EU to Investigate Apple Over Spotify's Antitrust Complaint

[Rogifan]

Comparing Spotify to Uber or Deliveroo is the definition of being disingenuous , whether it originated from Spotify or not, you further it by using the argument.

They call it a “tax” and the don’t want to pay it but they still want access to iPhone users and apples platform to sell a recurring digital subscription. Yeah good luck with that.

Apples decision to curate the App Store might not have any bearing on your purchase, but it is one of the reasons I and so many other users choose to purchase and use an iPhone and apples ecosystem.

There is an alternative to apple and iOS....

How was the disingenuous? Sure seems to me that without iPhone in the App Store Uber would not exist. I believe Eddy Cue even said so. Also you’re not buying a physical good with Uber you’re buying a service. So what if the service doesn’t happen in an Apple made car. Why should Uber be able to use their own payment service in-app but not Spotify - other than Apple’s arbitrary digital goods distinction which was made before Uber existed.
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Are you saying apple allows you to charge Uber to your iTunes account?

https://www.theguardian.com/technol...mmission-unfair-european-commission-complaint

They call it a tax.

No. I’m saying Apple allows Uber to charge my credit card directly bypassing iTunes.

 

[TVOR]

Does Apple Music paying 30% to mother company? When it starts to do this and will have zero support from it = we will have equal competition.

As far as I know, Apple Music isn’t a separate legal entity but even if was it was, you believe that Apple (Music) paying Apple (Inc.) somehow makes things more fair? I don’t get it...

 

[jlc1978]

Apple disallow Spotify or other app developer link their website through app. This is the whole argument. Please let me know the logic behind that. And that is prevent competition, you know you can do in app subscription to Apple Music through App and does Apple charge themselves for 30% cut?

A lot depends on how Apple structures its profit centers. Id Apple Music has a separate P&L from the App Store then they could charge them a 30/15% cut like everyone else. This forces each to make a profit, even though all the cash ultimately flows to Apple.
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Nobody (well, definitely not Spotify) needs Apple to distribute their app. Apple forces companies/people to use it and then charges them. So, to continue with my analogy, it is just like mafia charging store/restaurant owners a fee for "protection" that one cannot refuse./QUOTE]

Hardly. No one forces anyone to develop for iOS. Their product, their rules.

Maybe Spotify should be forced to carry other services streams a swell? After all, their app forces you to us etehir stream and excludes some artists.

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They also run App Store to sell their hardware. Remove Spotify app and see how iPhone sales drop. So, distributing Spotify app for free is economically profitable for Apple.

I doubt Apple would notice it. I'd expect most users to switch to another service such as Pandora or Apple music if they pay for Spotify. Spotify, OTOH, would be in much worse shape.

 

[FFR]

I have seen nobody give a good reason why payment for a "recurring digital subscription" or a "digital item" should be treated any differently than payment for a service or a physical good.

I don't understand the curation aspect of your statement. How does preventing Spotify from using its own payment service in-app do anything to protect or enhance the user experience? I do like Apple's review of apps to ensure they do nothing nefarious and to quickly remove apps that don't give the results promised, but as far as the payments go any seller can defraud the user regardless if what they are paying for is digital, physical, or a service.

Because a physical service or physical good isn’t recurring, they are not subscriptions like Spotify.

You don’t understand that apples curation is a reason consumers purchase iOS devices? And that includes restricting developers.

If you want to diy buy android, apples curation is something some people like, the 20% that choose iPhones, and have no need to jailbreak.
Those app reviews are a usp of the App Store.

Spotify already has a payment option on its website. People aren’t using it. In app link won’t make a difference. If someone wants to subscribe to Spotify they will. Most don’t.

 

[Rogifan]

1) You might expect Apple to take a cut of physical goods and/or services from App Store purchases, but they don’t. They also don’t charge based on how crucial iPhone or the App Store is to a company’s business model. I suppose these could be additional avenues for future Apple revenue, but for now there is no charge for any of those. I’m not really sure what your point is though, or how any of that is relevant.

