Apple Accuses Spotify of 'Resorting to Rumors and Half-Truths', Sets Record Straight on App Rejection

[Phoenixx]

Yep, the credit card companies charge money to process transactions, and have a list of rules by which you must abide if you want to play in their sandbox. You are free to go elsewhere, or you can stay and abide by the rules and be sad, but you don't get to break the rules just because you don't like them yet still continue to use their service. In fact, I don't know if they still do it, but for a long time they had a rule that you couldn't offer a discounted price if someone paid with cash instead of credit.

I'm pretty sure that the credit card companies don't charge 30% on top of the transaction amount, or even 15%. It's not the fact that Apple are expecting some kind of payment here, but the ridiculous percentage they are after. I'm pretty sure than many people wouldn't mind if it was more like 2% to 5%

 

[castlerock]

"You not liking the terms of use of a product you purchased is irrelevant to monopoly classification."

Oh my goodness, so much content there. A+



I will allow you to explain yourself how this is a monopolistic practice, with no analogies please. Your understanding of "monopolies" are as flawed as they could be. Considering this isn't even the discussion.

I already did. YOU CANNOT INSTALL A NATIVE APP UNLESS IT'S THROUGH THE APP STORE. How in God's green earth is that not a monopoly? Am I speaking Greek?

 

[X Cruz 187]

[QUOTE="X Cruz 187, post: 23085278, member: 551049"I agree they should pull out or apple should remove them trust me they need apple more than apple needs them. This is a store no one said apple has to have spotify on their App. Store. If you sell @ Walmart that doesn't mean nordstrum has to sell you too! Be great full for the money apple allowed you to make this far & fall in line. Enough Said move on to real news.[/QUOTE

 

[tjleonard]

Good. Are you really a lawyer? I'm not but I can read. The FTC says that an anticompetitive practice by a single firm is, quote:

It is unlawful for a company to monopolize or attempt to monopolize trade, meaning a firm with market power cannot act to maintain or acquire a dominant position by excluding competitors or preventing new entry. It is important to note that it is not illegal for a company to have a monopoly, to charge “high prices,” or to try to achieve a monopoly position by aggressive methods. A company violates the law only if it tries to maintain or acquire a monopoly through unreasonable methods.

Just because regulators and the DOJ choose not to prosecute doesn't make it legal. Just because Uber's or Airbnb's business model is based on breaking the law but they've managed to BS their way into getting jurisdictions to agree to allow them to conduct business doesn't mean their business model isn't based on having people engage in unlicensed taxi or hotel services. So don't give me this nonsense that "Oh, but you agreed to it" somehow legitimizes monopolistic practices.

And remember, the Apple iOS user is the PRODUCT here, and Spotify is the one objecting to the lack of access to iOS users except through the App Store and their toll.

I'm pretty sure that IOS users are not the product...if they are, Apple isn't selling those, they're charging a fee to all of the R&D, App Store servers, and bandwidth to deploy your App...

 

[castlerock]

I'm pretty sure that IOS users are not the product...if they are, Apple isn't selling those, they're charging a fee to all of the R&D, App Store servers, and bandwidth to deploy your App...

Oh, I'm sure it costs $36 a year per user to serve a 80 MB app. Right.

 

[Rigby]

That isn't why Apple rejected their update.

You don't know that. Apple has rejected apps it didn't like before even though they didn't violate any of the review guidelines, like e.g. Launcher.

Their app is on the app store currently as it always has been.This specific update broke their contractual agreement that Spotify agreed to.

Exactly which contractual agreement was that?

People trust Apple more than Spotify, it's true. Apple has more to lose if they cant protect their customers data.

I don't trust any company. But I don't really care that much in this case since credit card numbers are not really that critical. When one of my cards is compromised, I file a dispute with my bank, any fraudulent charges are removed, and I have a replacement within a few days. No big deal. Just don't use a debit card since they can cause more hassle.
[doublepost=1467603975][/doublepost]

You are still misunderstanding. It is Apple's marketplace. Spotify is free to cease usage of IAP, they can do all their subscriptions through their own terminals.

The problem is that this also puts Spotify at a competitive disadvantage since it increases friction for potential customers, particularly since Apple does not allow any kind of link to an external sign-up page. And now we learn that developers apparently can't even mention that a discounted trial offer exists without providing a link (which is what Spotify did in the rejected app version).

