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

[Kirkster]

I guess Spotify missed out on the Elizabeth Warren quote of "you didn't build this"

 

[LordVic]

Its a very interesting argument, and there are good points and bad points from both camps.

Wearing the Apple Hat:
It costs time and money to develop and provide the App store and App distribution network. Its entirely reasonable to expect that paid apps help pay for this via a portion of their purchase price.

To use the Brick and Mortor storefront analogy into play: Apple is the shopping mall. if you want to run a store in the shopping mall, and use real-estate, you have to pay for that. In return, the Shopping mall takes care of the hydro of the building, access to and from, parking, etc, etc.


Wearing Spotify hat:
After initial App download, Apple isn't involved in the Spotify application or delivery of streaming music. Why should they continue to require 30% of each and every months subscription fee? Apple is not involved in the delivery of content. Its not their network or bandwitdh and its no longer using the App store. Why should Spotify be required to continued to pay 30% of every single user's months subscriptions? Especially since with 30% taken off the top by Apple, There is absolutely no way of staying competitive in the streaming industry when Apple's own music streaming service isn't subjected to a 30% and can afford the 9.99 pricepoint

 

[avanpelt]

I don't know why Spotify is throwing a fit now all of a sudden. The IAP cut going to Apple has remained unchanged since its inception. Apple is now, with iOS 10, throwing a bone to developers to take less of a cut on subscriptions after the first year.

I can appreciate that Spotify is trying to make enough noise to try to cause Apple to change the IAP system to be in their favor, I guess; but if they aren't successful, they just need to remove the IAP option from the Spotify app and call it a day.

I buy Kindle books on my iPhone/iPad a few times a year. Is it a pain to have to launch Safari and purchase a book that way? Yeah, but I do it because I prefer reading e-books on the Kindle platform. If anyone should be throwing a fit about IAP cuts, it's Amazon because their customers have to interact with the Amazon website every...single...time...they want to buy a digital download thanks to Amazon wanting to circumvent giving Apple a cut of IAP revenue. All Spotify has to do is tell people that they have to sign up via their website, the subscription will auto-renew, and the customer can go back to the Spotify app and sign in. How difficult is that?!

 

[BaldiMac]

Does Apple demand different terms from it's competitors in the App Store than it asks from apps that it doesn't compete with?

Seems like the answer is "No" to me.

 

[Batman89]

Would any of these apps like Spotify, Instagram, Snapchat even exist or be as widely used if not for the App Store and the iPhone?

 

[andy9l]

Using another company's platform to peddle your product/service will nearly always result in fees. That is not anti-competitive. That's business.

If it's not working for Spotify, their business model is flawed. This concept is not new, nor something Apple invented.

As far as I'm aware, no-one is stopping Spotify developing their own OS and devices.

One would hope that a young, agile company like Spotify could focus on improving their product and gaining market share the proper way, rather than complaining about a larger, slower corporate having more money.

 

[WiseAJ]

People still use Spotify?

 

[oneMadRssn]

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.

 

[Jeremy1026]

Let me sell in your shop but I will charge my customers somewhere else, is this what they are asking or I am wrong?

I'm willing to bet Spotify would be happy hosting their app themselves and having users bypass Apples servers to save Apple the bandwidth, if that would mean they could sell their product without giving away a cut. The problem here is that Apple doesn't allow side loading applications in any way that makes the process usable for end users.

 

[stevet]

This is crap. Without the iPhone, spotify is a fraction the size they are now. Apple is not causing them grave harm.... Apple made them rich. If they don't like the terms, go develop the SpotifyPhone.

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?

 

[FSMBP]

People still use Spotify?

Yeah, number one streaming music service...You should embrace competition, it benefits consumers.

 

[C DM]

People still use Spotify?

People still make these types of comments?

 

[pat500000]

Spotify and Apple merge into one...

 

[waitandwait]

Hmmm, a vp of Spotify has a pretty straight forward-pro Apple stance. Meanwhile over on the other side of the office........
Spotify's head of communications and public policy Jonathan Prince took the opportunity to lambaste Apple in a statement given to Recode.
"Apple has long used its control of iOS to squash competition in music, driving up the prices of its competitors, inappropriately forbidding us from telling our customers about lower prices, and giving itself unfair advantages across its platform through everything from the lock screen to Siri. You know there's something wrong when Apple makes more off a Spotify subscription than it does off an Apple Music subscription and doesn't share any of that with the music industry. They want to have their cake and eat everyone else's too."

HELLOOOOO!!!!!! Sounds like Spotify vp Jonathan Price needs to speak with Spotify's head of communications and public policy Jonathan Prince. They need to get their story straight.

Very true. Not as if Android makes its Voice search Spotify easily.

Spotify needs to wake up their idea and business model. They are making losses after losses every year because they allow everyone to use their app for free. They made that choice to sell free things, why complain about the App Store?

 

[mateytate]

People still use Spotify?

Is this a joke? I can't tell. They have 100m active users so yes, people still use it.

 

[stopthenonsense]

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.

Maybe Apple should stop doing all those services to check apps and it can be just like the Google Play store, laden with spyware.

 

[SMIDG3T]

Look, every app on the App Store has to abide by the same policy, if you don't follow the rules, you know where the door is.

Being on the App Store isn't a right.

 

[BaldiMac]

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.

Ha! That's not called an "unfair advantage". That's just called an "advantage". A company with lower overhead costs can charge less or be more profitable. That's basic, fair competition!

 

[MillieWales]

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.

Why? If Spotify provided a free service then Apple wouldn't charge - they don't charge for free apps. However Spotify want to put their product on their competitors device and go up against them and don't want to pay for it. Why is that anti-competitive? Apple isn't saying Spotify can't be on the store, or their apps can't run on their devices, or that they can't charge, just that if they do they will take a cut. It's not freezing them out at all, that would be saying "Your app is not welcome on our store".

I really don't understand how people don't get it, if you owned a business and a direct competitor wanted you to not only promote their business but cost you money through this promotion (I'm pretty sure hosting an app has a cost implication) you wouldn't be keen to say "oh sure yeah have the business, I'm happy for my customers to switch to you!".

Apple will probably lose because they are crying so loudly and the legal system love an underdog, but I really don't see what Apple is doing wrong.

Trust me of Apple blocked Spotify from iOS or didn't let them sell the apps then I would be saying it's disgusting and they should be stopped, but I'm pretty sure that's not what's happening. They are stopping Spotify from taking away the business they give Apple, and Spotify don't like it.

If people think Spotify are right then they must also agree that when you launch the Spotify app there is an advert for the Apple Music app that you can click to access.

 

[KALLT]

I believe that Apple is unreasonable. 30% is a very significant cut. I understand that Apple must finance the App Store too, but the flat 30% rate is neither fair nor justified to developers, particularly when they force developers to use this transaction mechanism, and it also punishes oblivious customers who are not aware of this and purchase in the App Store. The 15% reduction after a year is a pitiful compensation and only rubs developers’ noses in it further. It is a dickish policy and Apple should stop doing it.

 

[SMIDG3T]

Let's see how well you do when your app is removed from the store shall we? That'll shut them up.

 

[stevet]

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?

Your comment makes absolutely no sense.

 

[bozzykid]

People still use Spotify?

Yes. Many more than use Apple Music.

 

[Kaibelf]

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.

It's only "unfair" because you fail to account for the fact that the store owner didn't actually build the strip mall, provide parking, water, utilities, and signposts.

 

[sentiblue]

I really don't get it....

Did Spotify really think Apple should spend millions of dollars designing a platform so that its competitors can use to make money without sharing profits to Apple? Have they all lost their minds?