2) You might expect Apple to charge a $0.99 minimum for any app, but they don’t. I suppose that could be an additional avenue for future Apple revenue, but for now companies don’t have to charge for apps if they don’t want to. I’m not really sure what your point is.

3) Apple isn’t charging a fee for customer acquisition, they’re charging a percentage of the sales of digital goods sold through in-app purchases. Spotify or any other company can choose not to offer in-app purchases; Apple is still glad to host their app, even if that results in billions of downloads of the app, like Netflix. If companies don’t want to pay Apple for in-app sales, they can simply choose not to sell in-app.

4) If Apple doesn’t actually do the billing, how would they know what the amount of the sale was, or whether there had even been a sale at all? I suppose Apple could offer PayPal or some other payment method during checkout, but Apple would still be entitled to their portion of the revenue share since it’s still an in-app purchase.

5) App updates are also handled through the store, but I’m not sure what point you’re trying to make. If the app has in-app purchases of digital goods, those purchases are subject to the 15/30% revenue share. What do you mean by “part of Apple’s store”, and how is that relevant?

I know what Apple’s current policy is. My points are challenging those who seem to think the current policy is acceptable and/or makes sense as is. Of course Spotify isn’t forced to offer in-app purchases. They know that. They’re challenging Apple’s rules, not pretending they don’t know what the rules are.

Nobody in good faith could really argue that it makes sense for Apple to take 30/15% of e-book or digital music sales but not a ride sharing transaction. Uber didn’t exist when the App Store “tax” was first introduced. As to your point #3...a lot of people defend the 30/15% “tax” by calling it a customer acquisition fee; that Apple has the right to charge it because they’re providing access to a large lucrative customer base. If that’s the case then arbitrarily applying it to digital goods only makes even less sense.

Apple’s policy used to be 30% in perpetuity for subscriptions, then they changed it to 30% for the first year and 15% for every year after. Apple should be constantly reviewing App Store rules and changing things as needed. Why couldn’t Apple offer something simple like Sign up via iTunes or Sign up via [insert app name here] (which would redirect to the web to complete sign-up and provide credit card details). People who want to use iTunes billing because they think it’s more secure or they want all their subscriptions/purchases in one place would use iTunes. Those that don’t care might choose the other option. Of course Apple would never do that because the non-iTunes option would be cheaper so more people would probably select it. But again, unless Apple can legitimately argue that getting a cut of sales of digital goods is warranted there’s no reason for them not to offer an alternative payment method in-app.

 

[78Bandit]

Because a physical service or physical good isn’t recurring, they are not subscriptions like Spotify.

You don’t understand that apples curation is a reason consumers purchase iOS devices? And that includes restricting developers.

If you want to diy buy android, apples curation is something some people like, the 20% that choose iPhones, and have no need to jailbreak.
Those app reviews are a usp of the App Store.

Spotify already has a payment option on its website. People aren’t using it. In app link won’t make a difference. If someone wants to subscribe to Spotify they will. Most don’t.

You do know the purchase doesn't have to be recurring, right? Apple applies the same restrictions to one-time purchases of eBooks, digital albums, or movie streams.

You also know that it doesn't apply to all subscriptions too, right? I can subscribe to recurring deliveries of coffee and dog food from Amazon directly through the app and it goes through Amazon's payment system.

Yes, I understand curation. What you are avoiding is my question as to what user benefit there is to not allowing Spotify to use their own payment system in-app while allowing other sellers of services or physical goods to do so. What exactly is being curated?

 

[Rogifan]

I have seen nobody give a good reason why payment for a "recurring digital subscription" or a "digital item" should be treated any differently than payment for a service or a physical good.

Uber doesn't pay the "tax" yet still has access to iPhone users and Apple's platform. You again differentiate on a "recurring digital subscription" yet there is no good reason why Apple should make such a distinction.

