Spotify Legal Chief: 'Apple's Ability to Strangle its Competitors is Unprecedented'

[xyz01]

I would think many developers are quite happy with the iOS App Store. I think it’s only those big corporate types that think they are entitled to the iOS App Store without paying, crying monopoly to the authorities.

If you are a small developer, having Apple handle things like receiving credit card payments, paying local taxes, refunds etc is extremely helpful - you couldn't do it yourself.

If you are big company already having the infrastructure for doing this (Netflix, Spotify etc) paying 30% is 10 times their own cost - and when Apple has launched competitors in their markets, giving themselves a 30% cost advantage is a major thing.

 

[Abazigal]

You do realise it’s us that have the cost passed onto us, right? Spotify do use other platforms like Android so if they follow your advice and not offer a service on iOS, again it is is that lose out and are stuck with less options for music streaming. It seems completely counterproductive from a consumer point of view to not support lower costs for services IMO.

Well, if Spotify does ever decide to pull out of iOS, I suppose it’s a good thing that Apple has hedged their bets in the form of Apple Music. So in this regard, Spotify really doesn’t have much bargaining power in this relationship.

Epic was supposedly insanely popular as well, and Apple had no qualms kicking them out of the App Store and as it turns out, their user base barely batted an eyelid.

You have also made a very strong argument for Apple to have as many duplicate / competing services of their own, in case other companies try to hold Apple hostage. Like what Google tried with Maps, only to have Apple implement their own mapping solution.

As a consumer who is deeply entrenched in the Apple ecosystem, I care more about the continued vitality and viability of the App Store, than saving a dollar here or there.

That 30% goes a long way towards ensuring this, and I will argue that it is in our best interest as consumers that the App Store not be positioned as a loss leader.

Lastly, I doubt that any cost savings will be passed on to the consumer at any rate. I just renewed my subscription for Fantastical (meaning the developer is getting 85% of my money rather than 70%), and I am still paying the same amount. IAPs in games are priced to maximise revenue (them having zero marginal costs).

From what I can see, the cons far outweigh the pros.

 

[MacBH928]

I think the real problem here is that Apple has too much control, basically they "arrest, convict, sentence, and execute" . There is a reason why in politics there is separation of powers.

 

[quarkysg]

If you are a small developer, having Apple handle things like receiving credit card payments, paying local taxes, refunds etc is extremely helpful - you couldn't do it yourself.

If you are big company already having the infrastructure for doing this (Netflix, Spotify etc) paying 30% is 10 times their own cost - and when Apple has launched competitors in their markets, giving themselves a 30% cost advantage is a major thing.

Well, those big companies would have to innovate then wouldn’t they. Furthermore Apple allows them to charge subscriptions outside of iOS. They can spent the 30% on advertisement then. The problem is they expect to tap on the massive iOS user base for free (which Apple actually allows) and still want to get subscription within the iOS app also for free (which Apple forbids.) Them suing Apple, to me is purely greed, hiding behind the facade of fighting for the users or developer. For that, I side with Apple, because Apple has been consistent as far as I can tell.

 

[quarkysg]

I think the real problem here is that Apple has too much control, basically they "arrest, convict, sentence, and execute" . There is a reason why in politics there is separation of powers.

I think you are overly dramatic. Nobody is forced to participate in the iOS eco-system. Anybody can leave anytime.

 

[DeepIn2U]

These are rather problematic, not just Music, but also the other categories where Apple directly competes with others in the App Store, like Fitness and Video Streaming.

It's a difficult position to compete from if you have to give 30% revenue to your competitor to begin with.

Spotify KNEW they’d be competing with Apple before creating an app for iOS - ITunes anyone?!

the music app has always been on iOS so complaints bout competing is just whining; it’s a capitalist market.

regarding Guiterez’ math - he’s a fool. 70% of potential customers is a LOT better than nothing.

