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Digital Markets Act: Spotify calls Apple's App Store plans extortion

Spotify boss Daniel Ek has criticized Apple’s plans to reorganize the app business because of new EU rules. The project is a “total farce” and must be rejected by the EU Commission, it said in a blog entry by the music streaming market leader from Sweden on Friday. Spotify described the new annual app fee of 50 euro cents per installation as “blackmail”.

The new EU Digital Markets Act (DMA) requires operators of large platforms to allow apps to be downloaded from external sources. It is also stipulated that app developers can use external payment systems instead of the platform’s own payment services. Neither was previously possible on Apple’s iPhones. The DMA regulations take effect from March 7th.

Apple therefore presented corresponding alternatives for the app business in the EU on Thursday. This includes reducing the tax on the sale of digital items and subscriptions via the in-house app store. The previous 30 percent and 15 percent for subscriptions from the second year onwards will become 17 and 10 percent respectively. However, Apple emphasizes that this share should be collected regardless of which payment service an app developer uses. If an app uses Apple’s payment system, an additional three percent is due.

Developers fear high fees if they do not use the App Store

The new “core technology fee” hits apps that are installed often. App developers have to pay the fee after an app has had one million initial installations in a period of twelve months – later updates in the same account are not counted during this time. After reaching the million mark, 50 euro cents are due for each additional initial installation of the app until the end of the twelve months.

This fee also applies if an app is loaded via another provider’s platform without further charges to Apple. Spotify emphasized that with a base of around 100 million users on Apple devices in the EU, they would be asked to pay heavily. The tax will also have to be paid for people who don’t use the service at all, but only have the app on their iPhones. When the next twelve-month period begins, payment must be made again.

Developers fear that the new regulation will mean they will have to pay high fees to Apple if they do not continue to use the App Store or decide on a new fee system. Apple gives developers the freedom to remain in the App Store under the existing app conditions. Spotify criticized that the iPhone company had come up with an alternative that was unacceptable for developers so that they would prefer to stay in the old system.

In response to Spotify’s criticism, Apple countered, among other things, that with the new rules 99 percent of developers would have to pay the same amount as before or less to the company. The changes would give them more choices.

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