Apple fights back against Spotify claiming the music streamer's data is out of tune

Apple fights back against Spotify claiming the music streamer's data is out of tune
Music streamer Spotify has been complaining about having to pay the so-called "Apple Tax." This is the 30% cut Apple takes from revenue generated by apps that use the tech giant's payment system. This is why Spotify charges $12.99 a month, $3 more than its regular price, for an individual subscription on the App Store. And to make matters worse for the company, it competes in Apple's iOS app storefront with Apple Music. Because of the "Apple Tax," an Apple Music subscription is cheaper than signing up for Spotify from the App Store. However, outside of the App Store, both music streamers have the same exact pricing structure. Spotify could decide to eat the 30%, but that would sharply curtail profitability by cutting its profit margins.

Spotify's complaints led the EU competition commission to start investigating the matter; if the commission rules against it, Apple could be forced to change its business practices and pay a fine up to 10% of its global revenue. That means Apple could be forced to write a check for $26.6 billion. In a related matter, earlier this year the U.S. Supreme Court ruled that a class action suit against Apple can proceed. The plaintiffs, in this case, argue that the "Apple Tax" forces them to pay more for apps in the App Store because of the 30% cut that Apple takes. But there is a slight difference from Spotify's argument. The class action suit points out that because iOS users are stuck using the App Store (unlike Android users who can sideload apps), Apple is violating antitrust laws. However, prospective Spotify subscribers can go to Spotify's own website to subscribe to the service (more on that later).

Apple says that it takes a 15% cut on only 680,000 Spotify members

Apple today submitted a filing with the EU in response to Spotify's claims. According to Germany's Der Spiegel (via AppleInsider), Apple says that it is taking a 15% cut on only 680,000 of Spotify's 100 million worldwide premium subscribers. These are Spotify members who converted from a free ad-supported subscription to the premium service using Apple's in-app payment system (iAP) between 2014-2016. The 30% "tax" applied to the first year of their subscriptions, but that dropped down to 15% annually after the first year. And those upgrading to the premium service from the free tier after 2016 were no longer able to pay for their subscription inside the App Store.

Apple also reportedly used the filing to respond to additional comments made by Spotify CEO Daniel Ek. The executive claimed that Spotify members paying through the streamer's website instead of the App Store do not receive email and other messages sent from the music streamer, and in some cases, they cannot update the app. In the filing, Apple supposedly dismissed those allegations and said that they are not true. To refute the argument that it is a monopoly, Der Spiegel wrote that Apple pointed out that its share of the smartphone market in the EU is only 25%, and that Apple Music is not dominant among streaming providers.

Spotify is the world's most popular music streaming platform with over 200 million members. Roughly half of them listen for free using an ad-supported tier of service while the other half pay for a premium subscription. The latter allows users to download music, play any song from the Spotify library, and use unlimited skips to navigate past songs they don't want to hear.

Spotify is not the only company that has complained about the "Apple Tax." Late last year, video streamer Netflix stopped new and returning iOS subscribers from using the App Store to subscribe. Netflix told prospective new and returning members that they can sign up by going to its website.



1. vgking9699

Posts: 194; Member since: Mar 01, 2019

Spotify can go shut the f**k up and make their own phone and App Store then

2. sgodsell

Posts: 7456; Member since: Mar 16, 2013

That's dumb on your part. Try to remember Spotify was streaming music on Apple's app store before Apple decided to make their Apple music and compete with Spotify. Yet Apple doesn't have to pay a 30% fee. Look at what Apple did recently to all those developers that made parental control apps. Apple kicked them off their app store without any warnings what so ever. Why because Apple decided to get in that game as well with adding in their own parental controls to iOS. Apple doesn't care about it's developers at all. Apple even charges it's developers $100 every year to stay a developer and get aid. Try to remember Apple only cares about profits. Apple has been giving the lawyers fuel for years now. Especially with Apple's monopolistic ways. This is one case that Apple is definitely not going to win. Btw, Netflix had to remove any and all information in their app that would tell the customers to go to their website for any subscriptions. Because if any app even mentions about going to another website for any monetization, then that app will never make it on Apple's app store. No wonder why the DOJ, EU, and many others are now after Apple and their crooked ways.

