Spotify Executive Justifies Antitrust Pressure on Apple and Calls for Other App Store Payment Providers

[jamcgahey]

My suggestion would be to allow alternative payments within apps, BUT the app creators have to provide the apple pay option as well.

Personally I think Apple should be allowed to run their software/business how they seem fit to, but this solution would be a nice middle ground.

I loved Spotify, but this constant crying about unfair business practices when they dominate music streaming and have completely destroyed the podcast industry through buying up exclusives caused me to personally decide not to use them anymore. You're not a bad person if you choose to continue using them though so no angry replies please

 

[I7guy]

This line of reasoning is much better than what Epic is spouting. Spotify is arguing for different payment systems on the App Store whereas Epic is essentially arguing for multiple app stores.

However, since you can no longer subscribe to Spotify through an in-app purchase (and haven't been able to for years), Spotify isn't paying the 15% commission on most Spotify users on iOS.

Spotify just wants it to be easier to have more paying iOS users without having to pay Apple anything to use the ecosystem.

Sure. I believe that's fair. Let Apple grant Spotify easy access to it's 1 billion customers and not pay Apple a dime to take advantage of the ecosystem Apple built from scratch.

 

[SamuelW]

From a composer/musician’s point of view, the “bully” is Spotify, paying far less than Apple for distribution of music. Spotify is nothin’ but a record player in the sky.

 

[mazdamiata210]

If I buy a magazine at Walmart, take it home and then decide to subscribe to it no one would say Walmart should get a cut of that monthly/yearly subscription.

The point apple is making is saying that then you have idiots who try to fight to get a refund and when some random dev says **** off, it makes Apple look bad. This way Apple handles it all and has control over their "brand" and the customer experience.

 

[Stella]

apple didn't create this platform, the developers did. there would be no "there's an app for that" if it wasn't for the developers of these apps. all apple does is sit on their rear while money that these developers made get taxed. the tax should be no more than 5-10%

Apple created the platform, no question. However, developers made it a success.

The platform would be bland if it only consisted of Apple products.

 

[I7guy]

Hate Spotify all you want but he’s not wrong. Allow other payment options and then let Apple prove why 30% or 15% is justified.[...]

I don't hate spotify, I think their exec wrote a good op-ed piece.I don't think Apple has to justify anything. If they have to justify their margins every business on the face of the earth should have to justify theirs.

 

[Apple_Robert]

Too many CEO's now days love playing the victim, especially when the media is involved.

 

[AppliedMicro]

Apple does NOT have a monopoly in any pre-apple definition of the term. There are many alternatives, Android being the most obvious and even larger market share than iOS/Apple.

It's not a monopoly, it's just pretty much a duopoly.
Between the Apple App Store and the Google Play Store.
Other mobile app stores are hardly relevant in the market.

If I wanna move somewhere that has a home owners association fee and I don’t want to pay the fee to live there then DONT MOVE THERE lmao it’s pretty simple

There's dozens of thousands of home owner's associations.
It's not as if you could take your business to any other (relevant) app store.

Does Apple gain enough from Spotify to justify this hassle? Maybe it's time for Apple to flag Spotify as malicious company and ditch them from the platform and let Spotify do their business without Apple.

That'd be providing even more ammunition to Spotify's argument that Apple has an antitrust-relevant market power.

If these other companies don't like it, fine make the investment Apple did and create your own device, operating system, and ecosystem and before anyone suggests that these firms don't have Apple's deep pockets, neither did Apple at one time.

As if it were that easy. Maybe you missed the point, maybe you just chose to ignore it:

"The biggest cases in the history of antitrust enforcement in the U.S. had to do with companies that had built that infrastructure and then used the power that that control gave them to hurt competitors."

 

[crazy dave]

Except no one uses Apple’s IAP when buying digital goods or when buying via the browser. Do security and privacy not matter when you’re buying toilet paper via the Target app?

It’s not arbitrary. As someone else mentioned the digital goods that are forced to use IAP are for those goods consumed on the device.

Now I’m not necessarily against other payment systems .... But why just IAP? Why not download fees too? Why not other app stores on the iPhone? What about other devices such as consoles? The business models are no different and the store rules are often more onerous. You can’t just create a law or regulation that says only iPhones are not allowed to be walled gardens because ... reasons. Everyone else it’s okay 👍 go nuts. Further there needs to be recognition that changes to the App Store business model that you suggest in other posts could very well hurt smaller developers who rely on the low barrier to entry to reduce development risk. Now reducing the amount of apps to the store might not be worst thing in the world but you do have to consider that while the biggest companies definitely would benefit from these changes, the smaller ones wouldn’t necessarily. This isn’t a dealbreaker per se, sometimes it has to happen, but again, a change in business models won’t necessarily benefit *everyone*.

