Spotify Says Apple Won't Approve New Version Of Its App Because It Doesn't Want Competition For Apple Music (recode.net)

According to a report on Recode, Apple has rejected an update to Spotify's iOS app, and that this has caused a "grave harm to Spotify and its customers." The Swedish-based music company competes with Apple's Music streaming app and service. In a letter to Apple's top lawyer, Spotify says that Apple turned down a version of the app citing "business model rules" and demanded that Spotify uses Apple's billing system if it wants to acquire new customers and sell subscriptions. From the report:The letter, sent by Spotify general counsel Horacio Gutierrez to Apple general counsel Bruce Sewell on May 26, suggests that Spotify intends to use the standoff as ammunition in its fight over Apple's rules governing subscription services that use its App store. "This latest episode raises serious concerns under both U.S. and EU competition law," Gutierrez wrote. "It continues a troubling pattern of behavior by Apple to exclude and diminish the competitiveness of Spotify on iOS and as a rival to Apple Music, particularly when seen against the backdrop of Apple's previous anticompetitive conduct aimed at Spotify ... we cannot stand by as Apple uses the App Store approval process as a weapon to harm competitors."

Comments

Walled garden

[110010001000]

If you work in a walled garden you are just a gardner.

Re:Walled garden

[tripleevenfall]

Apple was already charging more per month for a Spotify subscription than what you'd pay by going through Spotify. You could subscribe through Spotify for $9.99, but if you subscribed through iTunes I think it was $12.99.

Apple is just making sure they get a hefty cut of what Spotify is doing, while adding no value.

Re:Walled garden

[Anubis IV]

This whole thing is a bit weird on both sides.
1) When Apple added in-app payments (IAP) to the App Store, they came with a set of draconian rules (e.g. devs must use Apple's IAP system and pay Apple their 30% cut; devs can't advertise other ways to pay outside the store, etc.). No one liked it, but devs adjusted by doing things like raising the price to cover Apple's 30% cut from people who paid via IAP which is what Spotify did.

2) This arrangement continues for several years.

3) Spotify decides it no longer likes playing by the rules they've been following for years, so they submit an update that includes ads for an off-store way of paying for a subscription at a lower price.

4) Apple rejects the update since it's in violation of the rules.

5) Spotify decides to take its ball and leave, so they not only pull the advertising, they also pull the ability for iOS users to pay at all from the app.

6) Apple apparently decides it wants to punish Spotify, so they reject that update, even though there's so far no indication of any form of rules breaking.

All of which is to say, this seems childish on both sides. Apple's rules are soon-to-be relaxed a bit (e.g. 15% cut for subscriptions that last longer than a year), but they're still draconian, and Spotify seems to be breaking the rules intentionally, then acting outraged in as loud a way as possible simply for the purpose of drumming up some PR.

Re:Walled garden

[known_coward_69]

spotify was always free to disable subs via the app and only do them via the website and spend their own money marketing their service

Re:Walled garden

[barc0001]

I agree with most of what you say, except instead of categorizing Spotify as being childish and looking for PR, I'd call it they're using their position to point out Apple's greedyness and trying to get changes to happen. When Taylor Swift did the same thing with Apple Music and the free trial crap, everyone was falling all over themselves to congratulate her on using her status for good. How is this any different?

Re:Walled garden

[davester666]

No, Spotify is the company which decides how much to charge for their subscriptions within Apple's App Store. They have decided to add the cost of Apple's billing fee to their subscription rate.

Re:Walled garden

[Half-pint HAL]

Apple was being unfair to artists, not its customers. Spotify customers who are paying through the app itself are the ones affected by the changes in Spotify's app, and Spotify has the gall to paint the situation as though these rules have suddenly changed.

I am no fan of Spotify -- as with all streaming services, they shortchange musicians. However, the fact is that they're operating in a space where margins are exceptionally tight (and all their competitors are shortchanging musicians, too) -- Apple's cut is humungous in relation to most of the other costs in the system, and it takes a dubious business model and makes it unworkable.

