"You're anticompetitive," Spotify tells Apple in a letter

Music streamer Spotify, whose chief rival in the business of music streaming is Apple Music, has a few choice words for Apple. More precisely, it is one word that Spotify accuses Apple of being and that is "anticompetitive." It seems that Apple rejected Spotify's request to update its iOS app. As a result, Spotify general counsel Horacio Gutierrez sent a letter to Apple general counsel Bruce Sewell. In the letter, Gutierrez accused Apple of "causing grave harm to Spotify and its customers," by rejecting the update to the app.

According to Spotify's letter, Apple told its rival that it would have to use Apple's iTunes billing system if Spotify wanted to  use its iOS app to "acquire new customers and sell subscriptions." Gutierrez claims that Apple is trying to use the App Store approval process as a way to make Spotify less of a competitive threat to Apple Music. Currently, Spotify has 100 million users, although only 30 million of them pay for the service. The remaining 70 million use the ad supported free tier. As of this month, Apple has 15 million paid subscribers to Apple Music.

Spotify's main bone of contention is the iTunes billing system. Apple does not force subscription services to use it, but those that don't are not allowed to use another payment system inside the app. On the other hand, those subscription services that do use the iTunes billing system have to pay Apple 30% of revenue. Spotify has had iOS customers pay the fee by charging $13 to those who subscribe to the service using Spotify's iOS app. The usual price that Spotify charges for monthly service outside Apple's eco-system is $10.


Yesterday, possible Hillary Clinton running mate Elizabeth Warren (D-Mass.) said that "Apple has long used its control of iOS to squash competition in music." 

source: recode

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136 Comments

3. aikoo

Posts: 129; Member since: Feb 27, 2016

This is why I'll never buy an Apple product. Not because of their phones or their extreme prices but because they petty as hell and as the Spotify counselor said anti-competitive.

11. kiko007

Posts: 7493; Member since: Feb 17, 2016

So I take it you believe everything out of this counselors mouth? Be real, this is nothing more than a business man pandering to legality illiterate idiots who have no clue as to how or why Apple can do what they want. Spotify wants to have it's app in the App Store, but doesn't want to pay Apple for promoting it. If Spotify had any balls it would pull it's app from the store, but they won't, because they are cowards hiding behind claims they cannot prove :^).

13. gagdude

Posts: 33; Member since: Mar 18, 2013

you're kidding me right? I use spotify daily on my iPhone. If they were to just remove their app just to prove a point I'm pretty sure that would annoy the heck out of people like me. what a retarded suggestion.

21. kiko007

Posts: 7493; Member since: Feb 17, 2016

True. However, if they take a stance against these so called "anti-competitive" the ant-Apple herd will flock to their aid like police officer to a Duncan Donuts :D.

43. Awalker

Posts: 1977; Member since: Aug 15, 2013

They could take legal action.

102. yoghibawono

Posts: 240; Member since: May 04, 2016

i like all platform actually. Android being the most versatile leaves me with no option to use it. You see, if you think apple is indeed very competitive in this field then so be it. Just dont suddenly attack others who think that apple is being anticompetitive. Since majority here thinks that way. it makes you really look like an isheep

139. Leo_MC

Posts: 7432; Member since: Dec 02, 2011

You could, then, simply not buy any more Apple products.

137. TheOracle1

Posts: 2289; Member since: May 04, 2015

You've clearly got your head buried in your ass. Fact, Spotify and many other apps cost 30% more on IOS. If your boss cut your salary by 30% you'd probably plot his demise. If he increased it by 30% you'd start worshipping him. Defending Apple is one thing but irrationally ignoring facts is pathetic.

194. YOURDADkid unregistered

@ Kiko007 Apple can make Business and lot of profit my making you fool and that's what you like but be smarter you don't have to spent 1000 for something you can get from 100. I do agree its all about business but you are Customer and you should make smart choice not just throw your money to buy the phone which your friend bought. (that's why people like is**t) Only reason I see people buy an is**t is because my friend bought it. But what's inside No one knows. You seems to be techi but fool too. Cause apple just made you Fool. Be smart!!

