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

[samcraig]

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.

If you keep insisting on ignoring the context of the original post and my reply - than I can't help you since I never said there weren't costs involved with maintaining the infrastructure. What I said was that it is not analogous to talk about product space in a physical environment vs a virtual one.

Perhaps you don't know how supermarkets (for example) work when it comes to shelf space, costs brands incur to be there and how smaller brands often can't get into supermarkets because the costs are too high. As an example - an App Store has infinite space. There is obviously competition on rankings/listing location.

So my point (again) was that you can not equate a physical store with a virtual one.

So keep trying to tell me I have no business sense. I not only have that - but I also know how to read and provide context. Something which you could learn a thing or two about instead of trying to prove me wrong by introducing straw man arguments or going on some side rant.

 

[BB8]

But hasn't Apple always rejected programs that use a system that circumvents in-app purchases?

Yes, and it has always been pretty messed up that they've gotten away with it.

 

[samcraig]

Do you even know what's wrong with Spotify? Do you mean Apple should bend their backs just to clear the mess Spotify create for themselves?

https://www.theguardian.com/technol...-financial-results-streaming-music-profitable

Sorry - I might have missed it - among your many rants against Spotify specifically. But have you answered my question as to why it makes a difference that Apple takes a % of a renewal or in-app purchase on some apps, but not on Seamless, Uber, Dominos, etc?

 

[mariusignorello]

Actually, Apple has paid $50 billion to App developers, per the last WWDC.

Oh I know, I was just pointing out that from that particular figure. Apple pays developers well.

 

[omihek]

Facepalm.

Spotify has every right to use that "shelf space" to advertise their product. They're trying to sell a service and turn a profit on that service. Due to the makeup of the mobile landscape, their only choice if they want their product to succeed is to have it on the App Store. There's no sideloading. There's no alternative shop. And unfortunately, due to Apple's 30% cut, they are unable to make the same kind of profit on one sale that Apple does with their similar service.

Now, I know that some of you will say, "Just don't sell on the App Store, then." Unfortunately, it's not that cut-and-dry. Mobile is huge, and there are few people that will take the time to get on a computer just so they can purchase an app subscription. If the option is not there on their phone, they just won't bother. Not to mention, removing themselves from one of the most popular mobile platforms is a very risky move--there's absolutely no guarantee that people would switch to Android for just one app.

Now, here's the thing that I don't understand--Spotify is trying to sell access to their service, not the app, so why should that be governed by Apple? I could understand if they were selling the actual app, but they are not.

Also, for those talking about Apple's 30% cut going towards overhead, what the hell is the $99 they charge for the Developer Program put towards, if not that?

Yes, they have every right, because they pay the developer fee and follow the policies of having their product on the "shelf space". When they decide to stop doing one of those things (either paying the fee or following the policy) then yes Apple has every right to step in and stop them from using their shelf space. If Spotify doesn't like the mobile landscape they shouldn't be in music streaming. I like eating candy but I don't like getting fat... so I don't eat candy. Poor me. And poor Spotify for choosing a certain business and having to deal with the hardships of being successful in that space.

 

[thisisnotmyname]

I wrote this in another thread yesterday, but I think it illustrates why what Apple is doing with Spotify is patently unfair and anti-competitive:

Imagine this:

• A landlord owns a strip mall and leases one store to a store owner that wants to sell widgets, where the store owner has to give the landlord 30% of all sales. The widget factory charges $1.
• Scenario 1: The store owner marks the widgets up to $2.50, where $0.75 (30%) goes to the landlord and $0.75 is net profit to the store owner.
  • This is fine.
• Scenario 2: The landlord opens up his own store right next door to the store owner and sells the same widgets for $1.75. The landlord still makes $0.75 from each widget sold.
  • This is now not fine. It is mathematically impossible for the store owner to compete with the landlord. If the landlord charges less than $1.43 for the widgets, the store owner cannot possibly make money under the circumstances.
  • It doesn't matter to the landlord if the store owner goes out of business. If either the store owner or the landlord make a widget sale, it's all the same to the landlord.
  • By acting as both a store and landlord, he has an unfair advantage. Typically, tenants of malls write language into their leases that prohibit the landlord from doing this. They can do this because there are thousands of commercial areas in the U.S. There are only 2 "digital" commercial areas of any value, and they don't negotiate. Instead, they offer unreasonable contracts of adhesion.