 

[Ethosik]

I can agree that apple has the right to its cut on payments done through App Store, but apple not allowing Spotify to direct people to its website seems shady

Its a slippery slope to allow something like that. Maybe if there weren't so many criminals or people taking advantage of stuff we would have some relaxed rules. I worked at some businesses before that blocked all streaming websites because people took advantage and was just watching YouTube all day instead of working. Yet it impacted my job finding guides/tutorials/content I needed. There was a piece of software I needed to support and there was an issue. On their own website, they didn't have a written guide, they had a YouTube video discussing how to resolve the issue. I was not allowed to watch it so I just had to do it on my phone.

 

[Ethosik]

I think you are overly dramatic. Nobody is forced to participate in the iOS eco-system. Anybody can leave anytime.

I agree. I am a developer. I am currently working on a pretty big game project. I don't recall anyone telling me I NEED to develop for iOS. In fact, my game would not be suited for iOS anyway.

 

[ipponrg]

Spotify KNEW they’d be competing with Apple before creating an app for iOS - ITunes anyone?!

If I recall, wasn’t iTunes originally a transactional service? I don’t remember it starting off to be a streaming service. If so, that is not a good comparison.

 

[Ethosik]

wah-wah-wah. Apple began getting into this digital Music business 20 years ago. They laid the groundwork like it or not for the modern streaming platforms and services, not to mention a platform for access to their apps and how to build their apps. which has also been replicated by other mobile OS developers on other platforms. While i despise these corporate conglomerates being the only choice, these other services are only making a single component of something that is dependent on someone else's proprietary services.

Why is this missed by so many pro-Spotify people? Music streaming is/was the natural evolution of the iPod and iTunes. Just like streaming video is the natural evolution of renting DVDs. I really don't understand the complaints here. Apple shouldn't have improved and gotten with the times to allow streaming music? They can't advertise their own stuff? And who cares if product A is less than product B. Have you been to a grocery store people? I can get the same product - lets say frozen pizza. There are cheap ones - literally $2. And there are expensive ones - $5 or more. I buy the most expensive one because the cheaper ones taste....cheap. No offense if you like the cheaper ones, its just not for me. I also buy expensive toothpaste. I never heard of companies complaining that their competitors are cheaper and its "unfair".

 

[Ethosik]

Normally I am in the "so don't use the platform" camp -- for example, with Epic. It gets dicier here though, because Apple competes directly in the streaming music space. The fact Spotify has to pay 30% to do in-app subs, and Apple Music does not because it's a 1P app, means Apple is leveraging it's platform ownership into a significant competitive advantage over all 3P apps. Pay to play for something like a game is fine in my view, because it's not like Apple has a competing version of Fortnight that's benefiting. In the music space it's different, because Apple Music has a huge advantage over 3P competitors in terms of being able to charge less to earn the same revenue, while still offering in-app subs.

If I were Apple's legal counsel, I'd strongly advise them to at the very least allow linkouts to the web for subscriptions where the app in question offers a service that competes with one Apple offers.

Spotify was founded in 2006. Apple has been in the iPod and music game longer than Spotify. Streaming music is just the natural evolution of how to listen to music in 2021.

 

[Drag'nGT]

I thought they were just being nice to their customers. I don’t need the lossless music because 99% the time I’m using Bluetooth but it’s nice that they gave it to customers who do want it.

 

[quarkysg]

Why is this missed by so many pro-Spotify people? Music streaming is/was the natural evolution of the iPod and iTunes. Just like streaming video is the natural evolution of renting DVDs. I really don't understand the complaints here. Apple shouldn't have improved and gotten with the times to allow streaming music? They can't advertise their own stuff? And who cares if product A is less than product B. Have you been to a grocery store people? I can get the same product - lets say frozen pizza. There are cheap ones - literally $2. And there are expensive ones - $5 or more. I buy the most expensive one because the cheaper ones taste....cheap. No offense if you like the cheaper ones, its just not for me. I also buy expensive toothpaste. I never heard of companies complaining that their competitors are cheaper and its "unfair".

