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

[chiefcrash]

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?

Microsoft makes an operating system and gives away a web browser with it. Netscape could make a computer operating system and give away web browsers too. But instead, it wants to JUST give away its web browser, and ride on the coattails of someone else who bothers to make the operating system to make that possible...

On a related note.... Netscape of course doesn't make the websites either. It is just a middle man...

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.

Amazon's annual fee and small order fee

[tepples]

Summary of fees to sell physical goods on Amazon:

- $480 per year for a seller to be on its platform
- 15 percent of each order's total, including shipping but excluding sales tax, or $1.00 per order, whichever is higher
- 3 percent of sales tax

Apple charges each seller only $99 per year, and it has no $1 minimum fee per order. I imagine the $1 minimum fee has something to do with credit card and ACH debit processors taking a 30 cent fee per transaction.

Paid apps and in-app purchases on Amazon Appstore have a similar fee structure to Apple (source), though without the $99 per year fee:

- 20 percent for movie and TV subscription IAPs within Android apps
- 30 percent for paid apps and all other IAPs, including paid Alexa skills

Re:Amazon's annual fee and small order fee

[Sebby]

Just because “Amazon and Google do it too” doesn’t make it any more right.

Re: Art of text

[Harlequin80]

Not really.

Apple is trying to have its cake and eat it too.

Apple can either be the gateway to ios or it can be the music provider. But being both is anticompetitive.

If apples service can compete with a 1.3 multiplier then ok. But not ok without.

Re:There is no 30% tax

[Orphis]

You didn't read the article.

The problem isn't doing a website and host your own payment platform for your service, but it is that Apple prevents any company from contacting their own customers about payment options that are not linked to Apple.

Even if you create a Free Spotify account, on another platform, use it on your iDevice, then Apple can tell you that you have breached the developer terms of service if you contact them with an email saying they could upgrade to premium on your website.

The margins in this business are thin, and honestly, I wouldn't be surprised if Apple made more money from the 30% tax (all expenses accounted for) than Spotify providing the actual service. And that's with Apple providing their own competing service too which isn't limited to those ridiculous rules (and honestly would be surprising if they made a profit too, but that's not an issue for Apple to operate this at loss anyway).

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.