A new regulation in the European Union requires Apple to let the company bill users directly.
Spotify recently announced that along with an upcoming update to its iPhone application, it will start allowing consumers in the European Union to buy through direct in-app sales of subscriptions and audiobooks.
In the majority of regions worldwide, the Apple App Store bans direct billing through applications.
According to Apple, developers in markets other than the EU should use the iOS store’s own billing services for in-app sales. By doing this, it means that Apple can take a cut as high as 30% of any purchase.
The EU is different due to the Digital Markets Act (DMA), which will become effective in March 2024. It will require that any “gatekeeper” company, such as Apple, must allow smaller rivals to access their online services. In the case of in-app sales through Apple’s application marketplace, it means third-party developers must be able to distribute their iOS applications outside the official App Store and to bill customers directly for those purchases.
Apple has yet to reveal just how its in-app sales policies and software will be altered to be compliant.
That said, the company has already stated in its SEC filings that it has every intention of changing its software and policies for full DMA compliance. Three years ago, Tim Cook, CEO of Apple, was highly and openly critical of the law before it was passed and was still being debated. According to Cook at that time, such a law would “not be in the best interest of users.”
Spotify’s announced changes can be interpreted as securing the way it has interpreted Apple’s compliance with the DMA, even before the iPhone maker has shown precisely what implementation will look like. Spotify was very vocal in lobbying antitrust regulators in the European Union in favor of the change that was made law. This represents the first large instance of how a popular application intends to use the DMA to its advantage with in-app sales.
“For years, even in our own app, Apple had these rules where we couldn’t tell you about offers, how much something costs, or even where or how to buy it. We know, pretty nuts,” said a Spotify blog post. “The DMA means that we’ll finally be able to share details about deals, promotions, and better-value payment options in the EU.”