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Spotify CEO’s Response to Apple’s Compliance with EU Regulation: Navigating Challenges and Opportunities

Spotify, a prominent critic of Apple’s policies, wasted no time in expressing its dissatisfaction with Apple’s response to the EU’s Digital Markets Act (DMA). Following Apple’s announcement, Spotify CEO Daniel Ek lambasted the tech giant’s plan as “extortion” and a “farce” during the company’s Q4 2023 earnings call with investors. Despite this initial outcry, Ek adopted a more measured tone, highlighting that, from an investor’s perspective, there’s little immediate impact on Spotify’s business due to the option to maintain existing terms with Apple. However, he also emphasized potential future benefits under the DMA that could be significant for Spotify.

Joining a chorus of other critics including Epic Games, Mozilla, and Microsoft, Spotify voiced concerns about the complexity of Apple’s compliance with the DMA. While Apple technically adheres to the letter of the law by opening its app ecosystem, its convoluted terms, including a Core Technology Fee and commissions on external purchases, have raised eyebrows.

Ek didn’t hold back in his criticism, describing Apple’s approach as distortion and cautioning that Spotify might struggle under the imposed fees. Nevertheless, he reassured investors that Spotify’s business and revenues wouldn’t suffer in the short term, as the company can maintain its current arrangements.

Ek also hinted at potential opportunities arising from the DMA, such as the possibility of superfan clubs and alternative app stores. He underscored Spotify’s ability to explore new revenue streams, such as in-app purchases for audiobooks, under the revised rules.

Despite sporadic profitability, Spotify faces ongoing challenges in maintaining consistent earnings. Ek stressed the importance of regulatory intervention to unlock innovative features currently restricted within the iOS ecosystem, expressing hope for action from the European Commission.

In summary, while Spotify remains critical of Apple’s response to the DMA, Ek sees potential long-term benefits amid the changes, emphasizing the need for regulatory support to foster a more competitive landscape for both consumers and creators.

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