Now unlike some “defenders” here, I will agree that Spotify has a correct on several accounts. Apple may not be a monopoly but it is a duopoly and has market dominance which is enough in some jurisdictions to earn increased attention. Especially when Apple, by both controlling and competing on its platform, can’t help but win. But regulations and laws have to be written generalized and applied to when a company breaks them. So far it’s not clear what those laws should actually be and the ones proposed so far by Epic, Spotify, and the app alliance have been targeted specifically, too specifically to the point where they might not hold up in court even if passed and so far been defeated easily.

 

[gregmancuso]

It's not a monopoly, it's just pretty much a duopoly.
Between the Apple App Store and the Google Play Store.
Other mobile app stores are hardly relevant in the market.

There's dozens of thousands of home owner's associations.
It's not as if you could take your business to any other (relevant) app store.

That'd be providing even more ammunition to Spotify's argument that Apple has an antitrust-relevant market power.

As if it were that easy. Maybe you missed the point, maybe you just chose to ignore it:

"The biggest cases in the history of antitrust enforcement in the U.S. had to do with companies that had built that infrastructure and then used the power that that control gave them to hurt competitors."

It really would not be that hard. Spotify could fork Android and embed Spotify as the music app. They could OEM the hardware with a smaller producer. Does it make financial sense to do so? Probably not. But it into where near the uphill battle it was in 2007 to come to market with a new phone paradigm (model).

That is basically what Facebook was trying. The problem with Facebook is they wrapped the entire interface around their crap web site. Spotify could be viable as they only need to "customize" a small part.

 

[Rogifan]

Apple can *potentially allow third party payment system, so long as those payment system:
- follow the same rules and limitations
- 30% revenue goes to Apple

But I would still prefer paying through Apple so my credit info are not with multiple vendors.

What is the point of allowing 3rd party payments if 30% still has to go to Apple?

 

[Rogifan]

Sure. I believe that's fair. Let Apple grant Spotify easy access to it's 1 billion customers and not pay Apple a dime to take advantage of the ecosystem Apple built from scratch.

Uber has the same customer access as Spotify yet they don’t pay Apple anything. Are they taking advantage? How about all the other apps that are free?

 

[Rogifan]

The point apple is making is saying that then you have idiots who try to fight to get a refund and when some random dev says **** off, it makes Apple look bad. This way Apple handles it all and has control over their "brand" and the customer experience.

But there may be devs who want control of the customer experience. Not all devs are losers who don’t have their crap together and don’t know how to do customer service or payment processing.

 

[iSRS]

Spotify is telling it like it is especially the last quote. The Apple fan boys are going to lose it.

Are we just going to ignore the fact that he’s, at best, misleading, at worse, intentionally lying? The 30% was always there. In fact, going back eliminates the reduction to 15% after a year.

Serious question: is what he saying true, because I don’t remember it that way. I thought when the App Store launched, you had to use Apple’s payment. I know rules were created down the road to stop cross-promotion, but the fundamental was the same.

But maybe I have forgotten.

see above. The 30% was always there.

apple didn't create this platform, the developers did. there would be no "there's an app for that" if it wasn't for the developers of these apps. all apple does is sit on their rear while money that these developers made get taxed. the tax should be no more than 5-10%

Malls and shopping plazas charge rent based in part on sales. Those suggesting 5% is ignoring the fact that that Apple does incur costs for all apps.


Also, the Walmart/magazine analogy is not the same thing. Walmart has nothing to do with future issues of the magazine.
Apple never stops having costs associated to each app update, bandwidth for downloads, etc.

 

[Rogifan]

From a composer/musician’s point of view, the “bully” is Spotify, paying far less than Apple for distribution of music. Spotify is nothin’ but a record player in the sky.

Easy for Apple to pay more when they can subsidize Apple Music via hardware profits. But I guess the answer here would be then that Spotify needs to sell a $1000 phone.

 

[Rogifan]

Also, the Walmart/magazine analogy is not the same thing. Walmart has nothing to do with future issues of the magazine.
Apple never stops having costs associated to each app update, bandwidth for downloads, etc.

Sure then charge apps for that. And charge every app. Those costs still exist even if the app is “free” to then end consumer. What people here seem to want is Spotify subsidizing Instagram.

