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Spotify goes to war with Apple, asks EU to investigate anti-competitive behaviour

By | Published on Thursday 14 March 2019

Spotify

Already fighting a battle with the songwriters and music publishers of America, Spotify yesterday confirmed it was going to war on another front too, this time against its biggest competitor in premium streaming, big bad Apple. The streaming firm has filed a complaint with the European Commission accusing the tech giant of anti-competitive behaviour.

This has been a long time coming. Digital music companies have long complained about tech giants which – as well as manufacturing devices and/or controlling operating systems and app stores – also offer competing music services. The allegation is that said tech giants exploit their platforms to give their music set-ups an unfair competitive advantage.

Although complaints are sometimes also made about Amazon and Google, generally the loudest moaning has been about Apple’s behaviour in this domain. Not least because Apple also has strict rules about in-app communications, which means you can’t sign-post consumers when you are – for example – no longer allowing them to sign up within an iOS app in order to avoid having to pay your rival a 30% commission.

Spotify boss Daniel Ek took to his company’s blog yesterday to announce that, “after careful consideration, Spotify has filed a complaint against Apple with the European Commission the regulatory body responsible for keeping competition fair and non-discriminatory”.

“In recent years”, he then explained, “Apple has introduced rules to the App Store that purposely limit choice and stifle innovation at the expense of the user experience – essentially acting as both a player and referee to deliberately disadvantage other app developers. After trying unsuccessfully to resolve the issues directly with Apple, we’re now requesting that the EC take action to ensure fair competition”.

That 30% commission on in-app purchases – often dubbed the “Apple tax” – is, unsurprisingly, Ek’s top gripe. “Apple requires that Spotify and other digital services pay a 30% tax on purchases made through Apple’s payment system”, he wrote. “If we pay this tax, it would force us to artificially inflate the price of our premium membership well above the price of Apple Music. And to keep our price competitive for our customers, that isn’t something we can do”.

But, he explained, “if we choose not to use Apple’s payment system, forgoing the charge, Apple then applies a series of technical and experience-limiting restrictions on Spotify. For example, they limit our communication with our customers – including our outreach beyond the app”. Those restrictions, he said, can even include emailing customers.

Beyond the Apple Tax, Ek also complained that “Apple also routinely blocks our experience-enhancing upgrades. Over time, this has included locking Spotify and other competitors out of Apple services such as Siri, HomePod and Apple Watch”.

Ek then set out a three part wish list for new rules the EC might want to enforce. First, he argued that all apps should be subject “to the same fair set of rules and restrictions”, including those operated by an app store’s owner. Secondly, “consumers should have a real choice of payment systems, and not be ‘locked in’ or forced to use systems with discriminatory tariffs such as Apple’s”. And, finally, “app stores should not be allowed to control the communications between services and users”.

Concluding, Ek wrote: “Let me be clear that this is not a Spotify-versus-Apple issue. We want the same fair rules for companies young and old, large and small. It is about supporting and nurturing the healthy ecosystem that made our two companies successful in the first place. Consumers win and our industry thrives when we’re able to challenge each other on fair footing. That’s what competition on the merits is all about”.

Companies like Spotify have been quietly lobbying on this issue in EU circles for a while. Indeed, for the streaming platforms – which will arguably benefit from the safe harbour reforms contained in the European Copyright Directive – this has always been a bigger issue than the copyright reforms that the music industry has been campaigning for.

Said businesses hope that EU law-makers will consider the issues around Apple, Amazon and Google controlling access to consumers while also operating their own content services as they start to put the spotlight on platform responsibility in the years ahead.

Of course, at various points Apple, Amazon and Google have all sparred with each other over how they deliver their content services to consumers using a rival’s device, app store or website. Though Apple and Amazon have generally started getting on in this domain of late, with Apple Music as of yesterday fully integrated with Amazon’s Fire TV set-up in the US. It already works with Amazon’s Alexa voice assistant on the Echo device Stateside, with that functionality expected to also launch in the UK very soon.



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