Spotify: Apple abuses App Store's power to 'stifle' rivals

14 March, 2019, 14:11 | Author: Sammy Rose
  • Spotify CEO Daniel Ek

A report published by Variety tells the story of Spotify accusing Apple of unfairly limiting choice and competition in the Europe marketplace.

Spotify has filed a complaint against Apple with European Commission regulators, alleging the so-called "Apple tax" gives Apple an "unfair advantage" over rival companies.

"Spotify is largely on the right side in both facts and principle, which creates risk that App Store policy terms will be forcibly changed in a way that negatively impacts Services revenue and Apple's brand", KeyBanc analyst Andy Hargreaves wrote in a note to clients.

It's not the first time Apple has faced criticism over how it manages the App Store, and the demands it places on developers producing apps for iOS devices like iPhone and iPad.

Chief executive Daniel Ek blasted what he called an "Apple tax" which forces his company to pay a 30 per cent commission for sales made via Apple's payment system.

He then blamed Apple for not providing a robust alternative solution to Apple's payment system.

"We aren't seeking special treatment", he said in a blog post. However, if you choose to pay your subscription fee through Apple (an in-app payment), Spotify charges $12.99 a month for individuals, $16.99 a month for families and $7.99 a month for verified students.

"For example, they limit our communication with our customers - including our outreach beyond the app".

Spotify argues that it has to raise prices, making it more expensive than Apple's own streaming service, Apple Music.

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The main problem here is that Apple not just operates the App Store, but also the competitor to Spotify in the form of Apple Music. We simply want the same treatment as numerous other apps on the App Store, like Uber or Deliveroo, who aren't subject to the Apple tax and therefore don't have the same restrictions.

Apple did not have any immediate comment on the lawsuit.

The restrictions, according to Ek, limit Spotify's communication, disallowing the music streaming platform to send emails to its customers who use Apple in some cases.

The reasons why include Apple's "app tax", the 30 percent cut that Apple takes when developers sell their wares in the company's App Store.

Ek specifically highlighted the 30 percent fee that Apple charges for app payments made through its system.

A spat between the companies that operate two of the biggest music streaming services in the world has landed at the doorstep of the European Union, which has been taking an increasingly tough stance lately against antitrust-related issues involving USA tech companies. When Apple (NASDAQ:AAPL) launched its music service in the European Union, they were able to be both the platform holder as well as a competitor to Spotify.

As I recently shared, competition pushes us to evolve and improve both the customer and creator experience. So, let me be clear that this is not a Spotify-versus-Apple issue.

Consumers win and our industry thrives when we're able to challenge each other on fair footing.

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