Spotify Scores a Regulatory Win—Here’s Why Investors Should Cheer

The music streaming wars just got a major twist. After years of legal battles, Spotify’s long-awaited U.S. app update—approved by Apple in late 2024 following a landmark court ruling—has finally hit the market. This isn’t just a technical upgrade; it’s a game-changer for Spotify’s business model, user experience, and, most importantly, its stock. Let’s break down what this means for investors.

The Ruling: A Blow to Apple’s “Apple Tax”

The U.S. federal court’s decision in September 2024 found Apple guilty of willful violation of antitrust laws by enforcing its 30% commission on in-app purchases—a fee colloquially known as the “Apple Tax.” The ruling specifically ordered Apple to stop blocking developers like Spotify from directing users to external payment systems and hiding pricing details. This victory forced Apple to approve Spotify’s update, which now allows U.S. users to:
- Compare subscription plans (Individual, Student, Family) with full pricing transparency.
- Switch plans or upgrade to Premium via dynamic links to Spotify’s website—bypassing Apple’s payment system entirely.
- Use third-party payment methods, reducing Spotify’s operational costs and potentially lowering prices for consumers.

Why This Matters for Spotify’s Bottom Line

The update directly addresses two critical pain points for Spotify: cost savings and user retention. By cutting Apple’s 30% fee on external purchases, Spotify’s gross margins—already at 31.6% in Q1 2025—could expand further. Even a 2–3% margin improvement could add hundreds of millions to annual profits.

Financial highlights from Q2 2025:
- Subscribers: 268 million (up 12% YoY), driven by a freemium model that’s now more competitive with Apple Music.
- Revenue: €4.2 billion (+15% YoY), fueled by subscriptions and ads.
- Stock Performance: Up 96% year-to-date through June 2025, reflecting investor optimism about margin tailwinds and regulatory wins.

The Bigger Picture: Antitrust Momentum

The court’s ruling isn’t just about Spotify—it’s part of a global push to dismantle tech monopolies. In parallel, the EU’s 2024 Digital Markets Act forced Google to allow alternative app stores, while U.S. regulators continue scrutinizing Apple’s App Store practices. These trends create a tailwind for Spotify and other developers, reducing barriers to innovation and competition.

Risks on the Horizon

• Apple’s Appeal: The ruling isn’t final. If Apple wins its appeal, it could reverse these changes.
• Label Royalties: Spotify’s margin dip to 31.5% in Q2 2025 was partly due to rising music licensing costs. This could offset some savings from reduced Apple fees.
• Ad Revenue Slowdown: Ad growth slowed to 5% YoY in Q1 2025, reflecting broader economic headwinds.

Conclusion: A Buy with an Eye on the Long Game

Spotify’s U.S. app update is a strategic win that investors should celebrate. By reducing dependency on Apple’s ecosystem, Spotify gains pricing flexibility, user trust, and a clearer path to profit. Even with near-term risks like label contracts and Apple’s appeal, the long-term outlook is bright:
- Market Share: Spotify holds 32% of global music streaming, and its 689 million monthly active users are growing steadily.
- Creator Economy: The update’s “one-click” purchasing for audiobooks and podcasts could unlock new revenue streams, boosting engagement.
- Regulatory Tailwinds: Antitrust actions are here to stay. As other platforms follow Spotify’s lead, the “level playing field” the company seeks becomes more achievable.

For investors, SPOT remains a buy, especially at current valuations. While short-term volatility is possible, the structural advantages from this ruling—paired with Spotify’s first-ever profit in 2024—paint a compelling picture for sustained growth. As Jim would say: “This is a buy on the dip!”

In short, Spotify’s regulatory victory isn’t just about app updates—it’s about rewriting the rules of the music streaming industry. Investors who bet on this trend could be tuning into a winning melody.