Spotify accuses Apple of anti-competitive practices in Europe over App Store restrictions

Posted:
in General Discussion
Music streaming company Spotify has filed a complaint with the European Commission claiming that Apple takes more money than it should be entitled to, isn't providing information on customers to vendors, and is unfairly limiting third-party access to technologies such as Siri, HomePod and Apple Watch.




Spotify has filed an official anti-competition complaint about Apple with the European Commission. The company, which competes directly with Apple Music, alleges that Apple is artificially limiting innovation and constraining user choice by refusing to allow Spotify and other firms access to technology and information via the App Store.

Daniel Ek, founder of Spotify, announced the complaint on the company's blog.

"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," Ek said. "After trying unsuccessfully to resolve the issues directly with Apple, we're now requesting that the EC take action to ensure fair competition."

As an example, Ek describes Apple's 30 percent cut of purchases made on the App Store as a tax.

"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," wrote Ek. "And to keep our price competitive for our customers, that isn't something we can do."

Spotify's blog announcing the complaint
Spotify's blog announcing the complaint


"If we choose not to use Apple's payment system," he continues, "Apple then applies a series of technical and experience-limiting restrictions on Spotify. Over time, this has included locking Spotify and other competitors out of Apple services such as Siri, HomePod and Apple Watch."

Ek further says that third-party developers are also locked out of information regarding customers. "For example, they limit our communication with our customers-- including our outreach beyond the app," he writes. "In some cases, we aren't even allowed to send emails to our customers who use Apple."

Spotify does have an Apple Watch app but it is limited to being a remote control for music played on iPhone or Spotify Connect devices, not the watch itself.

The company has not issued a copy of the complaint it has sent to the European Commission, but it has set out a list of what it wants to see happen. Ek says Spotify is first asking that all apps "should be able to compete fairly on the merits, and not based on who owns the app store".

Then the company wants users to have a choice of being able to pay subscriptions directly to Spotify through the App Store, yet without Apple's cut. Lastly, Spotify wants app and service developers to get access to customers for marketing and promotions.

The latest figures available show that in November 2018, Spotify was maintaining a lead on Apple Music with 87 million paid subscribers. The firm has recently partnered with Hulu to offer subscriptions and bought podcasting companies in order to compete with iTunes.

Apple has yet to comment publicly on the complaint.
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Comments

  • Reply 1 of 61
    gatorguygatorguy Posts: 20,911member
    Considering that this is in the EU which has different views on "unfair" competition than the US I would not discount the possibility of the EU Commission stepping in with a formal investigation on Apple's App Store. Whatever decision would be reached would of course apply to Google Play as well. 

    Personally I think there's a good chance this gets the Commission's attention. The typical "Apple isn't a monopoly" chant won't be the deciding factor there IMO.

    EDIT: Spotify lays out their general complaints explained here, the formal one is under seal still.
    https://timetoplayfair.com/


    edited March 13 muthuk_vanalingam
  • Reply 2 of 61
    Mike WuertheleMike Wuerthele Posts: 4,777administrator
    gatorguy said:
    Considering that this is in the EU which has different views on "unfair" competition than the US I would not discount the possibility of the EU Commission stepping in with a formal investigation on Apple's App Store. Whatever decision would be reached would of course apply to Google Play as well. 

    Personally I think there's a good chance this gets the Commission's attention. The typical "Apple isn't a monopoly" chant won't be the deciding factor there IMO.
    I rather suspect that they will be looking into it, formally. Many column-inches will be slain over it for the next few years.
    croprbeowulfschmidtronn
  • Reply 3 of 61
    kkqd1337kkqd1337 Posts: 211member
    I agree with all of Spotify’s complaints. 
    kestralgutengelagilealtitudebitmodcrowleyCarnage
  • Reply 4 of 61
    darkpawdarkpaw Posts: 130member
    Then the company wants users to have a choice of being able to pay subscriptions directly to Spotify through the App Store, yet without Apple's cut.
    Yeah, Apple should absorb all the costs for handling subscription payments every month and pass all the money onto Spotify, while Spotify has to pay payment processing itself for their customers who choose to pay outside of the App Store.

