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

[crazy dave]

That is not "another store," and you know it. Both Microsoft and Google allow different installation methods and different stores, which Apple does not. I'm not arguing that they should, but if they aren't going to, then they need to provide an alternative or else they're going to continue to be in hot water with regulators around the world, and rightly so.

I'm tired of the big box retailer comparisons – this isn't a big box retailer and the situations are not the same. This is an online app store on a platform that doesn't allow other app stores, unlike every other platform that exists in this space.

So I agree with some of your points but Microsoft do not allow other digital stores on Xbox and do take a cut of every console software sale regardless of where it is sold through. And the new low end MS and Sony consoles are digital only (mostly to cut out the used market). Sony is being sued because it doesn’t allow people to buy gift cards at retailers. And Nintendo makes a profit on every console sold so the argument that walled gardens are okay as long as the hardware is initially sold as a loss leader is okay doesn’t work there either (never mind that consoles are eventually, over the course of their cycles, sold at profit).

Also Epic is suing Google too as they feel it is not good enough and many of the same regulators looking at Apple are looking at Google.

Basically people have to know they either want or don’t to allow walled gardens. This really isn’t about Apple which is why I find Spotify’s and Epic’s statements to the contrary lacking in honesty.

 

[laptech]

Apple with it's digital store has to understand that at some point they will be told to operate in very similar manner to that of brick and mortar stores. How many shopping malls do you know where the owner has told it's retail tenants that they can only use the malls own payment system if they want to operate in the mall? None because you know why? laws do not allow them too but yet digital stores such as Apple's app store and Googles Play store have so far avoided such laws. Not so now.

 

[alexandr]

yes it is.

 

[JippaLippa]

So don’t use platform.

Exactly.

 

[ineedanaccont]

How is this any different from selling a product on Amazon? Amazon takes a cut of every transaction...

 

[ender78]

Think about the App Store like a really nice shopping mall. Businesses pay rent, but they don't pay a percentage of their sales. Seems like Apple needs to offer some additional business models for in app purchase instead of taking 30% cut.

For example, someone downloads Spotify for free on the App Store. Spotify pays apple $1 for the download to a new potential paying customer to cover the hosting, financial transaction, app review, etc. If they subscribe to a monthly in app purchase, take 30% the first month, and then 30% once a year....

Retail leases can/do include clauses for the property owner being paid on a percentage of sales.

How Much Extra Will Your Store Pay in Percentage Rent?

Learn about percentage leases—common in retail malls—which require a tenant to pay a base rent plus a percentage based on monthly sales.

www.thebalancesmb.com

Percentage rent - Wikipedia

en.wikipedia.org

 

[now i see it]

It's funny to watch insanely wealthy companies squabbling over money like seagulls over a bag of chips

 

[crazy dave]

I'd argue that the value that those apps bring to the platform more than makes up for whatever hosting fees they lose. And if not, then they should be more upfront about it and charge more than $99/year. But I really don't think that's the issue – iOS with Facebook or Instagram or What's App, etc., is greatly diminished. Apple's getting plenty of value out of them.

I'd also bet that the majority of developers would stick with using Apple's payment processing anyway, simply because it's simple and damn near every iOS user has a credit card on file with Apple. Sure, they'd lose the big ones, but they're not even getting some of them as it is, like Netflix, Amazon, etc. I think the amount of antitrust pressure-relief it'd bring would be worth the loss of revenue.

And if Apple chose to look at it that way that’d be fine, but forced to ... hmmm ... maybe but I think Apple saying they can get a flat rate or charge a download fee if you want to link out and have people buy elsewhere is also fair. If it’s allowed at all.

 

[jdmachogg]

Spotifys issues with Apple

 

[DocMultimedia]

Spotify is gone? Apple destroyed them. Oh well. Guess there are no longer any options. Choose with spending - if one service is better than another you buy it.

 

[ender78]

Except Apple doesn’t take a cut of everything. If they deserve a cut because of the time and money they invest in iPhone/iOS then why doesn’t Uber have to pay them 30% of every transaction? Why does Apple allow reader apps which don’t require IAP?

Because the Uber provides a physical service. The app is just a transaction. Your logic would give Apple 30% of all purchases using Safari if I take it to the extreme.

 

[Program_Install]

I’m sick of Spotify and Epic. Don’t like it create your own platform, phone, tablet, whatever. No one is stopping you.

 

[cdarlington1]

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.

Lol. Apple Tax? Why should Spotify not have to pay to have their service on Apple’s platform. That’s ridiculous.

 

[ender78]

You have mixed everything… use Android and use different store. You don’t set the rules in BestBuy if you own the roads that are leading to the store!!!

Your analogy is flawed. Your municipality of state or federal gov owns the roads. Apple does not yet own the Internet.

Spotify is asking for its product to be displayed in the nice store that Best Buy built but pay NOTHING for that privilege.

 

[Karma*Police]

I guess Spotify's legal chief is too young to remember the Wintel days?