I don't understand the curation aspect of your statement. How does preventing Spotify from using its own payment service in-app do anything to protect or enhance the user experience more than compared to a seller of services or physical goods? I do like Apple's review of apps to ensure they do nothing nefarious and to quickly remove apps that don't give the results promised, but as far as the payments go any seller can defraud the user regardless if what they are paying for is digital, physical, or a service.

There is no good explanation other than when Apple made these rules services like Uber didn’t exist.

 

[FFR]

How was the disingenuous? Sure seems to me that without iPhone in the App Store Uber would not exist. I believe Eddy Cue even said so. Also you’re not buying a physical good with Uber you’re buying a service. So what if the service doesn’t happen in an Apple made car. Why should Uber be able to use their own payment service in-app but not Spotify - other than Apple’s arbitrary digital goods distinction which was made before Uber existed.
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No. I’m saying Apple allows Uber to charge my credit card directly bypassing iTunes.

Yes and that’s why apple doesn’t charge Uber a fee. Uber doesn’t use apple iTunes payment portal.

You can do the same with Spotify on its website.

Your buying a physical service with Uber so they get to use their own payment system.
So does amazon and eBay, and none are recurring payments.

Spotify with its digital services that is recurring can’t be compared to Uber or amazon.
Spotify doesn’t have any physical goods or a physical service, that’s why the comparison is disingenuous.

 

[Rogifan]

Yes and that’s why apple doesn’t charge Uber a fee. Uber doesn’t use apple iTunes payment portal.

You can do the same with Spotify on its website.

Your buying a physical service with Uber so they get to use their own payment system.
So does amazon and eBay, and none are recurring payments.

Spotify with its digital services that is recurring can’t be compared to Uber or amazon.
Spotify doesn’t have any physical goods or a physical service, that’s why the comparison is disingenuous.

Uber doesn’t use Apple’s payment system in-app because they don’t have to. Spotify would. Uber is not proving me a physical good. I’m not buying a car. I’m buying a service - a ride from point A to point B. The comparison is not disingenuous. Apple’s rule that this “tax” only applies to digital good is outdated. So either expand the tax to encompass more things or allow digital goods to be purchased in-app using non-Apple payment methods.

 

[78Bandit]

Yes and that’s why apple doesn’t charge Uber a fee. Uber doesn’t use apple iTunes payment portal.

You can do the same with Spotify on its website.

Your buying a physical service with Uber so they get to use their own payment system.
So does amazon and eBay, and none are recurring payments.

Spotify with its digital services that is recurring can’t be compared to Uber or amazon.
Spotify doesn’t have any physical goods or a physical service, that’s why the comparison is disingenuous.

The comparison is disingenuous only if there is a rational reason for making a distinction between purchases of digital items and purchases of services or physical goods that is not anti-competitive. Do you have any idea what that reason might be?

 

[Intellectua1]

I wonder how residents of the EU would feel if Apple packed up and left? Or how Spotify would feel if they were required to put a link to Apple music in their iOS app? Or if a ruling against Apple were to be applied to physical stores? The EU may well rule against Apple, that doesn't mean it makes sense, or is right, or will benefit anyone at all.

Luckily you're not the CEO of a major company because you'd lose investors and money thinking it's a smart move to pull out of the EU. You seem to be leading with your emotions rather (which is pretty common here) than doing logical thinking. It's not about this is about Spotify being able to properly advertise their app in their app store description, not about placing ads all over iOS. Also your comparison to an app store vs physical stores are Apple's to Watermelons.

 

[FFR]

You do know the purchase doesn't have to be recurring, right? Apple applies the same restrictions to one-time purchases of eBooks, digital albums, or movie streams.

You also know that it doesn't apply to all subscriptions too, right? I can subscribe to recurring deliveries of coffee and dog food from Amazon directly through the app and it goes through Amazon's payment system.

Yes, I understand curation. What you are avoiding is my question as to what user benefit there is to not allowing Spotify to use their own payment system in-app while allowing other sellers of services or physical goods to do so. What exactly is being curated?

Yes if you are using iTunes Store or iBooks store and by extension apple iTunes payment portal.

