To be fair, Spotify has little choice but to use the App Store, it's not as if you can distribute iOS apps to consumers in any other way. Apple would have a point if Spotify could just put the IPA up on their website for users to download, but they can't.
You’re missing the point. Simply using the App Store does not make Apple take 30% of Spotify’s revenue. The only portion of revenue Apple takes is of in-app purchases for Premium, and that drops to 15% after a year. Spotify could easily go the Netflix, Hulu, etc. route and simply not offer in-app purchases, instead relying on customers to be smart enough to open up Safari and sign up there. Netflix, Hulu, all the streaming live tv platforms, Amazon, etc. don’t seem to struggle with this, yet Spotify can’t seem to figure it out. Desperate move from a desperate company.
1. dominant share in handsets in the US among people that pay for services (probably)
3. a competing music service, which is tied to the handset owner's credit card and therefore frictionless sign up.
1: that’s really breaking it down, isnt it? Does Apple have a dominant share of handsets in the US, period?
3: If someone signs up for Spotify using the iOS app isn’t the billing just as frictionless? I haven’t used Spotify so I really am not familiar with their process.
Apple is great in portraying itself as the „good guy“ or „victim“. Excellent press department.
I’m not saying they are the bad guy in this context. However, given the ludicrous amounts of cash they are accumulating (with margins most other businesses can only dream of), I do wonder if 30% are necessary or greedy.
It would be interesting to see calculations of what it actually costs Apple to render these services to app makers - but of course we‘ll never ever get that...
A better question is what would it cost Spotify to sell their product in the abscence of the App Store. Legacy methods of selling software cost far more than 30%.
Apple's website letter says it all. Spotify wants all the benefits without having to pay a dime! Read Apple's website response it tells you everything you need to know clearly. Apple is not the problem here, Spotify is.
Apple is trying to be disingenuous on several fronts: 1. If they allowed Spotify to let customers download their app directly from Spotify’s website and process their own payments then the cost to Apple would be virtually zero. There is only a cost here as Apple forced them to use the App Store. This goes to the heart of Warren’s desire to break up large tech companies. 2. Apple makes money from the sale of devices that have apps that people want. People apparently want Spotify on their iOS devices. Apps help Apple sell hardware so there is a symbiotic relationship, and it is not all one sided in favor of Apple. If there was no Netflix, Hulu, Amazon, YouTube etc on iOS there would be fewer iPhone sales. 3. Apple is trying to muddy the water with the claim about Spotify paying artists. This is a valid issue that needs to be addressed. But, considering that Apple apparently tries to pay creatives with goods instead of cash it is the pot calling the kettle black.
Read the website, Apple spells it out clearly in plain English. I think they know more about their own business model than you do.
To be fair, Spotify has little choice but to use the App Store, it's not as if you can distribute iOS apps to consumers in any other way. Apple would have a point if Spotify could just put the IPA up on their website for users to download, but they can't.
You’re missing the point. Simply using the App Store does not make Apple take 30% of Spotify’s revenue. The only portion of revenue Apple takes is of in-app purchases for Premium, and that drops to 15% after a year. Spotify could easily go the Netflix, Hulu, etc. route and simply not offer in-app purchases, instead relying on customers to be smart enough to open up Safari and sign up there. Netflix, Hulu, all the streaming live tv platforms, Amazon, etc. don’t seem to struggle with this, yet Spotify can’t seem to figure it out. Desperate move from a desperate company.
1. dominant share in handsets in the US among people that pay for services (probably)
3. a competing music service, which is tied to the handset owner's credit card and therefore frictionless sign up.
1: that’s really breaking it down, isnt it? Does Apple have a dominant share of handsets in the US, period?
3: If someone signs up for Spotify using the iOS app isn’t the billing just as frictionless? I haven’t used Spotify so I really am not familiar with their process.
After rereading the article i see this is an EU complaint and especially once the UK leaves at the end of the month, they can't claim Apple has a dominant position there. So I'll retract that statement. Regarding 3. that was in response to the OP talking about opening up Safari to pay there. I've done that but I doubt your average user would consider it
Apple is great in portraying itself as the „good guy“ or „victim“. Excellent press department.
