STOCKHOLM, SWEDEN – Spotify CEO Daniel Ek spoke about Apple’s compliance with the EU’s Digital Markets Act (DMA) during the company’s Q4 2023 earnings call. The DMA requires Apple to open up its app ecosystem to new app stores and alternative payment methods. Spotify, along with other tech companies like Epic Games, Mozilla, and Microsoft, has been critical of Apple’s implementation of the new rules.
Ek initially criticized Apple’s DMA compliance plan, calling it “extortion” and a “complete and total farce.” However, during the earnings call, he took a more subdued tone, indicating that there would be no real downside for Spotify from an investor standpoint. He also suggested that there could be potential future benefits that may be significant for the company.
Apple’s new terms involve a Core Technology Fee and a commission on digital goods and services sold through developers’ websites within seven days of a user tapping through an in-app link. Ek expressed concern about these terms, labeling them a “masterclass in distortion” and warning that Spotify could not afford the fees if it wanted to remain profitable.
Despite his criticism, Ek downplayed the negative impact Apple’s rules would have on Spotify’s business and revenues. He clarified that Spotify would still be able to operate under the old terms and suggested that there could be future upsides to the new competitive landscape, such as the ability to establish fan clubs and offer in-app purchases for things like audiobooks and top-ups of hours.
Ek reiterated his hope that the European Commission will take action and allow more flexibility within the iOS ecosystem, benefitting both consumers and creators. Apple responded to Ek’s comments, emphasizing that Spotify pays Apple nothing and can continue to do so even under the new DMA compliance plan.
Despite the ongoing debate between Spotify and Apple, the music streaming platform continues to strive for profitability, looking for opportunities to increase its revenues and expand its offerings. The company’s response to Apple’s compliance with the DMA reflects its efforts to adapt to evolving regulatory and market conditions, maintaining its position in the competitive landscape of digital music and entertainment.