    I guess I should be able to use that lovely gym equipment in the gym, and not pay for it?

    /s
    beowulfschmidttmayn2itivguyradarthekatronnNotsofastpscooter63jmey267uraharawatto_cobra
  • Reply 5 of 61
    croprcropr Posts: 955member
    gatorguy said:
    Considering that this is in the EU which has different views on "unfair" competition than the US I would not discount the possibility of the EU Commission stepping in with a formal investigation on Apple's App Store. Whatever decision would be reached would of course apply to Google Play as well. 

    There is a small but fundamental difference  between Apple App Store and the Google Play Store.  Google does allow the app developers to make buttons in the apps opening a website where the user can buy/extend subscriptions, thereby legally bypassing the 30% (or 15%) cut.  Apple does not allow this.  Looking at how the EU commission has handled similar cases in the past, this difference might be crucial
    muthuk_vanalingam
  • Reply 6 of 61
    dewmedewme Posts: 2,125member
    So ... Apple invests many billions of dollars (or Euros), over a decade of calendar time, many millions of worker hours, and mortgages the future of their company in building out a massive infrastructure of technology, products, and services needed to support an ecosystem for their products to deliver a premium set of services to their paying customers.

    Now Spotify jumps in with blather about "an ecosystem in which fair competition is not only encouraged, but guaranteed."  

    Whose and what "ecosystem" is this guy talking about? Some magical ecosystem that fell like manna from heaven for the benefit of everyone in this highly competitive market struggling to win over the same set of customers? Business ecosystems don't just happen like, they are complex systems that are purpose-built, and at great expense. Ecosystems are not the same as "markets" either. Apple is in the streaming music market just like Spotify is in the music streaming market. But Apple has built a massive ecosystem to support their foray into this market - but only after they effectively rescued the whole music industry with 99 cent music purchases on iTuness.

    Spotify has created nothing. They are simply leeches who suck profits from the creativity of others at the lowest possible cost to themselves. 

    I'll have to issue the Total BS card to this guy. Apple bought and paid for their "ecosystem." If Spotify wants to play in Apple's ecosystem they have to pay-to-play to enjoy the fruits of Apple's labor. Or they can build their own ecosystem. Get to work Spotify. Send the lawyers packing and hire some engineers. Create something.
    beowulfschmidttmayn2itivguyradarthekatronnpscooter63JanNLlostkiwiwatto_cobrawaltg
  • Reply 7 of 61
    The 30% cut is a lot, especially for apps with millions of users and recurring subscriptions, though I do believe Apple has a 15% cut for the second year and beyond. It's still a lot compared to a 2% credit card processing fee. I'd predict these fees come down somewhat over time and especially with scale. As for the services, Siri is opening up and I see no evidence Spotify is being treated any differently than any other app provider besides Apple itself. There are privacy issues there and I wouldn't want Spotify to get a direct line on what I say to Siri, as much as they might want it. Watch, it's a fairly constrained device, but forcing Apple to be a bit more proactive making APIs available fairly to app devs (no private Apple only APIs) would be a good thing. Homepod? I can play spotify from my phone to a Homepod. Or is Spotify complaining they're not native on the Homepod, a device which doesn't have app ability? If Spotify made their own speaker, should they be forced to have Apple music natively on it? As for customer info, I don't want Apple sharing my info with anyone, not even for apps I'm using. If the app wants info about me, they can ask and I can choose to share or not. End of story. Good luck getting Europe to budge on that one.
    edited March 13 radarthekatronnwatto_cobra
  • Reply 8 of 61
    I do not understand. Is Apple being accused of doing something illegal or do people simply have a issue with the business model? 
    watto_cobra
  • Reply 9 of 61
    croprcropr Posts: 955member
    darkpaw said:
    Then the company wants users to have a choice of being able to pay subscriptions directly to Spotify through the App Store, yet without Apple's cut.
    Yeah, Apple should absorb all the costs for handling subscription payments every month and pass all the money onto Spotify, while Spotify has to pay payment processing itself for their customers who choose to pay outside of the App Store.

