Apple and Spotify. Spotify and Apple. It is time for another complaint in the EU about competition.
Spotify has filed a complaint that Apple is misusing its role as the distributor of iOS apps. On a site describing their position, Time to Play Fair, Spotify explains why things are where they are. Essentially, Spotify is frustrated with the changing terms of service in the App Store, the review process for app releases and updates, and access to iOS devices. According to Spotify, Apples’ decisions and how it enforced its terms of service was motivated by a desire to promote its own services over competitors and stifle competition on the iOS platform. This includes a direct competitor to Spotify, Apple Music.
Apple Music launched years after Spotify released its first iOS mobile app. Without having to share its revenue with a third party, Apple Music could be priced at the same price point as Spotify, who would have to share 30% with the iOS App Store curator, operator, and owner which is Apple. Spotify, forced by market forces had to launch an iOS app to go where the users are. Over the years, terms of service prohibited displaying alternative payment mechanisms within the app or promotions that could only be taken advantage of if the user subscribed. Apple also rejected efforts to produce compliant apps for the Apple Watch or the Home Pod home speaker. Siri, the iOS voice assistant also did not recognize or accept commands to play music or playlists associated with Spotify user accounts. Spotify also characterized the relationship with Apple as being full of contradictions and shifting positions. One minute Spotify was in compliance, and the next they were not.
Apple describes things a little bit differently. Apple is a for-profit company and they are just trying to monetize their platform responsibly. The App Store fees pay to maintain the service including the stability and quality of the curated selection of apps. Apple representatives also contend that they had tried to work with Spotify but they could not get a watch app done initially. As part of its side of the story, Spotify did actively pursue ways to circumnavigate the App Store guidelines and avoid paying 30% of revenue generated from iOS app payments by Spotify subscribers in the app. This may have contributed to app update denials and delays in availability of new features.
Both sides contend the other did not act in good faith or misrepresents the facts. Apple claims that it has facilitated 300 million plus downloads of the Spotify iOS app and that Spotify was trying to act like a free app when it arguably is not. However, Apple is not acknowledging that the presence of the Spotify app added value to the iOS ecosystem as stated in the Time to Play Fair info-gram. Without app developers and their ideas brought to life, the iOS ecosystem would not be the consumer choice that it is today. And by offering a competing service that undercuts Spotify, Apple is effectively monopolizing iOS users for itself because why would a consumer pay more for a service that it can get for less.
Due to the fact that this complaint was registered with the EU, Spotify should be favored to have a good shot at some kind of action by regulators. Apple has been under scrutiny for using how it allocates profits to perceived tax havens such as Ireland. Regulators have also found Apple to be making false claims of having 4G technology prior to the release of hardware supporting the new standard and forced Apple to either remove the offending advertisements or put stickers over them. In addition, other companies that originated in the U.S., such as Microsoft and Google, have had their own share of complaints that seem to be at least partially protectionist. The outcome is not clear and could possibly go either way.
