Spotify Accuses Apple of Using App Store Approval Process as a 'Weapon to Harm Competitors'

[omihek]

For those still on Spotify's side, here's an example of what they want to do. For the sake of the example let's say Spotify sells headphones in the Apple Stores. This would be like Spotify going into the Apple Store and removing all the Spotify products from the shelf and replacing them with a sign that said, "Looking for the SpotifearPods?! Head over to our website Spotify.com to purchase them there."

I wonder how long Apple would let the sign sit there before taking it down. Spotify is using precious App Store "shelf space", from which they are reaping ma$$ive benefit$. But Apple won't let them advertise a different store on Apple's shelf. Oh the horror.

Hey Spotify how about I host my music on your streaming service but you don't get any of that money? Sounds fair, right?

 

[BaldiMac]

So basically Spotify is subsiding all the free apps in the App Store?

Obviously. All paid apps are.

 

[truthertech]

As a consumer, explain to me please, why would I want to defend Apple here? Telling Spotify to withdraw the app? I'm sure it would be the same for Amazon Kindle then? Are some of you so blinded with Apple fanaticism?

I'm old enough to remember when IBM introduced the PS/2 computer line. With it, it introduced a new expansion card architecture called Micro Channel. It was much better technically than ISA, but it required computer makers to pay a royalty to IBM, vs the free nature of ISA. Well, guess what. That didn't go so well for IBM, and it was the moment when it lost the grip on the market. It had every right to create MC and charge others for it, just like the market had every right to react the way it did - create EISA.

I'm a consumer of Apple products. I care about their products. I don't give a rat's rear-end about Apple, just like Apple doesn't care about me, other than to take as much of my money as possible. I see nothing wrong with that, just the way things are. Difference now is, Apple is not in such a dominant position as it once was, and they are starting to play with fire. The choice of platforms for a growing number of people is now here.

Actually it has been here for many years. The vast majority of people have chosen the Android and Microsoft platforms. It has been good having you. but it looks like you will be joining those other platforms. Rumor has it they are doomed, so you are probably making good decision to get out know before they burn themselves down.

 

[mariusignorello]

According to Computerworld, Apple generated $20 billion in app store revenue in 2015 and kept about $6 billion of that. Smells like profit to me.

That's exactly 30%.

 

[Gary03mw]

But if you want to sell your products through a different channel than Ebay, YOU are allowed to do that. Any apps on IOS must be both approved and sold through Apple. I have an idea, let's encourage Ebay to first review and approve your diesel parts to be sold on their network before you are allowed to sell on Ebay ... how would you like them Apples.

Yes, I am allowed to sell through other channels (and I do). So can spotify (and they do). But I am not allowed to find customers on Ebay and redirect them out to those other channels. Apple is also not allowing this. This is perfectly understandable.

The products I sell on Ebay are approved by them. Images have to be a certain size for petes sake... If items I list aren't to their standards then they get removed.

 

[Glideslope]

Someone is getting nervous.

 

[calzon65]

For those still on Spotify's side, here's an example of what they want to do. For the sake of the example let's say Spotify sells headphones in the Apple Stores. This would be like Spotify going into the Apple Store and removing all the Spotify products from the shelf and replacing them with a sign that said, "Looking for the SpotifearPods?! Head over to our website Spotify.com to purchase them there."

I wonder how long Apple would let the sign sit there before taking it down. Spotify is using precious App Store "shelf space", from which they are reaping ma$$ive benefit$. But Apple won't let them advertise a different store on Apple's shelf. Oh the horror.

Hey Spotify how about I host my music on your streaming service but you don't get any of that money? Sounds fair, right?

You are not acknowledging that Apple refuses to allow anyone to sell or distribute any IOS app they don't approve, so the ONLY way to sell a product/service to an iPhone owner is to first get permission from Apple then sell through their so-called "store". This a lot more than an argument about shelf space, vendors don't have any other outlet to sell IOS apps because Apple forces all product/service sales through them. Vendors don't have a choice to choose a different "store" to sell through.

 

[gotluck]

It's because it's true. Apple pays for server space for the App Store, Apple pays developers to continue updating the operating system, Apple pays people to approve apps, and all of those services make the App Store possible. We're supposed to believe Apple should offer all of that for free so Spotify can make money, especially for a service which Apple itself directly competes? It's not a pro-Apple response, it's a pro-"how to run a business" response.

well apple doesnt let companies circumvent the app store, spotify has no choice other than to ignore ios or appease apple. microsoft wouldnt get away with this on windows

 

[mantan]

Spotify is being ridiculous...

I run a business that sells diesel parts. Ebay is one of many outlets that we use to sell these parts online. Ebay, like Apple, takes a cut of every sell we make. Ebay does not allow us to redirect customers to our personal website. And why should they allow that? Of course we could sell to customers a little cheaper through our direct website, but the point is that Ebay deserves the cut they take for doing what they do... which is connecting my business with millions of potential customers.