15. Unordinary unregistered

It's Apple's marketplace, with established terms that Spotify agreed to with every submission of their app, which began prior to Apple having anything to do with streaming audio that would compete with Spotify. Apple is only requiring a 30% cut of subscription sales through the appstore in return for added convenience to the customer and to Spotify to have payment routed through the Appstore. It was Spotify who decided to increase their price to $13/mo to preserve their own profit margin, and Spotify is still perfectly capable of charging their $10/mo outside of the Appstore. Apple provides a service to process subscription payments, they should be allowed to claim a fee for that service from the developer. The rate of the fee happens to be fairly high, but Spotify agreed to it with every app update they submitted, and Apple even announced a new fee structure for the future. I love that Spotify charges more through the appstore, but then turns around and says it's because Apple is being greedy and anti-competitive, rather than admit they're unwilling to give up their own profit margin to pay for a service that Apple provides through the store.

19. kiko007

Posts: 7493; Member since: Feb 17, 2016

^This :D.

37. VZWuser76

Posts: 4974; Member since: Mar 04, 2010

So please tell me, is Apple Music exempt from the 30% fee? If they are, that puts any competition at a disadvantage, either they charge more, eat the difference, or most likely lose customers to an easier to pay for app put out by their competition. This is actually similar to the issue with browsers on Android, except in that case there's no money changing hands.

140. Leo_MC

Posts: 7432; Member since: Dec 02, 2011

No, it's not: Apple pays a 30% fee to Apple..

166. VZWuser76

Posts: 4974; Member since: Mar 04, 2010

Link?

174. Leo_MC

Posts: 7432; Member since: Dec 02, 2011

If you think anyone but IRS has access to Apple's accounting transactions, you must not know how economy works.

184. VZWuser76

Posts: 4974; Member since: Mar 04, 2010

So how do you have this knowledge then? You made a statement, I was simply asking you to back up what you said.

185. Leo_MC

Posts: 7432; Member since: Dec 02, 2011

Because I don't believe every bullsh and I know a lot of stuff. I buy their services through Apple - Ireland, which is a subsidiary; if you want to know more about the chain, you have to learn (or pay to be taught).

186. VZWuser76

Posts: 4974; Member since: Mar 04, 2010

And what does that have to do with qualifying what you said? And how does buying their services provide any facts of your statement that they're paying themselves 30%? None of what you said provides any factual evidence to back up your claim. I know a lot of stuff? smh

190. Leo_MC

Posts: 7432; Member since: Dec 02, 2011

I'm not here to teach economy; if you want that, I can send you an account number, you pay me, and I will explain things to you.

193. VZWuser76

Posts: 4974; Member since: Mar 04, 2010

God you're thick. I asked for proof to back up what you said. Not an economy lesson. And judging by your reluctance to provide said proof, either you're on the inside at Apple, or you're an idiot who got caught making things up and are trying to get out of it. I know which of those two options I think it is based on your other comments.

195. Leo_MC

Posts: 7432; Member since: Dec 02, 2011

I am longer than I am thick... :) Do you really think I care if some random guy on the internet learns stuff or believes me?! Educated people immediately understood (or they already know) how things are and the rest of the people are uninteresting. I'm not going to show any evidence (because there is none to show, unless one has Apple's balances), I'm just going to say that there's no public evidence that proves Apple is exempt from paying the fee and even if it is (in some countries, depending on their fiscal laws), it's because, either way, all the money goes to... yes, Apple.

196. VZWuser76

Posts: 4974; Member since: Mar 04, 2010

You may not care, but people who have actual facts to back up their statements are more likely to be taken seriously. The point was that if your going to make a statement as factual and not opinion, you should be able to back it up with facts. Otherwise what you're saying could be no more factual than the bull$hit you don't believe. Either way, whether they're not paying the fee or paying themselves, it still puts Apple at a financial advantage over their competition. Both are charging $10 for service, but if you pay through iTunes for Spotify, they're charging $13 to cover the fee. Now Apple Music is $3 per month and $36 a year cheaper than Spotify. Is that not an advantage in Apple's favor?