4. tedkord

Posts: 17417; Member since: Jun 17, 2009

So can you.

3. Mike88

Posts: 438; Member since: Mar 05, 2019

How jealous can someone be?? This "googlers" gang is unbelievable and going low and low in their fight coz they can't compete. Apple is not a music company like Spotify,, it's a billion dollar hardware and software manufacturer brand,,even ios itself is Apple's proprietary system software and they aren't competing against anyone in their own app store,, Apple music is an inbuilt service and they can make it totally free or can charge any amount they want... Spotify didn't try to find out the subscription costs of other music streaming services along the world, which can be much cheaper or more expensive,, the subscription plan on app store is for everyone not just Spotify,, if Apple bring some gaming service tomorrow (arcade coming soon) other gaming services like psn can't file a case on apple based on their pricing schemes, say sony had an option to subscribe for psn via app store... Same is for their upcoming TV series.. If completion gets fierce brands try to make their service better, try to offer freebies and discounts to get customers instead of filing a case on rivals for their pricing scheme, what spotyfy and these googler gangs are doing is a big joke but not funny at all. If LG decides to open a big electronic store where it sells smartphones and electronics of every brand,, Samsung can't file a case on LG for providing their own Bluetooth headphones on a cheaper price while still earning profit from other brand's sales... Don't cross the limit of craziness Spotify

5. oldskool50 unregistered

You have no idea what is going on. Apple has the advantage on their own platform in that Apple isn't gonna charge itself 30% on the subs for its service. In order for Spotify as an example to be competive, it has ot be able ot charge the same price as Apple. Spotify is sayign they can't, because they lose money to Apple, and they have to past the cost onto their customer. Hwoever, if Apple is claim, less than one million people even paid through Apple store for a sub to Spotify, and Spotify now has 100M subs, then Spotify seems to be doing fine. But that doesn't mean Apple isn't doing something wrong.

7. Mike88

Posts: 438; Member since: Mar 05, 2019

What are you saying?? Are you crazy!?? Why would apple charge itself?? Question - do you know how much apple spends on their music service and how much Spotify spends?? Apple and Spotify are two different companies and there's no pricing standard for a music service,, why should they keep their subscription cost equal to Apple music.. Profit depends on many factors, one company can increase advertising cost while other can spend more in making it more interactive,, they don't spend equal amount. Use your mind,, the only thing Spotify can do is either reduce its profit margin and reduce subscription cost, or make a new OS and app store where they choose the subscription fee or leave ios if they have problems with their subscription fees which is for everyone,, idk why Apple doesn't ban spotify,, no one needs it even.. Atleast on ios.

12. Vancetastic

Posts: 1612; Member since: May 17, 2017

If Apple bans Spotify, or other competing apps, the App Store does indeed become a monopoly.

13. lyndon420

Posts: 6836; Member since: Jul 11, 2012

A simpler solution for Spotify is to just point their customers towards their web app instead...all iPhones have safari preinstalled. They can still download the app through the app more step big deal lol.

17. oldskool50 unregistered

Like I said, you don't understand. Like I said, since Apple.isnt going to charge itself the same 30", then they have the advantage of being able to charge less for the same service, because Spotify has to charge more because they don't want to eat the 30%. Spotify is saying they. Ant equally compete on Apple own platform which is a form of being a ti-competitive. Apple forcing devs to remove any info telling people to buy outside the Apple store is also wrong and unfair. Customers of Spotify are not Apple customers. That's why Apple shouldn't get a piece. This is the same Apple who complained about Qualcomm business practices and they are effectively doing the exact same thing Apple are hypocrites plan and simple.

9. Vokilam

Posts: 1285; Member since: Mar 15, 2018

You hit the nail on the head there buddy, when you said “Apple has advantage on their OWN platform...”. Well, duh! Apple built their platform - Apple can do whatever they want. Spotify is welcome to make their own - and not charge themselves anything. But if you gonna love in my house - you gotta pay rent!!!