I’m not saying they are the bad guy in this context. However, given the ludicrous amounts of cash they are accumulating (with margins most other businesses can only dream of), I do wonder if 30% are necessary or greedy.
It would be interesting to see calculations of what it actually costs Apple to render these services to app makers - but of course we‘ll never ever get that...
It’s their platform and their marketplace. Participation is voluntary, genius.
To be fair, Spotify has little choice but to use the App Store, it's not as if you can distribute iOS apps to consumers in any other way. Apple would have a point if Spotify could just put the IPA up on their website for users to download, but they can't.
You’re missing the point. Simply using the App Store does not make Apple take 30% of Spotify’s revenue. The only portion of revenue Apple takes is of in-app purchases for Premium, and that drops to 15% after a year. Spotify could easily go the Netflix, Hulu, etc. route and simply not offer in-app purchases, instead relying on customers to be smart enough to open up Safari and sign up there. Netflix, Hulu, all the streaming live tv platforms, Amazon, etc. don’t seem to struggle with this, yet Spotify can’t seem to figure it out. Desperate move from a desperate company.
1. dominant share in handsets in the US among people that pay for services (probably)
3. a competing music service, which is tied to the handset owner's credit card and therefore frictionless sign up.
1: that’s really breaking it down, isnt it? Does Apple have a dominant share of handsets in the US, period?
They do, and by a significant margin, more than twice as much as their nearest competitor. In fact Apple holds nearly a 60% share of the US market for smartphones.
But this complaint is in the EU, not the US. In Europe Apple reportedly has north of a quarter of the market, just behind Samsung. Everyone else is far behind them.
This is new, the market dominant firm (Spotify, in music streaming) is suing for antitrust relief from its competitor.
Well, check that, Amazon did it first when it successfully sued to get the US government to restore its dominant position in eBooks after Apple had breached it. Maybe that's what gives Spotify encouragement.
This Apple response is weak IMO but I feel their case is weak anyway so it falls squarely into the PR realm and has no real substance to tackle the issue at hand:
"Sixteen years ago, we launched the iTunes Store with the idea that there should be justone trusted place where users discover and purchase great music and every creator is treated byourdefinitionof fairly. The result revolutionized the music industry, and our love of music and the people who make it are deeply engrained in Apple."
I have added the bolded words to highlight what Apple isn't tackling with its note.
If the EU runs with the Spotify complaint, at the very least it will apply the same logic it applied to past complaints about Google. That at best. At worst it might look harder and take a stance on what I added in bold to the quote above.
Away from the formal complaint perspective, the PR perspective may also see people's noses put out of joint and get attacked (again for the points I highlighted).
In this particular case I think it would have been better to stay silent and let Spotify let off steam, file the complaint and just wait.
By responding, Apple has brought Spotify's gripe to a wider audience.
Its about time that Apple put the appropriately positive spin on the vast majority of Apple App "Store" offerings being FREE, Null, Zilch, Nada. Not a penny charged by Apple for over 80% of the App store content. And yes, if you want to make $$$$$, then you pay the toll.
I mostly agree with you, especially now that the long term cut is only 15% and seems fair to me but what makes me a little uneasy is that this is a corporate giant that has 1. dominant share in handsets in the US among people that pay for services (probably), 2. on those devices, an app store that is the only means of installing apps, and i could be wrong here but i believe there is no linking or even advertising from apps to safari for payments, and 3. a competing music service, which is tied to the handset owner's credit card and therefore frictionless sign up. They are using their dominance in one place to squeeze out a competitor in another service.
Your analysis is in error.
This sentence of yours has no bearing on antitrust at all: "[Apple] has ... dominant share in handsets in the US among people that pay for services (probably)"
Even if that were true, which you aren't sure of, antitrust theory and law limits the extent to which you can slice and dice markets to arrive at the relevant market. For any company, you can always slice and dice markets to the point that they become the dominant firm. What you are asserting is no different than saying something like Ferrari has a dominant share in Monaco among people who purchase exotic sports cars.
