European Regulators Awaiting Response From Apple After Spotify Called the App Store a Monopoly
The European Commission is awaiting a response from Apple after Spotify accused the iPhone maker of anticompetitive business practices in relation to its App Store, said the European Union's antitrust chief Margrethe Vestager.
"We are looking into that and we have been asking questions around in that market but of course also Apple themselves, for them to answer the allegations. And when they come back, we will know more," said Vestager, speaking on the sidelines of an economic conference, according to Reuters.
In March, Spotify announced it had filed an antitrust complaint against Apple with the European Commission over unfair App Store practices. Apple responded two days later, labeling the complaint as "misleading rhetoric" and arguing that "Spotify wants all the benefits of a free app without being free."
In a blog post, Spotify founder and CEO Daniel Ek took particular issue with Apple charging a 30 percent "tax" on App Store purchases. This results in Spotify charging existing subscribers $12.99 per month for its Premium plan via the App Store just to collect nearly the $9.99 per month it charges normally.
Apple also forbids developers from alerting users that they can sign up for a subscription or complete a purchase outside of an app, which would bypass Apple's commission on in-app purchases tied to digital goods.
Spotify later said "every monopolist will suggest they have done nothing wrong" and that Apple's response was "entirely in line" with its expectations.
Apple has faced increasing scrutiny as of late over the way it runs its App Store, beyond Spotify's complaint. In the United States, for example, the Supreme Court recently ruled that a class action lawsuit accusing Apple of operating an App Store monopoly can proceed to trial in a lower court.
Parental control app developers have also petitioned Apple to release a public API for its Screen Time feature to ensure a fair playing field on the App Store, while the Netherlands is investigating whether or not Apple favors its own apps.
In response, Apple added a new page to the App Store section of its website titled Principles and Practices, noting that the App Store was created with two goals: to be "a safe and trusted place for customers to discover and download apps" and "a great business opportunity for all developers."
Apple emphasized that the App Store "welcomes competition" and listed many examples of third-party apps that compete with its own apps, such as Spotify versus Apple Music and Google Maps versus Apple Maps.
We believe competition makes everything better and results in the best apps for our customers.
We also care about quality over quantity, and trust over transactions. That's why, even though other stores have more users and more app downloads, the App Store earns more money for developers. Our users trust Apple — and that trust is critical to how we operate a fair, competitive store for developer app distribution.
The deadline for Apple's response to the European Commission is unclear.
Top Rated Comments
Apple: “we welcome competition”...if you pay our 30% cut so that we can still profit off of that competition
Apple: “we welcome competition”...but we don’t allow other app stores or browser downloads to compete with us
I do agree having an app approval process does provide a good measure of quality control and protection for users so here's what I propose - have a voluntary app certification program where developers can submit their apps to Apple, which would then undergo the same process as current App Store approval but allow those certified apps to be signed as "Apple Certified" and distributed elsewhere. Apple could charge a significant premium for this service. This would allow developers to choose which economic model they want - for small developers it would make sense to avoid the certification fee and infrastructure costs by using the App Store, whereas larger developers could use the certification program and distribute apps on their own.
What's even more pathetic by Apple is that they have spent billions building and spend billions maintaining the App store and supporting ecosystem, only to allow Spotify to use the App Store for essentially free to have access to about a BILLION customers. Yep, that's right, Spotify, a company now worth close to 30 BILLION dollars is portrayed by much of the media as the underdog.
The media rarely reports the facts, but Spotify has to pay a commission to Apple for only a small fraction of its over 200 MILLION customers. Instead, Spotify takes in billions from ad revenue and keeps 100% of those dollars. Also, Spotify signs up many of its customers directly and again, Apple doesn't get a cent from those. Finally, for the small fraction of customers that Spotify has to pay Apple a commission for, the vast majority of those are 15%, not the 30% universally reported.
Don’t whine to the government to fix things for you. Be creative and competitive. It’s fair to remove the opportunity to subscribe through the Spotify app on iPhones. That makes people go to website to subscribe. What’s the big deal? Wahhhh.
Try again, Spotify.