Spotify has decided to begin reducing their investments in France.

In response to a controversial new tax aimed at music-streaming platforms operating in France, Spotify has announced the withdrawal of support from two music festivals. The company also warned of further action in the upcoming months.

This week, Spotify’s managing director for the France and Benelux areas, Antoine Monin, expressed his criticism of a recently proposed tax. The new levy, expected to range from 1.5% to 1.75%, will be imposed on all music-streaming platforms. The collected funds will benefit the Centre National de la Musique (CNM), created in 2020 to provide aid for the French music industry.

Despite the united front against the new law by top music-streaming platforms such as Apple, Google’s YouTube, and Deezer, Spotify stands out as the most outspoken. Following last week’s announcement, Spotify expressed disappointment, calling it a setback for innovation, and is currently considering its next steps.

The company has recently revealed its plans, as Monin stated that it will withdraw its support for the Francofolies de la Rochelle and Printemps de Bourges festivals from 2024. These events have previously received financial and on-the-ground assistance from the company. Furthermore, Monin mentioned that further announcements will be made in 2024, without specifying any details about these upcoming actions.

Spotify recently had a dispute with the Uruguayan government regarding a new law that guarantees fair payment for all artists involved in a recording. The company believed this would result in double payments to rightsholders and threatened to leave the country. However, after receiving reassurances from the government that streaming platforms would not bear any additional expenses, Spotify changed course.

Unlike other countries, France holds a vast potential as a market for Spotify and simply abandoning it is not a viable option. As Monin implied recently, the company’s approach will probably involve directing more resources towards other markets.

According to Monin, Spotify will be able to handle this tax, but they will choose to redirect their investments away from France due to the lack of support for innovation and investment in the country.