European Regulators Awaiting Response From Apple After Spotify Called the App Store a Monopoly

[MacRumors]

The European Commission is awaiting a response from Apple after Spotify accused the iPhone maker of anticompetitive business practices in relation to its App Store, said the European Union's antitrust chief Margrethe Vestager.

"We are looking into that and we have been asking questions around in that market but of course also Apple themselves, for them to answer the allegations. And when they come back, we will know more," said Vestager, speaking on the sidelines of an economic conference, according to Reuters.

In March, Spotify announced it had filed an antitrust complaint against Apple with the European Commission over unfair App Store practices. Apple responded two days later, labeling the complaint as "misleading rhetoric" and arguing that "Spotify wants all the benefits of a free app without being free."

In a blog post, Spotify founder and CEO Daniel Ek took particular issue with Apple charging a 30 percent "tax" on App Store purchases. This results in Spotify charging existing subscribers $12.99 per month for its Premium plan via the App Store just to collect nearly the $9.99 per month it charges normally.

Apple also forbids developers from alerting users that they can sign up for a subscription or complete a purchase outside of an app, which would bypass Apple's commission on in-app purchases tied to digital goods.

Spotify later said "every monopolist will suggest they have done nothing wrong" and that Apple's response was "entirely in line" with its expectations.

Apple has faced increasing scrutiny as of late over the way it runs its App Store, beyond Spotify's complaint. In the United States, for example, the Supreme Court recently ruled that a class action lawsuit accusing Apple of operating an App Store monopoly can proceed to trial in a lower court.

Parental control app developers have also petitioned Apple to release a public API for its Screen Time feature to ensure a fair playing field on the App Store, while the Netherlands is investigating whether or not Apple favors its own apps.

In response, Apple added a new page to the App Store section of its website titled Principles and Practices, noting that the App Store was created with two goals: to be "a safe and trusted place for customers to discover and download apps" and "a great business opportunity for all developers."

Apple emphasized that the App Store "welcomes competition" and listed many examples of third-party apps that compete with its own apps, such as Spotify versus Apple Music and Google Maps versus Apple Maps.

We believe competition makes everything better and results in the best apps for our customers.

We also care about quality over quantity, and trust over transactions. That's why, even though other stores have more users and more app downloads, the App Store earns more money for developers. Our users trust Apple -- and that trust is critical to how we operate a fair, competitive store for developer app distribution.

The deadline for Apple's response to the European Commission is unclear.

Article Link: European Regulators Awaiting Response From Apple After Spotify Called the App Store a Monopoly

 

[MaxGravy]

It's a monappley!

 

[squizzler]

App Store got so big it has become a public domain.

 

[BvizioN]

Spotify - Stop whining!
And if I pay to use your service (which I do for now), I am your customer, not your fan.

 

[Marshall73]

Spotify is a monopoly.

 

[Number 41]

Apple isn't even a majority of the industry it operates in.

Try again, Spotify.

 

[Glideslope]

The EU has far larger issues than the App Store. They will wait, and wait, and wait.

 

[weup togo]

Apple knows it is in significant legal jeopardy. Within the next 18 months, you will see them start listing how many billions they have set aside to pay for any fines related to their business practices.

 

[Achillias]

Apple is going to get a hefty fine, Google got it, Microsoft got it. Apple will get it too.

 

[Appleman3546]

Apple: “we welcome competition”...but you have no other choice on how to distribute your app.
Apple: “we welcome competition”...if you pay our 30% cut so that we can still profit off of that competition
Apple: “we welcome competition”...but we don’t allow other app stores or browser downloads to compete with us

 

[code-m]

Wouldn’t Spotify be technically considered a Store that sells/subscribes music.

How is this any different to the iTunes/Music Store.

Not sure how Spotify is comparing themselves to the Apps store as they only sell music.

