Spotify Files Complaint Against Apple With the European Commission Over 30% Tax and Restrictive Rules (spotify.com)

Spotify today filed a complaint with EU antitrust regulators against Apple, saying the iPhone maker unfairly limits rivals to its own Apple Music streaming service. Spotify CEO Daniel Ek writes in a blog post: In recent years, Apple has introduced rules to the App Store that purposely limit choice and stifle innovation at the expense of the user experience -- essentially acting as both a player and referee to deliberately disadvantage other app developers. After trying unsuccessfully to resolve the issues directly with Apple, we're now requesting that the EC take action to ensure fair competition. Apple operates a platform that, for over a billion people around the world, is the gateway to the internet. Apple is both the owner of the iOS platform and the App Store -- and a competitor to services like Spotify. In theory, this is fine. But in Apple's case, they continue to give themselves an unfair advantage at every turn.

To illustrate what I mean, let me share a few examples. Apple requires that Spotify and other digital services pay a 30% tax on purchases made through Apple's payment system, including upgrading from our Free to our Premium service. If we pay this tax, it would force us to artificially inflate the price of our Premium membership well above the price of Apple Music. And to keep our price competitive for our customers, that isn't something we can do. As an alternative, if we choose not to use Apple's payment system, forgoing the charge, Apple then applies a series of technical and experience-limiting restrictions on Spotify.

For example, they limit our communication with our customers -- including our outreach beyond the app. In some cases, we aren't even allowed to send emails to our customers who use Apple. Apple also routinely blocks our experience-enhancing upgrades. Over time, this has included locking Spotify and other competitors out of Apple services such as Siri, HomePod, and Apple Watch. We aren't seeking special treatment. We simply want the same treatment as numerous other apps on the App Store, like Uber or Deliveroo, who aren't subject to the Apple tax and therefore don't have the same restrictions.

Comments

competition

[fluffernutter]

What ever happened to the concept of restricting businesses due to unfair competition? At one time TV networks could not sell products. Surely it works the same for the owner of the whole marketplace?

Re:competition

[e3m4n]

Actually it sounds like the internet explorer case that microsoft lost, but on steroids. Its significantly more egregious since the app store is the gateway to loading software. At least in windows 98/xp the only means of installing software was to download a zip/exe/cab file and run an installer. That precluded the ability to stifle the customers power to install whatever they wanted. They still lost. With the app store, they can not only tell you what you can and cannot install, but also force the vendors to give them a cut of gross sale regardless how razor thin the profit margin is. I really don’t see how it’s much different then the mob showing up in your business and insisting that you buy their fire insurance.

Re:competition

[registrations_suck]

Apple makes a phone and sells music services on it.

Spotify could make a phone and sell music services on it too. But instead, it wants to JUST sell its music services, and ride on the coattails of someone else who bothers to make the hardware to make that possible.

On a related note...Spotify of course doesn't make the music either. It is just a middle man. It wants to connector creators and consumers, and charge a Spotify tax to SOMEBODY (either users who pay, or advertise), to make use of its marketplace. Sound familiar?

Re:competition

[DRJlaw]

Apple makes a phone and sells music services on it.

Spotify could make a phone and sell music services on it too. But instead, it wants to JUST sell its music services, and ride on the coattails of someone else who bothers to make the hardware to make that possible.

That's a bit of revisionist history.

Apple makes a phone and launches a store that is the only way for non-enterprise, non-developer customers to load software upon it. Apple invites essentially all comers to the store, which is governed by generally applicable rules. It's 2007.

Spotify launches a music service and an app through the Apple store. It's 2008. Apple sells music services -- through iTunes, which is automatically present on the phone -- that do not include streaming music services.

Apple launches streaming music services -- through the Music app, which is automatically present on the phone -- that includes streaming music services. It's 2015. Spotify has been in this space on this device for 7 years.

Apple's music app is not subject to the same pricing structure -- Apple simply matches the Spotify service fee without the overhead of paying itself 30% -- and is marketed by email to all Apple ID holders, something Spotify itself cannot do.

But instead, it wants to JUST sell its music services, and ride on the coattails of someone else who bothers to make the hardware to make that possible.

They were invited in. Then Apple leveraged its dominance in the platform to make special, anticompetitive rules for itself and expand into that line of business. There are terms for bodies of law that govern that. I believe that they include antitrust (U.S.) and competition law (E.U.).

On a related note...Spotify of course doesn't make the music either. It is just a middle man. It wants to connector creators and consumers, and charge a Spotify tax to SOMEBODY (either users who pay, or advertise), to make use of its marketplace. Sound familiar?

Nope - not remotely familiar. Spotify doesn't impose special rules on the content of music based whether the artist is a Spotify employee (or partner) or not. Spotify doesn't function as a creator and a connector self-interested in promoting itself to the detriment of other creators. Spotify doesn't have a fee structure that requires artists to pay it substantially more than it pays itself to distribute creations through the service.

I'm not convinced by your argument at all. European authorities will not be either.

Re:Be brave

[fluffernutter]

You can't seriously think an app business can survive without having their app on iPhones.

There is no 30% tax

[gnasher719]

Apple has exactly the same terms for everyone. If you sell your product including in-app purchases through Apple, you get 70% of the official price. Apple doesn't keep 30%, they have to pay credit card fees, carry the cost of gift cards that stores pay less than 100% face value for, and so on. They host your app on the store, and they supply all the in app purchases.

And there is a very simple way to get around the payment, which Netflix chose to use and which everyone else is free to use: Don't sell through your app and through the app store. Create a website, and handle the purchases yourself. I worked for a company that did that (same price through in-app purchase and through the website, we kept more money from the website), Netflix does it, everyone can do it.

I have an app on the store that I wrote just for fun, and it makes a little bit of money. If I had to sell it myself I wouldn't get a penny. (I hate advertisements, so I refuse to add advertisements). Nice thing about Apple is that they treat me exactly the same as Spotify. So I'd tell Spotify to p*** right off.

Re:There is no 30% tax

[ilsaloving]

So apparently you missed the part, in the summary no less, that Apple places technical restrictions in your app if you don't go through their payment system?

Apple Music doesn't have to take a 30% hit to run on an iOS. Apple apps get additional benefits and integration that no other competitor is allowed to achieve even if they follow the rules.

This is pure anti-competitive behaviour, pure and simple. They were able to get away with this before when they were too insignificant to be worth bothering with. Apple is now a serious player and shouldn't be allowed to get away with these shenanigans anymore.

Re:There is no 30% tax

[guruevi]

So companies can't spam you to death for upgrading their 'free' service. Sounds great. Spoitfy could do the same as Pandora and Netflix, simply sell it through their own website, why do you want to spam/ad everyone to upgrade? If they see value in your premium service, people will sign up by themselves. If not, stop spamming me.

Apple must die

[WCMI92]

They have become Microsoft back in 1995-8, a true monopolist.

Ironically Microsoft is largely irrelevant.

Apple, Google, Facebook, Twitter, however all need to be shattered.

Spotify has it backwards

[izzo nizzo]

If Spotify can't make their finances work, that's not a sign that Apple should subsidize them with both cash and platform changes.

Spotify is a disruptive business that has doubtless killed many other businesses. It's pretty normal to expect that they themselves may not survive. Yes, Apple's product is markedly similar, but it arrived later and has access to lots of ways to operate more efficiently.

When someone uses the term 'fair', it's typically when they are trying to trick you.