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Spotify CEO Daniel Ek Speaks Out on Dispute With Apple Over App Store Policies
Spotify CEO Daniel Ek elaborated on his company's complaint against Apple with the European Commission in a speech today at the International Conference on Competition in Berlin, according to Variety and The Hollywood Reporter.
Spotify has accused Apple of unfairly applying its 30 percent App Store commission. While a 70-30 revenue split applies to most apps, including Spotify, others like Uber and Deliveroo are exempt since Apple's commission does not apply to "goods or services that will be consumed outside of the app."
Ek doubled down on this issue, referring to Apple's commission as a "competitor tax":
Spotify did experiment with offering Premium for $12.99 per month through its iOS app starting in 2014, netting it $9.09 per subscriber after Apple's cut, but this put it at a competitive disadvantage since Apple Music is $9.99 per month. Spotify has since stopped allowing upgrading to Premium through its iOS app.
Spotify is aiming for all apps to be subject to the same fair set of rules, including Apple Music. Spotify also believes consumers should not be "forced to use systems with discriminatory tariffs such as Apple's" and that Apple should not be able to place "unfair restrictions" on marketing and promotions.
Spotify has accused Apple of unfairly applying its 30 percent App Store commission. While a 70-30 revenue split applies to most apps, including Spotify, others like Uber and Deliveroo are exempt since Apple's commission does not apply to "goods or services that will be consumed outside of the app."
Ek doubled down on this issue, referring to Apple's commission as a "competitor tax":
Let's call this 30% revenue-share exactly what it is – a competitor tax. Importantly, Apple's posture towards Spotify became increasingly hostile after Apple acquired a rival music streaming service and launched Apple Music. But until now, we felt like we didn't have much of a choice.Spotify Premium normally costs $9.99 per month, the same price as Apple Music, but if Spotify were to offer that price on the App Store, it would only receive $6.99 of that amount after Apple's cut.
Spotify did experiment with offering Premium for $12.99 per month through its iOS app starting in 2014, netting it $9.09 per subscriber after Apple's cut, but this put it at a competitive disadvantage since Apple Music is $9.99 per month. Spotify has since stopped allowing upgrading to Premium through its iOS app.
As we all know, iOS and the App Store is the only way to offer our service to anyone with an iPhone or iPad. That's over a billion people around the world. So not being on their platform is just not an option for us — or really for any competing internet service in this day and age. Apple knows this.The issue doesn't end there, as Apple's App Store review guidelines prevent Spotify from letting users know that they can subscribe to Premium for $9.99 per month on the web or other platforms. The guidelines also prevent Spotify from advertising discounts and other promotions in its iOS app.
If we wish to use Apple's payment system to allow our customers to upgrade to our Premium service, we must pay that 30% tax. This means we cannot be price competitive because we are forced to increase our cost to consumers … while Apple avoids the tax all together and can offer Apple Music at a much lower, more attractive rate. This is especially damaging to a company like ours who already pays out a significant portion of our revenues to record labels and music publishers.
We are essentially faced with a "gag order" that prevents us from communicating with our own users about our service. From dictating how we communicate with our own customers to imposing an unjustified tax, Apple isn't playing fair. Let me be clear: we have no desire to step into the spotlight on this issue. But we also believe we have no other choice.Ek concluded with a ping-pong metaphor:
It's like inviting you to a match on our ping-pong table and then forcing you to play blindfolded while we change the rules throughout the game.On a new website titled Time to Play Fair, Spotify also says it is not allowed to be on the HomePod or Siri, along with other accusations.
Spotify is aiming for all apps to be subject to the same fair set of rules, including Apple Music. Spotify also believes consumers should not be "forced to use systems with discriminatory tariffs such as Apple's" and that Apple should not be able to place "unfair restrictions" on marketing and promotions.
Tag: Spotify
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5 days ago at 08:21 am
What I'm hearing from Spotify is: "Apple did a lot of work creating this fantastic distribution platform and Apple did a lot of work creating a fantastic integration between their Store and their devices and Apple amassed a huge database of satisfied returning customers, but now WE want to benefit from all that for nothing."