    I guess I should be able to use that lovely gym equipment in the gym, and not pay for it?

    /s
    The market price for the payment processor service you are describing, is around 2.5%.  Apple charges 30% and any app developer is forced to use it. Spotify does not ask to have a free lunch but a fair lunch 
    ElCapitanmuthuk_vanalingam
  • Reply 10 of 61
    carnegiecarnegie Posts: 726member
    I think if I was one of the major players in this industry - e.g., Spotify or Apple or some of the large labels - I wouldn't want to give regulators any (more?) reason to be asking questions about anti-competitive behavior relating to music streaming services.

    I understand that the accusation Spotify is making here only relates to Apple's actions and wouldn't necessarily reflect on its own actions. But I wouldn't be surprised if regulators soon start targeting, e.g., Spotify and Apple and some of the large labels for alleged anti-competitive dealing.

    I obviously don't know what went on behind the scenes when the licensing deals were worked out. And I myself don't have a problem with how the streaming music model works. I'm also not a general proponent of how anti-trust laws work. I think governments go too far in regulating some business conduct which should be allowed. But, with all that said, the industry has effectively agreed on a retail price (or set of prices) which music streaming services will be sold at. Spotify and Apple dominate the paid music streaming markets. And they're only able to operate because large music labels have agreed to let them offer services at, e.g., $10 a month and take, e.g., $6 of that. Is there actual vertical and/or horizontal price fixing? I doubt it. But that wouldn't stop overzealous regulators from trying to (and perhaps successfully) making the case that, in effect, there is. Horizontal price fixing (on the part of labels) accomplished through mutual vertical business relationships?
  • Reply 11 of 61
    dewme said:
    So ... Apple invests many billions of dollars (or Euros), over a decade of calendar time, many millions of worker hours, and mortgages the future of their company in building out a massive infrastructure of technology, products, and services needed to support an ecosystem for their products to deliver a premium set of services to their paying customers.

    Now Spotify jumps in with blather about "an ecosystem in which fair competition is not only encouraged, but guaranteed."  

    Whose and what "ecosystem" is this guy talking about? Some magical ecosystem that fell like manna from heaven for the benefit of everyone in this highly competitive market struggling to win over the same set of customers? Business ecosystems don't just happen like, they are complex systems that are purpose-built, and at great expense. Ecosystems are not the same as "markets" either. Apple is in the streaming music market just like Spotify is in the music streaming market. But Apple has built a massive ecosystem to support their foray into this market - but only after they effectively rescued the whole music industry with 99 cent music purchases on iTuness.

    Spotify has created nothing. They are simply leeches who suck profits from the creativity of others at the lowest possible cost to themselves. 

    I'll have to issue the Total BS card to this guy. Apple bought and paid for their "ecosystem." If Spotify wants to play in Apple's ecosystem they have to pay-to-play to enjoy the fruits of Apple's labor. Or they can build their own ecosystem. Get to work Spotify. Send the lawyers packing and hire some engineers. Create something.
    Arguably, the App Store system is a collaboration between Apple and thousands of app developers who have over the years built complementary services. 

    During the initial years of the App Store, its main contribution was to lock customers into the Apple ecosystem and have them buy more Apple hardware - where Apple made most of its profits. It's not so different from all the ancillary services that Google provides such as News or Gmail which make no money in itself (News has no ads) or very little money (Gmail ads do not seem to make enough money to pay for Gmail development) - but they are important referral services for Google's main money maker which is search.

    One could argue that after creating this robust ecosystem, Apple is now using it as a money maker on its own plus it gradually introduces first party services to replace some of the most important apps on the App Store so it can capture 100% rather than 30% of profits.

