with Siri, CarPlay, Apple Watch, AirPlay, Widgets, and more.
  • Like every developer, Spotify can access Apple’s more than 250,000 APIs — and uses 60 of our frameworks — so their apps can connect with Bluetooth, send notifications, play audio in the background of a user’s device, and more.
  • Spotify has used our beta-testing tool, TestFlight, for almost 500 versions of their app to experiment with new features and capabilities.
  • Our App Review team has reviewed and approved 421 versions of the Spotify app — usually with same-day turnaround — and frequently expedites reviews at Spotify’s request.
It takes continuous effort and a lot of investment for Apple to make the tools, the technology, and the marketplace that Spotify uses every day. We’ve even flown our engineers to Stockholm to help Spotify’s teams in person. And the result is that when a user opens the Spotify app, listens to music on their commute, or asks Siri to play a song from their library, everything just works. And again — Spotify pays Apple nothing.

 

 

While Apple's point about providing hosting for downloads/updates is somewhat valid, apps like Spotify wouldn't need to use Apple's App Store if Apple allowed 3rd party app stores on iOS devices. Apple took on that burden of hosting and managing apps when they decided to prevent 3rd party app stores.

 

Once the new EU laws go in effect that allow iOS app installs outside of the App Store I wonder if we will see a split between Spotify and Apple resulting in the Spotify app being removed from the App Store.

Spotify is one of those major apps that people expect to be able to use on their device and it is mutually beneficial for Spotify and Apple for the app to be available on the App Store. If popular apps like Spotify weren't available on Apple devices it might drive consumers to buy competing phones (android) that do offer the apps they want. While Apple can argue all they want about how they're not getting anything from Spotify being on the App Store, it would probably hurt them to start losing popular apps like Spotify.

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19 minutes ago, BrandonT.05 said:

The US needs to do more about companies taking advantage of people the way they do.

Agreed. The problem is that Apple is bringing in a lot of money to the U.S. government. Allowing Spotify to offer alternative payment alternatives means more money will stay inside of the EU. Apple squeezing out as much money as possible from the EU with their 30% cut is financially beneficial for the U.S. (unfortunately).

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4 hours ago, emosun said:

so thats like almost one whole couch cushion apple will have to move to afford that fine

 

I've heard a few different specific values stated elsewhere and haven't had chance to check them myself but i've seen multiple claims that the fine amounts to a few percent of Apples gross profits last year within the EU. Compared to Apples total income it's small, but it's not remotely small compared to what apple actually earns from the EU. They're also facing several more cases about how they're planning to do things under the new rules the EU's bringing in which could see multiple additional fines of a similar size levied.

 

And of course if apple doesn't comply with the ruling much larger fines as a percentage of their profits will be imposed.

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The irony though that its Spotify, who pay the people producing the content for their app peanuts in royalties.

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4 hours ago, Spotty said:

I didn't mention it in my post, but the original fine was only 40 Million Euro. They added 1.8 Billion Euro on top of the original fine as a fuck you deterrent to Apple.

Honestly 1.8 Billion Euro's isn't enough, and doesn't work too much as a deterrent.

 

They had $85 billion in net sales for services (so this should include the 30% fee, although there is a chance they rolled it into products) in 2023.  They had $24 billion on the cost of services in 2023

If one were to assume that Apple services from apps only accounted for 10% of the services (which is unlikely and very low), then it still means they made $6.1 billion in 2023.

 

But based on what Apple has stated in 2022 numbers, they claim $104 billion in digital sales (not including their advertising which they forced on people which amounts to an additional $100 billion).  Which if you assume 15% would make it still over $6 billion of profits.

 

After all, the $400 million USD fine for price fixing by Apple (on ebooks) showed how little Apple really cares about these larger fines.  It's the cost of doing business.

 

Overall though, the biggest issue I had with Apple in this whole ordeal is that they willingly used their monopoly to profit by draconian rules.  While I haven't seen it mentioned, it's important to also remember that Apple once upon a time also tried enforcing that pricing could not be different from the Apple price vs other stores.

 

I do agree that Apple created it and should be able to reap a certain amount of profits from it, but it's not like they are losing money on iPhones and I feel when a company gets to this large of dominance in a market they should have to charge reasonable rates (or allow the companies to essentially cover the costs).

 

One way to actually look at it is look at Twitch.  They are losing money on their current model, and yet many streamers are taking sponsorships etc which effectively is ad revenue that could be going to Twitch.

