Spotify CEO Daniel Ek Speaks Out on Dispute With Apple Over App Store Policies

[BigDO]

They are providing a platform and the most lucrative base of customers that exists. You feel like Apple should just give that away for free?

That logic could be applied (and was applied) before Apple had a competitive product. There is a very good reason why Spotify waited for AM to reach/overtake their own subscriber base before filing this suit. Also note that this is filed in the EU, where antitrust laws are enforced stringently.

 

[H3LL5P4WN]

How about "all of computing since forever?" You used to be able to easily build an application for a Mac or PC and distribute it on your own, and pay absolutely nothing to Apple or Microsoft. Now, with the creation of these walled gardens and app platforms, Microsoft and Apple (and others) are finding ways to extract money from consumers and developers for basically just inserting themselves as middle men.

I'll gladly take that middleman who also acts as the software equivalent to an ex-Navy Seal Team working as mall security.

 

[Martius]

I'm not fan of what has Apple done in recent years (with some exceptions), but they are making the platform and the also the rules of this platform. I understand that there are just two main platforms, so it's quite hard for other companies to abandon on of those platforms without a huge money loss, but I always thought that it's how capitalism works – business is business. Of course it would be fair to lower the revenue-share, however who is gonna force them?!

But what I actually don't understand is why Microsoft and Google had to pay fines in EU for promoting their own apps (IE, Chrome) but Apple never had to pay any fine, yet their business is build on such behavior. Could anyone explain it for me?

 

[Foggy82]

This is incredibly similar to what got Microsoft in trouble with IE back in the day. When you are the OS and by extension the platform, you are put in a special position where you have to play fair, even with your competitors. Apple is not playing fair, and Spotify is exactly right to complain about it. Compete on the service, don't compete on business leverage.

there's a huge difference:
Windows had 93% Market Share at the time of the IE trial,
iOS has now the 23% of the market.
Apple is very far from being in position to control the Smartphone market as much as MS was doing with the Desktops.

 

[polbit]

This is the same argument as some of the net neutrality discussions. If an ISP owns a streaming service, should they be able to charge other streaming services that use their pipe extra to make them noncompetitive? They would be using their market share in one market (Internet provider) to take an anti-competitive advantage in another market (streaming).

No, Apple should not be able to take advantage of its app store to crush their competition in other markets, like music streaming. Otherwise we are one step away from vertically-integrated mega-corps that will provide everything from hardware, to distribution, to content. Imagine your choice for phone, internet, music/video/general web streaming, etc. being reduced to Google or Apple, because there is no feasible financial way for others to compete.

 

[ravenstar]

No, the better analogy of this entire App Store situation is if you as a customer bought a Ford, and then you were only allowed to buy parts and service from a Ford dealer; or if you went to a third-party service center, they still had to pay Ford a 30% cut of their business. This is already illegal.

You're changing the argument. We're not talking about replacement parts or service. We're talking about fees for using a platform. It's not the same at all.

 

[cardfan]

People still defend Apple over the iBooks thing. Even today. Apple lost that soundly. What’s best for consumers is an edge Spotify has here. And a powerful one

 

[DNichter]

The 30% argument is not a strong argument for Spotify.

In reality the core of this debacle is that Apple is bullying competition on their public platform. The same thing happened with Microsoft back in 2000s.

There are laws against this, so it doesn't matter if Apple "owns" their platform.

I agree, but that is the reason they are taking this stance. They want to profit from Apple's platform, but they don't want to pay their fee. I don't see how Apple is bullying the competition though. Spotify doesn't have to use their platform at all if they don't want to and have a larger market share than Apple does. If Apple had 90+% share of the market back in the 2000's, I may agree with you, but they don't have anything close to that. iOS is the minority.
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That logic could be applied (and was applied) before Apple had a competitive product. There is a very good reason why Spotify waited for AM to reach/overtake their own subscriber base before filing this suit. Also note that this is filed in the EU, where antitrust laws are enforced stringently.

That's fine, it's not for me to decide if this is in violation of anti-trust laws. Apple will make their argument and likely win. Nobody is forcing Spotify to use their platform. If they want to profit from their platform, there is a fee. It's not that hard to understand. I am not seeing how this gives them any sort of competitive advantage in the market place. Spotify could offer in app purchases, accept the fee, and make it easier for their customers to buy their services if they wanted to.

 

[NachoSH]

I think the problem is the 30% is too high. Also not being able to direct customers to your site to see further subscriptions is a lame way for Apple to take advantage of that 30%.
Imagine if comcast/cox/insert your internet provider here wanted to charge you 30% more to use Netflix.

