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Apple hits back at Spotify’s competition complaint, then lays into CRB appeal

By | Published on Friday 15 March 2019

Apple

Apple has responded to Spotify’s complaint to European regulators about its App Store policies. It accuses the streaming firm of making misleading statements, before getting in a sneaky little dig about its rival’s current fall-out with the songwriters and music publishers of America.

Spotify boss Daniel Ek penned a blog post earlier this week confirming that his company had now filed a formal complaint with the European Commission over what he thinks is Apple’s abuse of its App Store to give its own streaming service an unfair advantage.

Although Ek listed various gripes, he focused on mainly on the so called Apple Tax, which has been discussed many times before by those operating in the digital music market.

It means that if services like Spotify take subscription payments from users through their iOS apps, they must pay a 30% commission to Apple. But in the streaming market, that is the digital music service’s entire profit margin.

One solution is to just not take subscriptions through the app, forcing users to sign-up on the digital music company’s own website, before returning to the app to actually consume some music. But, Spotify et al complain, Apple – keen to stop this happening – imposes rules around consumer communications, to make this option less viable.

Ek argued that, despite trying to negotiate a better way forward with Apple, the tech giant has refused to budge. Which raises competition law concerns that the European Union should investigate.

But that’s just not true, Apple countered yesterday. It argued that Spotify simply wants all the benefits of Apple’s iOS platform and App Store without paying for the privilege. Meanwhile, it said that Ek’s missive was misleading. He failed to mention that the 30% commission drops to 15% after a year. And he incorrectly said that Apple was locking Spotify out of some of its devices and platforms.

Writes Apple: “Spotify claims we’re blocking their access to products and updates to their app. Let’s clear this one up right away. We’ve approved and distributed nearly 200 app updates on Spotify’s behalf, resulting in over 300 million downloaded copies of the Spotify app. The only time we have requested adjustments is when Spotify has tried to sidestep the same rules that every other app follows”.

“We’ve worked with Spotify frequently to help them bring their service to more devices and platforms”, it adds. “When we reached out to Spotify about Siri and AirPlay 2 support on several occasions, they’ve told us they’re working on it, and we stand ready to help them where we can. Spotify is deeply integrated into platforms like CarPlay, and they have access to the same app development tools and resources that any other developer has”.

As for the Apple Tax, many iPhone-owning Spotify users are on the streaming service’s free level, and Apple doesn’t ask for a share of any ad income, the tech giant points out. With premium subscribers, Spotify is just treated like every other app maker. Though the statement does then concede that Apple only charges a commission on apps providing digital services, which means apps like Uber aren’t charged.

Even so, Apple argues, that seems fair. “Apple connects Spotify to our users. We provide the platform by which users download and update their app. We share critical software development tools to support Spotify’s app building. And we built a secure payment system – no small undertaking – which allows users to have faith in in-app transactions. Spotify is asking to keep all those benefits while also retaining 100% of the revenue”.

“Spotify wouldn’t be the business they are today without the App Store ecosystem”, it goes on. “But now they’re leveraging their scale to avoid contributing to maintaining that ecosystem for the next generation of app entrepreneurs. We think that’s wrong”.

And you know who else Spotify is trying to short change? Not just Apple and all its shareholders. Oh no, all those lovely artists and songwriters as well!

Because, of course, Spotify has filed its formal complaint about Apple in Europe at the same time as appealing the rate rise payable under the compulsory licence that covers the mechanical copying of songs in the US.

That appeal has angered the American music community big time, all of whom have been quick to point out that lovely cuddly best-mate-to-all-music-makes Apple hasn’t filed an appeal, despite operating the other main streaming service.

“We share Spotify’s love of music and their vision of sharing it with the world”, Apple’s statement goes on. “Where we differ is how you achieve that goal. Underneath the rhetoric, Spotify’s aim is to make more money off others’ work. And it’s not just the App Store that they’re trying to squeeze – it’s also artists, musicians and songwriters”.

“Just this week”, it said, “Spotify sued music creators after a decision by the US Copyright Royalty Board required Spotify to increase its royalty payments. This isn’t just wrong, it represents a real, meaningful and damaging step backwards for the music industry”.

“Apple’s approach has always been to grow the pie”, it argues, “by creating new marketplaces, we can create more opportunities not just for our business, but for artists, creators, entrepreneurs and every ‘crazy one’ with a big idea. That’s in our DNA, it’s the right model to grow the next big app ideas and, ultimately, it’s better for customers”.

Concluding, Apple’s post states: “We’re proud of the work we’ve done to help Spotify build a successful business reaching hundreds of millions of music lovers, and we wish them continued success – after all, that was the whole point of creating the App Store in the first place”.

So, there you go, two major Spotify disputes on both sides of the Atlantic now officially joined up, in PR terms at least. Keeps things interesting, I guess.



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