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":
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.
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.
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.
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.
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.