And in my line of work we have a similar fee but it's at MAX 15%, usually 6-8% however.

EDIT: Also ridiculous that spotify is not allowed on siri, apple tv. If I don't want apple music please allow alternatives.

That's not the comparison. Imagine comcast/cox/your internet provider can provide you with a Netflix subscription but charges +1$ to Netflix monthly because they got a new client for them.. Tons of new users can join Netflix because your provider lets you suscribe easily with one click billing you monthly without you having to provide credit card details.

 

[realtuner]

Daniel Ek is a liar along with a whiner. Hard to take anyone seriously who outright lies in their “examples”.

 

[Knight3]

If Apple charged everyone 30% and doesn't itself compete in music streaming, that's fine. Everyone is playing on the same field and by the same rules. The problem is Apple is using its market strength in app stores to advantage itself in the market of music streaming because it isn't subject to the same 30% fee and restrictions on advertising.

Just think about the math: Let's say a Content Owners charges $2.50 to anyone who wants to offer it for download, and both Apple and Competitor offer it to download. Apple sets the price at $3. If Competitor sets the price at $3, it has to pay Apple $1, and thus only gets $2. Thus, at the $3 price point, Competitor loses $0.50 per download AND Apple makes $1 for each of Competitor's downloads, and Apple makes $0.50 for each of Apple's downloads. Competitor can't price it higher than Apple, because they would lose customers.

I don't think you understand how a business operates. Expansion is the way to generate proper revenue and it's Economics 101. You see a an opportunity, you go for it. You don't dance around hoping for some miracles.
That being said, Spotify does raise some valid arguments about the high mark-up.
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They have billions, so where’s your argument now?

You think every billion dollar company should make concessions for others and lose revenue? I see the moral argument there but it's not how a business works.

 

[BigDO]

That's fine, it's not for me to decide if this is in violation of anti-trust laws. Apple will make their argument and likely win. Nobody is forcing Spotify to use their platform. If they want to profit from their platform, there is a fee. It's not that hard to understand. I am not seeing how this gives them any sort of competitive advantage in the market place. Spotify could offer in app purchases, accept the fee, and make it easier for their customers to buy their services if they wanted to.

That is fine indeed, apart from the fact that you clearly don't understand how antitrust law works, and thus mistakenly think that Apple will "likely win".

 

[Knight3]

The problem isn't necessarily that Apple charges a fee for their service. The problem is that they are using that fee in an anti-competitive manner. This is actually a similar complaint against amazon selling their own products now, and placing them first in search results. It's anti-competitive. Search for "HDMI Cable" on amazon. First you get folks who PAID amazon to be first, then you get amazon's own cables. You don't see an actual decent cable until page 2.

Now Amazon can't even market their own products on their own platform?

 

[an-other]

I'm not an expert on EU law.

• Apple sells 20-25% of the overall market of smart phones.
• There is no requirement to use an iPhone to access Spotify. Spotify can be accessed on so many platforms I'm not even sure how the iPhone alone could be considered a trade barrier.
• Apple has developed a loyal and desirable user base.
• Spotify has greatly benefited from being allowed access to this base. Spotify wants better terms. Amazon Prime Video negotiated better terms.
• It's hard for me to understand how the first two bullets mean this is a legal issue. I could be well wrong, but it doesn't pass the "it's the same as Microsoft" test.
• Apple owns iOS.
• There's a similar suit in the US, however I don't think it's Spotify behind it.

In broad terms I do think a manufacturer should have the right to set user agreements and conditions. The maths don't indicate Apple has the market share to claim any monopoly power nor can prevent new competition.

 

[BigDO]

People still defend Apple over the iBooks thing. Even today. Apple lost that soundly.

They settled, not lost, but the writing was on the wall, and that was in the US which has archaic anti-competitive laws at best.

 

[AZREOSpecialist]

Similar cases are making their way through US courts. It's just a matter of time before Apple will be required to play fair with everyone in the app store and drop its selective premium. Creating a platform and then being the gatekeeper for what apps are available on that platform and under what conditions, creates a special case and special set of responsibilities. Apple can fight it, obviously, but they will eventually lose.

Of course, Spotify (and others) could pass on that 30% fee to consumers. That would create an incentive to switch to Android. Maybe if more companies like Spotify just bit the bullet and upped their prices only in the Apple App Store, consumers might start seeing the light.