200. Leo_MC

Posts: 7432; Member since: Dec 02, 2011

Dude, if I'm a bread and meat producer and I sell sandwiches made from my bread and meat, it doesn't mean I have an advantage over my competition, because I also have expenses with the bread and meat production. The same with Apple: it needs to pay for App Store servers, technicians, fiber, rent, security, client services etc (or do you think all those are free?) while Spotify does not have those expenses. It would be crazy business from Apple to spend billions so that Spotify gets to it's clients for free... Besides, why should a streaming service cost 10 euros (when in US it only costs 10 dollars), why can't it cost 6.57 or 3.94 euro? Who says 10 euro is the right price? You must have mistaken the internet with a court of law... No, dude, on the internet everybody can say everything, no matter how stupid, no matter if one knows or not what one is saying. I'm not here to state facts but to doubt.

202. VZWuser76

Posts: 4974; Member since: Mar 04, 2010

I realize they have expenses, apparently you think you're the only one who knows stuff. But those expense are part of iTunes, right? And I'm assuming in terms of finances, they're a separate department from app development, correct? iTunes would be the one who would be taking in revenue from devs for app sales and levying the 30% fee for in app payments, not the department that handles app development. Now with that in mind, do you think with the number of apps available and the number of customers Apple has trouble covering the costs of iTunes? But one thing you're forgetting, even though companies may have the same costs, what each company pays can be completely different. Do you think Walmart pays the same for a box of Wheaties as your local mom and pop supermarket does? And 99% of the time, the larger corporation will be paying less. Now that that's settled, while you say that Spotify doesn't have those expenses, they also don't have another department within their company to help offset the costs of operation like Apple does. What does Spotify have? Their app, and that's it. Apple has iPhone sales, iPad sales, iPod sales, Apple Watch sales, Mac sales, accessory sales, eBook sales, Video sales, purchase to own Music sales, all in addition to their app and streaming revenue to fall back on. As far as the cost, because that's the cost they set. I don't know how much Apple's actual cost of operation for Apple music is, but one thing I do know is that if they want to undercut their competition, they could easily use the revenue from other departments so they could take a loss on their product to undercut their competition. And it's not like they don't want sole control of the streaming market, Apple music used to be Beats Music, and now they're looking at buying Tidal. Spotify won't sell for cheap, so rather than shell out a huge chunk of cash to buy them out, why not undercut them using revenue from elsewhere in the company to undercut Spotify's prices to either weaken them for a lower buying price or simply run them out of business? It's been done before many times. You said you're not here to state facts, correct? When I asked if Apple was exempt from their own 30% fee, you said: "No, it's not: Apple pays a 30% fee to Apple" Now that to me sure sounds more like a statement of fact rather than opinion. Opinions contain phrase like I think of I believe. There's no hint of that here. Now I realize anyone can say anything on the internet. Hell, they can anywhere besides the internet as well. But without qualifying your statements, why should I take stock of anything you say. What I've said is speculation, all of it, because I don't know Apple's inner workings, but I can speculate based on what I know about them. What you said to me was first saying I was wrong, and then telling me what Apple was doing. No I believe or I think they're doing this, just they're doing it. That is a statement of fact.

203. Leo_MC

Posts: 7432; Member since: Dec 02, 2011

You're making excellent points. Let me address some of them. App Store has it's costs (and/or should generate income) and Apple charges all the developers a commission from all the sales made in its store and to its clients. It is irrelevant if people think the costs are high or low as long as they are agreed by the parts (and - this is a subjective thing - they apply equally to all, because why should a small developer pay more - in percentage - than a big one?). I'm not ok with Apple supporting App Store costs from other departments income (why should I - the end client - pay 10 euro more on every device so that Spotify is exempt of paying the commission?). Anyone can make a business from selling phones, tablets, music players etc, anyone can build an app store, this is the economy and this is the competition - anyone can do what you do on a market - Apple knows that, Google knows that (Nokia found out the hardest way) and Spotify should have also known that. I have told you that I'm buying Apple's services through its Ireland subsidiary, which pays those services to Apple Inc - the US company. This, for one who knows something about accountancy, is prof enough that Apple's services are distinct entities inside the company.