And what does Apple bring to the table? People keep saying it brings the customers, but that's a two-way street -- there are plenty of Spotify users whose decision on what tablet or phone to buy would be heavily coloured by the unavailability of Spotify on a given platform. And Apple does not bring users to Spotify -- Apple passively facilitates it. They don't promote many apps, and Spotify has to advertise independently to get any awareness. Apple is trying to make a 500% markup by offering credit card processing facilities that Spotify still have to duplicate from someone else anyway (because Apple do not offer general payments processing that non-iOS customers can access) on customers that Spotify have to get for themselves.

Apple is not a shop. They do not stock the shelves. They rely on third-parties to do that for them, and the third-parties take on all the risk; then they skim the cream off the top of all income while assuming no risk themselves. I'm grateful for the fact that I can trust most apps to be secure on my iPad, but their payment system is crazy.

Good

[geek]

Fuck Apple

Everyone protects theiro own interests

[evolutionary]

Is this really a surprise? If it weren't for federal laws requiring competitors be allowed to participate in Canada, we'd only have Bell (Canada), Rogers and Shaw for providing ANY Internet access and consequently, crazy high prices for Internet services abusing their monopoly. Fortunately our laws require those companies with the physical infrastructure to provide at wholesale prices so resell to end customers. Food for thought..

I give no fucks.

[Dishevel]

Companies have bent over to allow Apple this power.
If the people are too stupid to realize that they are being treated like children or if they are ok with it then they should be cut off the good apps that us responsible people can handle.
If Apple wants to be a shit and separate their customers from the rest of the world, then we should just abandon them to their choices.

Re:Fuck Spotify

[dc29A]

There service

Where?

Re:Spotify

[Holi]

Or you know, have morals.

This is why android

[shaitand]

This right here. Understand now iphone users?

Re:This is why android

[Half-pint HAL]

Google, Apple and MS all built huge empires and they have every right to occasionally strong arm competitors.

No, they don't. That's why we have antitrust laws and the like.

Re:This is why android

[thegarbz]

Specifically I don't really understand what the dispute is actually about or what has changed.

What's changed is that companies are finally sick of apple taking a 33% cut for adding precisely zero value on top of another company's effort. This is resulting in a very popular company attempting to pull out of the market altogether.

Enjoy Spotify while you can. Unless they come to an agreement you'll very soon understand what is changing for you.

And this is a surprise?

[QuietLagoon]

Apple needs to assure that the walls of its garden are not breached. Apple customers must only access what Apple wants them to access within the increasingly higher walls of the Apple Walled Garden.

.
It's the reason (well, that and buggy software, but mainly that) why I dumped the AppleTV, gen4, that I recently purchased.

Re:"Adding no Value"

[Gojira Shipi-Taro]

It's certainly not worth 1/3 the base subscription fee.

Re:"Adding no Value"

[suutar]

As the subscriber (and therefore the person actually ponying up some cash) I can say that there is nothing Apple is doing with regard to spotify that has 3 dollars a month value to me.

This is why anti-trust laws exist

[Tony Isaac]

When a single company controls an entire marketplace (in this case, the marketplace of iDevice users), abuse is sure to follow.

Re:"Adding no Value"

[FlyHelicopters]

They aren't, until Apple becomes big enough, then they have no choice...

That is why the anti-trust issues come in, Apple is large enough they should know better.

LOL yeah. For CONSUMERS, different value

[raymorris]

> hundreds of millions ... with one click ... default to auto-renew?

> Ask me how I know you don't understand business or money at all.

LOL, absolutely. Apple brings a LOT of value, for app developers. I wrote some software that was way better than anything else in its $100+ million industry. And made almost nothing from it because I didn't get it in front of customers who were ready to pay. What Apple provides, an app store full of people who readily pay for apps, is hugely valuable.

For CONSUMERS, Apple provides payment convenience, which is worth a buck or two, and provides a good app store where they can easily find things like Spotify.

Re:LOL yeah. For CONSUMERS, different value

[Holi]

>and provides a good app store where they can easily find things like Spotify.