To add on, if memory serves, it was iTunes Store that paves the way for DRM free music file download, which IMHO ultimately made it easier for streaming music service as we know it now.

 

[Ethosik]

This is what Steve Jobs said about the App Store in 2008:
View attachment 1776848
It’s obvious that Apple no longer needs 30% of digital purchases/subscriptions to cover the cost of running the App Store. It’s a profit center under Tim Cook. Hardware growth slowed and Tim Cook needed to find revenue growth somewhere. Now Wall Street expects services to keep growing. Also App Store under Phil Schiller is much more about the company believing it deserve a cut of someone else’s business because they created the platform. Except when that someone is big enough and might threaten to leave…then Apple creates a whole new app category for them so they can get around paying the 30%…even if it means a slightly worse experience for consumers (like not being able to buy books in the Kindle app). If Apple deserves 30% then does my ISP or cellular provider too? How much can you do on an iOS device without an internet connection? And how much would you pay for an iPhone if the only apps available were Apple’s first party apps? And if it really is about the cost of running the App Store aren’t there better ways of charging for that? The majority of the most downloaded iOS apps are free to download and if you can live with ads free to use. How much are Facebook and Google contributing to the cost of running the App Store when all their apps are “free”?

I GUARANTEE you, you are paying your ISP and they are still making a profit. What is this argument about, Apple should not be making a profit? Every company in existence exists to make profits.

 

[macsimcon]

"Apple's Ability to Strangle its Competitors is Unprecedented"​

Unprecedented: never done or known before.

Really?

AT&T? U.S. Steel? Microsoft? Google? Facebook? This guy is obviously a moron.

And Apple doesn't even have monopoly control over the smartphone software market, Google does. Apple controls a portion of that market, and wants to enforce their own conditions. If customers and companies don't like it, they can use Android...and most of them do.

 

[ggibson913]

If Spotify is being strangled because its subscribers have to go to www.spotify.com to subscribe, they have bigger problems than Apple. Seriously, I get them not wanting to pay the 15% or 30% but have they lost a single subscriber because a user wasn't capable of going to their website and subscribing? I should think that those who aren't tech savy enough to go to Spotify.com to register likely don't subscribe to music streaming services.

So companies like Spotify and Fortnight believe that it is Apple's obligation to provide them access to the app store for free? That apple should have to eat the cost of running their data centers and hosting thier apps? That Apple has an obligation to them to ensure that their business is profitable?

 

[quarkysg]

If customers and companies don't like it, they can use Android...and most of them do.

True, but it is a generally accepted fact that iOS users are more willing to spend, for whatever reasons.

 

[The-Real-Deal82]

You do know that Spotify can charge whatever subscription cost they like for their users and that they are not forced to use the iOS IAP API for subscription right? Apple's rules is that if the subscription is done via the iOS app, it must be done via the IAP API. Otherwise Spotify can get the users to subscribe and pay thru. Spotify's website, just like what Netflix is doing.

Spotify has a choice.

Spotify can then spend the 30/15% cut to advertise this to their iOS customers. I think this is fair. I don't see why any government has an issue with this unless it is a cash grab opportunity for them.

They have a choice but are also a business with margins that need to be maintained. Sure they could make less of a profit or break even, but 30% is a very high commission in the first place. I can’t imagine Apple allowing them to go down the Netflix route as Netflix started out as a website subscription before branching out to mobile devices. Apple would no doubt make it difficult to Spotify to cut the commission rate already being extorted I would imagine.

 

[quarkysg]

They have a choice but are also a business with margins that need to be maintained. Sure they could make less of a profit or break even, but 30% is a very high commission in the first place. I can’t imagine Apple allowing them to go down the Netflix route as Netflix started out as a website subscription before branching out to mobile devices. Apple would no doubt make it difficult to Spotify to cut the commission rate already being extorted I would imagine.

