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

[BvizioN]

Apple is not playing fair, and Spotify is exactly right to complain about it. Compete on the service, don't compete on business leverage.

Except that Spotify is not right! Apple has done great work to bring AppStore to where it is and I can only assume all this has not been achieved without a cost. Now, we have Spotify here who seem to think it can run a business on Apple's platform without any cost! Well, sorry but **** that! My store, my rules. If you don't like it, you can **** off and take it somewhere else.
I think that is the situation between Spotify drama and Apple right now.

 

[raghu8912]

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.

I Agree it is strange situation because Apple Music competes with Spotify, but sellers selling on Amazon have same issue where Amazon is competing with sellers with Amazon Basics products.

 

[Fender2112]

The issue doesn't end there, as Apple's App Store review guidelines prevent Spotify from letting users know that they can subscribe to Premium for $9.99 per month on the web or other platforms. The guidelines also prevent Spotify from advertising discounts and other promotions in its iOS app.

I don't streaming music. But assuming Spotify works like everything else. When you sign up, you give them an email address. Can Spotify not solicit through this channel like EVERYONE else does.

 

[Airstrip1Guy]

eBay, Etsy and Amazon take a cut of everything I sell on their platforms. Sure, I could sell my item without them, but I'd have to find the customers and handle the transactions myself...

Remind me what the cut is on those three platforms?

 

[mmikuta]

Really just wondering about those Apple Watch APIs and why we can't get a real Spotify client on the Apple Watch that can download playlists and stream over LTE. All the other apps that could do this have disappeared, Apollo, etc, although they couldn't do it well. Love / hate Apple sometimes.

 

[Merode]

yeah but when I signed up for Spotify, they sent me those exact e-mails. So unless that was stopped by Apple recently ...

Yeah, that is recent action.

 

[raghu8912]

I'm with Spotify on this. There should be no reason Apple should be taking 30% of Spotify's subscription fees. The same goes for any subscription service that isn't leveraging Apple's own developed apps. If Spotify wanted to charge a fee to buy their iOS client, Apple can get their cut. If Apple allowed Spotify to somehow allow customers to use Apple's Music app, Apple should get a cut. 30% is excessive and should be drastically reduced.

There should be no reason Apple should be taking 30% of Spotify's subscription fees.
Its business, Apple can charge what ever cut they think they can get, Apple is providing a market place for app developers, just like Amazon taking a cut on each sale.
If Apple doesn't take a cut in subscription then every app will be free and they will charge subscription for all games and apps.
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Apple owns half a duopoly on app stores. It is literally illegal for them to use their market power in the app store market to unfairly advantage a totally different market, music streaming subscription services. This isn't about app store rules, this is about Apple using their app store to unfairly advantage Apple Music over all other competitors in the music streaming subscription market.

One way to look at it would be if a customer shifts from Sporify to Apple Music, Apple is loosing 30% cut from Spotify from that customer.

 

[DNichter]

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".

Okay, enlighten me. What is the undisputed proof that they have violated antitrust laws?

 

[ArtOfWarfare]

What I'm hearing from Spotify is: "Apple did a lot of work creating this fantastic distribution platform and Apple did a lot of work creating a fantastic integration between their Store and their devices and Apple amassed a huge database of satisfied returning customers, but now WE want to benefit from all that for nothing."

That's not what Apple did though. There's already a fantastic way to distribute applications, you might have heard of it - it's called having a website. Apple didn't create an amazing store. Apple set up a mediocre store and disabled any means of obtaining apps except for via that store.

If Apple's stores were great, you know where people would get Mac applications from? They'd get them from the Mac Application Store. How many non-Apple Mac Applications have you installed? How many (non-Apple) apps did you get via that store?

 

[heov]

So when Apple decide to not allow porn apps in their store that is also an abuse of monopoly power that should be regulated?
Take your time with your answer....

Are you serious? Porn is an entirely regulated industry. Change your argument to banning cooking apps, then yes- they have a problem.

 

[DNichter]

Purchasers of the iphones have already paid for the platform and are the ones paying the apple tax in the app store or if don't want to pay it are blocked from full use of the platform they've paid for. Apple is cxxkblocking its customers too not just Spotify.