This is an overly simplistic view. We're not talking about physical stores and inventories here nor are we talking about a perfect uniform widget.

To indulge you though:

• tenant pays no rent to the property owner in this scenario if they make no sales directly from the property (Spotify is a free app with a free ad-supported tier in which case Spotify pays nothing to Apple)
• tenant can still leverage the "traffic" from the property owner's mall to promote its services (Spotify is able to reach its customers via the App Store even with the free app and free tier, placement in rankings becomes a source of lead generation for them without any fee per lead)
• tenant is able to sell widgets elsewhere and then have their customers bring them into the mall to enjoy without any charge (Spotify can still sell subscriptions to its service outside of IAP without any decrease in experience of the service)
• tenant had its widget factory subsidized by the property owner (Spotify was able to leverage Apple's development stack to create their app and the OS on which it runs)
• property owners cost to operate their own "rent free" store is equal to the rent they are charging the tenant so at a $0.75 profit they also had $0.75 in costs for facility upkeep and management effectively bringing their profit to $0 (Apple's App Store is a zero sum unit, the revenue brought in from App Store fees is equal to the costs Apple incurs in running App Store*).

Apple has not violated any laws and is not operating in an unethical manner. Sure, Spotify wants to be able to use Apple's distribution channel without paying for it, who wouldn't, they won't gain any (more**) ground here though.

Flip this around though, let's take a look at two direct scenarios though (directly, not using weak metaphors)

1) Apple drops all fees on subscription in app purchases. The next day every App becomes SaaS (software as a service). Now you can pay for my $1.99 Kardashian themed voter guide in 12 easy monthly installments and Apple doesn't see a dime from App Store (but still has to shoulder significant costs of infrastructure).
2) Apple allows redirects from App Store to external subscription pages. Again, everything goes SaaS with a simple link to purchase from the developer's web site. Again, Apple continues to incur all costs while losing the revenue stream that supports the process.

This wouldn't be universal, there would continue to be companies that do the right thing and sell their apps in the traditional method but there would likely be enough people trying to game the system to have a real impact on the viability of the App Store and none of us want App Store to die. The method Apple has suggested of dropping fees in year two and beyond is a good compromise. It prevents the scenarios above while recognizing that Apple's costs follow a sliding scale with time for subscription services. There are still costs in year two and beyond (any App that's going to hold a subscription audience is going to receive updates and still occupies storage, takes processing overhead, requires bandwidth for delivery, audits of updates, share of the costs of continued development of App Store platform etc...) but are likely disproportionate to perpetual license scenarios.

* In aggregate although I realize the sources of those costs and revenue are not evenly distributed. I also see Apple's revised year 2+ subscription model as being a response to those discrepancies.
** given that Apple has already dropped fees on subsequent years of subscription.

 

[bushido]

Facepalm.

You think the $99 developer program covers the cost for the infrastructure of the App Store??? There's also the infrastructure of the Apple Developer program that is completely separate, the main element of which is the swift development platform itself. I doubt the $99 even covers that.

what covers the "costs" on free apps then?

This is an overly simplistic view. We're not talking about physical stores and inventories here nor are we talking about a perfect uniform widget.

To indulge you though:

• tenant pays no rent to the property owner in this scenario if they make no sales directly from the property (Spotify is a free app with a free ad-supported tier in which case Spotify pays nothing to Apple)
• tenant can still leverage the "traffic" from the property owner's mall to promote its services (Spotify is able to reach its customers via the App Store even with the free app and free tier, placement in rankings becomes a source of lead generation for them without any fee per lead)
• tenant is able to sell widgets elsewhere and then have their customers bring them into the mall to enjoy without any charge (Spotify can still sell subscriptions to its service outside of IAP without any decrease in experience of the service)
• tenant had its widget factory subsidized by the property owner (Spotify was able to leverage Apple's development stack to create their app and the OS on which it runs)
• property owners cost to operate their own "rent free" store is equal to the rent they are charging the tenant so at a $0.75 profit they also had $0.75 in costs for facility upkeep and management effectively bringing their profit to $0 (Apple's App Store is a zero sum unit, the revenue brought in from App Store fees is equal to the costs Apple incurs in running App Store*).