    This change will raise concerns over time. The questions for regulators will be if Apple has enough monopoly power. Regulators expect all companies to behave badly and exploit consumers but competition constrains their behavior. Whether there is enough competition always comes down to how you define the market. At first sight, Apple only has a minority market share in hardware. However, some regulators might argue that Apple has a monopoly among those who use Apple products because (a) switching costs are getting more and more expensive (Facetime, App Store, Apple Watch working with iOS devices only etc.), (b) there is no choice outside the App Store to get apps and (c) many app creators make most of their profits from iOS devices despite the lower market share because households with Apple devices tend to be wealthier and many apps are first developed for iOS.
    edited March 13
  • Reply 12 of 61
    tap5atap5a Posts: 9member
    cropr said:
    gatorguy said:
    Considering that this is in the EU which has different views on "unfair" competition than the US I would not discount the possibility of the EU Commission stepping in with a formal investigation on Apple's App Store. Whatever decision would be reached would of course apply to Google Play as well. 

    There is a small but fundamental difference  between Apple App Store and the Google Play Store.  Google does allow the app developers to make buttons in the apps opening a website where the user can buy/extend subscriptions, thereby legally bypassing the 30% (or 15%) cut.  Apple does not allow this.  Looking at how the EU commission has handled similar cases in the past, this difference might be crucial
    And this is big one. Basicly in App Store apps you're not even allowed to tell where to buy your service if you aren't using App Store payment. Also I'm Apple fanboy but taking 30% of recurring payments is too much. Of course Apple should get something but apps that are allowed to use Apple Pay get ~0,15% of purchase so there's huge difference between different categories of apps.
  • Reply 13 of 61
    - Ek further says that third-party developers are also locked out of information regarding customers. "For example, they limit our communication with our customers—including our outreach beyond the app," he writes. "In some cases, we aren't even allowed to send emails to our customers who use Apple." -

    Hal-a-freakn-loo-ya!!! When I buy an app I want the choice to say DO NOT CONTACT ME UNDER ANY CIRCUMSTANCES!!! PERIOD!   Since virtually no app developer would agree to this on their own, Apple has to step in and say it's up to the consumer, not the app developer to set the terms of communication!! This is a privacy issue and Apples history with this is better then virtually all other companies I've dealt with.

    30% may seem like a lot but what's the mark up most goods and services? By the time most retail stores sell an item, they charge more then 30% over what the manufacturer received for producing the same item (shipping + handling + profits +...; Similar to curating the app store, policing apps, creating a device that people can use without selling their personal data...).  Seems cheep to me when all the things are considered! I gladly pay the extra 30% for what Apple offers on top of the app itself.   I doubt the EU will agree though.
    radarthekatwatto_cobra
  • Reply 14 of 61
    gatorguygatorguy Posts: 20,911member
    iOS_Guy80 said:
    I do not understand. Is Apple being accused of doing something illegal or do people simply have a issue with the business model? 
    Pretty much yes, "something illegal". Spotify (not the only one but the first one to go formal) is accusing Apple of illegally restraining competition via their business model combined with platform control. 
    https://timetoplayfair.com/facts/
    muthuk_vanalingamiOS_Guy80
  • Reply 15 of 61
    genovellegenovelle Posts: 972member
    cropr said:
    gatorguy said:
    Considering that this is in the EU which has different views on "unfair" competition than the US I would not discount the possibility of the EU Commission stepping in with a formal investigation on Apple's App Store. Whatever decision would be reached would of course apply to Google Play as well. 

    There is a small but fundamental difference  between Apple App Store and the Google Play Store.  Google does allow the app developers to make buttons in the apps opening a website where the user can buy/extend subscriptions, thereby legally bypassing the 30% (or 15%) cut.  Apple does not allow this.  Looking at how the EU commission has handled similar cases in the past, this difference might be crucial
    cropr said:
    gatorguy said:
    Considering that this is in the EU which has different views on "unfair" competition than the US I would not discount the possibility of the EU Commission stepping in with a formal investigation on Apple's App Store. Whatever decision would be reached would of course apply to Google Play as well. 

