The kicker here is that Apple doesn’t allow any app developer to add links (to circumvent in-app purchases) to premium services. Stinks like anti-competitive, monopolistic behavior.
Apple doesn’t have a monopoly though. If developers don’t like these terms they can refuse to support the platform and go Android only.
Hey,,,,why dont you or Spotify make your own App Store just like Amazon and Google....why complain on others own business model. Spotify was way ahead of Apple in music streaming, Amazon is not complaining of thier Music streaming and I have both of them which made me have selections. I use Spotify when I goes overseas because Spotify have a very good selections of local musics which I like. So quit complaining and make your services out shines. Dont sleep in purely music streaming only....
Spotify's costs are, 1. developing the app 2. running the service
Apple's costs are, 1. developing the developer tools 2. developing the operating system 3. developing the hardware 4. manufacturing the hardware 5. running the data centers 6. promoting the platform 7. developing the app 8. running the service
It takes a lot more effort and money for Apple to make Apple Music available than it does Spotify to make their service available. Apple's costs to run Apple Music are the same as Spotify's plus all the cost to keep the platform viable. Sorry, but if you stand to profit from utilizing Apple's platform, then you should absolutely pay a "tax".
Too many people assume the 30% cut is too much because it doesn't cost Apple that much to run the App Store... As pointed out above, that's NOT their only cost to make the App Store available to both developers and users.
Because Apple designed it that way to have a monopoly. I don’t think you have a clear grasp of what the issue is.
So the App Store should just be a free for all then? How else can you offer what Apple does without doing it the way they designed it at the scale they need?
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
Yes, first off, for most Spotify subscriptions Apple only gets 15%, but regardless, people who criticize Apple getting a cut forget, or don't understand, that Apple had to spend many billions of dollars to develop that platform, and billions to maintain it, so it goes well beyond the processing fees. Also, people fail to understand that Apple is subsidizing the millions of free and low cost apps.
Spotify's costs are, 1. developing the app 2. running the service
Apple's costs are, 1. developing the developer tools 2. developing the operating system 3. developing the hardware 4. manufacturing the hardware 5. running the data centers 6. promoting the platform 7. developing the app 8. running the service
It takes a lot more effort and money for Apple to make Apple Music available than it does Spotify to make their service available. Apple's costs to run Apple Music are the same as Spotify's plus all the cost to keep the platform viable. Sorry, but if you stand to profit from utilizing Apple's platform, then you should absolutely pay a "tax".
Too many people assume the 30% cut is too much because it doesn't cost Apple that much to run the App Store... As pointed out above, that's NOT their only cost to make the App Store available to both developers and users.
Because Apple designed it that way to have a monopoly. I don’t think you have a clear grasp of what the issue is.
Uhm, Apple is not a monopoly, by any definition.
The problem for Spotify is that they are selling a mostly generic service. Even given that the EU might force Apple to a maximum 15% subscription rate, Spotify still won't have the financial wherewithal to expand its subscription service in music alone to become profitable in the long term. So Spotify will end up entering other generic markets, like video, by adding someone else's service, also known as aggregation. Again, no different that Apple, Amazon, or Google.
This is not a sustainable business model, and whinging about Apple isn't going to solve that. The truth is that Apple users trust Apple's ecosystem, and that is a preference that Spotify isn't going to be able to change.
Yes, the real issue is Spotify is starting to get its ass kicked by users migrating to Apple Music and they're trying to stop the bleeding. They have as you said a generic service that anyone with money and contacts can start. Spotify was just fine before Apple Music started with everything but now that Apple has Apple Music and is starting to lure Spotify customers over, its an issue all of a sudden. Spotify doesn't have the revenue influx Apple has so it cannot afford to start losing customers. It doesn't have other products and services to recoup the losses like Apple does. Apple Music doesn't have to make money for Apple in the end.
And, why is Apple obligated to make its accessories compatible with someone else's service? If Apple wants to make HomePod an accessory for Apple Music, then it should be able to. If Spotify wants to go out and make a speaker that works with only Spotify then they should also be able to do this.
Spotify's costs are, 1. developing the app 2. running the service
Apple's costs are, 1. developing the developer tools 2. developing the operating system 3. developing the hardware 4. manufacturing the hardware 5. running the data centers 6. promoting the platform 7. developing the app 8. running the service
It takes a lot more effort and money for Apple to make Apple Music available than it does Spotify to make their service available. Apple's costs to run Apple Music are the same as Spotify's plus all the cost to keep the platform viable. Sorry, but if you stand to profit from utilizing Apple's platform, then you should absolutely pay a "tax".
Too many people assume the 30% cut is too much because it doesn't cost Apple that much to run the App Store... As pointed out above, that's NOT their only cost to make the App Store available to both developers and users.
Because Apple designed it that way to have a monopoly. I don’t think you have a clear grasp of what the issue is.
Actually your grasp of what a monopoly is is severely lacking.