Apple has not violated any laws and is not operating in an unethical manner. Sure, Spotify wants to be able to use Apple's distribution channel without paying for it, who wouldn't, they won't gain any (more**) ground here though.

Flip this around though, let's take a look at two direct scenarios though (directly, not using weak metaphors)

1) Apple drops all fees on subscription in app purchases. The next day every App becomes SaaS (software as a service). Now you can pay for my $1.99 Kardashian themed voter guide in 12 easy monthly installments and Apple doesn't see a dime from App Store (but still has to shoulder significant costs of infrastructure).
2) Apple allows redirects from App Store to external subscription pages. Again, everything goes SaaS with a simple link to purchase from the developer's web site. Again, Apple continues to incur all costs while losing the revenue stream that supports the process.

This wouldn't be universal, there would continue to be companies that do the right thing and sell their apps in the traditional method but there would likely be enough people trying to game the system to have a real impact on the viability of the App Store and none of us want App Store to die. The method Apple has suggested of dropping fees in year two and beyond is a good compromise. It prevents the scenarios above while recognizing that Apple's costs follow a sliding scale with time for subscription services. There are still costs in year two and beyond (any App that's going to hold a subscription audience is going to receive updates and still occupies storage, takes processing overhead, requires bandwidth for delivery, audits of updates, share of the costs of continued development of App Store platform etc...) but are likely disproportionate to perpetual license scenarios.

* In aggregate although I realize the sources of those costs and revenue are not evenly distributed. I also see Apple's revised year 2+ subscription model as being a response to those discrepancies.
** given that Apple has already dropped fees on subsequent years of subscription.

well thats not all what Spotify is asking for though. They just want to be able to sell it through iTunes as well as promote it on their own site through the App

Want to save money? Go straight to our site: click

 

[Muzzakus]

The end user experience is just getting better and better on IOS. I like standing on my head, rubbing my tummy while juggling balls to make a simple purchase.

 

[Gary03mw]

The bigger issue here is that I cannot sell my wares outside of the Apple store for Apple devices. This issue was literally unheard of (on a giant scale like this) until modern smart phones and gaming systems came to be.

There was a time when if you did this on PC or Mac (they still don't), the public outcry alone was enough to stop it. It will be interesting to see what, if anything, becomes of this.

Understandable, but I would make two points:

1. There are other platforms in Android and Windows phone.

2. I realize that Apple could theoretically allow other app stores, app downloads from the web, etc. The Apple App store doesn't have to be the only place we get our iPhone software. That said, as an Apple customer I actually believe in and pay for that closed off system. I want Apple to vet the software. This has largely gotten rid of junk and viruses in the mobile era. I'm glad that I have yet to download an app that sends my credit card to scammers in another country. I don't want to get into a debate about iOS being immune. I'm not saying that. I am saying that I appreciate the quality the App store has brought to the apps themselves and the discovery process.

 

[OldSchoolMacGuy]

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.

They've been closely examined. They're not anticompetitive and don't violate any laws.

Remember that Apple built this platform and is under zero obligation to allow anyone else to play in it. If they chose they could only allow partner companies to be part of the App Store. The choice it entirely theirs and they can run it how they choose.

People need to stop thinking of the iOS platform as some free and open thing like the internet. It's not. Just as Google, Microsoft, and others have rules for what can and can't be done on their own platforms, Apple has a right to make rules to ensure their platform remains appealing to their users. That's what the App Store rules are in place for and they do a great job. I saw this as a long time developer.

 

[Alenore]

Just because? Like being on hundreds of millions of devices, which is really one of the main reasons that makes spotify successful, is not a big thing? Ok then.

Would you find it fair if Windows took a 30% share on everything you bought while using a windows computer ?
No.

That'e what I thought.

 

[Thunderhawks]

Exactly. This is not how innovation and progress work. It would not be in the best interest of consumers for every company to develop its own phone and os so you could use their service. It would be like every every website having it own protocol or browser for you to use to access their site, every TV company designing their own video format, or every electronic company designing its own power plug.... obviously this argument can be taken to absurdum, which should be indication enough that it is ridiculous.