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5 hours ago, Spotty said:

Apple probably doesn't care too much about the fine. While it is substantial, 1.8 billion isn't that much for Apple. Apple is going to be hurt more long term by the requirement to allow app developers to inform consumers about alternative payment methods outside of Apple. Imagine going to subscribe to an app on iOS and seeing two prices listed; "Subscribe with Apple for $18.99/month or subscribe through our website for $13.99/month". How much money would Apple miss out on by people choosing the cheaper payment option cutting Apple out of their 30% tax? That's the money Apple is worried about.

Honestly I do think if this goes through then maybe they need to change the way they monetize because it does cost money to have Spotify on apple apps store so if they can no longer get their 30% cut then how do they pay for those costs? Do they just eat the cost? Regardless I think there does become and issue if Spotify can completely circumvent paying for their app to be on the app store. 

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interesting,  curious to see if apple now stops making their own "laws" or rather where's the actual threshold for them to consider following the real law?

 

doubt that'll do it but its a start (please tell me this is just the start...right?) 

 

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1 hour ago, Alex Atkin UK said:

The irony though that its Spotify, who pay the people producing the content for their app peanuts in royalties.

lets not get hung up in small details,  shal we? 🙂

 

 

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8 hours ago, Brooksie359 said:

Honestly I do think if this goes through then maybe they need to change the way they monetize because it does cost money to have Spotify on apple apps store so if they can no longer get their 30% cut then how do they pay for those costs? Do they just eat the cost? Regardless I think there does become and issue if Spotify can completely circumvent paying for their app to be on the app store. 

The problem with every argument and example Apple has made or will ever make is that literally everything also applies to free Apps on the App Store. There can, and are, Apps available with millions to billions of downloads and installed utilizing all the Apple developer tools, frameworks and iOS APIs and Apple has never and will never get any more money than the Apple Developer fee, the App is free.

 

 They can whine and moan all they like about Spotify, Netflix etc etc but so long as they allow free Apps on the App Store with zero extra fees a widely being used by millions they have irrelevant and dead points to make.

 

There is and forever will be zero basis for a monthly subscription fee for a services not hosted in any way by Apple to be application and even related at all in any way to their App Store associated costs. If I buy an iPhone, install Spotify once and have it only update as normal like every other App past/present/future it's going to cost Apple a small amount, no a tiny amount, individually for me so they have no grounds to be calming 30% of a subscription fee for a service that have no involvement with the ongoing operation of. The Spotify App is not the service, it's the mechanism of access to the service developed by Spotify and distributed by Apple for iOS.

 

If Apple wants and thinks they deserve more money from Spotify than the basic Apple Developer fee then change the damn fee model for the App Store and Developers.

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1 hour ago, leadeater said:

The problem with every argument and example Apple has made or will ever make is that literally everything also applies to free Apps on the App Store. There can, and are, Apps available with millions to billions of downloads and installed utilizing all the Apple developer tools, frameworks and iOS APIs and Apple has never and will never get any more money than the Apple Developer fee, the App is free.

Apple is big enough to not be paying for bandwidth, it owns it 's own IP address ranges, and any argument that it is "paying" anything means they aren't eating their own dog food. They make their own computers, why aren't they making their own servers and data centers if they want to argue it costs them money?

 

 

1 hour ago, leadeater said:

There is and forever will be zero basis for a monthly subscription fee for a services not hosted in any way by Apple to be application and even related at all in any way to their App Store associated costs.

Credit card fees are not cheap, but it's also easy to argue that Apple is big enough to swing actual bulk discounts with those payment networks. Sure, there is no reason for Apple to charge 30% on a recurring subscription, but the customer was STILL acquired on the platform, and saying they don't deserve the commission is like saying the car salesman or realtor (or the bank who wrote the loan) doesn't deserve their commission for spending all that time with you showing you the car or house. You may not like it, but that doesn't mean it's undeserved.

 

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27 minutes ago, Kisai said:

Apple is big enough to not be paying for bandwidth, it owns it 's own IP address ranges

Apple will be paying for bandwidth, having IP space is unrelated to that. Apple still have to peer and pay transit fees and while the may have some agreements in certain places they will absolutely be paying for bandwidth. They would have to be operating their own network i.e. actually own undersea fibre etc which far as I know they don't.

 

27 minutes ago, Kisai said:

Credit card fees are not cheap, but it's also easy to argue that Apple is big enough to swing actual bulk discounts with those payment networks.