A monopoly is when a single entity holds a majority share over a market it is competing in. It has nothing to do with a single company owning and controlling their own product/platform (even if they compete with 3rd parties that they allow on their platform).
Does HBO have a monopoly over their programming? No. They OWN and control their own programming whether it's proprietary content or 3rd party content. Does Target have a monopoly over their store shelves? No. They OWN that space and control what goes on those shelves whether it's their own brands or 3rd party brands.
Microsoft doesn't have monopoly over Windows, they own Windows. Windows holds a monopoly position the desktop operating system market. Google doesn't have a monopoly over google.com, they have monopoly in internet search.
Notice the difference?
When any product hits a monopoly position then the rules do change over what that company should and should not be able to do with that product, because it becomes possible for that company to persuade partners habits, making it difficult (and unfair) for competition to survive, thus, choking the "free" market mantra of Capitalism.
I will give you that with the AppStore Apple does yield an incredible amount of power, not because of Apple, but because of their user base. Who have demonstrated their willingness to spend more money than competing platforms users. And as soon as Apple steps in and starts removing competing services from their platform, or starts demanding developers only develop for their platform, then I will agree they are being unfair. They have not done that.
Ironic that Spotify, the largest streaming company in the world by a large margin, has achieved that by "stifling" smaller competitors by offering free music subscriptions. , now plays the victim. More importantly, Spotify may rue the day that it filed this complaint, and aroused Apple's ire. Spotify has always hemorrahged money and this while paying musicians among the worst royalties, but Apple can put a pin in the Spotify balloon simply by offering Apple Music in a bundle. Spotify has had to match every Apple discount program (family, student, etc.) to stay in business as consumers choose music streaming overwhelmingly based on cost. Right now they are all pretty much the same, offering the same music (though Apple has a larger catalog and is available in more countries), so consumers have little reason to switch. If Apple bundles AM with other services, Spotify will have little choice but to see out, which has been its real goal all along but this will hasten it and it's value will drop precipitously.
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.
It's immaterial whether you dislike the term "ecosystem" or whether you think that Apple is competing unintentionally with third party apps through its own apps.
Spotify's complaint with the EU and recent proposals within the Commission that want to regulate platform markets are very similar to Senator Warren's proposals on regulating platforms (such as requiring that Amazon gets rid of its Basic line, Google should not combine search with maps etc).
This discussion will continue and in the end it will matter whether the App Store is considered to be a market on its own or part of a larger market place which includes Play Store.
The kicker here is that Apple doesn’t allow any app developer to add links (to circumvent in-app purchases) to premium services. Stinks like anti-competitive, monopolistic behavior.
So what, it's Apple's platform. If you want to develop for their platform, you have to play by their rules. If not, go develop for Android or some other platform. There are tons of developers that do not develop for macOS, because they don't they think its a viable platform. That's perfectly within their right not to. If Apple's App Store terms are so onerous, developers can develop elsewhere.
People seem to forget that iOS is not an open development environment. You have to become a member of the developer program, something that Apple decides if you will or won't become a part of. Spotify didn't just develop an app and make it available in the App Store... Spotify had to agree to specific terms to become an iOS developer. That includes 30/15% subscription fee. And then Apple had to agree to let that app through to their store for distribution.
Do you honestly think that Spotify would've never developed an app for iOS if Apple Music previously existed? Of course they would have, just as anyone else did who wanted to compete with Apple. There are tons of apps that compete with Apple's own free built-in apps and services.
The kicker here is that Apple doesn’t allow any app developer to add links (to circumvent in-app purchases) to premium services. Stinks like anti-competitive, monopolistic behavior.
So what, it's Apple's platform. If you want to develop for their platform, you have to play by their rules.
That's what the EU Commission's competition folks are being asked to decide.
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/
If you build a product and services at a published price with rules/guidelines how is that illegal? If you want to play you have to pay.
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/
If you build a product and services at a published price with rules/guidelines how is that illegal? If you want to play you have to pay.
It may not be and that's what the EU Commission has been asked to look at and determine. Who knows, they might decline.
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/
If you build a product and services at a published price with rules/guidelines how is that illegal? If you want to play you have to pay.
What if the rules/guidelines themselves were 'illegal'?
If the EU proceeds with an investigation, it will determine what is legal or not according to EU laws. Until then, we will have to sit things out.
Apple charged the same 30% before Apple Music even existed..correct? So Spotify was good with the 30% fee prior to Apple Music, but now that Apple has a competing service it illegally restraining competition. Interesting...
That is exactly the issue. If Apple would not have Apple Music, then all music streaming services would have the same playing field. Now Apple Music has a clear advantage because it does not have to give 30% to the owner of App Store. From the viewpoint of Spotify this is unfair competition.
In another life I launched a national grocery item. The grocers, who "owned the platform", often charged slotting fees to brands like myself in order to get a spot on the shelves. They did not charge themselves this fee for their own in-house brands. Is that fair? Should non-in-house brands sue? Are we entitled to use their shelf space to sell our products to consumers?
