Spotify has filed a formal anti-competition complaint with the European Commission – the EU body that deals with competition issues throughout the EU – concerning Apple’s iOS App Store rules.
The music streaming company has alleged an issue with how Apple squeezes rival music streaming services, calling the tech giant a ‘monopolist’ whose actions ‘hurt competition and consumers, and is in clear violation of the law’.
Spotify CEO Daniel Ek called for ‘a level playing field’ in a recent blog post. He says that Apple, in recent years, ‘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’. The issue has become particularly problematic for Spotify since Apple launched its own music streaming service, Apple Music, in 2015.
Spotify is complaining that the ever-changing rules and 30% tax for third party developers using the Apple App Store have stifled its ability to compete effectively with Apple. The company claims that the 30% tax levied on in-app purchases, which has been present since 2008, has got to the point that it would force Spotify to artificially increase the cost of its monthly subscriptions for its Premium service from the Spotify app, making it more expensive than Apple Music as a result. Daniel Ek labelled it a ‘competitor tax’ for this reason.
Consequerntly, Spotify chose not to permit purchasing of its Premium subscription through the Spotify app, only through its website. However, it is alleging that this move has resulted in alternative restrictions by Apple on the company, including, for example, limiting its ability to communicate its subscription procedure and deals to consumers, and not allowing Spotify to be played using Siri.
Spotify’s general counsel, Horacio Gutierrez, said in a statement: ‘Once Apple became a platform provider, but also a direct competitor, their incentive to disadvantage rival services, like Spotify, become even greater and their restrictions started to become more frequent and extreme’.
Spotify has tried to get consumers on its side, going as far as to release an animated YouTube video to summarise its position in the complaint, and seemingly champion itself as ‘the people’s’ music streaming service’.
At the same time, Apple has provided its public response to Spotify’s complaint, hoping to gain support for the fact that its App Store has developed into its own economic ecosystem that encourages business creativity and growth. It argues Spotify clearly does not want to support this regime.
Apple also attacks the numerous claims Spotify made in its complaint, arguing that in the majority they are simply misleading. For example, Apple says that it has in fact reached out to Spotify to get their app to function using Siri, and that, while there is a 30% revenue share for use of Apple’s own in-app purchasing system, this is only for the first year of use, as it then drops to 15% in the years that follow.
Overall, it says that only a fraction of Spotify’s Premium subscriptions fall within Apple’s revenue-sharing model, so their concerns are unfounded as Spotify simply seems intent on securing a free-ride for use of the Apple App Store and payment software.
The two companies have long been engaged in disputes behind-the-scenes, so this formal complaint is recognition that relations between them are deteriorating. The outcome of the European Commission’s investigation into the anti-competitive allegations may have significant ramifications for the practices and relationship of both these companies going forward, and for all those organisations also utilising the App Store.