5 days ago at 08:21 am
This is incredibly similar to what got Microsoft in trouble with IE back in the day. When you are the OS and by extension the platform, you are put in a special position where you have to play fair, even with your competitors. Apple is not playing fair, and Spotify is exactly right to complain about it. Compete on the service, don't compete on business leverage.
5 days ago at 08:23 am
So then the Spotify argument is that unless Apple provides the App Store for free everyone except Apple is at a competitive disadvantage. Explain where else in the world a store, online or brick & mortar, lets someone else sell a product in their store without taking a cut (normally called a mark-up). Gotta call BS on Spotify's argument.
5 days ago at 08:24 am
Pretty silly. Spotify wants to use Apple's platform and customer base, which they have worked hard to develop and cultivate for years, to make money. Yet, they don't want to pay Apple a cut for providing this platform and customer base? If you don't want to pay it, you don't have to, but don't expect to use their platform for free.
5 days ago at 08:25 am
I agree that Apple aren't being fair in this field. Whether or not they can be sued for it is a whole another matter, but we've now reached a point where dozens of high profile companies are trying to dodge around Apple's revenue sharing systems, from HBO to Spotify etc. etc. Even Disney and Pixar are mad, and the latter of those companies was founded by, among others, Steve Jobs
There is no way that Apple receiving a 30% cut is fair in a scenario such as this. Apple is not offering any services other than billing the customer, for which 30% is massively, massively too high. They don't host the music, they don't pay for the bandwidth, they don't offer the catalogue, they don't protect customer nor provider from anything whatsoever. The only thing they've provided is the platform iOS. If Microsoft can have an anti-trust case just by pre-installing Internet Explorer, surely this more than qualifies as an anti-trust case.
There is no way that Apple receiving a 30% cut is fair in a scenario such as this. Apple is not offering any services other than billing the customer, for which 30% is massively, massively too high. They don't host the music, they don't pay for the bandwidth, they don't offer the catalogue, they don't protect customer nor provider from anything whatsoever. The only thing they've provided is the platform iOS. If Microsoft can have an anti-trust case just by pre-installing Internet Explorer, surely this more than qualifies as an anti-trust case.
5 days ago at 08:25 am
I'm completely with Spotify on this one. Apple should compete by just building better products - and they used to do exactly that. Let the customer decide.
5 days ago at 08:17 am
Hate to admit it but Apple IOS, Apple Store, Apple Rules.
When people use words like "we just want to be fair …" sounds like soar losers.
When people use words like "we just want to be fair …" sounds like soar losers.
5 days ago at 08:18 am
As soon as you start a free trial on the iOS app, Spotify sends an email stating that you can subscribe for $9.99 on their website. Spotify can do whatever it wants outside of the App Store and the app itself.
5 days ago at 08:26 am
I agree that Apple aren't being fair in this field. Whether or not they can be sued for it is a whole another matter, but we've now reached a point where dozens of high profile companies are trying to dodge around Apple's revenue sharing systems, from HBO to Spotify etc. etc.
There is no way that Apple receiving a 30% cut is fair in a scenario such as this. Apple is not offering any services other than billing the customer, for which 30% is massively, massively too high. They don't host the music, they don't pay for the bandwidth, they don't offer the catalogue, they don't protect customer nor provider from anything whatsoever. The only thing they've provided is the platform iOS. If Microsoft can have an anti-trust case just by pre-installing Internet Explorer, surely this more than qualifies as an anti-trust case.
They are providing a platform and the most lucrative base of customers that exists. You feel like Apple should just give that away for free?
5 days ago at 08:37 am
Apple's App Store review guidelines prevent Spotify from letting users know that they can subscribe to Premium for $9.99 per month on the web or other platforms. The guidelines also prevent Spotify from advertising discounts and other promotions in its iOS app.
This right here is why I side with Spotify. I understand Apple enforcing the 30% rule because Apple provides billing management and other technical services for that 30%, but to not allow Spotify to let people know they can sign up elsewhere? That feels like a tight grip that has clear competitive implications.[ Read All Comments ]
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