On any given day in the last ten years, you could probably find a news story detailing some kind of antitrust case taken against a Big Tech company. Whether it’s in the US, UK, or EU (especially the latter), there always seems to be a legal battle, one that usually ends in a hefty fine for Apple, Google, or Facebook. Of course, those companies appeal, often successfully, but it seems like the process simply starts all over again.
But, with the agreement of the DMA (Digital Markets Act) by the EU in late March, we might see an end to this back and forth in the courts. It is arguably the most significant piece of internet legislation in history, providing a set of rules for Big Tech companies to abide by. And as we are going to discuss here, it will have ramifications for the music industry.
Apple’s Commission have been highlighted by Spotify
To illustrate the point, we need to go back over a lot of recent history. Back in 2016, Spotify – the music streaming giant – launched an Antitrust case against Apple Inc. Spotify alleged several abuses of Apple’s power, most notably in the iPhone maker’s charging of 30% commission in App Store fees and the (alleged) charge that Apple was promoting Apple Music ahead of its rivals. A similar case was launched by Fortnite maker Epic, which took aim at the commissions charged on iOS games. These have been huge court cases, with billions of dollars of revenue on the line.
However, the DMA is aimed at changing all that. For a start, it solves Spotify’s issue of the preference given to apps owned by Big Tech companies. For instance, Apple would not be able to rank Apple Music above Spotify or any other music streaming service on the App Store. You should note here that the DMA does not classify Spotify as a Big Tech company, despite its global presence. It looks at those “gatekeepers” of the internet, mainly Google, Apple, Amazon, and Meta (formerly Facebook).
A pivotal moment for the music industry
Nonetheless, this is seen as a pivotal moment for the music streaming industry, particularly with regard to those app store fees (charged by Apple and Google) mentioned earlier. To be fair, things had been changing in the Google Play Store before the announcement of the DMA, and Apple has allowed some minor changes. But there was no getting away from the fact that both “gatekeepers” charged hefty commissions when an app is purchased through a store. It’s not always the 30% that is widely quoted in the media, but it can be a significant amount of a subscription or in-app purchase.
But the DMA has detailed plans on how it will let services bypass the gatekeepers’ usual payment systems and frameworks. Ever since the iPhone was created, you could only add apps from the Apple App Store. That meant that Apple could charge those fees. That could change with the new rules on allowing third-party apps. It means, in theory, you could download Spotify directly from source, instead of going through the route of the App Store.
Individual artist may benefit
So, you might be reading this and thinking, so what if Spotify’s profits are hurt? Well, this also matters for the little guy, too. Not just for smaller streaming platforms, but for individual artists and labels. It has been pointed out that musicians now have a direct line to fans, selling experiences and content. They, too, are subject to the fees charged by the so-called gatekeepers. If you are making a few hundred bucks as an artist, paying that potential wedge of 30% is sure to hurt.
To finish, we should add a few important details. First of all, Apple and other Big Tech companies disagree with the DMA, and Apple, in particular, maintains that its policies are all about security and the DMA will impact that. Secondly, the DMA is not yet law. It has gotten over a significant political hurdle in the EU, but it is expected to be ratified in the fall of 2022. Finally, while these are EU laws, they are expected to overspill around the rest of the world. So, this will matter to musicians in America and beyond just as much as those based in Europe.
