Spotify could benefit greatly from Apple’s massive loss.
Late last week, Apple’s (NASDAQ:AAPL) stock took a hit after a federal judge overturned some of the company’s App Store rules governing how payment systems are handled in apps that run on its devices (like iPhones and iPads). Epic Games, the creator of Fortnite, had brought the case to the court. While the ruling may harm Apple, other requested changes Epic sought as part of its lawsuit were denied by the court. Epic management has stated that it intends to file an appeal.
The judge’s ruling basically says that developers can now send their app’s users to external payment systems from within the app. Apple is not required by the ruling to allow users to use Apple’s in-app payment system without paying a 15 percent to 30 percent commission fee.
App developers, game developers, and companies like Spotify (NYSE:SPOT) have long fought Apple’s 30 percent transaction fees, arguing that they should be able to sign up customers using any payment system rather than having to use Apple’s payment system exclusively for accounts accessed on Apple devices.
While the rulings that went against Epic may be overturned on appeal, the case ended up being a partial victory for Apple. It can still charge fees for transactions processed through its payment system. However, the ruling confirmed a trend that suggests Apple’s grip on the App Store is slipping.
Apple, for example, announced earlier this month that it will allow “reader apps” and apps to use a single link to sign up customers on their own websites rather than using Apple’s payment system. This latest case takes things a step further by requiring Apple to accept other (non-Apple) payment methods for in-app purchases. Changes like this could have a significant impact on a rapidly growing tech company like Spotify.
Apple keeps 30% of all transactions that take place in the App Store or within its ecosystem. That may seem fair on the surface because the transactions are happening via Apple devices, but there are reasons these fees are being challenged in court and even in Congress right now. The basic argument is that Apple has gone too far in its efforts to control how app developers for its devices can make money.
The tech giant’s developer rules have long contained “anti-steering” provisions – essentially, developers were forbidden from even letting. Washington Newsday Brief News.