 

[bollman]

Apple and Google has successfully eliminated all competition in the mobile industry.
The only reason they don't try to eliminate each other is plain and simple: they would be regulated to tiny bits for sure.
Microsoft "invested" in Apple for many years just for the simple reason that if Apple went under, Microsoft would be in a world of regulatory hurt.

The only real solution to the situation is to break up both Google and Apple. Hardware business, software business, store business. Easy peasy and competition would be back online. You could get iOS on Samsung phones, Android on iPhones, Play store on iOS and App Store on Android.

Sounds horrible? Well then, Apple will have to give somewhere to make sure regulators don't see that as the only solution.

 

[Rogifan]

It’s not arbitrary. As someone else mentioned the digital goods that are forced to use IAP are for those goods consumed on the device.

Now I’m not necessarily against other payment systems .... But why just IAP? Why not download fees too? Why not other app stores on the iPhone? What about other devices such as consoles? The business models are no different and the store rules are often more onerous. You can’t just create a law or regulation that says only iPhones are not allowed to be walled gardens because ... reasons. Everyone else it’s okay 👍 go nuts. Further there needs to be recognition that changes to the App Store business model that you suggest in other posts could very well hurt smaller developers who rely on the low barrier to entry to reduce development risk. Now reducing the amount of apps to the store might not be worst thing in the world but you do have to consider that while the biggest companies definitely would benefit from these changes, the smaller ones wouldn’t necessarily. This isn’t a dealbreaker per se, sometimes it has to happen, but again, a change in business models won’t necessarily benefit *everyone*.

Now unlike some “defenders” here, I will agree that Spotify has a correct on several accounts. Apple may not be a monopoly but it is a duopoly and has market dominance which is enough in some jurisdictions to earn increased attention. Especially when Apple, by both controlling and competing on its platform, can’t help but win. But regulations and laws have to be written generalized and applied to when a company breaks them. So far it’s not clear what those laws should actually be and the ones proposed so far by Epic, Spotify, and the app alliance have been targeted specifically, too specifically to the point where they might not hold up in court even if passed and so far been defeated easily.

But not all digital goods consumed on device. I can’t buy Kindle books in-app. I can’t sign up for Spotify or Netflix in-app. And is Uber really a physical good? I’m not buying a car I’m buying a ride in one. Can one really say Apple is responsible for Spotify’s success but not Uber’s?

 

[squirrellydw]

Maybe Apple should just ban all third party music apps. Since they complete with Apple Music. Any paid app that competes with an Apple app can no longer be installed.

 

[gregmancuso]

Apple and Google has successfully eliminated all competition in the mobile industry.
The only reason they don't try to eliminate each other is plain and simple: they would be regulated to tiny bits for sure.
Microsoft "invested" in Apple for many years just for the simple reason that if Apple went under, Microsoft would be in a world of regulatory hurt.

The only real solution to the situation is to break up both Google and Apple. Hardware business, software business, store business. Easy peasy and competition would be back online. You could get iOS on Samsung phones, Android on iPhones, Play store on iOS and App Store on Android.

Sounds horrible? Well then, Apple will have to give somewhere to make sure regulators don't see that as the only solution.

Even if such a break up were to happen it would not work like that at all.

Even if you did end up with the following business:

1. Apple Hardware
2. Apple Software
3. Apple App Store
4. Google Software (Android)
5. Google Play Store
6. Google Other (all the rest of the stuff they do)

There is 0% chance of seeing iOS on any non-Apple Hardware phone. There is 0% chance of seeing Android on an iPhone. That would require licensing deals that will never be inked. No one can mandate a hardware manufacturer license a specific OS. Nor can they force the boot loader to be open to allow any OS. Also Apple Software would not be forced to license their OS to any competitor - just ask Psystar.

 

[I7guy]

Uber has the same customer access as Spotify yet they don’t pay Apple anything. Are they taking advantage? How about all the other apps that are free?

Apple's rules. Digital delivery of product for end-user vs physical delivery of product for end-user. I guess within that spectrum there are some nuances....but so be it.

 

[crazy dave]

But not all digital goods consumed on device. I can’t buy Kindle books in-app. I can’t sign up for Spotify or Netflix in-app. And is Uber really a physical good? I’m not buying a car I’m buying a ride in one. Can one really say Apple is responsible for Spotify’s success but not Uber’s?