The relevant market is not the market you defined, nor is it the market for "Apple iPhones" (surely it is not illegal for Apple to 'monopolize' the market for its own branded products). It's not even the market for "high end smartphones"; you cannot define markets by price ranges because anyone who buys the expensive brand can obviously also afford the cheap brand. The relevant market is the market for "all smartphones" and Apple is not the dominant vendor in any country in the world (including the US), but especially in the EC, where the complaint has been lodged.
The other things you point out are "[iPhone's] app store .. is the only means of installing apps" and "a competing music service, which is tied to the handset owner's credit card and therefore frictionless sign up". Basically you are complaining against Apple's efforts to offer its customers greater device security and ease of use. i.e. a better product. There is no law against that either.
Finally you say "there is no linking or even advertising from apps to safari for payments". Should we also force Toyota to provide advertising and quick links to Honda in their dealerships, websites, and cars?
One of the most damaging points Apple makes in that response is that the vast majority of Spotify users on iOS are making use of the free version of the app that does not require a cut to Apple.
I mostly agree with you, especially now that the long term cut is only 15% and seems fair to me but what makes me a little uneasy is that this is a corporate giant that has 1. dominant share in handsets in the US among people that pay for services (probably), 2. on those devices, an app store that is the only means of installing apps, and i could be wrong here but i believe there is no linking or even advertising from apps to safari for payments, and 3. a competing music service, which is tied to the handset owner's credit card and therefore frictionless sign up. They are using their dominance in one place to squeeze out a competitor in another service.
Your analysis is in error.
"[Apple] has ... dominant share in handsets in the US among people that pay for services (probably)"
Even if that were true, which you aren't sure of, antitrust theory and law limits the extent to which you can slice and dice markets to arrive at the relevant market... The relevant market is the market for "all smartphones" and Apple is not the dominant vendor in any country in the world (including the US), but especially in the EC, where the complaint has been lodged.
Apple is trying to be disingenuous on several fronts: 1. If they allowed Spotify to let customers download their app directly from Spotify’s website and process their own payments then the cost to Apple would be virtually zero. There is only a cost here as Apple forced them to use the App Store. This goes to the heart of Warren’s desire to break up large tech companies. 2. Apple makes money from the sale of devices that have apps that people want. People apparently want Spotify on their iOS devices. Apps help Apple sell hardware so there is a symbiotic relationship, and it is not all one sided in favor of Apple. If there was no Netflix, Hulu, Amazon, YouTube etc on iOS there would be fewer iPhone sales. 3. Apple is trying to muddy the water with the claim about Spotify paying artists. This is a valid issue that needs to be addressed. But, considering that Apple apparently tries to pay creatives with goods instead of cash it is the pot calling the kettle black.
Point 1 is invalid. Apple lets Spotify put it's app in the app store for no virtually no cost. Any Spotify user can go to Spotify's website, sign up for an account and pay for it, then go to the app store an download and use the Spotify app for free. Stated more clearly Apple receives no money from customers Spotify managed to acquire/sign-up on it's own website or by phone or by whatever other means excluding the app store. Apple only take a cut if the customer opts to sign-up/subscribe through the app store. One could even make the claim, the current model reduces Spotify's cost as it does not need to host the download.
Point 2 is a valid point for the most part. It is not a one sided relationship in Apple's favor as you claim. I can tell you with certainty if the Apple App Store did not exist, I would not purchase or use outside apps. While I am not a heavy app user, I probably spend couple hundred a year, these are sales these companies would otherwise never see regardless of price point.
Point 3 is valid, but only so much as it was a poor choice of Apple to engage them on their level. Spotify's argument only makes sense to the stupid or misinformed, but they went ahead with it only to try an tarnish Apple's public image over what they know is a baseless claim. Apple choose to point out a factual claim that Spotify pays artist and creators the least which does not look great on them, however unlike Apple music subscribers most Spotify users don't pay for the service anyway and as such likely don't much care about that issue.
To be fair, Spotify has little choice but to use the App Store, it's not as if you can distribute iOS apps to consumers in any other way. Apple would have a point if Spotify could just put the IPA up on their website for users to download, but they can't.