    There is a small but fundamental difference  between Apple App Store and the Google Play Store.  Google does allow the app developers to make buttons in the apps opening a website where the user can buy/extend subscriptions, thereby legally bypassing the 30% (or 15%) cut.  Apple does not allow this.  Looking at how the EU commission has handled similar cases in the past, this difference might be crucial
    The other fundamental difference is Google does not promote their App Store to help drive volume. Their business model is to collect customer data any way they can get it to sell
    so, they in fact don’t actively promote their platform so, they should not be charging at all I guess. 


    ronnwatto_cobra
  • Reply 16 of 61
    tap5atap5a Posts: 9member
    krreagan2 said:
    - Ek further says that third-party developers are also locked out of information regarding customers. "For example, they limit our communication with our customers—including our outreach beyond the app," he writes. "In some cases, we aren't even allowed to send emails to our customers who use Apple." -

    Hal-a-freakn-loo-ya!!! When I buy an app I want the choice to say DO NOT CONTACT ME UNDER ANY CIRCUMSTANCES!!! PERIOD!   Since virtually no app developer would agree to this on their own, Apple has to step in and say it's up to the consumer, not the app developer to set the terms of communication!! This is a privacy issue and Apples history with this is better then virtually all other companies I've dealt with.

    30% may seem like a lot but what's the mark up most goods and services? By the time most retail stores sell an item, they charge more then 30% over what the manufacturer received for producing the same item (shipping + handling + profits +...; Similar to curating the app store, policing apps, creating a device that people can use without selling their personal data...).  Seems cheep to me when all the things are considered! I gladly pay the extra 30% for what Apple offers on top of the app itself.   I doubt the EU will agree though.
    I think in this case no one is complaining Apple getting 30% of purchases from App Store. It's recurring in-app payments where it's too much and that app developers aren't even allowed to tell there's another way to buy your product (Google Play allows this).
  • Reply 17 of 61
    avon b7avon b7 Posts: 4,065member
    I've referenced this issue in the past and said that all it would take was a formal complaint to the EU.

    The ball is now rolling. We'll see how far it gets but I have the feeling that the Commission will run with this one.
    ronnmuthuk_vanalingam
  • Reply 18 of 61
    markbyrnmarkbyrn Posts: 609member
    I have Spotify premium and use the Spotify web site to pay for my premium service.  If people were forced to use the in-app purchase feature, I'd think the complain might have merit and with with respect to withholding customer information, that would be the only reason I'd use the in-app purchases - to protect my privacy.  
  • Reply 19 of 61
    gatorguygatorguy Posts: 20,911member
    genovelle said:
    cropr said:
    gatorguy said:
    Considering that this is in the EU which has different views on "unfair" competition than the US I would not discount the possibility of the EU Commission stepping in with a formal investigation on Apple's App Store. Whatever decision would be reached would of course apply to Google Play as well. 

    There is a small but fundamental difference  between Apple App Store and the Google Play Store.  Google does allow the app developers to make buttons in the apps opening a website where the user can buy/extend subscriptions, thereby legally bypassing the 30% (or 15%) cut.  Apple does not allow this.  Looking at how the EU commission has handled similar cases in the past, this difference might be crucial
    cropr said:
    gatorguy said:
    Considering that this is in the EU which has different views on "unfair" competition than the US I would not discount the possibility of the EU Commission stepping in with a formal investigation on Apple's App Store. Whatever decision would be reached would of course apply to Google Play as well. 

    There is a small but fundamental difference  between Apple App Store and the Google Play Store.  Google does allow the app developers to make buttons in the apps opening a website where the user can buy/extend subscriptions, thereby legally bypassing the 30% (or 15%) cut.  Apple does not allow this.  Looking at how the EU commission has handled similar cases in the past, this difference might be crucial
    The other fundamental difference is Google does not promote their App Store to help drive volume. Their business model is to collect customer data any way they can get it to sell...