Kindle books can be read and consumed in app. You can’t sign up for Spotify or Netflix in-app because they don’t want to pay Apple (and actually Netflix found subscribers through the app were more likely to cancel than web based subscribers! It was too convenient ... 🙃). It should be noted some walled gardens don’t allow cross wallet services or like Sony in the PlayStation demand developers pay them to enable cross wallets.

Uber and the like are providing a service which are by necessity outside of the phone - a car ride. Now let’s say Uber wanted to charge IAP for tracking your driver on the app, then Apple would say “give me my cut”. Apple’s position is that if you’re charging for a service that can be consumed on this device, they get a cut of that.

But overall Apple isn’t responsible for any of their successes. People arguing that are silly and I don’t find the “they should build their phone” terribly persuasive either. We can regulate markets and interactions between consumers, platforms, and competitors.

 

[threesixty360]

I feel like the Spotify lawyer is playing with the timeline of events to make it look like Apple just added the 30% in app payments to get at Spotify!
From what I remember the 30% came in as they introduced in app payments and was in line with the 30% they asked for in terms of app sales. The reason was that developers (mostly games) would make the games for free download and then collect fees via in-app purchases, basically avoiding paying for the 30% on the sale of the app.
Eventually so many games went to in-app purchase that they would end up getting nothing. More importantly, paid apps would not be able to support the free apps on the store. And it was that model that allowed dev's to "wet their feet" in the app world and create the large number of apps available for the platform.

Also, the anti-trust arguments to do with rail roads etc is rubbish as well. They are comparing transport, communication, energy etc... things that people generally need or aid society in some way, with a mostly personal entertainment device! I think Spotify inflate their importance to society and seek remedies normally only associated with issues that seriously effect society and importantly, the general consumer. This issue only effects Spotify share holders. If they wished to lower their costs to help the blessed consumer why not let their shareholders eat that cost!

The builder of a property will seek rent. Its that simple. If they price the rent higher than the market can bare they will not earn enough rent. You cannot penalise Apple for being successful unless their success came from illegal activity or unfair practise. But from where I see there are many companies that build platforms with proprietary components, from games consoles, to franchises (McDonald ice cream machines that can only be fixed by 1 company etc..).

The key thing is our society has the choice to buy them or not. Spotify are creating an argument for a world that doesn't actually exist. Capitalist society isn't how Spotify pretend it to be.

 

[Mr. Donahue]

I absolutely do not want other payment options in apps. I don’t want to give my payment info to every app under the sun and risk potential data leaks where my credit card number gets stolen. I trust Apple to keep my payment info secured

What?! Nobody is making you hand over anything. They want payment options. You have no option. I trust PayPal more than apple. Someone may trust visa more than MasterCard etc... people want options of method of payment rather than only having Apple who in turn charges % of the transaction. Imagine walking into an Apple store to buy the new Bose headphones with your credit card and Apple says sorry you can only buy from us if you have an Apple master card credit card. How disappointed would you be?

 

[arlomedia]

I signed up for Spotify outside of the App Store so there's no issues there. As far as "Subscription Apps" I would like to see that come to an end. I get it for streaming apps, but other than that it's BS. Some of these apps are insane with the subscription fees. Just charge a one time fee like the old days.

One problem is that Apple has never supported charging for version updates. So a developer can invest a huge amount into version 2.0, version 3.0 etc. but can't collect additional revenue for those releases. The basic App Store business model is "buy once, get free upgrades forever." This stopped adding up for me after a few years of app development, so I switched to subscriptions for apps that were undergoing constant new development and regular feature releases.

(Another problem is that with most apps syncing data across devices and sometimes between users, compared to "the old days" of most apps just reading and writing files on your hard drive, it's difficult to have everyone running different app versions. In this world, it's better to tie revenue to something other than version upgrades so there's no reason for people not to run the latest versions.)

Everyone wants Apple to have an alternative payment system in place, but why would you want to give your personal information to every developer that uses a different payment system? Most of these developers don’t store your information correctly as it is. Then, all of a sudden there’s a data breach. Most of the people that would be affected by this leak aren’t going to blame the developer, they’re going to blame Apple.

If someone blamed Apple for a data breach from a third-party payment system, they'd clearly be wrong. I don't think that hypothetical situation is a good argument against changing anything.

Who do you think paid for the marketing for the "There's an app for that"?

You make it sound like developers should be grateful for this publicity, but that campaign was promoting the iPhone, not third-party developers' apps. In fact, it's a great example of how important Apple thinks third-party apps are. Clearly developers need Apple and Apple needs developers, and the success of one grows the market for the other, but Apple's self-serving policies are really pushing the limits of that relationship.