This is the first time I've read that Apple only allows Netflix to do what it does, i.e. have users subscribed externally instead of via IAP.

AFAIK, everyone with a subscription service in the iOS eco-system can do what Netflix does. The only restriction is that the app cannot advertise that they can subscribe externally. The developer has to advertise this fact outside of the iOS eco-system.

If this is indeed true, then Apple is not playing fair and Spotify will win. Somehow I doubt it.

 

[scottjl]

I can agree that apple has the right to its cut on payments done through App Store, but apple not allowing Spotify to direct people to its website seems shady

Honestly before all this I had no idea that companies weren’t able to advertise or at least advise customers to sign up for services on their site to circumvent the Apple tax.
Seems like a lose-lose for both consumer and the company providing the service.

And Apple's response to this was, they aren't allowed to go into a Verizon/T-Mobile/AT&T store and post a sign that says "you can buy your iPhone from an Apple store cheaper."

Just as Costco can't go put up a sign in Best Buy and say "You can buy this same TV for $50 cheaper at our warehouse." This practice has long been prohibited in the physical world, no reason it should be allowed on-line.

 

[The-Real-Deal82]

This is the first time I've read that Apple only allows Netflix to do what it does, i.e. have users subscribed externally instead of via IAP.

AFAIK, everyone with a subscription service in the iOS eco-system can do what Netflix does. The only restriction is that the app cannot advertise that they can subscribe externally. The developer has to advertise this fact outside of the iOS eco-system.

If this is indeed true, then Apple is not playing fair and Spotify will win. Somehow I doubt it.

It sounds such a simple fix for such an expensive legal tangle between the two.

The problem with comparing Spotify to Netflix is they operate very differently. Netflix operates on contracts that are fixed whereas Spotify has to pay artists every time a song is streamed through their service which haemorrhages money. They operate at a very low profit but are continuing to grow their catalogue whereas Netflix control their content by reducing it when licensing runs out. Spotify can’t afford to walk away from Apple even if they are being screwed for 30% of each user subscription on iOS. Netflix are also able to make more money via their Original programs like Stranger Things that have a huge merchandise business. Spotify don’t have any original content and effectively share access to other peoples material and are totally at the mercy of record companies.

Apple could drive them out of business eventually and that will only help their own music streaming business, hence why its being recognised as stifling its competition.

 

[skitidetdu]

Typo...meant Spottyphone

 

[JippaLippa]

It’s not as popular in my part of the world yet and I don’t yet know anybody who subscribes to it. I use Amazon music myself and have never found a song I want that isn’t on there but most I know use Spotify.

The fact I strongly prefer Apple music doesn't mean it's more popular.
I too know only people who use spotify.

 

[Tailpike1153]

Are you actually hearing yourself?

I think you are overly dramatic. Nobody is forced to participate in the iOS eco-system. Anybody can leave anytime.

Me (several years ago): iPhone more like iToy. There is no way I'm paying for that thing.

Apple: We're sorry you feel that way. But you'll reconsider.

Me" Not a chance. Hey what are you doing with my TNT video card.

Apple (breaks card over knee): Why nothing. You said you'd never buy our products.

Me. What are you doing with those dimms?

Apple (snapping dimm): Absolutely.

Me: Ahhhh!!! No, please. Please don't...

Apple: Nothing. (Snapping 4 dimms of Crucial Ballistix)

Me: Alright. Alright. I'll buy an iPhone.

Apple: And other products.

Me: (sniff, sniff): Yessss!


That's how Apple got me the 4th time.

 

[thekeyring]

What does Spotify want the rules to be? No transaction fee? It seems like Apple will always have an advantage owning the platform because they can build their services into the system.

Otherwise, doesn't every notification centre app for Android have a case against Google for bundling Google's notification centre as the default one, and not letting users choose?