Apple may be in hot water with the European Union, with regulators there preparing a big fine and ban that could change how it works with companies on its App Store thanks to a challenge by Spotify.
The EU is readying a decision that blocks Apple’s practice of banning music services that steer users away from the App Store and toward cheaper alternative subscription options, according to Bloomberg, citing an unnamed source. The report said the decision could come early next year, and could include a fine of as much as 10% of its annual sales, which would represent billions of dollars.
The news comes just days after a jury ruled that Google’s Play Store was an illegal monopoly that conspired to clamp down competitive app services. While Apple runs a more closed operating system, regulators took a close look at how it pushed companies to run their subscriptions through the app store, which would entitle Apple to a 30% commission on each transaction. It’s just the latest instance of a wider crackdown on Big Tech companies from the EU, which a sweep that’s targeted Facebook parent Meta and Google parent Alphabet as well.
Taken together, these actions could change how app stores work on Apple’s iOS and Google’s Android, which make up the vast majority of smartphones around the world. For cord cutters, this could make it easier to subscribe for services like Spotify on the app. Wedbush Securities analyst Michael Pachter predicted the move could also lower commission rates with more competition, particularly on Android, which could mean cheaper services down the line.
Spotify filed a complaint against Apple nearly four years ago, claiming the 30% commission forced it to raise prices to cover the costs to operate on Apple’s platform. The regulators focused on the so-called anti-steering rules, which were designed to discourage companies from redirecting users away from the App Store.
Apple had told the EU that it had already addressed the concerns, according to Bloomberg. Last year, Apple began letting Spotify and other services, which compete against its own Apple Music, direct users to the web for subscriptions. It also allowed apps to advertise lower prices for subscriptions outside of the App Store. Spotify said at the time that new rules were “just for show.”
A spokesperson for Apple wasn’t available for comment.