Spotify to Make Inroads in Europe

Spotify (NYSE:SPOT) shares climbed Wednesday, on declaring it will update its iPhone app in Europe to allow users to buy in-app subscriptions and audiobooks.

In most regions, Apple’s (NASDAQ:AAPL) App Store rules prohibit companies such as Spotify from billing users directly within the app. Apple says app makers should instead use Apple’s App Store billing service, which takes a cut of up to 30%.

But a new law in Europe, called the Digital Markets Act, goes into effect in March, and will require companies it calls “gatekeepers,” such as Apple, to open up their online services to allow smaller competitors access. In Apple’s case, it requires the company to allow third-party developers to distribute iPhone apps outside the App Store, as well as bill their customers directly.

Apple hasn’t yet revealed how it will change its software and policies to comply with the DMA, although it said it would do so in SEC filings. In 2021, Apple CEO Tim Cook criticized the law while it was being debated, saying that it would “not be in the best interest of users.”

The changes Spotify announced Wednesday can be seen as a stake in the ground showing how it interprets the DMA before Apple reveals its implementation. Spotify was heavily involved in lobbying European Union antitrust regulators in favor of this outcome. It is the first major example of how a popular app plans to take advantage of the DMA.

SPOT shares gained $6.79, or 3.3%, to begin Wednesday at $213.50.

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