Spotify Expands Offerings in Europe, Dodges Apple’s 30% Fee Using Digital Markets Act
In a strategic move prompted by Europe’s new competition law for Big Tech, Spotify announced on Wednesday that users in Europe will soon be able to purchase audiobooks and subscription plans directly within the music-streaming app starting March.
This decision is a direct response to the region’s Digital Markets Act (DMA), set to be enforced by March 7, which requires Big Tech firms to treat their own products and services on par with those of their competitors, reported Reuters.
The Stockholm-based company’s decision to offer audiobooks and subscription plans directly within its app aims to bypass the 30% fee imposed by Apple for purchases made through its App Store. This fee has long been a contentious issue between Apple and app developers, including Spotify, which has been embroiled in a legal battle for years, alleging that the company was compelled to raise the prices of its monthly subscriptions to offset the costs tied to Apple’s App Store rules.
Spotify’s move signifies a step towards greater autonomy for app developers, freeing them from the restrictions imposed by Apple’s App Store regulations. In a blog post, Spotify expressed its enthusiasm about the changes brought about by the Digital Markets Act, stating, “For years, Apple had these rules where we couldn’t tell you about offers, how much something costs, or even where or how to buy it. The DMA means that we’ll finally be able to share details about deals, promotions, and better-value payment options in the EU.”
The Digital Markets Act not only enables companies to operate more freely within the European market but also requires them to treat their own products and services in the same manner as those of their competitors. This aims to foster fair competition and prevent anti-competitive practices within the digital marketplace.
The news of Spotify’s expansion into audiobooks and subscription plans within the European market had a positive impact on its U.S.-listed shares, with a reported increase of around 2%. This move is expected to bolster Spotify’s position in the digital market and attract more users who seek a one-stop-shop for their audio entertainment needs.
In response to the changing landscape, Apple reportedly plans to challenge the European Union’s decision to include the entirety of the App Store in the bloc’s new digital antitrust list. Bloomberg News had previously reported Apple’s intentions to contest the decision back in November.
As the March 7 deadline approaches for compliance with the Digital Markets Act, the move by Spotify and the anticipated legal challenges from Apple highlight the ongoing dynamics between Big Tech companies and regulatory authorities, shaping the future of the digital marketplace in Europe.