Spotify is no different than my business using a platform created by somebody else for their benefit. Not to mention that unlike spotify and Apple, my business doesn't directly compete with anything Ebay does. Spotify really needs to get a grip...

That's a one time sale. I think everybody understand and is comfortable with that. The issue is that Apple continues to take a monthly cut for a subscription when they are no longer involved in the transaction. It would be like you selling an item on eBay that required a monthly service fee...and eBay taking a cut. The App Store isn't involved in the purchase after the initial sale, so they shouldn't get a cut.

This is especially true when Apple offers a competing product.

I'm pro business. But I also agree with that competition should be fair. I think a lot of people cut Apple a break because they love their toys. People on here go crazy when AT&T or Verizon raise add a $5 fee - but will go to the mat for Apple to skim 30% on monthly sub fees.

 

[CWallace]

So basically Spotify is subsiding all the free apps in the App Store?

The real "subsidizers" are all the freemium games that make a big mint off in-app purchases (of which Apple then takes a small mint).

 

[Gary03mw]

Your example is not relevant.

Now what if Ebay was also in the business of selling diesel parts in direct competition with your business, but could consistently undercut you since they didn't charge themselves the overhead they charge you.

If Apple weren't a direct competitor in these markets it would be a slightly different story. But this is traditional monopoly behavior.

My example is perfectly relevant. Why on Earth would Ebay charge themselves the overhead when they own the platform? That sounds like they have created a durable competitive advantage and they have every right to use that advantage.

The question I pose to you is why you seem to think that my business is entitled to compete on equal footing with Ebay on their platform? Why am I entitled to the millions of customers they have captured for nothing?

 

[mariusignorello]

Terribly sorry, but your perspective is overly simplistic -- the kind of outlook held by college freshmen idealists that have read too much Ayn Rand.

Ah yes, the "i'm high on my academic horse so i'll just insult rather than provide value" card. Seriously? This is business. Something you don't seem to know much about.

Here's the deal: Apple is providing a service to Spotify which Spotify has agreed to pay for via revenue share. If they choose to not pay, they lose the service (App Store sales privileges).

 

[calzon65]

Yes, I am allowed to sell through other channels (and I do). So can spotify (and they do). But I am not allowed to find customers on Ebay and redirect them out to those other channels. Apple is also not allowing this. This is perfectly understandable.

The products I sell on Ebay are approved by them. Images have to be a certain size for petes sake... If items I list aren't to their standards then they get removed.

Don't try to cloud the issue by saying Spotify has other outlets to sell ... anyone who wants to sell products/service on IOS must get approval by Apple and then sell through Apple. We are talking about selling to iPhone/iPad users.

 

[jimbobb24]

This is an incredibly long thread that ultimately boils down to 2 diametrically opposed viewpoints that have existed for centuries without hope for a middle ground:

- If a company builds a successful model then it has earned any profits it pulls in, and there is no ethical reason to restrict any of its business practices since the invisible hand will correct, and competition will balance the scales

- If a company has established a monopoly-level control of a market then it has tremendous power to prevent any competition from gaining a foothold, and thus breaks the possibility of any future competition, so there must be balances in the system, possibly through regulation, to assure a level of competition continues to exist.

As utterly pro-Apple as I am, I am very much in the second camp, looking back historically to why monopoly trade laws were put in place in the first place.

But nothing I say will sway a fervent libertarian/objectivist, and vice versa. So the dance of politics continues to try to find some kind of compromise in our system of self-governance.

Well you ought say something that is not a straw man if you want to bridge the gap. I don't know what is a fervent libertarian or what about it makes it have opinions on monopolies but I lean toward freedom instead of government intervention in business matters.

There are few historical examples of actual real monopolies persisting over time. There are tons of situations where monopolies exist naturally and the government is always and appropriately involved, but even these sometimes don't persist. Even they are often disrupted by technology the best example being Sprint and ATT. The lawsuit from the government was still going on when ATT was shrinking because Sprint had found a way to do long distance without them.

Which gets to the next point. It's hard to define monopolies. Which successful model is a monopoly? Despite Steph Curry choking in a tragic fashion, he has a monopoly at being Steph Curry and no one is getting after him with regulations. Outside of natural monopolies they are very hard to define and very hard to prosecute and most "monopolies" get broken up over time by the market so it makes the whole effort wasteful.

Apple has a monopoly on the App Store but they have a monopoly on iPhones and iMacs. Google has a monopoly on Android. But then we say they are competitors And Apple is the smaller vendor. So in what sense do they have a monopoly power? Bring in the economists to argue and get paid consultant fees as we watch the spectacle.

I lean toward freedom in such situations but am very open to breaking up monopolies or interfering when they exist. Heck, one way to view the constitution is an attempt to break up the monopoly on state power held by governments. Monopolies are bad for everyone. We just are not very good at finding them and proposing useful solutions.