204. VZWuser76

Posts: 4974; Member since: Mar 04, 2010

Yes they are charging the same to all devs. The only thing we don't know is what Apple is paying. I believe they're not paying anything, you believe they are. The money wouldn't come from you. Apple already has the highest profit margins in the industry, they can cut some profit here and there without charging the end customer. What you should be more worried about is that if they are doing that, it's to either buy up their competition, creating a monopoly, or to run their competition out of business, creating a monopoly. No, not everyone can have a phone, tablet, or appstore business. You even pointed it out in your statement, look at Nokia. Anyone can START a business, but that doesn't mean it will be profitable or long lived. And right now for these companies like Spotify, there aren't many games in town. Android, iOS, WM, BB and.... And like I said before, Spotify doesn't have anything else to fall back on. It wouldn't be such an issue if they weren't competing with the co.pany that also makes the rules. Actually Apple Ireland holds that money offshore for Apple, so they don't have to claim than income on US federal income tax. I never said Apple's services weren't separate distinct entities inside Apple. In fact I said the opposite, but I also said that with those entities under one company, they have the ability to shore up one division.

167. tedkord

Posts: 17358; Member since: Jun 17, 2009

Making facts up doesn't help your position.

25. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

Just because you have a terms of service, doesn't make it legal. A landlord can put whatever it wants in a lease, if you sign yes you agree, but that doesn't make it legally binding and many have fault lease in court and won, because landlords have included theings that were actually illegal for their State of residence. But you wouldnt know this because you artent a business man. That is why States liek Illinois are Pro-tenant, because of the abuse landlords have placed on tenants. Apple is the same. There terms are anti-competitive. When an app is placed on the app store, I only agree Apple can charge a fee to devs for hosting the app for them. The same as leasing floor space from a retailer. Hwoever, you don't get to to charge me for the items I sell on top of it. When I lease floor space at a retailer like best Buy, I pay for the square footage of space I lease. whatever products I sell, best Buy doesn't get a piece of that and nor should they. That is called double-dipping ...MORON!!!! It is anti-competitive because Apple wants to discourage people from using Spotify to use Apple music so they make more money and competitors make less. Funny how you can be for everything Apple does, even when its wrong. Yet they aren't paying your dumb ass. This stuff is goign to make Apple the most hated OEM even over how much people hated Microsoft back in the 70/80's.

71. AlikMalix unregistered

Wrong, I own rental property!!! You can put whatever you want in the lease, it's legally binding. The only time you fall back on state law is if the made contract between two parties does not include or mention certain parrameters or incidents. App Store is apples product, if they wish to charge 30% they can, they can charge 99% if they like; Spotify he the right to raise the price of their service to satisfy their profit margin, or eat the "operating costs". Apple has the best paying customer base (I think in the 85-ish percent of all mobile media/app revenue all platforms considered). You want the best customers - you pay to be in the club. It takes injunuity to provide customers an ecosystem that customers willing to spend money on - something Google is struggling to do with android, Spotify wants the cake, but doesn't want to pay for it. They don't like the terms that EVERYONE accepted - they can leave, but you know why they're whining? Because outside Apple ecosystems - not much profits to be made. This is the same as me saying that Google should stop showing me ads when I use android - that's googles baby and Google can do what they please with it - if I don't like it - I don't have to buy!!! I don't know why there's even an argument.

87. tedkord

Posts: 17358; Member since: Jun 17, 2009

That's not actually true. You can't include terms that break the law in a lease. For instance, a clause forbidding black visitors would be struck down.

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