Apple is in hot water with the European Commission and could be hit with a hefty €500 million fine. This is tied to Spotify’s 2019 complaint over alleged App Store favoritism.
The core issue is that Apple Music doesn’t pay the “Apple tax” which Spotify and other third-party subscription services must pay. This includes an initial 30% cut of subscriptions, reduced to 15% after the first year.
Spotify argues this creates an unfair playing field since Apple Music avoids fees and restrictive rules other apps face. Apple tried to defend itself back then, but its rebuttal wasn’t very convincing.
Initially, the potential fine was going to be a massive 10% of Apple’s global revenue, around $40 billion. But the reported €500 million penalty is still substantial.
At the heart of the matter is whether Apple improperly uses its control of the iOS App Store to benefit its own services, hurting competition. This long-running dispute is also why Spotify hasn’t offered in-app purchases on iOS.
The final EU ruling could have major implications and force changes in how Apple manages the App Store. But Apple will likely appeal any large fines or imposed adjustments to its business model. Expect this feud with Spotify to drag on as regulators pressure big tech over competition concerns.