 

[ggibson913]

I don't understand this. So Spotify wants the ability to sell its services through the app store for the same $9.99 per month that Apple charges for its music services seems to be the major issue. It wants Apple to handle the transaction and cut them a check every month for its subscribers free of charge because they feel that it is unfair that subscribers have to find their web site to to be able to get that price? Perhaps if Spotify wanted to generate more revenue, they should eliminate their free tier like everyone else does. As far as not allowing them to point to the web page, when you sign up for the free tier you get an e-mail immediately from them telling you how to sign up for premium.

 

[macfacts]

The solution is simple. Spotify should develop their own OS and ecosystem of products to support their music service.

SpotPod, iSpot, SpotPad, HomeSpot, Spiri

Then they can save on commission fees and charge competitors whatever they want! Wouldn't that be fair?

"Hey Spiri, play my faves on my SpotPod!"

What if apple is breaking the law right now by doing all these restrictions? Should apple be punished?

Or should apple be allowed to do anything because you like them?

The solution is simple, apple should create their own county with any laws they want.

 

[i-John]

This is incredibly similar to what got Microsoft in trouble with IE back in the day. When you are the OS and by extension the platform, you are put in a special position where you have to play fair, even with your competitors. Apple is not playing fair, and Spotify is exactly right to complain about it. Compete on the service, don't compete on business leverage.

^This

 

[ggibson913]

The reality is that society needs to be pragmatic. Sure Apple made the platform, but they are also a multi-billion dollar corporation. They’re not farmer Brown trying to scrape pennies off of his land so he can feed his family.

Any app that is a competing service to something Apple offers should be charged a 0% fee by Apple to operate BY LAW, otherwise it is anti-competitive.

Spotify, Netflix, Kindle, etc.

Competition is what made America great, and smart regulation HELPS that and consumers, not hurts it.

Cry me a river over Apple’s lost profits, corporatists.

So because Apple is successful, they owe all the bandwith they host, server farms they store the apps on, Transaction processing to the world free? So how much money is a company allowed to accrue by your logic before all of its products are free?
[doublepost=1552585055][/doublepost]BTW I looked it up, Google play charges the exact 30% on in app purchases that Apple does. So the only real difference is that Apple doesn't allow Spotify to add a link to its web site to sign up for premium, they have to e-amil customers with that link instead.

 

[paul4339]

I don't understand this. So Spotify wants the ability to sell its services through the app store for the same $9.99 per month that Apple charges for its music services seems to be the major issue. It wants Apple to handle the transaction and cut them a check every month for its subscribers free of charge because they feel that it is unfair that subscribers have to find their web site to to be able to get that price? Perhaps if Spotify wanted to generate more revenue, they should eliminate their free tier like everyone else does. As far as not allowing them to point to the web page, when you sign up for the free tier you get an e-mail immediately from them telling you how to sign up for premium.

I dont' get it either...

"We are essentially faced with a "gag order" that prevents us from communicating with our own users about our service."

When I sign up for Spotify, I get emails telling me to sign up for premium on their web page.

 

[schmidm77]

Correct, Spotify customers don't belong to Apple, but their App Store does. Customers don't need to absorb the 30% cut, Spotify does by utilizing their App Store and it's highly lucrative base of customers that Apple has garnered. Spotify doesn't need to host their app in Apple's App Store if they don't want to.

Please enlighten me how Spotify is suppose to make their app available to iPhone users without the App Store; or why you believe that Apple is the reason why these potential customers exist, as if Apple is cultivating them like plants in a garden?

 

[ggibson913]

What if apple is breaking the law right now by doing all these restrictions? Should apple be punished?

Or should apple be allowed to do anything because you like them?

The solution is simple, apple should create their own county with any laws they want.

Then Google Play is breaking the same law, they charge the exact same 30% for digital in app purchases Apple does. That also means that if an Apple Music subscriber on Google play subscribes, Apple pays them 30%

 

[macfacts]

Pretty silly. Spotify wants to use Apple's platform and customer base, which they have worked hard to develop and cultivate for years, to make money. Yet, they don't want to pay Apple a cut for providing this platform and customer base? If you don't want to pay it, you don't have to, but don't expect to use their platform for free.

If Apple wants Spotify to pay to access iOS device customers base, then that means you are the product.

 

[Nramos33]

Read the story again. Spotify just wants to be able to tell their customers it is cheaper 2 sign up via the web page. Spotify doesn't want anything free.

No, they want to tell people to go elsewhere so Spotify can be more profitable. This is not about the consumer, it is about Spotify's profit margins.