Apple's App Store contributed just around 8 percent to Apple's coffers in 2024, but punched way above its weight by entailing operating margins of over 75 percent, as per publicly released court records cited by Wall Street Journal.
This extremely lucrative revenue stream, however, has been under a coordinated assault lately from the likes of Epic Games and Spotify, with the latter playing a low-key but quite effective role in shaping the attitude of global antitrust regulators towards Apple's App Store monopoly.
The bad blood between Spotify and Apple can be traced back to 2015 when the iPhone manufacturer launched the Apple Music, a rival music streaming platform priced at $9.99 per month, constituting a hefty discount to Spotify's App Store monthly subscription price of $12.99.
Spotify executives saw this pricing strategy as a direct assault, especially as the iconic music streaming platform was compelled to share 30 percent of all App Store-derived sales with Apple in what the industry cheekily describes as the "Apple tax."
In 2016, Spotify lured a veteran antitrust lawyer, Horacio Gutierrez, away from Microsoft. Shortly, thereafter, the music streaming platform submitted a new version of its app to Apple, one that curtailed new users from purchasing an active subscription from within the app. Instead, new users were to be sent an email, allowing for an upgrade to paid subscriptions at a discount.
Essentially, Spotify was coming after Apple's App Store launch. It is hardly a surprise, therefore, that Apple rejected the update, prompting the music streaming platform to dispatch its star lawyer, Gutierrez, to Cupertino. There, Gutierrez butted heads with Bruce Sewell, whose legal practice ethos revolved around embracing risk.
Unsurprisingly, the meeting ended in a stalemate, with Gutierrez accusing Apple of undermining the "competitiveness of Spotify" in a subsequent letter, while Sewell responded by accusing Spotify of "asking for exemptions to the rules we apply to all developers."
While Apple eventually stopped stonewalling Spotify's app update in return for a minor tweak, the relationship between the two entities continued to spiral south. And, to make matters worse, Spotify could not elicit sympathy from US regulators, who were unwilling to go after Apple at the time.
Gutierrez then changed tactics and began actively lobbying in the EU, where he was able to find a kindred spirit in Margrethe Vestager, the head of the bloc's antitrust regulator. A meeting between Vestager and Apple's Tim Cook followed, and is often described as the "worst tech meeting" to have occured in Brussels, where Cook lectured Vestager on tax laws in a tone-deaf manner, only to be seen as an intimidation tactic by the Europeans.
Spotify provided Vestager a smoking gun by instituting an A/B app update test, empirically demonstrating how Apple's stringent rules constrained subscriptions by as much as 20 percent relative to Google's relatively relaxed rules for Android apps. Spotify then filed an official complaint with the European Commission in March 2019.
During the ensuing proceedings, Apple accused Spotify of leveraging its "scale to avoid contributing to maintaining that ecosystem for the next generation of app entrepreneurs." Ultimately, the European Commission sided with Spotify and slapped a 1.8 billion euro fine on Apple, one that is currently being appealed by the iPhone manufacturer.
Concurrently, Gutierrez, among others, pushed the EU to revamp its antitrust rules, resulting in the Digital Markets Act in 2022, which prohibited Apple from banning app developers who sought to direct European users towards off-app payment methods. In 2025, Apple was again hit with a $500 million fine for delaying its compliance with the Digital Markets Act.
Do note that Apple under Tim Cook appears loathed to give up its App Store moat. As a case in point, consider the fact that the Cupertino giant is still proposing the imposition of fees that seek to perpetuate the status quo while proclaiming its overarching intentions to comply with the EU's Digital Markets Act.
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