Spotify, known for its criticism of Apple, responded strongly to Apple’s compliance with the EU’s Digital Markets Act, calling it “extortion” and a “farce.” However, Spotify’s CEO Daniel Ek expressed a more tempered view during the Q4 2023 earnings call, stating that there are no real downsides from an investor standpoint and potential significant future upsides as companies can remain on their current terms with Apple.
Spotify is among the many vocal critics of the new law, joining others like Epic Games, Mozilla, and Microsoft, who have raised concerns about Apple’s implementation.
Apple’s compliance with the law involves complicated new terms, including a Core Technology Fee and a commission on digital goods and services purchased through external links within 7 days of an in-app tap. Spotify’s CEO, Ek, initially criticized Apple’s solution as a “masterclass in distortion,” citing concerns about profitability in light of the new fees.
Despite their initial outcry, Ek reassured investors during the earnings call that Spotify’s business or revenues would not be negatively impacted by Apple’s rules in the near term. He also suggested that future opportunities could arise from the new competitive landscape, potentially leading to significant upsides for Spotify. These opportunities include fan clubs and in-app purchases for things like audiobooks, which were previously restricted.
Ek emphasized that Spotify could leverage these new rules to enable innovative features that were previously limited on the iOS ecosystem, expressing hope that the European Commission would take action to allow these changes, ultimately benefiting consumers and creators.
Last quarter, Spotify turned a rare profit, but this quarter reported a loss, underscoring the company’s desire to maximize in-app revenues. Despite these challenges, Ek remains optimistic about the potential for positive developments under the new law.