Sure amazon calls those subscriptions but you are receiving a physical good, and you can buy other physical goods, amazon doesn’t REQUIRE a subscription to buy from its app or use its services. And you don’t pay for your amazon purchases from you iTunes account, which is why apple doesn’t charge a fee for every transaction.

The curation is why apple doesn’t allow it, they won’t give Spotify preferential treatment just because they are having a temper tantrum.

There is no benefit or difference between subscribing to Spotify from within the app or on the website. If a user wants a Spotify subscription they can get one from the website.

If Spotify wants to use apples iTunes portal to manage and pay for the subscription they need to pony up the 30% for the first year and 15% each subsequent year.

Thats more reasonable.

 

[FFR]

The comparison is disingenuous only if there is a rational reason for making a distinction between purchases of digital items and purchases of services or physical goods that is not anti-competitive. Do you have any idea what that reason might be?

Yes a recurring digital service using apples payment platform vs a physical service that does not.

 

[FFR]

Uber doesn’t use Apple’s payment system in-app because they don’t have to. Spotify would. Uber is not proving me a physical good. I’m not buying a car. I’m buying a service - a ride from point A to point B. The comparison is not disingenuous. Apple’s rule that this “tax” only applies to digital good is outdated. So either expand the tax to encompass more things or allow digital goods to be purchased in-app using non-Apple payment methods.

Uber is providing you a physical service.
I hope you can understand the distinction.

Spotify is not.

Uber, Amazon, eBay will charge you as much as you use the physical service or physical goods.

Spotify will charge you per month or per annum.

That’s the difference.

 

[78Bandit]

Yes if you are using iTunes Store or iBooks store and by extension apple iTunes payment portal.

Sure amazon calls those subscriptions but you are receiving a physical good, and you can buy other physical goods, amazon doesn’t REQUIRE a subscription to buy from its app or use its services. And you don’t pay for your amazon purchases from you iTunes account, which is why apple doesn’t charge a fee for every transaction.

The curation is why apple doesn’t allow it, they won’t give Spotify preferential treatment just because they are having a temper tantrum.

There is no benefit or difference between subscribing to Spotify from within the app or on the website. If a user wants a Spotify subscription they can get one from the website.

If Spotify wants to use apples iTunes portal to manage and pay for the subscription they need to pony up the 30% for the first year and 15% each subsequent year.

Thats more reasonable.

The restrictions apply to all one-time purchases of digital items, not just iTunes or iBooks. That is why Amazon tells you "this item is not available to purchase from this app" when you search for an eBook, digital album, or streaming movie. If Amazon or any seller tried to offer a digital purchase they would only be able to offer it as an in-app purchase from directly in the app and use Apple's payment system. They would be subject to the same prohibition of using their own payment services or even telling the user that it is available.

I agree if Spotify wants to use Apple's payment system for collecting and remitting revenue that they should pay the fee. Please provide a link to where Spotify says it wants to use Apple's payment services. Everything I've read says they want to be treated no differently from other non-digital providers and use their own in-house account signup and payment system from within the app.

 

[ggibson913]

Serious question. Does Spotify use Google to collect and remit payments? I know Google Play offers similar commission rates for developers who choose to have payments go through Google, but I was under the impression Spotify linked to and used their own subscription service to handle payments.

The digital vs. physical distinction is arbitrary. True, they don't use iTunes as a payment portal, but that is what Spotify is asking for themselves as well.

Although google also takes a cut, as I understand it, the difference is that Google allows the app to point to the Spotify homepage to get them to sign up whereas the app store forbids such redirects. That may be a tough sell though considering how many more subscribers Spotify has than Apple Music. Obviously Spotify users are able to "figure out" how to sign up. The crux of this for me is the likelihood of someone attempting to sign up with Spotify would grow so frustrated with the process of having to do so though the Spotify web site that they throw up their hands and sign up for Apple Music instead.

 

[TVOR]

Apple wants to be both a platform owner and competitor. The problem is unique to the music streaming space: It cannot fairly do both. The music streaming space here is key because rates are set by statute, so Spotify cannot compete with Apple by somehow getting a lower rate.

