Music streamer Spotify Technology will begin offering in-app purchases on Apple iPhones in the European Union starting March 7 thanks to a new EU competition law. Spotify stock rose on the news.
The EU's Digital Markets Act will allow Spotify to provide in-app purchases without having to pay Apple a 30% commission. The so-called Apple tax and restrictions on communicating directly with users have kept Spotify from offering in-app purchases previously.
Next month, Spotify will let European customers buy subscriptions and make other purchases without having to leave its iPhone app.
Apple's rules have required app developers to use its App Store billing system. But the EU law changes that.
"Consumers have asked us for years about the dead ends, lack of information, and endless hoops to jump through just to purchase a subscription or audiobook," Spotify said in a blog post. "But beginning March 7, if you live in the European Union, that will change."
Spotify Stock Rises On News
On the stock market today, Spotify stock advanced 2.1% to close at 211.14.
On Jan. 12, Spotify stock broke out of a flat base at a buy point of 202.88, according to IBD MarketSmith charts. The 5% buy zone extends to 213.02, based on IBD trading guidelines.
"The DMA means that we'll finally be able to share details about deals, promotions, and better-value payment options in the EU," Spotify said. "And an easier experience for you means good things for artists, authors, and creators looking to build their audiences of listeners, concertgoers, and audiobook-loving fans."
Analysts say the change will improve Spotify's profitability.
Spotify said it will push other governments to enact consumer-friendly laws like the EU's DMA.
Spotify stock is on the IBD Leaderboard stock list.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
