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Apple Slams Spotify For Asking For 'Preferential Treatment' (buzzfeed.com)
On Thursday, Spotify made major accusations against Apple of playing unfair to its music service. The Swedish-based music company said that Apple didn't approve a new version of Spotify's iOS app because "it didn't want competition for Apple Music." The Cupertino-based company has responded to the accusations. In a letter sent to Spotify general counsel Horacio Gutierrez on Friday, Apple general counsel Bruce Sewell rebutted the streaming music service's allegations, adding "we find it troubling that you are asking for exemptions to the rules we apply to all developers and are publicly resorting to rumors and half-truths about our service," Sewell wrote. BuzzFeed News reports:"Our guidelines apply equally to all app developers, whether they are game developers, e-book sellers, video-streaming services or digital music distributors; and regardless of whether or not they compete against Apple. We did not alter our behavior or our rules when we introduced our own music streaming service or when Spotify became a competitor," Sewell explains. "Ironically, it is now Spotify that wants things to be different by asking for preferential treatment from Apple."
And as for Spotify's suggestion that Apple is treading on dangerous, anticompetitive ground, well, Sewell doesn't seem too concerned. "There is nothing in Apple's conduct that 'amounts to a violation of applicable antitrust laws.' Far from it," Sewell, writes after wryly observing that not only has Apple's platform generated "hundreds of millions of dollars in incremental revenue to Spotify"; but that the Spotify App currently in the App Store is still in violation of Apple's guidelines. "I would be happy to facilitate an expeditious review and approval of your app as soon as you provide us with something that is compliant with the App Store's rules," he quips.Apple commentator John Gruber, writing for DaringFireball:Cry me a river. Spotify has long charged $12.99 via in-app subscriptions to get around the 30 percent "App Store tax". And Apple has now cut the long-term subscription split from 70-30 to 85-15. And Spotify is the streaming service most at war with artists over their abysmal royalty rates. Read between the lines and the real message here is that Apple Music is kicking Spotify's ass.
"Apple fanboi John Gruber"
There, FTFY.
Um.. That percentage is there to pay apple for the development and operation of the app store ecosystem. Apple is paying for that ecosystem every day in the form of developer salaries and massive infrastructure costs. To suggest that Apple gets to use the app store for free is one of the silliest things I have ever seen. It is like complaining about Microsoft not paying for Windows licenses. The only rational response to your argument is the equally silly comment of "Well why doesn't spotify just go make their own fucking massively popular smart phone and app store ecosystem?"
Spotify added 20 million users in the past 18 months, so nah, bro.
Also, remember that Apple already had all the login info and credit card numbers of all the iTunes users, and Apple Radio users. And, the largest base of handheld devices. Spotify did 20 million new users without that structural advantage.
You are welcome on my lawn.
Most of the articles on this dispute aren't getting too deep into what's going on, but here's some more information...
1. Spotify's current app allows users to subscribe through the app, using Apple's billing system, which gives Apple of cut. User's can also subscribe on the Spotify website, which bypasses Apple's cut.
2. Spotify is not allowed to advertise through the app that users can subscribe on a website outside the app. Spotify and Apple have had a dispute over this in the past, but Spotify chose to do as Apple asked, and removed all in-app subscription advertising targeted at iPhone users.
3. Spotify is now trying to submit a new version of their app that offers no in-app subscription method, period, and also has no advertising or instructions on how a user can get a subscription. Spotify is assuming that even with no in-app advertising or instructions, users will figure out that they can subscribe on the website.
4. Apple is claiming that this is still breaking the rules, and thus is rejecting the new version of the app. Spotify is claiming that this doesn't break the rules, and that Apple is just going to keep rejecting the new version of the app as long as they can so that users are stuck using the older version of the app that still has in-app purchases, from which Apple gets a cut.
Yes but the fact that spotify isn't even allowed to tell users that when they download or run the app isn't reasonable.
If you read other articles on it you will find that Spotify tried to put a link in their app that would take you to Spotify's website to sign up for a subscription.
That is against the App store rules.
They are free to NOT use Apple to start subscriptions... but they cannot link to another mechanism to do so. The best they are allowed to do is say "You must sign up for a Spotify account before using this application".