32. TBomb

Posts: 1579; Member since: Dec 28, 2012

Mehh.. not the best comparison. Renting vs. app development is completely apples to oranges... but since you'd like to go down that route, let's try..... Spotify is already paying $100 in rent every year to live in iOS's apartment (the app store). Spotify is also paying a second rent of 30% of it's revenue to Apple to live there also (30% of their sales). Meanwhile Apple doesn't pay the $100 rent to live there, nor do they pay the 30% rent. Because of this, Apple can charge less to the customers and still make the same amount of money per customer. Since Apple also doesn't allow the creation of more apartment buildings (App Stores), Apple can therefore charge any amount of money it wants to prevent competition in the area. They can also completely restrict it too (blue light screens, parental modes, etc). Definition of Monopoly: Market situation where one producer (app developer) controls supply of a good or service (an app store/OS), and where the entry of new producers is prevented or highly restricted.

35. blastertoad

Posts: 46; Member since: Jul 17, 2018

That is the problem, within the Apple ecosystem Spotify can not make their own platform to sell their service. Any other platform you can download your programs directly or through many different digital stores. This is where it becomes an antitrust issue as any App or service could be banned or censored from the app store. Apple has already crossed this line, removing apps and killing companies in the process at their own whim. This kind of unilateral control is bad for customers and the public in general. Hence the lawsuit.

11. Vancetastic

Posts: 1612; Member since: May 17, 2017

If Apple is not a music company, why does Apple Music exist? (That’s as far as I read into your novel, Tolstoy...)

15. sgodsell

Posts: 7456; Member since: Mar 16, 2013

Your delusional. Even your statements below where you said if Apple wants to charge 50% then Apple could do it if they want. Sure they could do that. But that would add even more fuel for these lawsuits. Try to think mike88, if the Supreme Court, DOJ, EU, and all these developers didn't have any case or leg to stand on. Then these court cases will fall through. If they do have a leg to stand on, then Apple will win. Now I will place a bet that Apple is going to lose big time on this one.

16. Mike88

Posts: 438; Member since: Mar 05, 2019

I don't know how a court in the world even accept such a childish lawsuit,, I smell lots of money from googlers going into their pockets to make it look like apple is finally losing while they actually did nothing wrong,

18. apple-rulz

Posts: 2198; Member since: Dec 27, 2016

sgodsell why are you so obsessed with Apple? Please don’t lie and say words to the effect that you don’t like Apple, because your actions speak differently. I’m honestly trying to understand your Apple obsession.

22. Vancetastic

Posts: 1612; Member since: May 17, 2017

I am also curious about this.

25. whatev

Posts: 2333; Member since: Oct 28, 2015

He won’t say anything about it, I’ve always inquired him about this, I think it hurts him, apple is haunting him 24/7 without doing nothing

6. oldskool50 unregistered

I for one am not against Apple charging a fee to host apps for devs, giving them and their customers easy access to apps for iOS. The problem is, how much is too much?! Since you are forced to make all purchases through Apple, then because of the total volume, those costs should be less. Paypal only levies a 3-5% transaction fee for accepting payments for you. I am sure, 100M+ people use Paypal services. If Apple is doing 100M+ transaction per year, that means they can charge a lower fee to devs. It shouldn't be higher than 10%. But see, if these devs would give Android as much support as they do iOS, they wouldn't have to eal with it, becaus ethey don't have to host their apps in Google Play if they don't want too. But see, there is a cost in hosting your own apps, and then having a merchant system too. It may be cheaper to use a 3rd party for it. Like many sites use to do, they used DigiRiver to take payments for them, which has fees attached. But Apple is charging an excessive fee, but then complains Qualcomm costs were excessive? POT MEET KETTLE!