 

[tjleonard]

Oh, I'm sure it costs $36 a year per user to serve a 80 MB app. Right.

Hats off to you, except you failed pulling that one line out of my post. You wouldn't base it off of a per user, you would base it off of a per device.

 

[Rigby]

Why the quotes around broke, like it doesn't really count? Spotify agreed to a contract, and then violated the terms of the contract. That's pretty cut and dried.

There is no contract with firm rules. There are only review guidelines, and those are, by Apple's own admission, a "living document", meaning they can (and do) get changed unilaterally by Apple all the time. Here's a quote:

"This is a living document; new apps presenting new questions may result in new rules at any time. Perhaps your app will trigger this."

 

[castlerock]

Hats off to you, except you failed pulling that one line out of my post. You wouldn't base it off of a per user, you would base it off of a per device.

Huh? Does that really make a difference, in orders of magnitude? It's like saying that the cost per MB of text messages back in the day was justifiable. It clearly was not. They charged that much... because they could.

 

[alexmarchuk]

You don't know that. Apple has rejected apps it didn't like before even though they didn't violate any of the review guidelines, like e.g. Launcher.
Exactly which contractual agreement was that?
I don't trust any company. But I don't really care that much in this case since credit card numbers are not really that critical. When one of my cards is compromised, I file a dispute with my bank, any fraudulent charges are removed, and I have a replacement within a few days. No big deal. Just don't use a debit card since they can cause more hassle.
[doublepost=1467603975][/doublepost]The problem is that this also puts Spotify at a competitive disadvantage since it increases friction for potential customers, particularly since Apple does not allow any kind of link to an external sign-up page. And now we learn that developers apparently can't even mention that a discounted trial offer exists without providing a link (which is what Spotify did in the rejected app version).

I don't mean to disrespect you but you are wrong. Spotify can sell their product as many other devs have for the last several years (don't make me quote myself on this, it's a lost cause). Spotify is charging $12.99 on the IAP and also having a WIKI in the form of telling the customer that Apple "charges" them more so they sell their product at a loss. Listen that's economics. If you don't want to use Apple's IAP and direct your customers to your "cheaper method" off site that's perfectly acceptable. HOWEVER, Spotify is trying to double dip and use the customer initiation method of the App Store THEN redirection their customer the month after for $9.99 purchases after the after. Apple CREATED those subscriptions for their service, now they are trying to back stab their success by saying you can purchase it for 30% less on our site. That is the infringement they are under.

 

[AdonisSMU]

To accuse Apple of ripping off everything they can get their grubby hands on is hardly lacking as a cohesive argument and resorting to fear, uncertainty and doubt. Apple have a long history of stealing ideas.

Look at their latest upcoming "developments" with iOS and WatchOS and what is immediately clear is that they are direct rip offs of Android, and Android Wear. MacOS isn't much better.

Now, other companies also rip off ideas, but none do it as blatantly as Apple, or pretend so hard that they have come up with these ideas themselves.
[doublepost=1467601195][/doublepost]
Agreed. Apple should be getting paid a finders fee, or a small transaction fee, and that's it. A 30% royalty, or even a 15% royalty is ridiculous.

The 30% of subscription revenue for a year and 15% going forward is the finders fee....that Spotify and its developers agreed to when placing their app on the app store.
[doublepost=1467604736][/doublepost]

I already did. YOU CANNOT INSTALL A NATIVE APP UNLESS IT'S THROUGH THE APP STORE. How in God's green earth is that not a monopoly? Am I speaking Greek?

Actually you can Ive done it on many many many occasions and jailbroken app stores exist as well. The business model was bad to begin with and everyone knows it. It won't save their business since there isn't enough money to be made off the vast majority of customers. why should a court bail out spotify from a bad business model?

 

[castlerock]

The 30% of subscription revenue for a year and 15% going forward is the finders fee....that Spotify and its developers agreed to when placing their app on the app store.
[doublepost=1467604736][/doublepost]
Actually you can Ive done it on many many many occasions and jailbroken app stores exist as well.

So you're admitting in a public forum that you've violated the DMCA? I don't think jailbroken app stores get to count. And note that I said NATIVE. This HTML5 nonsense doesn't count toward "native app".

