Skip to main content

Market Overview

KeyBanc Warns Apple Investors: 'Spotify Complaint Has Merit'

KeyBanc Warns Apple Investors: 'Spotify Complaint Has Merit'

Streaming music leader Spotify Technology SA (NYSE: SPOT) has filed a complaint with the European Commission accusing Apple Inc. (NASDAQ: AAPL) of implementing noncompetitive practices with its App Store, and one Wall Street analyst is warning Apple investors the complaint should be taken seriously.

On Wednesday, Spotify filed the complaint alleging that Apple forces third-party apps like Spotify to agree to its payment terms to be included in the App Store. By doing so, Spotify claims Apple is able to underprice competitors with its own services, limiting their ability to compete.

Why It’s Important

KeyBanc analyst Andy Hargreaves said Apple investors should be watching closely to see how the European Commission responds.

“We believe Spotify is largely on the right side in both facts and principle, which creates risk that App Store policy terms will be forcibly changed in a way that negatively impacts Services revenue and Apple's brand,” Hargreaves wrote in a note.

Hargreaves said Apple’s terms require companies to use its payment method in-app, making it difficult or impossible to link outside the app so services can process payments via alternative means. Hargreaves said he can see no good reason Apple would set up its system this way other than to force competitive services into charging higher prices.

Apple collects 30 percent on in-app payments.

Changes Coming?

Spotify CEO Danial Ek said in a blog post Apple has a responsibility to allow all apps to compete fairly in the app store. He also said consumers using Apple devices should be free to choose any payment method without restriction.

Hargreaves said any major change to App Store payment terms imposed in Europe or elsewhere could meaningfully impact Apple’s Services segment revenue growth and earnings. The noncompetitive claims could also do damage to Apple’s reputation as an advocate for quality and inclusion.

KeyBanc has a Sector Weight rating and no price target for Apple stock.

Related Links:

Do You Love Cult Stocks?

Barclays Analyst Says Tesla Is No Apple

Latest Ratings for SPOT

Apr 2021Pivotal ResearchUpgradesHoldBuy
Apr 2021JefferiesInitiates Coverage OnBuy
Apr 2021Evercore ISI GroupAssumesOutperform

View More Analyst Ratings for SPOT
View the Latest Analyst Ratings


Related Articles (AAPL + SPOT)

View Comments and Join the Discussion!

Posted-In: Andy Hargreaves App StoreAnalyst Color Eurozone Legal Markets Analyst Ratings Tech Best of Benzinga

Latest Ratings

BTAIHC Wainwright & Co.Maintains170.0
HEEvercore ISI GroupUpgrades45.0
RVMDSVB LeerinkMaintains46.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at