Everyone pays those so it doesn't really matter and they aren't actually high, not for Apple and not for low risk transactions. Recurring fees is around 0.8%, yes 0.8%. You'll notice 0.8% is a lot smaller than 30% 😉

 

27 minutes ago, Kisai said:

but the customer was STILL acquired on the platform

No they were not, I'm absolutely NOT going to discuss this but absolutely no way they were acquired through or on their platform and there is no argument you can make to sway me on this.

 

We've been here before if my memory is correct, stop confusing acquisition of applications with acquisition of customers, 1000% different things.

 

Spotify is not discovered through he App store, people do not discover and learn of it's existence on the Apple App Store, from iOS or from Apple and Apple does not and will never promote Spotify.

 

The correct way to say this is people USED the App Store to acquire the Spotify App to use Spotify the service.

 

The App Store is not a discovery platform for these things in the exact same way Floatplane is not a discovery platform or a platform to attain new viewers.

 

27 minutes ago, Kisai said:

and saying they don't deserve the commission is like saying the car salesman or realtor (or the bank who wrote the loan) doesn't deserve their commission for spending all that time with you showing you the car or house. You may not like it, but that doesn't mean it's undeserved.

It costs a fixed amount to list a car or house sale in a realtor/car sale magazine for a fixed length of time for an infinite number of people to view. Apple is not a realtor or car sales, they are only a "magazine". They DO almost nothing other than provide the App aka "the printed copy of the magazine".

 

They deserve ONLY to be compensated for the work and service they actually offer which is precisely zero of the subscription service fee, none.

 

Change the fee structure for the App Store. The solution is blindingly obvious. We can all see $299 developer fee isn't enough to cover the costs of providing the Spotify App but that doesn't mean they deserve a share of the Spotify subscription fee, not even slightly. This is Apple's own created problem with their own fee structure that they can change.

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20 minutes ago, Kisai said:

Apple is big enough to not be paying for bandwidth, it owns it 's own IP address ranges, and any argument that it is "paying" anything means they aren't eating their own dog food. They make their own computers, why aren't they making their own servers and data centers if they want to argue it costs them money?

Making data centres isn't free... Just because they're not paying an outside company for the service doesn't mean there isn't a cost involved. Whether Apple is doing it themselves or contracting out for data hosting and bandwidth it still ends up costing Apple money to operate.

 

2 minutes ago, leadeater said:

No they were not, I'm absolutely NOT going to discuss this but absolutely no way they were acquired through or on their platform and there is no argument you can make to sway me on this.

 

Spotify is not discovered through he App store, people do not discover and learn of it's existence on the Apple App Store, from iOS or from Apple and Apple does not and will never promote Spotify.

 

The correct way to say this is people USED the App Store to acquire the Spotify App to use Spotify the service.

 

The App Store is not a discovery platform for these things in the exact same way Floatplane is not a discovery platform or a platform to attain new viewers.

Don't underestimate the number of people who just type "music" in to the app store to see which apps come up then choose one of the top rated apps and then go on to sign up to Spotify or other such apps.

Being on the app store - and being one of the most popular apps shown in search results - is a significant promotion for that app. There's probably a lot of people who have heard of Spotify but if they searched "music" on the app store and Spotify didn't show up as a top result they'd just choose one of the other options that does show up like Youtube Music, Amazon Music, or Apple Music.

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5 minutes ago, Spotty said:

Don't underestimate the number of people who just type "music" in to the app store to see which apps come up then choose one of the top rated apps and then go on to sign up to Spotify or other such apps.

Then they would be getting Apple Music 😉

 

Ain't no way Spotify is coming up more recommended than Apple's own service.

 

But honestly this is actually a weak argument because unless there is any real data for this then it's only supposition with no factual or data basis. Most people I know search the App store for something they actually want, the App, not to find "stuff". When they do it's for mobile games etc. I've actually never seen anyone go looking for music services or video services via the App store in this way.

 

And it doesn't even matter, show me when Fox gets a percentage share of Spotify/Netflix etc monthly subscription by showing adverts on TV.

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16 hours ago, Dillpickle23422 said:

thank goodness the fine is actually big enough to not be a "cost of business" and is actually something that will make them actually fucking change something for once. More companies could use a 1.8 billion dollar fine to change their minds

Maybe, just maybe, they'll start doing fines based on valutation of the company, so that fines actually hurt them. What's the point in fining Apple 5 million $ when they'll make that amount literally in minutes of time that just passes and is like you said, literally operating expense. 2 billions on the other hand, it's something you can't just write off even as such huge company. EU is stupid sometimes, but boy they are doing good stuff lately.

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