 

[AdonisSMU]

I'm pretty sure that the credit card companies don't charge 30% on top of the transaction amount, or even 15%. It's not the fact that Apple are expecting some kind of payment here, but the ridiculous percentage they are after. I'm pretty sure than many people wouldn't mind if it was more like 2% to 5%

Apple does a lot more than the 2 to 5%. They could just do away with the app store all together and then no body gets any access at all like it was previously. TBQH, id be shocked if a court would even touch this case with a 10 foot pole in particular the SCOTUS...

 

[castlerock]

Apple dopes a lot more than the 2 to 5%. They could just do away with the app store all together and then no body gets any access at all like it was previously. TBQH, id be shocked if a court would even touch this case with a 10 foot pole in particular the SCOTUS...

Since when does SCOTUS count as fair and impartial and taking up the cases that deserve to be heard? And it's a total red herring to suggest that the App Store could be abolished at this point. Apple would cease to exist if they did that.

 

[Rigby]

I don't mean to disrespect you but you are wrong.

No disrespect either. This is *without any doubt* a case where one company is trying to leverage its dominating position in one market to stifle competition in another. Let's not forget that Apple has been caught using anticompetitive practices before, like e.g. the ebook price fixing. You guys are arguing against your own interests as consumers.

If you don't want to use Apple's IAP and direct your customers to your "cheaper method" off site that's perfectly acceptable.

You don't seem to understand that Apple doesn't allow directing customers to an alternative billing method no matter if the app offers iTunes billing or not.

HOWEVER, Spotify is trying to double dip and use the customer initiation method of the App Store THEN redirection their customer the month after for $9.99 purchases after the after.

Nonsense. The trial offer only appeared for customers on the free tier who didn't pay anything before.

 

[castlerock]

You don't seem to understand that Apple doesn't allow directing customers to an alternative billing method no matter if the app offers iTunes billing or not.

Yeah, that's kind of the problem here. It's a little unfair for Apple to tell Spotify, now that they're tired of paying Apple the 30% toll, that they can't have an easy way to instruct their customers how to sign up via the web to continue their subscriptions. But what do I know. I obviously know nothing about monopolistic practices, trade law and such as has been made perfectly clear by my esteemed forum members.

 

[Michael Goff]

So you're admitting in a public forum that you've violated the DMCA? I don't think jailbroken app stores get to count. And note that I said NATIVE. This HTML5 nonsense doesn't count toward "native app".

Nod for them to have a monopoly, they'd have to not be a minor player.

 

[webpoet73]

The difference here, also, is that if you sign up for a subscription through in-app purchase, the subscription is managed by Apple and billed through the iTunes store. That is why they charge the 30%.

Looking at the MLB AtBat app, they clearly state this.

You can sign up though MLB.com and pay; sign in using the app and MLB doesn't have to pay Apple the 30%, but at the same time, you have to manage the subscription though MLB.com rather than though iTunes.

Inside your account in iTunes, there is the subscriptions link with all of the subscriptions you have done though in-app purchases and those were billed to me by Apple, so there is something to be said about Apple taking a piece of the pie. The only real argument is how much is too much? The 30% rule has been in place since the inception of the app store and the inception of the subscription model. So why cry now?

 

[castlerock]

Nod for them to have a monopoly, they'd have to not be a minor player.

It makes no difference to me as an iPhone owner that I have the choice to buy an Android phone and can use Google Play (or perhaps some other method) to install a mobile app. I have an iPhone. If I want my iPhone to have a native app, I _must_ go through Apple. We're redefining what the definition of "is" is by saying that you can just buy another gizmo if you don't like it. IT'S NOT THE POINT.

 

[Michael Goff]

It makes no difference to me as an iPhone owner that I have the choice to buy an Android phone and can use Google Play (or perhaps some other method) to install a mobile app. I have an iPhone. If I want my iPhone to have a native app, I _must_ go through Apple. We're redefining what the definition of "is" is by saying that you can just buy another gizmo if you don't like it. IT'S NOT THE POINT.

The law doesn't work the way you think it does.