I would beg to differ, as you cannot find Spotify on their store right now.
Until Apple had a competing product they were not in the habit of removing streaming apps from their store. Now that they are competing they are adding onerous conditions to their competitors.

Re:"Adding no Value"

[Grishnakh]

But are they big enough? All the numbers I've seen show Apple to be a rather small portion of the smartphone market, and that's just in the US. Outside the US, they're tiny. Of course, there's also data showing that iPhone users are much more likely to spend money on apps than Android users, but as a portion of the market itself, Apple is not dominant. They merely hold a very lucrative niche.

Re:"Adding no Value"

[known_coward_69]

not to you, but to the app creator

Re:"Adding no Value"

[green1]

If it was worth it to the app creator, don't you think they'd pay up instead of getting lawyers involved?

Re:"Adding no Value"

[known_coward_69]

netflix has been paying up for the last few years and growing subscribers

Re:"Adding no Value"

[saloomy]

This is a problem for one sector of the industry against another sector. The model Apple has created saves the small developer a lot of resources and energy by allowing them to offload to apple:

1) the hosting costs of serving their application

2) Set up a payment gateway, processor, PCI compliance.. etc..

3) Provides metrics for small developers, a user-feedback system, an automatic update mechanism

4) A sales strategy that helps get smaller app developers noticed.

Searching in the App store is more small-developer friendly than searching in Google. If we used google for searching for our app games, all we would ever find is EA, and other developers wouldn't be as successful. The model works and the ecosystem is a testament to that.

and I can't state this enough
5) Providing a lot of small developers a robust QA department.

Can you image the plethora of crash, buggy, shitty, malware-ridden, infected, suspicious, devious, dubious, and malicious apps we would have if we all downloaded apps off random web-pages instead of the curated app store?

I don't feel like looking through all the slashdot articles on the various bugs and crap that have come out on Android, and friends of mine who are devout Android users have remarked how much better the iOS app versions seem to be. There is nothing you could get me to do to leave the curated app store, even there are downsides to the curation. Some apps get banned for content or purpose (porn, political satire) reducing selection. Also, Apple isn't perfect, and providing a high quality product does lead the consumer to believe the apps must be for all intents and purposes, perfect. So they may be less likely to practice computing safety. Suspicions attachment in email? In outlook, you listen to the warning. On an iPhone, you feel like theres not much it that can break, but there still issues that get through.

But, can you imagine if Microsoft did this for Windows EXEs? We wouldn't have as many of the shitty anti-virus, anti-malware, any-spyware, toolbar-removing, homepage-changing, crap-vertizing safety apps we have on PCs today. Not having to deal with that mess on my phone, priceless, and well worth the 30% overhead on my measly app costs, considering most really useful apps are free anyway, where Apple just absorbs these costs itself.

The real complaints come from the big guys, who have all this infrastructure. This is why you can't subscribe to Office365 via the Office apps. This is why there is no Autocad purchasable on the iPad. Their costs take into account all these functions, without having to subsidize it for free Apps. But they have their own sales channels and the app is seen as a "bolt-on". Just like the app that comes with your company phone system.

The real problem here occurs when you have hyper-competitive markets like song-streaming. Spotify, AM, Pandora, they all fight every contract and deal they make for fractions of pennies due to the micro-margins and huge throughput in their business models. That causes them to penny-pinch for the cost savings they need to be competitive. Those markets are now butting up against Apple's hard and fast "We didn't negotiate with Microsoft for Office, why would we negotiate with you? The rules are posted on the website right there!" rules for cost-sharing. And they are not happy about it.

Re:"Adding no Value"

[ColdWetDog]

Please provide an example of how decreased purchasing friction benefits consumers.

Condoms?

Re:This is what laws are for...

[Grishnakh]

At some point, consumers need to take responsibility for their own choices. In the case of a true monopoly, it's true that consumers have little other choice, and even in the case of Windows you can make the claim that the presence of so much existing software on the platform, and the overwhelming marketshare, qualifies for similar treatment.

However, iPhone isn't even the market leader, not even close. Android is, by far. I really don't see why this warrants any attention other than "look! another way Apple users are getting screwed over! hahaha!"