I am not sure what you are saying. Yes, if you buy an iOS device, it gives you access to the App Store platform.

 

[raghu8912]

But they don't offer a porn app. That's the big difference here. The fact Apple offers their own competing service is the crux of the issue. They are using their platform as leverage to get more of the customer's money without necessarily competing on the merits of the service. See also Apple Maps. The default map program is Apple Maps, even though it is nowhere near as good as Google Maps, and you can't change it. Apple isn't competing on the strength of its program/service, it is competing on platform lock-in, and that's wrong.

You have an option to delete Apple Maps from iOS.
Can I buy an android phone where I can delete all Google Apps ?

 

[rfahey79]

Girl Scout Cookies?

That would be akin to Spotify adding their own App Store to the device.

When a Girl Scout sets up their table with their awning, with their cookies, and using their scouts and their parents, payment system, etc. It's not the same as if the store stocked and sold the cookies.

Apple hosts the Spotify app on their servers. Apple's employees check the code to make sure the app isn't trying to steal your personal info while you're listening to music. Apple markets the app in the App Store. Apple handles the payments through iTunes. All Spotify does is provide the product.

 

[ddtmm]

... If you don't want to pay it, you don't have to, but don't expect to use their platform for free.

Umm, 88% of the apps on the App Store are free. How much of that $0 do you think Apple is getting? If it wasn't for all the developers adding apps - paid or not - the Apple Store would be nowhere.

 

[78Bandit]

Apple charges all subscription-based services a fee to operate within the App Store. Uber, Lyft, Amazon, ABnB...none of those are subscription services, so they'd be exempt from such an "Apple tax."

Notice that I said purchase a Kindle book. That is a one-time purchase, not a subscription. Apple would indeed charge the 30% fee on purchases of ebooks, MP3 albums, and movies regardless if they are part of a subscription or not; hence Amazon's decision to remove the ability to purchase any digital items through its app and instead replace it with a messages saying "This item is not available for purchase through this app".

The distinction isn't the subscription, its the content. Apple charges for content "consumed on the device" and paid through in-app payments which pretty much covers music, movies, books, newspapers, etc. Not coincidentally, all areas where Apple also has a direct presence in that market.

 

[DNichter]

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

If Spotify wants to profit off the Apple platform, they need to pay a fee. I am not sure why this is difficult for people to get.

 

[robbietop]

He is such a whiny bitch

 

[heov]

Apple is technically part of a duopoly in the phone OS space.

However, the App Store is not a "monopoly" in the sense that there is only one media-streaming choice. There are multiple. All of which are subject to the same rules regarding subscription services. Apple does not restrict your entry into the market. They require you to price your product in a way that accounts for your true cost of doing business -- which in this case, is the percentage Apple receives from your ongoing subscriptions acquired through the Apple App Store platform. Convenience costs money. If you can't make money with those cost constraints, you lose.

It should also be noted, Spotify informs potential new subs that they can save money by signing up for a subscription outside the App Store -- a process that Apple does not limit, nor takes a cut of. Problem solved.

But that's just it- Apple's pricing prohibits Spotify from competing... according to Spotify.

And the problem is Apple doesn't allow them to advertise their pricing outsode the store.

 

[DNichter]

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?

Some of these comments are getting ridiculous. I didn't say Spotify is supposed to make their app available to iPhone users without the App Store. I said they don't need to host their app on the App store, which they don't. If they don't agree with their policies and don't feel that the 30% cut benefits their company, then they don't need to have their app on iOS. Yes, Apple is the reason the App Store, iOS, and iOS customers exist - they created the platform.

 

[threesixty360]

Are you serious? Porn is an entirely regulated industry. Change your argument to banning cooking apps, then yes- they have a problem.

My point is that apple have all sorts of rules to do with content that other content stores may not have. You can’t force them to sell something they don’t wants or tell them what to charge for selling stuff on their platform.

And they don’t have a monopoly so I don’t see what Spotify can sue them for.

 

[oneMadRssn]

One way to look at it would be if a customer shifts from Sporify to Apple Music, Apple is loosing 30% cut from Spotify from that customer.

This is part of why EU law is so skeptical of single companies owning both the platform and competing on that platform. It's a no-lose situation, if your product sells, you win. If you're competitor's product sells, you win too.