That's what Kindle, etc. do.
If Apple were to launch a service similar to Facebook you can be certain they would cripple the Facebook app.
Correct. Because Apple states in the rules for their walled garden that no apps can compete with their offerings. That shouldn't be a surprise to any app developer who read the rules.
Horse shit. You clearly need a refresher-course in Anti-Competitive behavior. See here.
Or for those of you are lazy:
Section 1: "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal."
Section 2:
"Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony [. . . ]"
That is the original text of the Sherman Act. The law that basically makes it illegal to monopolize a market by position. Apple do not have this position. Android is a larger OS by market share, which Apple can not influence. If Apple and Google decided to divvy up the music streaming business that would be a violation and an effective duopoly, but that is not the case here.
Apple does have costs associated with running the App store, and they have disproportionally levied fees on payments in order to subsidize their costs to provide the App Store services to free apps. Thank goodness they have, since most small developers can not afford:
1. A real quality control department. The review process keeps many bugs out of the App Store. Not all, but most.
2. Shady, shitty, data steeling apps.
3. Apps infested with spyware, malware, etc... etc...
4. The infrastructure to support updates, discovery, sales channels, a user-review solution...
the list goes on....
If the benefits of the App Store didn't make it worth-while for app developers, the App Store would be pretty barren of apps. Its not. Apple do not have a monopoly on phones, phone OS's, and therefore can not have a monopoly on anything contained therein.
Mr. Sewell is right.
Uh, no. Apple distributes free apps for free whether they offer in-app purchases or not. Apple gets rewarded for that by people buying hardware for which there are lots of apps available. Therefore, it is entirely nonsensical to suggest that because an app is tied to a subscription service, that Apple somehow deserves a cut of those services solely because they provided the ability to download an app that consumes those services.
And that argument fundamentally falls apart for another reason: The only reason Spotify is distributed by Apple is because Apple will not allow companies to distribute their own apps. Therefore those costs of distributing the app via the App Store are entirely Apple's decision, forced upon Spotify by Apple, not the other way around. Apple doesn't get to dictate that everyone must use their distribution mechanism, and then turn around and claim that because other folks used their distribution mechanism, suddenly they owe Apple a percentage of their income in perpetuity. I understand that Apple wants that, but it certainly isn't owed to them.
Frankly, this is a bit like Ford changing the gasoline filler connector and requiring every gas station to use their special filler, then demanding a percentage of the cost of every gallon of gas pumped through that nozzle. The fact that anybody puts up with it from Apple is, frankly, amazing, and there's a reason most of the major players have chosen to present an unfriendly login screen with no hints of how to get an account, rather than giving up a huge chunk of their revenue to a company that has done basically nothing to earn a huge chunk of their monthly revenue.
And most of the big companies that haven't been non-user-friendly about it (e.g. Facebook) have gotten permission from Apple to ignore that part of the App Store rules. Yeah, Facebook takes credit cards for Ad purchasing right in the app. No in-app purchases. This makes Apple's position even more legally tenuous, IMO, because they'll make exceptions for Facebook, but won't make exceptions for a company whose services are in direct competition with an Apple-branded service. Danger, Will Robinson!
It is not free, but it is nearly free. The proportional costs for Apple Music's use of the store (payment system) are negligible. Realistically, because Apple aggregates billing for multiple services and gets preferential treatment for being such a huge vendor with such a low charge reversal rate, I'd imagine their cost for operating the billing system is less than 2% of the cost of the subscription. The difference between that number and 30% (or even 15%) represents a major competitive advantage.
Check out my sci-fi/humor trilogy at PatriotsBooks.
No, they don't. But that's not really the same.
The better analogy is that I own a mall. You rent space from me in the mall and you start, say, a music store. You sell music. You make good money selling music. I notice this and I decide that, hey, maybe I'll do that, too! So I take an empty store in my mall and start my own music store. My prices are cheaper than yours because I don't pay rent. I also might inadvertently turn up the air-conditioning in your store to make it less pleasurable to be in. And it might take awhile for me to fix the problem.