Spotify says Apple a 'monopolist' in escalating war of words

Posted:
in iPhone
Spotify described Apple as a "monopolist" late Friday, dissecting the latter's reaction to a competition complaint Spotify submitted to the European Commission.

Spotify


"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.
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Comments

  • Reply 1 of 146
    racerhomie3racerhomie3 Posts: 1,169member
    I say let the lawyers decide it. But I stand with apple over here. Apple doesn’t own a monopoly on any market. If you don’t like their rules don’t play in it. 
     Funny enough ,Spotify’s iOS app is much better than the Droid version last time I checked.
    tmayHenryDJPbshankcharlesgresmagman1979chaickaloopychewwatto_cobrajony0
  • Reply 2 of 146
    I think Spotify knows it’s a matter of time.  They have no other income streams.  Can’t afford the current business model.  They are fighting for their life.  They will lose.
    applesauce007jbdragontmaybshanklkruppracerhomie3n2itivguyagilealtitudechiadesignr
  • Reply 3 of 146
    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.
    I didn’t realize Spotify no longer offers in-app subscriptions. I was under the impression that was what their complaint was around and having to give up 30%. If that is no longer the case are they complaining about only those customers who initially signed up through IAP and they continue to pay 30% on?

    Also, if they no longer pay that 30% on new subscribers what is their complaint over unfairness re: Apple Music?
    bshanktmaychaickawatto_cobra
  • Reply 4 of 146
    evn616evn616 Posts: 26member
    Spotify has been, in my experience, inferior to Apple Music. I pay for an Apple Music family membership and I am extremely happy. I also have a Pandora family membership and I love it. I find Pandora to be superior to Spotify. In fact, I’m emotionally distraught by Spotify. The writing is on the wall Spotify. With a name like that, you can always change business models and market a stain removal pen for clothing. 👏🏻
    bshankAppleExposedmagman1979watto_cobra
  • Reply 5 of 146
    bwikbwik Posts: 562member

    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.

    edited March 16 lkrupphucom2000tehabeAppleExposedchaicka
  • Reply 6 of 146
    I have to say Spotify is either ignorant to their own actions or they are simply playing the victim. I can't stand companies who wanna capitalize off Apple's customers and not pay one red cent. Because Apple is the most popular company and they have a great deal of their share of haters Spotify is trying to use this to their advantage by calling Apple a monopoly (which is ridiculous) and hoping people join them in their hate wagon. 

    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. 
    bshanktmayAppleExposedmagman1979chaickawatto_cobra
  • Reply 7 of 146
    bwik said:

    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.

    There is precedent to suggest that Apple can't simply charge a 30% toll on all the revenue producing activities that happen across iOS.

    It may not be intentional but you are downplaying what Apple does for in-app purchases. They aren’t simply providing a portal to download an app. There’s also the maintenance costs, ongoing development costs (of iOS and SDKs), the billing, bandwidth, etc. 

    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. 
    bshankracerhomie3HenryDJPtmaychaickawatto_cobrajony0
  • Reply 8 of 146
    tehabetehabe Posts: 19member
    When it comes to distribution of applications for iOS Apple is a monopolist. You can't buy applications anywhere else. On the other hand, Spotify is not a monopolist, there are many music streaming services on the market, including Apple Music who are competing with Spotify. And currently i it is doubtful if you could charge more than $10 per month for music streaming.
    lkruppwilliamlondon
  • Reply 9 of 146
    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.
    I didn’t realize Spotify no longer offers in-app subscriptions. I was under the impression that was what their complaint was around and having to give up 30%. If that is no longer the case are they complaining about only those customers who initially signed up through IAP and they continue to pay 30% on?