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.
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
The 15-30% is not meant to be solely for credit card processing. There's the entire infrastructure of the platform to pay rent for. It's akin to paying a distributor. As a wholesaler, my product incurred costs from distributors and retailers before it got to the final retail price seen by consumers. cost of doing business.
In another life I launched a national grocery item. The grocers, who "owned the platform", often charged slotting fees to brands like myself in order to get a spot on the shelves. They did not charge themselves this fee for their own in-house brands. Is that fair? Should non-in-house brands sue? Are we entitled to use their shelf space to sell our products to consumers?
Spotify's costs are, 1. developing the app 2. running the service
Apple's costs are, 1. developing the developer tools 2. developing the operating system 3. developing the hardware 4. manufacturing the hardware 5. running the data centers 6. promoting the platform 7. developing the app 8. running the service
It takes a lot more effort and money for Apple to make Apple Music available than it does Spotify to make their service available. Apple's costs to run Apple Music are the same as Spotify's plus all the cost to keep the platform viable. Sorry, but if you stand to profit from utilizing Apple's platform, then you should absolutely pay a "tax".
Too many people assume the 30% cut is too much because it doesn't cost Apple that much to run the App Store... As pointed out above, that's NOT their only cost to make the App Store available to both developers and users.
Because Apple designed it that way to have a monopoly. I don’t think you have a clear grasp of what the issue is.
You need to look up in the dictionary what monopoly is.
Comments
Yes, the real issue is Spotify is starting to get its ass kicked by users migrating to Apple Music and they're trying to stop the bleeding. They have as you said a generic service that anyone with money and contacts can start. Spotify was just fine before Apple Music started with everything but now that Apple has Apple Music and is starting to lure Spotify customers over, its an issue all of a sudden. Spotify doesn't have the revenue influx Apple has so it cannot afford to start losing customers. It doesn't have other products and services to recoup the losses like Apple does. Apple Music doesn't have to make money for Apple in the end.
And, why is Apple obligated to make its accessories compatible with someone else's service? If Apple wants to make HomePod an accessory for Apple Music, then it should be able to. If Spotify wants to go out and make a speaker that works with only Spotify then they should also be able to do this.
Actually your grasp of what a monopoly is is severely lacking.
A monopoly is when a single entity holds a majority share over a market it is competing in. It has nothing to do with a single company owning and controlling their own product/platform (even if they compete with 3rd parties that they allow on their platform).
Does HBO have a monopoly over their programming? No. They OWN and control their own programming whether it's proprietary content or 3rd party content.
Does Target have a monopoly over their store shelves? No. They OWN that space and control what goes on those shelves whether it's their own brands or 3rd party brands.
Microsoft doesn't have monopoly over Windows, they own Windows. Windows holds a monopoly position the desktop operating system market.
Google doesn't have a monopoly over google.com, they have monopoly in internet search.
Notice the difference?
When any product hits a monopoly position then the rules do change over what that company should and should not be able to do with that product, because it becomes possible for that company to persuade partners habits, making it difficult (and unfair) for competition to survive, thus, choking the "free" market mantra of Capitalism.
I will give you that with the AppStore Apple does yield an incredible amount of power, not because of Apple, but because of their user base. Who have demonstrated their willingness to spend more money than competing platforms users. And as soon as Apple steps in and starts removing competing services from their platform, or starts demanding developers only develop for their platform, then I will agree they are being unfair. They have not done that.
Spotify's complaint with the EU and recent proposals within the Commission that want to regulate platform markets are very similar to Senator Warren's proposals on regulating platforms (such as requiring that Amazon gets rid of its Basic line, Google should not combine search with maps etc).
This discussion will continue and in the end it will matter whether the App Store is considered to be a market on its own or part of a larger market place which includes Play Store.
So what, it's Apple's platform. If you want to develop for their platform, you have to play by their rules. If not, go develop for Android or some other platform. There are tons of developers that do not develop for macOS, because they don't they think its a viable platform. That's perfectly within their right not to. If Apple's App Store terms are so onerous, developers can develop elsewhere.
People seem to forget that iOS is not an open development environment. You have to become a member of the developer program, something that Apple decides if you will or won't become a part of. Spotify didn't just develop an app and make it available in the App Store... Spotify had to agree to specific terms to become an iOS developer. That includes 30/15% subscription fee. And then Apple had to agree to let that app through to their store for distribution.
Do you honestly think that Spotify would've never developed an app for iOS if Apple Music previously existed? Of course they would have, just as anyone else did who wanted to compete with Apple. There are tons of apps that compete with Apple's own free built-in apps and services.
If the EU proceeds with an investigation, it will determine what is legal or not according to EU laws. Until then, we will have to sit things out.
I read; Apple dares to decide what it charges and dares to respect customer privacy.