Apple launched Apple Music in 2015 in a bid to compete with Spotify in the burgeoning streaming music space.
Spotify said it had chosen Europe instead of a U.S. venue because it is headquartered in Stockholm, Sweden.
Echoing complaints from other media companies, Spotify says Apple charges Spotify a 30% tax on purchases made through Apple’s payment system. Spotify says the fees make it impossible for its pricing to be competitive with Apple Music, noting that other apps on the App Store, including Uber and Deliveroo, are not subject to the 30% fee.
In a blog post announcing the suit, Spotify founder and CEO Daniel Ek said the company had attempted in vain to settle the matter with Apple directly. “In recent years, Apple has introduced rules to the App Store that purposely limit choice and stifle innovation at the expense of the user experience—essentially acting as both a player and referee to deliberately disadvantage other app developers,” Ek charged. “After trying unsuccessfully to resolve the issues directly with Apple, we’re now requesting that the EC take action to ensure fair competition.”
Apple stock has not moved on the news, but if the European action is a precursor to a U.S. challenge, Wall Street does see a potential downside for the tech giant. “We believe Spotify is largely on the right side in both facts and principle, which creates risk that App Store policy terms will be forcibly changed in a way that negatively impacts Services revenue and Apple’s brand,” KeyBanc analysts wrote in a note to clients.
One hurdle flagged by KeyBanc is Apple blocking efforts by companies to link to alternate payment methods that do not incur the 30% tax. The investment firm said such interference “holds no practical purpose other than to force competitive services into higher cost structures and unfairly tax service activity on the iOS platform.”
Apple did not have any immediate comment on the lawsuit.