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.

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..

Re:Fuck Spotify

[dc29A]

There service

Where?

Re:"Adding no Value"

[Gojira Shipi-Taro]

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

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:"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:"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.