I am not familiar with US Law, but are you saying that Federal or State Law can specify the minimum amount that a company can charge for a product or service? If so, how is that even reasonable? How does it benefit the consumer?

Take this simplified example:
- Statute sets rates, and we know the average streaming user streams $7 worth of music per month. Assume that's true for all people.
- Spotify sets their prices at $9/month, but Apple takes a third for in-app payments so Spotify gets $6. Spotify loses $1.
- Apple sets their prices at $9/month too. For Apple it's win-win: If the customer goes with Spotify, Apple gets $3. If the customer goes with Apple, Apple gets $2.
- Apple could also undercut Spotify and set their prices at $8/month, still making money and it's still a win-win.
- Spotify then has no choice but to get around Apple by getting rid of in-app payments, but then it is forced by Apple to have an inferior app. Apple can process payments in app and advertise plans, but Spotify cannot. Spotify is forced by Apple to make trade-offs that Apple does not have to make.

Aside from the fact that prices are $10 per month rather than $9 - which somewhat negates your first point about Spotify losing money on each subscriber, albeit replacing it with breaking even - you seem to be suggesting that Apple - as platform owner and supplier - should not be allowed to make a profit from a selling a competitor's product on its own platform...is that right? If so then the very fact of creating a service based on your own technologies means that - should there be a direct competitor on your platform - you should cease to be able to make a profit purely because you are both platform and supplier?

If Spotify needs to raise its prices by $3 per month for subscriptions on the App Store then any savvy user will quickly realise that they can get the service cheaper by signing up on the website. As pointed out countless times by myself and others in this thread, this can be achieved by simply sending a "welcome" email when a user signs up with the offer and direct sign up link embedded in the email.

If the user is not willing to put in the extra, one time effort of clicking on a link in an email and signing up rather than completing an in app purchase in order to save $3 per month then honestly, who cares? Spotify still get the fee they want to end up with and Apple get their commission...and the user who was clearly happy to pay $13 per month gets the service they want.

Finally, somebody who won't click on a link one time would most likely not have been bothered to re-enter all of their details again on Spotify's site even if there was a direct link within the app...they would most likely have preferred the Apple billing route anyway as it was already set up.

 

[78Bandit]

Yes a recurring digital service using apples payment platform vs a physical service that does not.

You are adding conditions that I didn't ask about. My question is why digital goods should be treated differently from services or physical goods in the first place. How about a recurring digital service that does not use Apple's payment platform, which is what Spotify wants? Would that meet your requirements for allowing a seller to link to their own payment platform within the app?

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Although google also takes a cut, the difference is that Google allows the app to point to the Spotify homepage to get them to sign up.

Thanks for the clarification. I was under the impression Spotify didn't allow billing through Google Play as an option.
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I am not familiar with US Law, but are you saying that Federal or State Law can specify the minimum amount that a company can charge for a product or service? If so, how is that even reasonable? How does it benefit the consumer?

It is the rates paid by the streaming provider to the artists that is set by regulation. When that amount has to come off the top then also requiring Apple's 30% commission makes it where Spotify can't make money at the same $9.99 rate Apple can get by with.

 

[FFR]

You are adding conditions that I didn't ask about. My question is why digital goods should be treated differently from services or physical goods in the first place. How about a recurring digital service that does not use Apple's payment platform, which is what Spotify wants? Would that meet your requirements for allowing a seller to link to their own payment platform within the app?

[doublepost=1557170605][/doublepost]

Thanks for the clarification. I was under the impression Spotify didn't allow billing through Google Play as an option.

Not my conditions those are apples, laid out in the terms of service.


Why are intangible goods and services that require a monthly or yearly subscription treated differently than a tangible good or service that doesn’t require a monthly or yearly subscription?

It’s pretty obvious.....

How about a recurring digital service that does not use Apple's payment platform, which is what Spotify wants?

That’s what Spotify has on their website.

 

[78Bandit]

Not my conditions those are apples, laid out in the terms of service.