I'm not worried about Ferrari owners getting the shaft with horrifically overpriced oil changes. So why should I care about Apple users getting screwed for $3/month?

Re:"Adding no Value"

[dgatwood]

The real problem here occurs when you have hyper-competitive markets like song-streaming. Spotify, AM, Pandora, they all fight every contract and deal they make for fractions of pennies due to the micro-margins and huge throughput in their business models.

That's not really the problem; I mean yes, it is part of the problem, but it is not the core problem. If every vendor had to pay that percentage for Apple's payment processing, those companies could continue to fight for every cent, but they would be competing on equal terms. The problem is that Apple itself is in the music streaming market, and by requiring everyone else to use Apple's payment service (on which Apple makes a profit) instead of much cheaper third-party payment services, it is effectively granting Apple an unfair competitive advantage over everyone else in that space, because they can choose to not take the extra profit on the transactions themselves, and thus can offer their own music service for considerably less money than anyone else.

Now if Apple is willing to give 30% of their Apple Music revenue to music charities to level the playing field, that's fine (and musicians everywhere would love it if they did), but otherwise, what they're doing is blatantly anticompetitive, in addition to undeniably harming consumers by tricking iOS users into paying a higher price for the same goods and services solely because they happen to have downloaded the app and subscribed through the app rather than going to the company's website and buying a subscription before downloading the app. (BTW, I reject the entire notion that Apple "brought those customers to the table". Most people who get apps do so after hearing about them outside the App Store. Almost nobody I know has ever discovered anything in the App Store without searching for it; the store is just too big for that to be practical.)

The thing is, lots of folks pointed out all of these problems way back when Apple first announced their in-app purchase rules, and it has been an ongoing battle ever since. Eventually, it is going to come down to an antitrust suit, which Apple is likely to lose. And that will also be bad for consumers, because the app store rules do have a valid purpose—making it so that users don't have to give out their credit card to every random app that they do business with.

IMO, the only solution that won't harm consumers is for Apple to change their rules so that the "in-app purchases only" rule has an explicit exception for subscriptions to services that are also available on non-mobile platforms via a website. This would basically cover all the interesting edge cases, would cause Apple minimal financial impact in the long run, and would prevent this from turning into an ugly lawsuit where everyone loses.

Re:"Adding no Value"

[dgatwood]

netflix has been paying up for the last few years and growing subscribers

Netflix isn't competing against an Apple-owned subscription video service. If that changes, you can bet their lawsuit will follow within days.

Re: "Adding no Value"

[MobileTatsu-NJG]

Around here Apple is a monopoly with a miniscule market-share. Must be Time Lord technology.

Re:Easy Fix

[BronsCon]

Seems like a simple fix,

From TFA:

Spotify stopped advertising the promotion. But it also turned off its App Store billing option, which has led to the current dispute.

Seems they did that, actually.

they could possibly include a "button" that directs you to their website to "manage your account" if they wanted to and Apple still wouldn't get shit.

That's specifically forbidden by Apple, actually, for the very reason you mention: Apple [...] wouldn't get shit.

Re: "Adding no Value"

[BronsCon]

No, Apple didn't "boot" Spotify from the app store. Spotify removed their approved app from the store. There is a world of difference between those two things.

Read that again, in context. Apple didn't give Spotify a choice other than: keep ripping off your customers for 20% of the profit a direct sale nets you, take an 18% loss, or leave.

What specific law prevents this contractual arrangement?

I'm not a lawyer so I can't quite the statute, but it'd be the same one that got Microsoft in shit for bundling IE.

Spotify chose to remove their existing app from the app store instead of removing the feature from their updated app that violated the terms of the app store developers agreement (which is likely the in-app redirection to a web site for payments).

RTFA again. They added the ad (which they'd been allowed previously) and were denied. They removed the violating feature (the ad) and the in-app purchase functionality. They were denied a second time for removing the latter.

I'll forgive you for arguing based on false assumptions if you'll take the time to correct your understanding.