Commentary

Spotify Wants European Commission To Throw A Red Card At Apple

Claiming that Apple is limiting choice, stifling innovation and “essentially acting as both a player and referee” in its App Store, the Swedish music streaming service Spotify yesterday asked the European Commission to step in and make Apple “play fair.”

Spotify makes its case to everybody else in a website listing five ways the Cupertino, Calif. megalith “[tilts] the field to favor its own services and [disadvantage] those who play against it.” An animated 2:17 video boils it all down.

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“Central to Spotify’s complaint .. is what it says is a 30% fee Apple charges content-based service providers to use Apple’s in-app purchase system (IAP). Horacio Gutierrez, Spotify’s general counsel, said the company was pressured into using the billing system in 2014, but then was forced to raise the monthly fee of its premium service from 9.99 to 12.99 euros, just as Apple Music launched at Spotify’s initial 9.99 price,” writes Reuters’ Philip Blenkinsop. 

“Spotify then ceased use of Apple’s IAP system, meaning Spotify customers could only upgrade to the fee-based package indirectly, such as on a laptop. Under App store rules, Spotify said, content-based apps could not include buttons or external links to pages with production information, discounts or promotions and faced difficulties fixing bugs. Such restrictions do not apply to Android phones, it said,” Blenkinsop continues. 

“The music streaming business has also complained that its service is locked out of Apple devices including the HomePod smart speaker and Apple Watch,” James Cook writes for The Telegraph

“The escalating conflict highlights growing criticism over the way Apple and Google control customer access to digital services. Through their app stores, the two tech giants have for years acted as gatekeepers to iPhone and Android users, dictating how many people shop for apps and pay for their services,” Hamza Shaban writes for the Washington Post.

“Spotify’s complaint against Apple arrived on the same day an expert panel convened by the British government called for a reinvigorated approach to antitrust enforcement, targeting tech giants such as Amazon, Facebook and Google. In a report published Wednesday, the experts proposed that Britain form a new digital competition regulator to boost innovation and consumer choice,” Shaban adds.

Calls for increasing oversight are certainly not limited to Europe.

“Scrutiny over Silicon Valley’s power has been increasing in recent years, and has already become a topic among Democratic presidential hopefuls. One of them, Senator Elizabeth Warren of Massachusetts, last week proposed breaking up the tech giants as a remedy to their unfair advantages. One of her ideas was to separate the App Store from Apple,” Adam Satariano and Jack Nicas point out in the New York Times.

“Spotify’s complaint is just the latest example of what can happen when these enormous companies abuse their power to undermine competition,” Warren said in a statement Wednesday. “We need a level playing field, and that starts by breaking up giant tech companies who both own a marketplace and operate in that same marketplace.”

Mind you, “none of these complaints are new for Spotify, which has pursued regulatory help from both the U.S. and the EU for years. They are also not new for other parts of the media business, like magazine and newspaper publishers, as well as video companies,” Peter Kafka reminds us for Recode.

“It’s an ongoing dispute that occasionally flares up in different parts of the industry: Late last year, for instance, Netflix stopped letting new customers sign up via the App Store, because it didn’t want to share subscription revenue with Apple.”

Picking apart Spotify’s complaints one-by-one for 9to5Mac, Bradley Chambers says that he “almost laughed out loud” after reading Spotify’s advocacy website, which he calls “a poor attempt to build a Steve Jobs’ style reality distortion field.” 

He concludes: “Instead of ‘It’s Time to Play Fair,’ they should have called it “We don’t have the margins to use in-app purchase, and we’re sad.’ Spotify should worry less about Apple and more about its own service.”

Spotify founder and CEO Daniel Ek claims this is an issue that transcends his creation.

“Let me be clear that this is not a Spotify-versus-Apple issue,” he blogs. “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.”

Oh, and it’s about the common folk, too.

“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,” Ek concludes.

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