 

[Mac-lover3]

Apple: “we welcome competition”...but you have no other choice on how to distribute your app.
Apple: “we welcome competition”...if you pay our 30% cut so that we can still profit off of that competition
Apple: “we welcome competition”...but we don’t allow other app stores or browser downloads to compete with us

But Apple doesn't have a monopoly in the smartphone industry they don't even have 20% of the market worldwide which makes claims like these BS. Look at Android there you have 80% or so of the users but it's well known they generally pay WAY less. So Spotify is going after them.

 

[BootsWalking]

Here's the bottom line: If Apple's App Store is as good as Apple claims, including their assertions of value, security, and convenience, then let it stand on its own merit and allow consumers decide with their wallets rather than forbidding them from even considering alternative app distribution models.

I do agree having an app approval process does provide a good measure of quality control and protection for users so here's what I propose - have a voluntary app certification program where developers can submit their apps to Apple, which would then undergo the same process as current App Store approval but allow those certified apps to be signed as "Apple Certified" and distributed elsewhere. Apple could charge a significant premium for this service. This would allow developers to choose which economic model they want - for small developers it would make sense to avoid the certification fee and infrastructure costs by using the App Store, whereas larger developers could use the certification program and distribute apps on their own.

 

[code-m]

Apple: “we welcome competition”...but you have no other choice on how to distribute your app.
Apple: “we welcome competition”...if you pay our 30% cut so that we can still profit off of that competition
Apple: “we welcome competition”...but we don’t allow other app stores or browser downloads to compete with us

Apple takes no cut for free apps, in fact they encourage free. Now the subscription portion is a valid concern, however if Apple is conducting the financial processing, etc then it makes sense, however is Apple charging fair market value or above and beyond including operating costs.

If you purchase a subscription on Spotify’s website you bypass Apple and Spotify has to pay for payment processing. If the link on the Spotify apps directs a future customer to their website for payment processing, I do not see a problem with that, I believe Netflix was doing this as well. If Apple does not permit this redirecting for payment processing or purchasing of services, then yes I believe it could be a problem.

 

[JM]

So why doesn’t Spotify just pull their app from the AppStore? They obviously don’t think it’s a fair situation. They should create their own Spotify smartphone.

Don’t whine to the government to fix things for you. Be creative and competitive. It’s fair to remove the opportunity to subscribe through the Spotify app on iPhones. That makes people go to website to subscribe. What’s the big deal? Wahhhh.

 

[pratikindia]

Apple also forbids developers from alerting users that they can sign up for a subscription or complete a purchase outside of an app, which would bypass Apple's commission on in-app purchases tied to digital goods.

This is why it's a Monopoly. Spotify does not have option to distribute outside AppStore and can't put link to subscription inside application. Clearly, it's a Monopoly by Apple. Apple must be fined and stopped this practice.

 

[hasanahmad]

Apple: “we welcome competition”...but you have no other choice on how to distribute your app.
Apple: “we welcome competition”...if you pay our 30% cut so that we can still profit off of that competition
Apple: “we welcome competition”...but we don’t allow other app stores or browser downloads to compete with us

welcome to 2011. Spotify didnt b*tch when it started out and Apple App store was the most used app store in mobile Market

Spotify starts to b*tch when its position it gets into competition with Apple Muslim and Apple app store is the not the most used app store in mobile market anymore

 

[Jsameds]

Apple: “we welcome competition”...but you have no other choice on how to distribute your app.

Distribute it on Android, on MacOS, on Windows, on Linux or on Windows Mobile for a laugh.

Apple: “we welcome competition”...if you pay our 30% cut so that we can still profit off of that competition

They built and sustain the entire platform from end to end, hardware and software, in over 100 countries and languages worldwide. 30% to piggyback the platform is a bargain.

Apple: “we welcome competition”...but we don’t allow other app stores or browser downloads to compete with us

Last time I checked there are plenty of other App Stores and browsers that compete with Apple.

 

[truthertech]

If it is a monopoly, Apple must be the most incompetent monopoler in history as they have allowed Spotify to use the App store to grow so large that it is now, by far, the largest music streaming business in the world! In fact, Spotify dwarfs #2 Apple, having about 217 million users compared to Apple's reported about 60 million.

