New Book to Detail War Against the Apple Tax

A new book will detail how Spotify, Epic Games, and others have used antitrust regulation to fight Apple’s illegal business practices and anticompetitive fees.

iWar: Fortnite, Elon Musk, Spotify, WeChat, and Laying Siege to Apple’s Empire by Wall Street Journal columnist Tim Higgins tells the story of how Spotify’s Daniel Ek, Epic Games’ Tim Sweeney, and others–some with less noble aims–were forced to turn to antitrust regulators in the United States and Europe to try and rein in Apple’s worst behaviors after each tried, in turn, to convince the company to do the right things for its customers, developers, and partners. There’s an excerpted adaptation available today in the WSJ. But some of the key highlights include:

Daniel Ek has played a key role in getting lawmakers and regulators from around the globe to understand how Apple abuses its dominance and overcharges developers, and thus customers, for services that drive a gargantuan profit engine at the company. His efforts led directly to the creation of the Digital Markets Act (DMA) in the EU and a €1.8 billion (~$2 billion) fine for Apple, not to mention sweeping changes to the Apple App Store.

Apple’s App Store has operating margins north of 75 percent, which neatly explains why its in-app and other App Store fees are egregiously high: It’s over-charging its customers for the services provided.

When Apple launched Apple Music to take on Spotify, it priced the service at $9.99 per month, which seems like it’s $3 less per month than the $9.99 Spotify was charging. But it was even more than that because Spotify was forced to pay egregious 30 percent fees on each transaction. This, Ek says, is how the Apple tax harms competition. When Spotify turned off in-app purchases and provided a button so customers could pay it directly from the web, Apple rejected the app update. Spotify’s lead counsel met with Apple executives in person to settle the matter, but that led nowhere. And so Spotify was forced to report Apple to antitrust regulators in the U.S. and EU.

Talks with the Federal Trade Commission also led nowhere, but the EU was receptive. “As a victim of a crime, it’s easier to go to the authority where you reside,” one Spotify executive noted, as the company was founded in Sweden.

EU Competition Commissioner Margrethe Vestager met in person with Apple CEO Tim Cook. The meeting was “widely known in Brussels as the worst tech meeting to ever occur,” one lawyer close to the commission said later. “People say it was pretty damn ugly.” The EU determined that Apple’s onerous restrictions were reducing Spotify’s in-app revenues by at least 20 percent, leading to the fine noted above. Apple was later fined another €500 million for its ongoing lack of DMA compliance.

“Apple is still proposing new fees that perpetuate the status quo—despite being told to stop its illegal conduct,” a Spotify statement notes.

I cannot wait to read this book.

iWar: Fortnite, Elon Musk, Spotify, WeChat, and Laying Siege to Apple’s Empire arrives September 16 in Kindle, Audible, and hard cover book formats. You can preorder it now from Amazon.com.