Exactly , and there are plenty of examples where that actually happened.
8-track vs. regular cassettes,
VHS vs Betamax and 8 mm
walkman vs cd players vs. iPod and (the iPod killed all other previous mp3 players coming in AFTER)

In the end the best solution for the consumer wins.
That is actually decided by the consumers as they buy what works for them.

 

[samcraig]

what covers the "costs" on free apps then?

I also stated earlier that it's also interesting that a bulk of free apps have in-app advertising, of which, Apple doesn't get a dime. I wonder if those arguing that Apple deserves money from all developers would argue that it would be OK if Apple denied access to outside ad servers and that developers could only use iAds.

 

[omihek]

Seriously. Stop talking. The more you talk, the less educated you look.

IIRC, many PC manufacturers like Dell did complain a while ago to Microsoft about the fee for Windows costing too much. As a result, Microsoft lowered the fee, and as far as I know, everyone has been happy ever since.

And this scenario is a bit different, as Microsoft is pretty much a software-driven company. Sure, they sell some Surfaces here, and a few Xboxes there, but a lot of their profit in the past has come from software, so they can't just simply hand it out to the OEMs for free (and the main reason why the free period for Windows 10 is ending soon).

I guess people who have a different opinion than you appear less educated. That's fine. I won't cry myself to sleep tonight if you think I'm uneducated.

Apple has addressed that; subscription fees lower to 15% after 1 year. Spotify still isn't happy, but in the end Apple gets to decide what Apple does. They didn't have to lower the fee to 15%, but they did. Good for them and good for all those subscription services about to make a lot more money because of it.

 

[BB8]

Can anyone in this thread please explain to me how prohibiting app developers from linking to their own subscription pages within their own applications is not the definition of anti competitive?

 

[Ries]

Imagine google buying a large area of cell phone towers, then demanding 30% profit share from handset makers while launching their own phone. Apple is free to setup their own towers right?

 

[vladi]

When we were talking about this on iPhone 3GS no one was taking it seriously. Customers were ok with this cause they got more apps and developers were embracing it like they are in the heavens. We said this before and we will say this again: Your app and your idea is only Apple's to steel and boot you out of THEIR game. It is their game and you are an idiot if you try to go and beat the Apple in it, they will come back at you with vengeance.

When we were talking about making that exact app on web, many were talking about number of downloads they have in app store not for a second thinking about integrity of their idea and implementation. Of course on-purpose crippled iOS Safari doesn't help either but there was a chance.

Developers had it in their hands to start switching to mobile web instead of apps but no, they were so star struck by BS of apps so they had to wait til 2016 to be like whooah about progressive web apps (which you have guessed it Apple has no intention to support).

If I was a Spotify I would make an app with a splash screen and a button that redirects you to web app until this matter resolves, simple as that.

 

[thisisnotmyname]

Really? What if Samsung said to Comcast "We want 30% of your subscription money to show your TV shows on our TV sets". Would you have the same opinion?

If they subscribed to Comcast through their Samsung set that would be fine. It would effectively be a fee for an affiliate marketer providing the lead and happens all the time.

 

[bushido]

Can anyone in this thread please explain to me how prohibiting app developers from linking to their own subscription pages within their own applications is not the definition of anti competitive?

Cuz no one one here reads and just jumps to the conclusion that Spotify doesn't want to pay any Money to Apple

It's more like

Here u can pay it easily and convenient using your iTunes account OR simply go straight to our site to take advantage of our current discount. I don't see how it's unreasonable at all

 

[waitandwait]

Sorry - I might have missed it - among your many rants against Spotify specifically. But have you answered my question as to why it makes a difference that Apple takes a % of a renewal or in-app purchase on some apps, but not on Seamless, Uber, Dominos, etc?

I have already answered but you cannot accept the answers because you are too idealistic.

As I say a million times, just don't use iPhones since you have so many rants against iphones in this thread and other threads, instead of wasting time arguing your idealistic points.

Those who disagree with Apple's policies, don't use Apple products. Simple.

Those developers who disagree with Apple's policies, don't update on Apple. Stop whining and expect others to cover your mess.

