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

[iSRS]

Do these same stores take a cut of the magazines you buy in their store that you subscribe to?

No, they also don't process the payment for my subscription and print the mailing label and apply the postage, either.

In other words, you example is exactly like my going to the App Store, getting the FREE Spotify App, then going to Spotify.com and subscribing there.

 

[w00master]

No, they also don't process the payment for my subscription and print the mailing label and apply the postage, either.

In other words, you example is exactly like my going to the App Store, getting the FREE Spotify App, then going to Spotify.com and subscribing there.

Fair point, but what if these bigger companies (Amazon/Spotify) decided to take on the cost subscription processing, why not make this as an offer? Also.. what about the second question? I don't see retailers preventing magazines to have their own subscription cards in the magazines that are sold there.

Why not Apple with their app store policy?

 

[[AUT] Thomas]

While the point is valid -the cut apple takes is quite huge-, Spotify is the last to complain. In the past they restricted themself to Facebook users (that are willing to login with their facebook credentials) -no alternative sign-up possibility. Now only 55% of their users are FB linked. That shows how stupid that move was. But we are not finished yet: Guess the percentage of Spotify users on mobile phones! About 50% acc. their own statistics. That said, most of these user likely use the Desktop Client as well. So how many of their userbase uses the App-Store as their primary means of payment? 10%, 20%?
Long story short: Now they are basically complaining about a competitor that could take a piece of their cake.
Ridiculous...

 

[ThaRuler]

This is proof Watch is a flop

 

[EricTheHalfBee]

Just scumbag Apple being scumbags again.

I just LOVE the fact this is supposedly causing so many people such butt hurt.

This is the most ridiculous pro-apple response regarding this dispute. Why people continue to repeat it is beyond me.

Because it's 100% true. Spotify won't release their subscription numbers by platform. You know why? Because iOS and the iPhone MADE Spotify what it is today with the majority of subscriptions coming from them. If iOS represented a tiny fraction of their subscription base, then there'd be no reason for Spotify to continually complain about Apple publicly. The reason they're complaining (and so many times over the last couple years) is because they make most of their money from iOS users.

 

[votdfak]

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?

iOS is nothing without developers. Just look at Windows Phone.

 

[toph2toast]

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.

There used to be flashlight apps you could pay for, then apple built it into the OS. Should those developers sue Apple for "freezing competitors out"?

 

[2457282]

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.

I used to believe that @Benjamin Frost was the most anti Apple poster on this site, but lately you have the lead.

Let's just say you run a business out of your garage selling boxes. I also sell boxes but need a place. I ask you to give me space in your garage so I can sell my boxes from there.

First it is pretty awesome of you to say I can store my competitive boxes in your garage. It would insanely awesome for you not to charge me. As a matter fact, please post your address here so we can all come and store our boxes at your place for free and then try to run you out of business.

 

[andy9l]

Most of the apps I have on my iOS devices were free. So should Apple not allow free apps in the App Store?

I don't follow. Of course they should, and do. That's the choice of the developer(s).

 

[4ubrey]

I like both of these companies, but seems as if Spotify doesn't get it.

It's like if Spotify were a store in a mall, it expects not to pay rent for the real estate? C'mon.

 

[Alenore]

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

You are wrong. The 30% cut when you buy the app is something normal. The 30% cut if you buy something in app is normal, too.
What isn't is forcing the developers to use their system and thus charge 30% of revenue they don't even furnish : what Apple does is just talking 30% for a service they don't even host, just because it's on the iPhone.
They should either allow developers to promote another way of paying (different infrastructures, so they don't have to rely on Apple's, and thus would totally make the 30% cut unjustified), either stop charging for what they don't provide.

To re-use your shop metaphor, this is : "I sell a DVD fitness program at Walmart, and Walmart refuses to sell my product if I don't give them 30% of every subscription I sell"
Even though the selling of subscription has nothing to do with selling the subscription.

 

[samcraig]

Do these retail stores get a revenue cut of the magazines bought in said store that you subscribe to?

Do they also not allow those subscription cards and offers in those magazines too?

I have no idea what you're asking or why you're asking me. What's your point exactly?

 

[EricTheHalfBee]

iOS is nothing without developers. Just look at Windows Phone.

Partially true. Developers wouldn't be making money without the worlds number one mobile platform available to them. To date Apple has paid $50 billion to developers. Google isn't even a close second.

 

[samcraig]

Disk space in a "virtual" world is not infinite, for the record.

Of course not - but it's also not remotely the same as retail space which was my point. Also - you can increase space far easier and cheaper "virtually" than you can physically.

 

[Soccertess]

Apple doesn't have any more innovation, so they need to squeeze the content providers to keep their revenue growth.

It makes up for the lack of apple watch sales.. remember.. the device that Tim said was going to be revolutionary and change our lives..

 

[TechGuy327]

Ease up there. I'm not saying what Apple doing is wrong. I only said it is painful business-wise for Spotify to pay $3 to their streaming music competitor every time they sell a subscription.

Why does Spotify even offer in app subscriptions? Remove the option to subscribe in the app than everyone has to go to their site and subscribe that way.
No paying Apple anything.