    For whatever reason you seem bent on promoting FUD. You know better about the selling of personal data (they don't), at least I would think so having been around here for so long. Honesty is a virtue. 
    edited March 13 muthuk_vanalingamCarnage
  • Reply 20 of 61
    dewmedewme Posts: 2,125member
    dewme said:
    So ... Apple invests many billions of dollars (or Euros), over a decade of calendar time, many millions of worker hours, and mortgages the future of their company in building out a massive infrastructure of technology, products, and services needed to support an ecosystem for their products to deliver a premium set of services to their paying customers.

    Now Spotify jumps in with blather about "an ecosystem in which fair competition is not only encouraged, but guaranteed."  

    Whose and what "ecosystem" is this guy talking about? Some magical ecosystem that fell like manna from heaven for the benefit of everyone in this highly competitive market struggling to win over the same set of customers? Business ecosystems don't just happen like, they are complex systems that are purpose-built, and at great expense. Ecosystems are not the same as "markets" either. Apple is in the streaming music market just like Spotify is in the music streaming market. But Apple has built a massive ecosystem to support their foray into this market - but only after they effectively rescued the whole music industry with 99 cent music purchases on iTuness.

    Spotify has created nothing. They are simply leeches who suck profits from the creativity of others at the lowest possible cost to themselves. 

    I'll have to issue the Total BS card to this guy. Apple bought and paid for their "ecosystem." If Spotify wants to play in Apple's ecosystem they have to pay-to-play to enjoy the fruits of Apple's labor. Or they can build their own ecosystem. Get to work Spotify. Send the lawyers packing and hire some engineers. Create something.
    Arguably, the App Store system is a collaboration between Apple and thousands of app developers who have over the years built complementary services. 

    During the initial years of the App Store, its main contribution was to lock customers into the Apple ecosystem and have them buy more Apple hardware - where Apple made most of its profits. It's not so different from all the ancillary services that Google provides such as News or Gmail which make no money in itself (News has no ads) or very little money (Gmail ads do not seem to make enough money to pay for Gmail development) - but they are important referral services for Google's main money maker which is search.

    One could argue that after creating this robust ecosystem, Apple is now using it as a money maker on its own plus it gradually introduces first party services to replace some of the most important apps on the App Store so it can capture 100% rather than 30% of profits.

    This change will raise concerns over time. The questions for regulators will be if Apple has enough monopoly power. Regulators expect all companies to behave badly and exploit consumers but competition constrains their behavior. Whether there is enough competition always comes down to how you define the market. At first sight, Apple only has a minority market share in hardware. However, some regulators might argue that Apple has a monopoly among those who use Apple products because (a) switching costs are getting more and more expensive (Facetime, App Store, Apple Watch working with iOS devices only etc.), (b) there is no choice outside the App Store to get apps and (c) many app creators make most of their profits from iOS devices despite the lower market share because households with Apple devices tend to be wealthier and many apps are first developed for iOS.
    You’re trying to create your own unsubstantiated narrative around Apple intentionally using its private ecosystem to squeeze out ecosystem partners like third party app creators. Interesting concept with no basis in fact or any evidence of intention by Apple.  

    You’re also confusing “market” with “ecosystem.” I realize that using the word “ecosystem” is trendy and conveys an organic quality, but a more accurate term for business and industry would simply be “system.” Apple created and paid for the development of a private business system that allows for third party participation. The participation of third parties in Apple’s business system requires payment in the form of fees. These fees offset Apple’s costs and expenses for building and maintaining their private business system and for the services that Apple is providing to their partners, including but not limited to providing a storefront, payment system, repository, app approval, access to a large base of customers, etc. 

    Oh, and don’t forget that Apple is only one such provider of such a business system. Google, Amazon, and Microsoft are all providing similar systems. None of these emerged from the soil, they were all bought and paid for by huge private corporate investments. 
    edited March 13 ronnradarthekatwatto_cobra
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