Is the Apple era now in decline?
Recently clobbered by the EU with a massive fine, Apple has seen the first cracks appear in its golden armour.
As reported this week by TechCentral.ie, following complaints by Spotify, the European Union has fined Apple €1.84 billion for violating antitrust rules in the music streaming services market. Apple was fined for not wanting to inform consumers about cheaper subscription models outside the App Store.
More trouble is due.
A third party app store called Mobivention will shortly appear on iOS, allowing users in the EU to circumvent Apple as a supplier of software, meaning the Cupertino-based company will not receive its 30% commission from sales made via Mobivention rather than the Apple App Store.
Apple has been forced to allow this under the EU’s Digital Markets Act (DMA).
As most users tend to stick to the defaults, the arrival of an alternative app store itself is unlikely to have a significant impact on Apple’s bottom line. It still matters, though, because a precedent has been set: Apple can no longer guarantee revenue from the sale of every app installed on an iPhone or iPad.
In addition, and for the same reasons, Apple has been forced to allow EU-based users to install browsers that use rendering engines other than its own WebKit, something it previously forbade.
This is not where the difficulties end for Apple. It and Epic Games, developer of the popular video game Fortnite, have been at loggerheads since 2020, and this dispute may prove even more damaging to Apple’s precious ‘ecosystem’. Having long objected to handing over a 30% share of sales to Apple, in 2021 Epic Games sued Apple – largely unsuccessfully – in the US courts. The battle is far from over, however.
On 6 March, news broke that Apple had given Epic Games the heave-ho, terminating its developer account. As the account was based in Sweden, it is being widely interpreted as an attempt to stop Epic Games from launching its own EU-based app store.
Unfortunately for Apple, the EU immediately moved to look into the matter. Posting on social network X (formerly Twitter), the EU’s Commissioner for internal market Thierry Breton said he the bloc was investigating, writing: “Under the #DMA, there is no room for threats by gatekeepers to silence developers. I have asked our services to look into Apple’s termination of Epic’s developer account as a matter of priority”.
App Store revenues are no small matter for Apple. Consumers spent some $89.3 billion (approx. €81.43 billion) in the App Store in 2023 (and $85 billion, or approximately €77.54 billion, in 2022). In addition, the App Store is the locus of control of both developers and consumers for Apple, which explains why Apple’s efforts to open things up are viewed by competitors as half-hearted.
For example, writing in January, Spotify claimed in a statement that Apple, even in its plans to comply with the DMA, was engaged in “extortion, plain and simple”.
Apple, for its part, complained that Spotify was Europe’s dominant music streaming service and that it worked in “coordination with the European Commission”.
On the specific issue of Spotify versus Apple, it seems to me that it is one of many cases where the world would be better off if both sides could have lost. After all, Spotify is no angel, paying artists a laughably small royalty (and as of last year has cut off payments altogether to smaller artists who do achieve 1,000 streams). More broadly, the damage being done to culture by algorithmic selection should not be waved away. Frankly, the music industry was always terrible, but the technology industry is worse.
However, the question now for Apple is will regulators in other markets, especially its native US, sit up and take notice of the EU’s decision and decide that Apple simply has too much control over what developers and, ultimately, end users can do with its devices. If that does happen, Apple’s business model will require a significant rethink.
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