 

[xsdeus]

No, what Apple is doing is asking for 30% on your electricity bill from your power company, because you downloaded an app on Apple store. basically if you sign up using an app, apple wants 30% of what-ever for providing nothing else than the initial download. And you can't add a signup here in your app.

Not the whole story. What Apple has done is create the power grid on which electricity is delivered from the power company to your household

Why should the power company get to use that infrastructure for free?
[doublepost=1467609950][/doublepost]

I feel like Spotify should pull out of the Apple App Store completely. I have a feeling the result would backlash on Apple and not on Spotify. Android owns the mobile market anyways. If anything, it would make more people switch to Android. Anytime you get in between a person and their music, your asking for trouble.

I personally would not switch to an Android for one app, especially one whose category is a dime a dozen such as Spotify.

As a Lexus owner, I would not switch to a BMW just for the convenience of memory seats. It would take a lot more than such a trivial feature as that.

 

[sudo1996]

All well and good that Apple "refers" customers to Spotify (a dubious claim, since it's not really possible to be sure why someone downloads the app- its being featured on the App Store or because they knew to look for it there anyway), but what choice does an iOS user have? If you want to have a native app on your phone you HAVE to use the App Store. Devs on other platforms have choices. Not here.

For two reasons, the referral claim isn't so dubious.
- If the user knew about Spotify beforehand, wouldn't he sign up on their site for the lower price instead of through the app? Seems that only an uninformed user would use IAP, unless...
- Maybe he just doesn't want to set up payments through Spotify's site and would rather use the convenient IAP payment feature, maybe with iTunes gift card money.

By the way, strictly speaking, the App Store isn't the only way to install apps, even if you're not jailbroken and aren't a dev. But of course, this is sketchy, and Spotify wouldn't do it.

 

[TangerineFloyd]

But the Spotify app is free. Once it's downloaded on my phone is it still part of the Apple Store? Can Apple successfully argue that Spotify's 30M paying subs are due to iOS platform?

Ok, to make a more accurate analogy, then:
- Say you wrote a software package that you gave for free on your own website, and on a couple of retail stores, e.g. Wallmart (for a standard minimum fee).
- At Wallmart, the customer gets a free booklet that has instructions inside, including a prompt to Wallmart's store shelves to buy your premium service package for $49.
- Now, one day you change the booklet, adding a note, saying 'Save $20 - buy it online for $29'.
- As a result, Wallmart decides to stop the distribution of your updated product, giving out only the old booklets, as you have essentially told costumers to not prefer Wallmart for this purchase (and it goes against store policy, too).
- You then resort to the internet for a public complaint about their decision, but Wallmart cares not .

 

[alecgold]

I do not think this stupid from spotify. They are operating in a razor thin margin environment. And it is unfair competition when apple's service can afford to price the same as spotify still win more money because it doesn t pay the 15% apple cut.

I understand Spotify perfectly well, but the arguments they used are not true or even right out untrue. If you want to use some competitors service, you'll have to pay. If that payment is higher or the conditions are worse then others, you have a rightful complaint and possible a good case in court. In this case Spotify isn't just compared to other music streaming services, but to 1000's of other developers, some big, some small. They all pay the same, no exceptions. (AFAIK)

And the razor thin margins are basically Spotifies own fault. I got a free premium account with my fiber Internet. Somebody is paying for that account, but I'm pretty sure my provider isn't paying the full 10 bucks every month. Spotify started out with prices that where so low they couldn't make a profit. Two things happened: artists wanted more (and IMHO rightfully so, the earnings are very low) and huge competitors started their own services. So they couldn't rise their prices but still did need to pay more to the artist.
And the advertisement model isn't working either: if I get a advertisement every song, I don't listen, but the ads don't pay that much either.
And now they are between a rock and a hard place: they can't go back on their free accounts or they loose millions of users, can't raise the price on the premium accounts when the likes of Amazon and apple are charging $10 as well or they loose the precious paying consumers. And with Google getting into the game with Play Music, I don't see how Spotify will able to make healthy margins and profits.

 

[alexmarchuk]

"If that payment is higher or the conditions are worse then others, you have a rightful complaint and possible a good case in court. "

Not true at all, that's Spotify's business model that's at fault. SPOTIFY DOESNT NEED TO USE IAP for their service. Simple as. The rest of your comment is legitimate.