 

[Rogifan]

No, they also don't process the payment for my subscription and print the mailing label and apply the postage, either.

In other words, you example is exactly like my going to the App Store, getting the FREE Spotify App, then going to Spotify.com and subscribing there.

Why can't Apple allow subscription apps to redirect users to the browser to sign up for the service? Obviously they're not doing it because they want cut. But why should they deserve a cut? Apple doesn't host any Spotify content. Don't app developers have to pay an annual fee to be able to develop for the platform? Why does Apple deserve fees beyond that (other than what would be required to cover credit card processing)?

Why does Spotify even offer in app subscriptions? Remove the option to subscribe in the app than everyone has to go to their site and subscribe that way.
No paying Apple anything.

Apparently they did remove it and now Apple is holding up approval of their app update.

 

[h3nrch]

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.

Your response is somewhat myopic. Apple does offer all of this for free - since most apps in the App Store are free. Apple's 30% share is a fixed toll that has two benefits for Apple - A) revenue and B) a cost advantage on their own platform. Apple's historic hardware revenue focus indicates that the cost advantage (benefit B) gives Apple flexibility to innovate on their own platform without worrying about fair competition.

However, the global smartphone market is becoming saturated because most mid and premium smartphones are good enough. New hardware innovations are few and far between since the majority of component supply chains are consolidated to a few manufacturers. So Apple will hold fast to the 30% as it needs to prove that it is indeed becoming a services company with services revenue. Expect heavier emphasis on benefit A - recurring revenue and hardware financing - this fall.

 

[waitandwait]

Apple doesn't have any more innovation, so they need to squeeze the content providers to keep their revenue growth.

It makes up for the lack of apple watch sales.. remember.. the device that Tim said was going to be revolutionary and change our lives..

15m Apple Watch are sold (>50% of market share). Samsung at a distant 7m. Bad?

You can choose Android and your Spotify if you are so righteous

 

[ApfelKuchen]

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

Overall, a reasonable pro/con.

As to the shopping mall analogy... you'll find that many mall lease rates include a percentage cut of the store's retail revenue. Stores that generate poorer than expected revenue will get the boot.

I'll add one caveat to "Wearing Spotify hat" - Apple is a sales agent. It's completely consistent with conventional business practices for the sales agent to get a continuing commission on the customer relationship that they established (ask any insurance agent). Whether 30% in perpetuity is too much is worth arguing - the change to 15% after the first year is a concession in that regard, but long term, perhaps Apple may need to offer some sort of sliding scale based on the subscription rate.

But here's the thing. If Spotify is marking up its subscription rate to cover Apple's cut and a subscriber keeps paying that higher rate year in and year out, then that commission is fully paid for. If Apple's commission was reduced or eliminated after the first year, Spotify should also drop the renewal rate to its subscribers. If Spotify were to keep charging the higher rate... let's hope consumer advocates would be as vocal about that as they are about the current situation.

Regardless, as others have noted, the whole, "We have to increase our rate to cover Apple's commission" argument is ridiculous. The cost of commissions/retail markups is normally built into a manufacturer's suggested retail price (or a publication's subscription rate). If Spotify made the mistake of assuming they would only sell direct-to-consumer when setting the price for their service (and making their royalty deals with the artists), that's not Apple's problem.

 

[ScoobyMcDoo]

If the App store bothers you so much, the obvious answer would be to not buy an iPhone.

If Apple started restricting Mac software to app-store only, I would sell my Mac and buy something else.

My point is not to say "okay then bye" because I agree with some parts of what you say. But I don't think there's any basis for a lawsuit or some sort of prosecution here.

You are exactly getting my point. I have put up with this - well sort of - my company buys my iPhones. But if I need to go off and buy my own phone in the future, this policy is going to make me rethink buying Apple products. I can't be the only one right?

Also, I see your point in the last sentence, but in court that argument will not fly. It didn't for Microsoft and it won't for Apple. The only way I can see apple avoiding an anti-competitive lawsuit (if they continue with these policies) is to show that they don't have the majority marketshare.

 

[ginkobiloba]

Everytime Spotify open their mouth, they get hated a bit more. They are already the most hated streaming service by musicians and indie labels, and now they're working hard to get hated by their customers.

 

[Rogifan]

I don't follow. Of course they should, and do. That's the choice of the developer(s).

What does Apple have to do with the service Spotify provides? If Spotify wants to process its own credit card transactions why can't Apple make it easy for them to do so in-app (or redirect them to the browser to do so)?

 

[Armandodj]

There's nothing wrong with Apple. Spotify can charge users 6.99 if they want to compete with Apple Music at 9.99 or offer no free option just like Apple. They didn't.

Its the same as you put your goods at Walmart. You need to pay Walmart to cover its operational costs too.

Really $6.99 for Spotify and Apple Music is $9.99. Let me tell you something so far Apple Music suck, and they are getting greedy.

 

[mariusignorello]

The amount of people whining that is unfair is hilarious. This is business and ecommerce 101. Spotify is using Apple's storefront and payment gateway "In-App Purchases" to complete their transactions. Last time I checked, every payment processor charges a fee. Nothing special here.