You’re missing the point. Simply using the App Store does not make Apple take 30% of Spotify’s revenue. The only portion of revenue Apple takes is of in-app purchases for Premium, and that drops to 15% after a year. Spotify could easily go the Netflix, Hulu, etc. route and simply not offer in-app purchases, instead relying on customers to be smart enough to open up Safari and sign up there. Netflix, Hulu, all the streaming live tv platforms, Amazon, etc. don’t seem to struggle with this, yet Spotify can’t seem to figure it out. Desperate move from a desperate company.
1. dominant share in handsets in the US among people that pay for services (probably)
3. a competing music service, which is tied to the handset owner's credit card and therefore frictionless sign up.
1: that’s really breaking it down, isnt it? Does Apple have a dominant share of handsets in the US, period?
They do, and by a significant margin, more than twice as much as their nearest competitor. In fact Apple holds nearly a 60% share of the US market for smartphones.
But this complaint is in the EU, not the US. In Europe Apple reportedly has north of a quarter of the market, just behind Samsung. Everyone else is far behind them.
That's user share, not marketshare of sales, for those that aren't looking closely.
Android OS Device sales almost always exceeded Apple's yearly marketshare of sales in the U.S, but that may be changing as Android OS users also hold on to their devices longer.
How’s Spotify’s profitability? I’m just guessing they’re still bleeding money attempting to make their streaming model work. It has never worked for any streaming music company. With Apple they can afford to make minimal profits since other aspects of their business make them highly profitable. Spotify should rethink their long term strategy... if they have one.
To be fair, Spotify has little choice but to use the App Store, it's not as if you can distribute iOS apps to consumers in any other way. Apple would have a point if Spotify could just put the IPA up on their website for users to download, but they can't.
You’re missing the point. Simply using the App Store does not make Apple take 30% of Spotify’s revenue. The only portion of revenue Apple takes is of in-app purchases for Premium, and that drops to 15% after a year. Spotify could easily go the Netflix, Hulu, etc. route and simply not offer in-app purchases, instead relying on customers to be smart enough to open up Safari and sign up there. Netflix, Hulu, all the streaming live tv platforms, Amazon, etc. don’t seem to struggle with this, yet Spotify can’t seem to figure it out. Desperate move from a desperate company.
1. dominant share in handsets in the US among people that pay for services (probably)
3. a competing music service, which is tied to the handset owner's credit card and therefore frictionless sign up.
1: that’s really breaking it down, isnt it? Does Apple have a dominant share of handsets in the US, period?
They do, and by a significant margin, more than twice as much as their nearest competitor. In fact Apple holds nearly a 60% share of the US market for smartphones.
But this complaint is in the EU, not the US. In Europe Apple reportedly has north of a quarter of the market, just behind Samsung. Everyone else is far behind them.
That's user share, not marketshare of sales, for those that aren't looking closely.
Android OS Device sales almost always exceeded Apple's yearly marketshare of sales in the U.S, but that may be changing as Android OS users also hold on to their devices longer.
To be fair, Spotify has little choice but to use the App Store, it's not as if you can distribute iOS apps to consumers in any other way. Apple would have a point if Spotify could just put the IPA up on their website for users to download, but they can't.
You’re missing the point. Simply using the App Store does not make Apple take 30% of Spotify’s revenue. The only portion of revenue Apple takes is of in-app purchases for Premium, and that drops to 15% after a year. Spotify could easily go the Netflix, Hulu, etc. route and simply not offer in-app purchases, instead relying on customers to be smart enough to open up Safari and sign up there. Netflix, Hulu, all the streaming live tv platforms, Amazon, etc. don’t seem to struggle with this, yet Spotify can’t seem to figure it out. Desperate move from a desperate company.
1. dominant share in handsets in the US among people that pay for services (probably)
3. a competing music service, which is tied to the handset owner's credit card and therefore frictionless sign up.
1: that’s really breaking it down, isnt it? Does Apple have a dominant share of handsets in the US, period?
They do, and by a significant margin, more than twice as much as their nearest competitor. In fact Apple holds nearly a 60% share of the US market for smartphones.
But this complaint is in the EU, not the US. In Europe Apple reportedly has north of a quarter of the market, just behind Samsung. Everyone else is far behind them.