 

[samcraig]

I guess people who have a different opinion than you appear less educated. That's fine. I won't cry myself to sleep tonight if you think I'm uneducated.

Apple has addressed that; subscription fees lower to 15% after 1 year. Spotify still isn't happy, but in the end Apple gets to decide what Apple does. They didn't have to lower the fee to 15%, but they did. Good for them and good for all those subscription services about to make a lot more money because of it.

I think it's a slippery slope though when/if Apple can dictate what content is allowed in an app. I see no reason why Spotify or any developer can't promote alternative ways to pay for a subscription to their app WITHIN their app. I'm not advocating for a link.

Here's where it gets tricky. They won't allow that - but would allow in-app advertising, right? So, Spotify could target in-app ads that promoted a way to subscribe via the web. And those ads could be served in the spotify app, right?

It's really no different.
[doublepost=1467324328][/doublepost]

I have already answered but you cannot accept the answers because you are too idealistic.

As I say a million times, just don't use iPhones since you have so many rants against iphones in this thread and other threads, instead of wasting time arguing your idealistic points.

Those who disagree with Apple's policies, don't use Apple products. Simple.

Those developers who disagree with Apple's policies, don't update on Apple. Stop whining and expect others to cover your mess.

Sorry - what was your answer?

How is ordering a pizza different than an in-app purchase in a game? Or renewing a subscription?

 

[Thunderhawks]

They've been closely examined. They're not anticompetitive and don't violate any laws.

Remember that Apple built this platform and is under zero obligation to allow anyone else to play in it. If they chose they could only allow partner companies to be part of the App Store. The choice it entirely theirs and they can run it how they choose.

People need to stop thinking of the iOS platform as some free and open thing like the internet. It's not. Just as Google, Microsoft, and others have rules for what can and can't be done on their own platforms, Apple has a right to make rules to ensure their platform remains appealing to their users. That's what the App Store rules are in place for and they do a great job. I saw this as a long time developer.

Please don't use logic or experience here.
All the people who want to pee on Apple's cart, would never admit that if they developed a distribution channel from the ground up, they would do the same.

Uneducated estimates about what it costs to run that business and the entitlement of getting everything for free and now is classic behavior of those who like to spend other peoples money their way.

Clearly Apple has a right to decide how things are to happen in their store.
If somebody doesn't their rules, walk away and do things your way and see how far you get.

 

[omihek]

But IOS owners are forbidden from purchasing Spotify from Spotify's channels ... stick to the subject at hand. We don't care and it's not relevant to this debate that Android users can purchase directly from Spotify, this is an IOS, Apple store debate.

Actually iOS users aren't forbidden from purchasing from Spotify's channels. I can open Safari (or Chrome or Firefox or any number of non-Apple browsers) on my iPhone and go to Spotify's website and sign up for Spotify Premium right there from my iOS device, and Apple doesn't get any of that money.

 

[gotluck]

Understandable, but I would make two points:

1. There are other platforms in Android and Windows phone.

2. I realize that Apple could theoretically allow other app stores, app downloads from the web, etc. The Apple App store doesn't have to be the only place we get our iPhone software. That said, as an Apple customer I actually believe in and pay for that closed off system. I want Apple to vet the software. This has largely gotten rid of junk and viruses in the mobile era. I'm glad that I have yet to download an app that sends my credit card to scammers in another country. I don't want to get into a debate about iOS being immune. I'm not saying that. I am saying that I appreciate the quality the App store has brought to the apps themselves and the discovery process.

I can appreciate that very much. I hear you.

Do you really think all that will crumble down if we are given the ability to side load apps? There is an argument for security, but I feel the primary reason is money. Even if we could side load , I doubt most users would, it could be locked down via corporate policies, etc

 

[Serelus]

Are you saying it be ok if I owned a store for your or someone else to expect to use my store to sell your product or services? Should a retailer be forced to sell a product that it doesn't want to? Can Babies'R Us be forced to sell adult porn magazines?

If they already got the product from my store? sure. I am already paying you to have my product in your store. So what is the problem with me having a product in your store that let's people buy something outside your store once they got it from your store? I don't see the logic in this....