 

[noveneerhere]

It will in the long run backfire on Apple since companies won't put their app on iOS.

 

[mantan]

well apple doesnt let companies circumvent the app store, spotify has no choice other than to ignore ios or appease apple. microsoft wouldnt get away with this on windows

Makes me think back to the Internet Explorer Anti-trust issue and how it was argued that it was unfair to the competition for IE to be loaded on every OS. People bashed MS and that was on a FREE item.

I bet every big company in the world dreams of having the unconditional love that Apple gets from their fanbase.

 

[newyorkone]

Straw man - never said that. You're the one with business sense if you think you can compare a physical store with a virtual one. Yes - there are expenses with a virtual one. However the analogies being used when referring to space/etc in one vs the other is not analogous. If you don't understand that - then there's little hope in having a debate with you.
[doublepost=1467317855][/doublepost]

I gave an example. I can buy pizzas and order ubers and meals, etc through apps on the app store and Apple doesn't get a cent.

Yes, I am the one with business sense, and clearly you have none. Just because there are apps that do profit while Apple gets nothing, doesn't mean EVERYONE should get to do the same. And who said anything about space. I was referring to the real COST associated with maintaining the infrastructure.

The rules and structure are there so that Apple can pay for the service and infrastructure that they provide. If you don't like the rules and regulations as an app provider, then you are welcomed to leave. Clearly the structure works for most developers who don't whine and cry like a narcissistic baby expecting the world to revolve around them. If you don't understand that, then there is clearly no hope debating someone who lacks common sense.

 

[waitandwait]

It will in the long run backfire on Apple since companies won't put their app on iOS.

No worries they will. iPhone users are more willing to pay for an app or use in-app purchases.

 

[gotluck]

Makes me think back to the Internet Explorer Anti-trust issue and how it was argued that it was unfair to the competition for IE to be loaded on every OS. People bashed MS and that was on a FREE item.

I bet every big company in the world dreams of having the unconditional love that Apple gets from their fanbase.

it always comes back to apple getting a pass because they dont have majority market share... they are in the best possible position you could be in. The control they posess is really unmatched

 

[calzon65]

My example is perfectly relevant. Why on Earth would Ebay charge themselves the overhead when they own the platform? That sounds like they have created a durable competitive advantage and they have every right to use that advantage.

The question I pose to you is why you seem to think that my business is entitled to compete on equal footing with Ebay on their platform? Why am I entitled to the millions of customers they have captured for nothing?

OK then I guess by your logic, Microsoft should now demand that all software that runs on Windows must be approved by Microsoft then sold through Microsoft. Microsoft created the platform, they created the market, so I guess every company that makes software for Windows needs to bow down to Microsoft, get their permission to sell then pay Microsoft to sell onto the platform THEY created.

 

[nicmart]

You just don't get it. What Apple and the App Store provides to developers isn't just credit card processing. That's just the tip of the iceberg. Servers, bandwidth, man-power to maintain the infrastructure, curation, security, and provide customer service, etc., and countless other costs that I can't think of or imagine. All of that costs money.

You want Apple to provide all of that for just the typical % cut of a credit card transaction???

All that costs not much money, and Apple is making out like a bandit on the app store. Probably the customary 20-something percent profit.

 

[maxsix]

Apple runs parts of its business in a completely anticompetitive manner. Freezing competitors out is a case in point, so is an elaborate list of exotic approval rules. Those aspects need to be investigated and if supported by evidence, then prosecuted appropriately. Apple isn't above the law.

Well said.

If Apple has its way they'll own everything and the cult like Apple Devotees will be paying through the nose... Outrageous prices because they enabled Apple.

 

[Gary03mw]

Don't try to cloud the issue by saying Spotify has other outlets to sell ... anyone who wants to sell products/service on IOS must get approval by Apple and then sell through Apple. We are talking about selling to iPhone/iPad users.

I'm not clouding the issue. Plenty of people have gotten Spotify through the web and Android devices. When they get it through iOS, Apple deserves a cut because they have the platform that connected them to the customer.

Once again, this is no different than me selling on Ebay. I also sell through my websites and over the phone but when Ebay connects me to a customer they take a cut (and deservedly so).

 

[Ries]

If this was microsoft, you all be weaponised and screaming murder death kill.

Oh, you wan't another browser than edge? Well though luck, make your own OS or use linux.
MS must have a 30% cut on all applications running on windows?
Ohhh, look MS Music! iTunes is now banned.

 

[mantan]

Spotify rips off artists so bad it should be criminal - they can dish it out but they can't take it.

While I agree with Spotify (and other companies in the rare position of not needed the App Store to brand, but still having to pay 30%), I totally agree that Spotify doesn't pay artists a fair value. But is that a digital rights issue...do Pandora or Apple Music pay a significantly higher rate?