That's user share, not marketshare of sales, for those that aren't looking closely.
Android OS Device sales almost always exceeded Apple's yearly marketshare of sales in the U.S, but that may be changing as Android OS users also hold on to their devices longer.
Spotify is talking about Apple and iOS, and so we should be talking about user share, share of all U.S. smartphone users, which Apple leads in the U.S., against Android OS user share. Worldwide, it's likely that Japan is the only other country with an iOS user share larger than Android OS user share.
Otherwise, Android OS leads iOS in every other country in both user share and marketshare of yearly sales. Whether Apple dominates other Android OS device makers in the U.S. is irrelevant as this is a comparison of platforms, and more so, of platforms in the EU.
To be fair, Spotify has little choice but to use the App Store, it's not as if you can distribute iOS apps to consumers in any other way. Apple would have a point if Spotify could just put the IPA up on their website for users to download, but they can't.
You’re missing the point. Simply using the App Store does not make Apple take 30% of Spotify’s revenue. The only portion of revenue Apple takes is of in-app purchases for Premium, and that drops to 15% after a year. Spotify could easily go the Netflix, Hulu, etc. route and simply not offer in-app purchases, instead relying on customers to be smart enough to open up Safari and sign up there. Netflix, Hulu, all the streaming live tv platforms, Amazon, etc. don’t seem to struggle with this, yet Spotify can’t seem to figure it out. Desperate move from a desperate company.
1. dominant share in handsets in the US among people that pay for services (probably)
3. a competing music service, which is tied to the handset owner's credit card and therefore frictionless sign up.
1: that’s really breaking it down, isnt it? Does Apple have a dominant share of handsets in the US, period?
They do, and by a significant margin, more than twice as much as their nearest competitor. In fact Apple holds nearly a 60% share of the US market for smartphones.
But this complaint is in the EU, not the US. In Europe Apple reportedly has north of a quarter of the market, just behind Samsung. Everyone else is far behind them.
That's user share, not marketshare of sales, for those that aren't looking closely.
Android OS Device sales almost always exceeded Apple's yearly marketshare of sales in the U.S, but that may be changing as Android OS users also hold on to their devices longer.
Spotify is talking about Apple and iOS, and so we should be talking about user share, share of all U.S. smartphone users, which Apple leads in the U.S., against Android OS user share. Worldwide, it's likely that Japan is the only other country with an iOS user share larger than Android OS user share.
Otherwise, Android OS leads iOS in every other country in both user share and marketshare of yearly sales. Whether Apple dominates other Android OS device makers in the U.S. is irrelevant as this is a comparison of platforms, and more so, of platforms in the EU.
No sir, they're talking access to iPhone users. You might like to talk about something else as it's a more convenient discussion point.
Not all Android devices are served by Google Play or even use Google Android, in fact tens of millions are not. But every iPhone, Apple Watch, Homepod, iPad etc is served by Apple and iOS. That's a majority share across the board for all of their mobile and/or streaming products (except the HomePod), far higher than any other consumer electronics manufacturer.
Apple is great in portraying itself as the „good guy“ or „victim“. Excellent press department.
I’m not saying they are the bad guy in this context. However, given the ludicrous amounts of cash they are accumulating (with margins most other businesses can only dream of), I do wonder if 30% are necessary or greedy.
It would be interesting to see calculations of what it actually costs Apple to render these services to app makers - but of course we‘ll never ever get that...
All that cash do not belong to Apple, it belongs to its shareholders. Apple's obligation is to spend that cash in the best interest of its shareholders, not to give certain apps a free ride in the App Store.
The people that should be paying for the cost of operating the App Stores are the developers that makes money using it. Over 80% of the apps pays nothing to Apple, for using the App Store. And even developers of paid apps do not have to pay Apple anything, unless they make money with their app. It's not like paid app developers have to pay rent just to have their apps on sale in the App Store. Apple customers that buys high margin Macs, iPhones, Airbuds, or any other Apple products, should not be the ones to subsidize those apps that are not paying anything. Nor should their shareholders.