What's even more pathetic by Apple is that they have spent billions building and spend billions maintaining the App store and supporting ecosystem, only to allow Spotify to use the App Store for essentially free to have access to about a BILLION customers. Yep, that's right, Spotify, a company now worth close to 30 BILLION dollars is portrayed by much of the media as the underdog.

The media rarely reports the facts, but Spotify has to pay a commission to Apple for only a small fraction of its over 200 MILLION customers. Instead, Spotify takes in billions from ad revenue and keeps 100% of those dollars. Also, Spotify signs up many of its customers directly and again, Apple doesn't get a cent from those. Finally, for the small fraction of customers that Spotify has to pay Apple a commission for, the vast majority of those are 15%, not the 30% universally reported.

 

[pratikindia]

If the link on the Spotify apps directs a future customer to their website for payment processing, I do not see a problem with that, I believe Netflix was doing this as well. If Apple does not permit this redirecting for payment processing or purchasing of services, then yes I believe it could be a problem.

The problem is Apple forbids developers to put any link within the application. That's where it starts.

 

[alex2792]

You’re welcome to download alternative browsers, maps, calendar and email clients. Too bad they’re useless since there’s no way to actually set them as default.

 

[hasanahmad]

The problem is Apple forbids developers to put any link within the application. That's where it starts.

thats been since 2009. Why is it an issue now that App store is not even number one app store

 

[Madmic23]

Apple takes no cut for free apps, in fact they encourage free. Now the subscription portion is a valid concern, however if Apple is conducting the financial processing, etc then it makes sense, however is Apple charging fair market value or above and beyond including operating costs.

If you purchase a subscription on Spotify’s website you bypass Apple and Spotify has to pay for payment processing. If the link on the Spotify apps directs a future customer to their website for payment processing, I do not see a problem with that, I believe Netflix was doing this as well. If Apple does not permit this redirecting for payment processing or purchasing of services, then yes I believe it could be a problem.

I've always had the same position on this. If Apple is hosting the content, they deserve a 30% cut. But if the content is coming from someone else (like Spotify, Netflix, Kindle books, etc) Apple shouldn't get anywhere near 30%. Give them a small fee if the people pay using their iTunes account, but give them the option to pay the service directly.

 

[fmillion]

Whether you love or hate spotify, I'm glad to see someone challenging Apple's practices and at least bringing them to light so they can be looked into. Remaining complacent only allows companies to slowly but surely wrench more and more power from others. It's not even that Apple is automatically "evil" for this--every company has a desire to maximize profits--but we NEED other companies (and the public at large) to continue to challenge the practices of large companies; this is how we as a society decide what we're willing to tolerate.

Apple unfortunately has made some weak arguments in the past:

• claiming the App Store is exactly the same as a brick-and-mortar shopping mall (mall management collects rent, which could equate to Apple's $99/year program fee, but it is rare that a mall would collect a percentage of all sales, and especially not 30%)
• claiming that they "welcome competition" (no other company can offer similar services for the same price due to the Apple 30% tax and their strict language requirements in apps, and Apple offers no sideloading method)
• claiming that the App Store model is necessary for security (every company runs to this excuse when they're challenged to make their platforms more open; fact is, plenty of bad apps have made it through Apple's approval process)
• claiming that the 30% is necessary to cover hosting and payment processing costs (this one is debatable, but it's harder to accept that for large apps with millions of downloads; it's extremely hard to argue that Apple needs $1M to host a small app that is downloaded for 99 cents by 3M people, even if you consider payment processing fees and salary of reviewers)

I'm interested to see what Apple does respond. Chances are it's simply going to be some PR jumble claiming they're doing nothing wrong and then bragging about how awesome Apple is. I kind of wish companies at large would stop filling legal responses with what amounts to advertising; we need intelligent and intense discourse on these matters, free of unresolvable conflict of interest or "fanboy" behavior on either side, in order to make any real progress.

 

[hasanahmad]

You’re welcome to download alternative browsers, maps, calendar and email clients. Too bad they’re useless since there’s no way to actually set them as default.

here comes ios 13