 

[PlayUltimate]

Can't people just access Spotify on their phones via Safari? No middle man at all. No need to have an iOS app. Apple does not prevent that from occurring.

 

[DNichter]

Umm, 88% of the apps on the App Store are free. How much of that $0 do you think Apple is getting? If it wasn't for all the developers adding apps - paid or not - the Apple Store would be nowhere.

I am not sure what your point is. You are taking that one piece out of the context of the conversation. We are discussing in app purchases (Spotify premium, for example) through the App Store platform. If you want to profit off services by using the App Store platform, there is a fee. If you don't want to pay the fee for these paid services, you don't have to offer them, or offer your app at all.

 

[cualexander]

I think everyone is missing the point here. Spotify does not say "we don't want to pay Apple %30 cut" since they were already paying that for a long time.

When Apple Music was introduced, Apple matched the price with Spotify. However, Apple is not paying any %30 cut and can still make more profit than Spotify which charges you the same price. What Spotify says is "if I have to pay %30 cut so that I have to make the $9.99 deal $12.99 to create profitable business where Apple can still charge its users $9.99 and make a lot of profit".

That's exactly why senator who is a presidential candidate for 2020 wants to break Apple by splitting App Store from Apple's control. Apple is now a competitor in the market but it uses its platform advantage unfairly. Of course, Apple should charge Spotify with whatever cut they want. However, Apple should not restrict Spotify from directing users to its own platform where people can get the service for $9.99. They might restrict this to many applications since they have to earn money from App Store. However, Apple hits two birds with one stone on this one which is completely unfair. They are making profit from App Store with %30 cut and restricting any directions to Spotify's own platform. So that is one bird which is fine. However, it causes Spotify to lose money if Spotify does not increase the price. Apple still charges $9.99 and hits the second bird. Do not forget Apple can send push notifications for deals. Another solution may be forcing Apple to add the %30 tax on Apple Music as well by making the price $12.99. But this is not users want.

Owning a platform and having rules do not mean that they are completely fair. Then, companies may think that "okey, the platform is mine. So I can do whatever I want".

Advocating Apple on this one causes trouble to us, THE CUSTOMERS. Competition will be lost, and therefore the users. This is basic economy principle.

I will give an example, a political one but it will clarify these. Let's say there is a governor in a district. And, there is company X in an industry. The company X accepts the district rules, taxes and all. After a while, governor sets up a company (Y) in the industry where company X is also serving for years. What do you expect from the governor? To apply all the rules and taxes on his/her company Y. However, governor is not paying any taxes for company Y. So that, company X finds itself in an unfair market. I think you will get the idea.

Nothing is stopping Spotify from making their own phone and app marketplace. This is Apple’s platform, their App Store their rules. Don’t like it? Tough, create your own. Your example is trash because that’s government collusion to benefit in the market overall. Not the same thing.

Apple’s App Store is not a free market. Apple built it, runs it, maintains it, supports it, etc. They pay all the infrastructure fees. And when you say split it off, who do you propose pay for the App Store?

The App Store is like a shopping mall. Merchants lease space to be a part of the mall. If the mall developer has a store of their own, of course they would get a preferential deal on the lease payments of their own store because they own the mall. To say that couldn’t be done is ludicrous.

 

[Roger67]

The irony is that Spotify pay their artists an absolute pittance. Its virtually legalised piracy. So they've got a cheek to whinge about what Apple is up to..

Name any other retailer that allows a sold product to advertise that it is cheaper to buy it directly from the manufacturer. Not going to happen.

This whole thing sounds completely disingenuous. Spotify and Apple Music have been fighting it out for years and NOW the "Apple tax" is a problem. I would have given this more credibility if Spotify complained when Apple Music was first introduced. But Spotify had such a huge lead, I suspect they did not want to upset the money and market that the iPhone was providing. Now that Apple is catching up, it is unfair.

I suspect Spotify filed this complaint after having lost the fight to prevent royalties increasing by 44%.
https://www.macrumors.com/2019/03/07/music-streaming-songwriters-royalty-increase/

Apple didn't fight it which makes sense because it further squeezes other, smaller music streaming service companies. Watch them bleed and go out of business.