The people that benefit the most from free apps are usually the people that have paid apps. Free versions of an app are essential free advertising for the paid versions of that app. Spotify has a free music streaming app that they use to attract streaming music customers to subscribe to their premium paid service. Lots of game developers offer free apps of their games in order to attract gamers to their paid version. They pay Apple nothing to have their free apps in the App Store. These are the developers that should be subsidizing those free apps and provide Apple with a profit, after the cost of operating and maintaining the App Store.
Even though the App Store, with all its free apps, provides Apple with a good selling point on owning an iOS device, they also serve to create a lot of "foot traffic" in the app store. And it has been shown that that "foot traffic" in the Apple App Store, are from the people that are the most likely to pay for apps. Which greatly benefit the developers of paid apps. So there shouldn't be any problem with Apple charging these developers of paid apps, the cost of operating the App Store, plus provide Apple with decent profit that will please its shareholders.
Comments
3: If someone signs up for Spotify using the iOS app isn’t the billing just as frictionless? I haven’t used Spotify so I really am not familiar with their process.
But this complaint is in the EU, not the US. In Europe Apple reportedly has north of a quarter of the market, just behind Samsung. Everyone else is far behind them.
Well, check that, Amazon did it first when it successfully sued to get the US government to restore its dominant position in eBooks after Apple had breached it. Maybe that's what gives Spotify encouragement.
"Sixteen years ago, we launched the iTunes Store with the idea that there should be just one trusted place where users discover and purchase great music and every creator is treated by our definition of fairly. The result revolutionized the music industry, and our love of music and the people who make it are deeply engrained in Apple."
I have added the bolded words to highlight what Apple isn't tackling with its note.
If the EU runs with the Spotify complaint, at the very least it will apply the same logic it applied to past complaints about Google. That at best. At worst it might look harder and take a stance on what I added in bold to the quote above.
Away from the formal complaint perspective, the PR perspective may also see people's noses put out of joint and get attacked (again for the points I highlighted).
In this particular case I think it would have been better to stay silent and let Spotify let off steam, file the complaint and just wait.
By responding, Apple has brought Spotify's gripe to a wider audience.
This sentence of yours has no bearing on antitrust at all:
"[Apple] has ... dominant share in handsets in the US among people that pay for services (probably)"
Even if that were true, which you aren't sure of, antitrust theory and law limits the extent to which you can slice and dice markets to arrive at the relevant market. For any company, you can always slice and dice markets to the point that they become the dominant firm. What you are asserting is no different than saying something like Ferrari has a dominant share in Monaco among people who purchase exotic sports cars.
The relevant market is not the market you defined, nor is it the market for "Apple iPhones" (surely it is not illegal for Apple to 'monopolize' the market for its own branded products). It's not even the market for "high end smartphones"; you cannot define markets by price ranges because anyone who buys the expensive brand can obviously also afford the cheap brand. The relevant market is the market for "all smartphones" and Apple is not the dominant vendor in any country in the world (including the US), but especially in the EC, where the complaint has been lodged.
The other things you point out are "[iPhone's] app store .. is the only means of installing apps" and "a competing music service, which is tied to the handset owner's credit card and therefore frictionless sign up". Basically you are complaining against Apple's efforts to offer its customers greater device security and ease of use. i.e. a better product. There is no law against that either.
Finally you say "there is no linking or even advertising from apps to safari for payments". Should we also force Toyota to provide advertising and quick links to Honda in their dealerships, websites, and cars?
Android OS Device sales almost always exceeded Apple's yearly marketshare of sales in the U.S, but that may be changing as Android OS users also hold on to their devices longer.
https://www.counterpointresearch.com/us-market-smartphone-share/
Otherwise, Android OS leads iOS in every other country in both user share and marketshare of yearly sales. Whether Apple dominates other Android OS device makers in the U.S. is irrelevant as this is a comparison of platforms, and more so, of platforms in the EU.
Not all Android devices are served by Google Play or even use Google Android, in fact tens of millions are not. But every iPhone, Apple Watch, Homepod, iPad etc is served by Apple and iOS. That's a majority share across the board for all of their mobile and/or streaming products (except the HomePod), far higher than any other consumer electronics manufacturer.