Spotify says Apple a 'monopolist' in escalating war of words
Spotify described Apple as a "monopolist" late Friday, dissecting the latter's reaction to a competition complaint Spotify submitted to the European Commission.
"Every monopolist will suggest they have done nothing wrong and will argue that they have the best interests of competitors and consumers at heart," a Spotify representative told Variety. "In that way, Apple's response to our complaint before the European Commission is not new and is entirely in line with our expectations.
"We filed our complaint because Apple's actions hurt competition and consumers, and are in clear violation of the law," the person continued. "This is evident in Apple's belief that Spotify's users on iOS are Apple customers and not Spotify customers, which goes to the very heart of the issue with Apple. We respect the process the European Commission must now undertake to conduct its review."
Apple's statement, released earlier on Friday, claimed that Spotify is disguising "financial motivations in misleading rhetoric about who we are, what we've built and what we do to support independent developers, musicians, songwriters and creators of all stripes," further attacking the Swedish service for joining Amazon, Google, and SiriusXM/Pandora in opposing higher royalty rates for songwriters.
It barely touched on Spotify's main argument though, which is that Apple has constructed barriers making it hard for third-party services to compete. In the case of on-demand music, Apple takes a 30 percent cut from new in-app subscriptions, and 15 percent from those a over a year old. Apple Music doesn't have any such split, and is moreover integrated across Apple platforms in a way third parties aren't allowed -- HomePod owners can't set Spotify as their default music service, for example.
Apple's most direct response was suggesting that Spotify wants "all those benefits [of the App Store] while also retaining 100 percent of the revenue," pointing out that it supplies development resources, a platform, and a secure payment system.
Spotify did offer in-app subscriptions at one point, but charged more to compensate for Apple's take, and ultimately decided to scrap the option. Another complaint developers have had is that they're not allowed to direct people to Web-based purchase options, which means Spotify subscribers have to learn elsewhere about how to unlock a Premium plan.
"Every monopolist will suggest they have done nothing wrong and will argue that they have the best interests of competitors and consumers at heart," a Spotify representative told Variety. "In that way, Apple's response to our complaint before the European Commission is not new and is entirely in line with our expectations.
"We filed our complaint because Apple's actions hurt competition and consumers, and are in clear violation of the law," the person continued. "This is evident in Apple's belief that Spotify's users on iOS are Apple customers and not Spotify customers, which goes to the very heart of the issue with Apple. We respect the process the European Commission must now undertake to conduct its review."
Apple's statement, released earlier on Friday, claimed that Spotify is disguising "financial motivations in misleading rhetoric about who we are, what we've built and what we do to support independent developers, musicians, songwriters and creators of all stripes," further attacking the Swedish service for joining Amazon, Google, and SiriusXM/Pandora in opposing higher royalty rates for songwriters.
It barely touched on Spotify's main argument though, which is that Apple has constructed barriers making it hard for third-party services to compete. In the case of on-demand music, Apple takes a 30 percent cut from new in-app subscriptions, and 15 percent from those a over a year old. Apple Music doesn't have any such split, and is moreover integrated across Apple platforms in a way third parties aren't allowed -- HomePod owners can't set Spotify as their default music service, for example.
Apple's most direct response was suggesting that Spotify wants "all those benefits [of the App Store] while also retaining 100 percent of the revenue," pointing out that it supplies development resources, a platform, and a secure payment system.
Spotify did offer in-app subscriptions at one point, but charged more to compensate for Apple's take, and ultimately decided to scrap the option. Another complaint developers have had is that they're not allowed to direct people to Web-based purchase options, which means Spotify subscribers have to learn elsewhere about how to unlock a Premium plan.
Comments
Funny enough ,Spotify’s iOS app is much better than the Droid version last time I checked.
Also, if they no longer pay that 30% on new subscribers what is their complaint over unfairness re: Apple Music?
Spotify makes an interesting argument. If HBO Now was downloaded from Apple (a fairly small service by Apple), does it mean Apple collects 30% of revenue for the first year and 15% thereafter? If so, that seems excessive, just for providing a download portal to its users. Apple could then compete with HBO on a lower cost structure and do its own shows, which apparently it is doing. Netflix, same? How about Amazon Prime revenue?
There is precedent to suggest that Apple can't simply charge a 30% toll on all the revenue producing activities that happen across iOS. Apple has some arguments that it created the platform. The literature on railroad competition provides many examples of monopolistic pricing that had to be made illegal. Usually the solution is to remove the barrier to entry, or if that is impractical (as building totally duplicate rail lines is somewhat impractical), to allow multiple carriers (= other App Stores) on the platform.
Spotify may be right that the current status quo on iOS App Store may be illegal. Just my opinion as a hobbyist on these topics, not a professional.
Using iOS customers to gain paid subscriptions by bypassing Apple's POS is pretty horrible of any developer, but Spotify should be ashamed of their actions.
To your second point, why not? Don’t railways charge me to ship something or travel on them? Would it be more fair if instead of requiring a portion of revenue generated they charged per download?
I bet Spotify also wouldn’t want to pay for every download each time they resubmit their app to address a bug fix or after there’s an iOS update or when someone restores their device/gets a new device. But would that be fair? Apple doesn’t charge them for that now.
And how they want to pay for selling their product through App Store?
I like Spotify app more than Apple's.
but seriously, regarding this I am on the Apple's side.
I hope you realize that Apple's global marketshare is less than 10% in any category, so good luck with that strategy in the long run.
With what we've heard so far post-acquisition (re: Anchor/Gimlet), Spotify seems to be up to no good in podcasting, so I have to wonder about them here too.
About my second point, Apple charging 30% would be like AT&T looking at Denver and saying, the gross domestic product of Denver is around $400 billion. As the monopoly telecom provider to Denver, AT&T has decided the phone bill is $130 billion, a reasonable 30% of the area's total revenue. Please pay."
Meanwhile, the water company could also demand an unlimited price like $130 billion, *IF* they have legal exclusivity on the water consumption in Denver. Without water, everyone would die. The water company then owns practically 100% of Denver (and can sell that ownership back to people) because Denver is uninhabitable without water.
If the entire US economy runs on iOS (which it doesn't, but still a very very large amount of it does), that becomes a pernicious situation that falls under antitrust law. iOS is now a huge part of how Americans read news and shop and manage their finances. That doesn't mean Apple can suck all the value out of that. That isn't fair.
And specifically running the only iOS App Store and parlaying that into being a big record / movie company by owning the delivery platform probably isn't fair. Railroads tried to own everything too.
to the AppStore to download the free App. Apple makes nothing in this case. They host the App free of charge as a courtesy for their joint user. The difference is when Apple’s marketing gets them to signup. Whether it be TV, web ads, App ads, or email campaigns. If that customer decides to signup for HBO via their Apple device instead of directly, Apple did the better job and deserves to be paid. Some even prefer to let Apple handle it so they can focus on what they specialize in.
Also, iOS doesn’t have a monopoly share, even in the US and having a monopoly isn’t illegal in the US so that point is kinda moot.