    Also, if they no longer pay that 30% on new subscribers what is their complaint over unfairness re: Apple Music?
    The reason for the complaint is that the only option for Spotify is paying the 30% when new users want to subscribe on iOS while making no reference to the possibility of other places where one could subscribe. So potential new paying users for Spotify on iOS would have to pay $13 to compensate for the 30%, and make no mention on the possibility of signing up on the web. As you said, the IAP subscription is removed, however Spotify is still not allowed to mention where to sign up, people have to figure this out for themselves. This while Apple Music can be bought for $10 per month. So people using predominantly an iOS device as their main computing device are more likely to subscribe to Apple music given the rules Apple has set up.
    hucom2000
  • Reply 10 of 146
    uraharaurahara Posts: 307member
    So what solution does Spotify offers?
    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. 
    AppleExposedviclauyyc
  • Reply 11 of 146
    bshankbshank Posts: 164member
    bwik said:

    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.

    Apple provides a lot more than just a download portal buddy
    HenryDJPtmayAppleExposedchaickamike1watto_cobra
  • Reply 12 of 146
    ElCapitanElCapitan Posts: 280member
    HenryDJP said:
    ... but Spotify should be ashamed of their actions. 
    They will probably be so ashamed they pull their app from the App store, together with Amazon Prime, HBO, Netflix and many others. Leaving Apple customers with one, curated,  left leaning, family centric offering from – Apple. 

    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. 
  • Reply 13 of 146
    cgWerkscgWerks Posts: 2,314member
    Spotify also recently bought Anchor and Gimlet, so I wonder if this is setting the scene for some other battle. I also wonder if it is more about control of the customer and their information than the percentage of revenue. The 'big media' people (who don't seem to get podcasting), have long been pressuring trying to get more and more data for ad purposes (like NPR and RAD, for example). I wonder if there is some connection here.

    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.
    edited March 16 n2itivguywatto_cobra
  • Reply 14 of 146
    urahara said:
    So what solution does Spotify offers?
    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 don't know what Spotify would offer, however I personally do not find it fair that Spotify cannot mention that you could subscribe to Premium via the web and would like Apple to allow this. 
    edited March 16 AppleExposed
  • Reply 15 of 146
    RhythmagicRhythmagic Posts: 47unconfirmed, member
    Stop fighting & learn how to coexist peacefully. 
  • Reply 16 of 146
    bwikbwik Posts: 562member
    bwik said:

    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.

    There is precedent to suggest that Apple can't simply charge a 30% toll on all the revenue producing activities that happen across iOS.

    It may not be intentional but you are downplaying what Apple does for in-app purchases. They aren’t simply providing a portal to download an app. There’s also the maintenance costs, ongoing development costs (of iOS and SDKs), the billing, bandwidth, etc. 

    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.


    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. 

  • Reply 17 of 146
    RhythmagicRhythmagic Posts: 47unconfirmed, member
    when doing business, honesty is the best policy. Do the right thing for all. We are all connected. 
  • Reply 18 of 146
    genovellegenovelle Posts: 981member
    bwik said:

    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.

    The only time Apple makes a percentage is if the customer signs up via Apple platforms. If HBO drives customer via marketing they will sign up via HBO’s site, the customer agrees to their terms of service and sends them
    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. 

    n2itivguychiaAppleExposedhlee1169radarthekatmacxpresscgWerkschaicka
  • Reply 19 of 146
    mac_dogmac_dog Posts: 705member
    Sounds like Qualcomm. 
    n2itivguyAppleExposedwatto_cobra
  • Reply 20 of 146
    bwik said:
    bwik said:

    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.

    There is precedent to suggest that Apple can't simply charge a 30% toll on all the revenue producing activities that happen across iOS.

    It may not be intentional but you are downplaying what Apple does for in-app purchases. They aren’t simply providing a portal to download an app. There’s also the maintenance costs, ongoing development costs (of iOS and SDKs), the billing, bandwidth, etc. 

    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.


    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. 

    Your logic is flawed. Apple only gets 30% of subscriptions that were started through the iOS app, not for all of Spotify’s revenue or even all of the revenue Spotify earns from iOS users. 

    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. 
    chiaAppleExposedcgWerkswatto_cobra
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