8. Mike88

Posts: 438; Member since: Mar 05, 2019

There's no set standard for that even,, they can choose to charge any amount they want,, it's on developers if they still choose to do business with them.. IPhones are super expensive but no one is forced to buy them. If they are charging more, they'll lose developers and apps like windows did,, you know many app developers didn't choose to make an app for windows because they didn't see profit in it.. If they see profit in Apple app store they'll do it or they can choose not to make apps for this OS.. The question is whose loss it would be... Nothing is unfair here, if Apple is confident that it has enough users to attract devs even at 30% subscription fees, they are doing it, they can make it 50% too.. App developers can't file a case on it, they can either choose to do business with them or not. If a start up business goes to Walmart to sell their goods in their stores and doesn't like their profit margin model, they have only 3 options -1) accept the business model with predefined profit margin for Walmart on goods sold. 2) negotiate 3) don't do business with them if they are requesting too much margin. Why would someone file a case in it??

19. oldskool50 unregistered

Yes they can charge whatever they want, but they have to be competitive. Apple is not competing against itself so they know the lowest they can go. If Apple wanted too, they could offer Apple Music at a discount based in which phone you have. If you ha e the Max, you should get Apple music for 4.99 per month, $6.99 if you have an X or XS and 9.99 for anyone with an XR or older. Apple is greedy. Yet they complain about Qualcomm?

10. Vokilam

Posts: 1285; Member since: Mar 15, 2018

So Qualcomm should reduce their pricing for Apple because of volume? I bet your be the first to argue for Qualcomm is right and Apple is wrong. I dosed with Qualcomm on model pricing - it’s theirs A they can charge whatever they want. iOS and AppStore is apples and they can charge whatever.

14. Vokilam

Posts: 1285; Member since: Mar 15, 2018

I sided with Qualcomm on modem pricing - it’s theirs and they can charge whatever they want. iOS and AppStore is apples and they can charge whatever they want. YouTube is Google’s and they can sensor anything they want.

30. Larry_ThaGr81

Posts: 592; Member since: May 26, 2011

Apple's "convenience fee/Apple Tax" is what has pissed off their customers. Spotify shouldn't have to eat this "convenience fee/Apple Tax" that is being placed on them. Apple's payment system streamlines the ability for Apple customers to pay for their Spotify subscription. Apple is just looking to make more money because some Apple customers prefer Spotify over Apple Music and that's sad. This could also be seen as a strategy to convince Apple customers that use Spotify music service to switch back to Apple Music in order to avoid having to pay the higher price. Once again in the end it's Apple customers that are suffering due to Apple's greed.

31. Mike88

Posts: 438; Member since: Mar 05, 2019

No apple customer is suffering due to this,, Apple users aren't paying more for Spotify but Spotify would earn lesser on app store than what it would earn at Google Play store as it'll be paying 30% to Apple instead of 15 or 20% its paying to Google but their problem is it doesn't see Google / YouTube music and other music services as it's competitors.. They are jealous of Apple music and it's growing subscriber's list.. And for the sake of stupidity they are arguing that Apple is earning more from its subscribers as it doesn't have to pay 30% to itself.. Now any sane person will figure out what's going on,, Spotify can never justify it.

33. TBomb

Posts: 1579; Member since: Dec 28, 2012

you must be the only sane Mf'er on this site Mike.... seeing how minimal amount of people are agreeing with you.

21. oldskool50 unregistered

No I didn't say that. Apple was already getting a volume discount. Qualcomm has no true competitor. They have near exclusivity on their tech. I never said Apple. Ant charge what they want. That doesn't mean a certain price isn't exessive and I have a right to say so. Apple isn't even being competitive with other merchant services.

27. whatev

Posts: 2333; Member since: Oct 28, 2015

Just one thing TechieXP: S T F U!!!!!!!!!! ;)

24. vgking9699

Posts: 194; Member since: Mar 01, 2019

What’s googles excuse then for charging YouTubers 45% for making videos that make money? Lol

26. iloveapps

Posts: 865; Member since: Mar 21, 2019

Too many trolls and butthurts. The reason why Apple’s app store is the best than any other app store is because they maintain the quality of apps and its policies. If spotify doesn’t want to follow apple’s rule then they should let their spotify app off from app store. Its responsibility of apple to make the best and quality service to its costumers that is why they’re making this apps.

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