 

[ender78]

The problem with Spotify's argument, and where it really falls down is when you look at marketshare: Spotify has 138 million users, compared to Apple Music's 72 million. If Apple really has the ability to "strangle its competitors" as Gutierrez claims, they seem to be doing a really poor job of using that ability.

On top of that, Spotify pays between $0.0026 - $0.0049 per stream, whereas Apple is paying $0.0076. So not only does Spotify have some 66 million more users, but their costs are significantly lower. Some strangulation.

The simple fact of the matter is that Spotify and Epic just don't want to pay anything they don't have to – certainly nothing new – and will warp the facts around whatever narrative supports that goal. Unfortunately for them, though, they don't really have a leg to stand on.

Spotify has 138 Million PAYING subscribers [158 million as of Q1 2021] and 190 Million "FREE" subscribers who get their music through advertising sponsored means.

I have yet to see anyone propose in this thread how the playing field could be levelled. What if the consumer had the choice, I can pay $10 a month to either Apple of Spotify for my Spotify subscription. What if I don't want to give Spotify my CC # and want to manage all my subscriptions through Apple. Why can't that be my choice ?

 

[Unregistered 4U]

There’s always one person who comes up with this old chestnut. What do you want - 300 different phone systems?

Why not? What’s wrong with a gradient of choices around the world that yields a phone that EXACTLY right for you?

 

[RFNB]

There's a pattern I'm noticing here where companies who're offering a competing, albeit inferior product are upset because Apple has developed a platform that appeals to millions and then offers a superior product that works with their platform.

Wanting to use said platform to sell your product is OK but it's still not their platform. I struggle to understand the logic of how it's anti-competitive. There's nothing stopping Epic or Spotify or any other competitor, developing their own hardware and software platforms to compete with Apple.

This is what Microsoft, Samsung, LG, Google, Huawei, etc do, is it not? I'm no legal expert in any of this but in the end it just sounds like a company that wants to actually hurt competition by dismantling a major player in that game just to take home more profit.

 

[Patroclus]

Spotify is trying to capitalize on current movement other companies are trying to do. Claim that Apple has a monopoly with App Store and it uses unfair practices.
1. Spotify does not pay a cent (not does other companies) to all the hardware, network cost, maintenance, monitoring of the entire App Store infrastructure. We're talking probably 1000 of servers spread in data centers around the world avail 24/7.
2. Apple App store does not prevent Spotify to offer Spotify download form its own web site.
3. Spotify benefits from free marketing via App store. Some apps are usually place upfront by categories, boosting downloads. As one user mentioned in this post, he/she discovered Spotify via App store. ($0 marketing cost)
4. If there is one company competing with Apple it is spotify. Itunes was released in 2001. SPotify 2008. Did Apple complained about Spotify eating subscription away from Itunes?
5. There are many subscription services now (AWS, Tidal, ...) probably eating piece of the cake. So yeah, Spotify is in tough spot.

So I don't know why these companies are complaining when a service is provided based on a commission. 30% might look expensive but Spotify has nothing to do than just publish their app to App store. Updates are rolled over to all its user based automatically.
The entire Apple App ecosystem is based on App store, it had created millions of jobs, created so many startups and new software and now some greedy companies want what? Free App store no commission? Or should Apple App store operate at a loss for other companies to make few extra % on their balance sheet?

They should be thanking Apple for helping them grow their user base. You don't like Apple, go on Android only.
Spotify behavior is really refraining me from even trying their service (which I have before).
Apple Music has pretty good library, and SoundCloud gives me some additional music discovery.

 

[RavynArcadia]

Apple should either eliminate the 30% fee or withdraw all it's apps from the app store. Go Epic, go Spotify!

Or they could all just deal with the 30% like they do on non apple platforms.

 

[jcshas]

How does that help customers?

I'm not saying it does or doesn't help customers.

 

[RavynArcadia]

Okay I’ll ask. Why?

Anti apple butt hurt. That's all it is.

 

[ender78]

Spotify doesn’t want to pay. Plain and simple. They don’t want to pay Apple. They don’t want to pay their artists. And they probably don’t want to pay their employees well either. They want to steal the Apple user base and artist’s music for their profit (and they can’t even make one), then spit on Apple and the artists for the privilege of doing so. I see bankruptcy in their future. The cost of doing business is not equal to zero and they’d love for it to be.

Spotify made a gross profit of 548 Million in Q1 2021, I think they will be fine. Let's remember that they are both publicly traded companies. If Apples share went down to 0% on Spotify subscriptions, Spotify shareholders benefit, Apple shareholders loose, the customer still pays $10 a month.

 

[kingestkong]

I’m so confused by this whole debate over Apple, Spotify and epic. We (Spotify and epic) want to use your platform so we can make money but we don’t want to pay you anything for it. Am I missing something here?
If you don’t like it, go exclusively Android or start your own suite of products and your own app store

 

[ender78]

How does that help customers?

It's not about the customers . It's about the shareholders