Why are intangible goods and services that require a monthly or yearly subscription treated differently than a tangible good or service that doesn’t require a monthly or yearly subscription?

It’s pretty obvious.....




That’s what Spotify has on their website.

It is not obvious at all if the provider has their own payment system and doesn't need to use Apple's system, please explain. And be sure to include why it isn't just monthly or yearly subscriptions; the rule applies to one-time purchases of digital goods too.

You also completely deleted the second part to my question. If the app doesn't use Apple's payment system would that meet your personal requirements to allow them to link to their own payment system in-app just like other sellers of services or physical goods do?

 

[TVOR]

It is the rates paid by the streaming provider to the artists that is set...

Ahh that makes more sense...sorry...I misinterpreted what you said.

But still...they can make money if they get people to sign up via the website...so they should invest their marketing dollars in to that objective. If somebody signs up via the website there is no issue...right? So try to get more people to sign up via the website. Send out an email to all new sign ups saying “Hey...if you subscribe via our website you can save $3 per month” and see what happens... just don’t offer a sign up option in the app and then people will have no choice but to sign up on the website!

What they really seem to want is to get the “impulse buy” ability that in app purchases give without having to pay anything. It’s my belief that Apple, as inventors of the App Store, have every right to have a competitive advantage over third party suppliers. In the same way, Google Play Store would have every right to charge Apple Music a commission if Apple Music was available on there even if their own service worked out cheaper. Apple chooses to limit its customer reach by not making Android versions of some of their apps (or PC versions of their MacOS apps). Spotify has that same choice but in reverse.

Nobody is forcing them to make their app available for iOS...they are choosing to do so...

 

[BuffaloTF]

Does Apple Music paying 30% to mother company? When it starts to do this and will have zero support from it = we will have equal competition.

Does Apple Music paying?

While we don't have exact figures to confirm 15% -- because it's 15%... the answer would be yes. The Apple Music cost center within the corporation WOULD be paying the App Store cost center for the services. That's how it works, nothing comes free even internally in corporations.

The computer provided to you is owned by an IT or similar department. IT rents or sells those computers out to every department within the business. Each department has a budget... each department needs to demonstrate value or there are RIFs. If they just handed those computers out for free, they lose hundreds of dollars for each item. You can even read the cost/revenues breakdown in the SEC filings.

 

[FFR]

It is not obvious at all if the provider has their own payment system and doesn't need to use Apple's system, please explain.

You also completely deleted the second part to my question. If the app doesn't use Apple's payment system would that meet your requirements to allow them to link to their own payment system in-app just like other sellers of services or physical good do?

Tangible goods and services vs intangible goods and services.

I did because I don’t see a point to linking.
If someone wants to to click the link and pay Spotify directly They can also go the website.

 

[TVOR]

Does Apple Music paying?

While we don't have exact figures to confirm 15% -- because it's 15%... the answer would be yes. The Apple Music cost center within the corporation WOULD be paying the App Store cost center for the services. That's how it works, nothing comes free even internally in corporations.

The computer provided to you is owned by an IT or similar department. IT rents or sells those computers out to every department within the business. Each department has a budget... each department needs to demonstrate value or there are RIFs. If they just handed those computers out for free, they lose hundreds of dollars for each item. You can even read the cost/revenues breakdown in the SEC filings.

While this is all true...ultimately it is a zero sum game. Those 15% chargebacks that you mention don’t actually have any tangible impact on bottom line profits. It’s just accounting gymnastics!

 

[BuffaloTF]

While this is all true...ultimately it is a zero sum game. Those 15% chargebacks that you mention don’t actually have any tangible impact on bottom line profits. It’s just accounting gymnastics!

It's not a zero sum game to anyone employed on the Apple Music team, whose revenues are equally impacted by paying for the hosting... or to the App Store team, whose revenues are bolstered by them.

Within the same corporation, head count is equally currency... if they need more people, they better have the revenue and workload needs to justify it. Likewise, if revenues are dropping, headcount drops...

It's only zero sum on the final SEC filing.