Apple on Friday laid out how its App Store will charge developers in the Europe as part of a new EU regulation that dismantles excessive power from Big Tech companies. Spotify quickly responded by calling it “extortion, plain and simple.”
The biggest change to the fee structure that developers pay to be on the App Store is the introduction of a “core technology fee,” which charges EUR0.50 for each download per year over a 1 million threshold. In addition, Apple said it would reduce the commission to either 10 percent for subscriptions and a majority of app developers, or 17 percent on transactions for digital goods and services. There’s also an additional 3 percent fee if an app uses the App Store’s payment processing. Under the new rules, Apple will allow developers to link users to their website to process payments.
Apple said it estimates that 99% of developers would reduce or maintain the fees it owes to Apple, while the rest would pay the Core Technology Fee on their EU apps. The company said that developers can keep their existing terms, which is typically a 30% fee on all app purchases and transactions made within the app (some developers qualify for the lower 15% commission).
“The changes we’re announcing today comply with the Digital Markets Act’s requirements in the European Union, while helping to protect EU users from the unavoidable increased privacy and security threats this regulation brings. Our priority remains creating the best, most secure possible experience for our users in the EU and around the world,” said Phil Schiller, Apple Fellow.
Spotify, however, has a different take.
“As Apple has just shown the world, they don’t think the rules apply to them,” the company said in a post on its site.
Spotify took aim at that EUR 0.50 fee, specifically calling that element “extortion.” The 1 million threshold specifically targets larger companies like Spotify, which boasts millions of users.
“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,” the company said. “This will hurt developers, potential start-ups and those offering free apps most: How will a developer pay Apple back if its free app goes viral – multiple millions of accounts install that free app, and then that developer owes Apple millions?”
Spotify also criticized Apple’s 17% “rent” on developers even if they offer an alternative form of payment.
Apple responded to Spotify’s post, stressing the new policy offers developers more options.
“We’re happy to support the success of all developers — including Spotify, which has the most successful music streaming app in the world,” the company said in a statement. “The changes we’re sharing for apps in the European Union give developers choice — with new options to distribute iOS apps and process payments.”