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In a new escalation to a fight that's been going on for years, Spotify this week asked the European Commission to investigate Apple's App Store practices. Specifically, the streaming service takes issue with a number of practices that give Apple an unfair advantage with Apple Music.
On a site called "Time to Play Fair," Spotify laid out a fairly compelling case for why Apple is abusing a monopoly position:
- Apple requires a fee of 30% from developers if using in-app purchases
- Apple blocks developers from using third-party payment processors, or even mentioning other ways to pay online
- Apple slows (or blocks) the development of features that would enable competing music apps on its platforms like Siri and HomePod
- Apple applies rules on developers, then doesn't follow them itself
Given how competitive the music space is, the Spotify argument is a good one: we all benefit from fair competition, and Apple's practices do appear to harm consumers by limiting choice in a number of ways.
In particular, there's a pricing problem for Spotify because while it would need to pay 30% of its subscription fees to Apple, the same would not apply to Apple Music. If Apple were to lower prices of its service to $5.99, Spotify could not compete in a fair way: it would only make $4.20 while Apple would take the entire amount (and benefit from each Spotify subscriber as well).
Apple's reaction was... interesting. It struck out at many of the company's claims in an open letter of its own. What was surprising to me was that Apple argued its own side but didn't really provide any actual answers. Instead, it dodged the point or tried to redirect the blame. I wrote a paragraph-by-paragraph piece for subscribers (unlocked), breaking down why the Apple argument doesn't have any bite or even glosses over recent history.
It's worth noting that Spotify isn't exactly a darling of the industry itself: it finds itself inviting the ire of artists on a regular basis, and is accused of underpaying them. That may be true, but what's important is to separate that issue from this one: regardless of Spotify's history there, anti-competitive behavior hurts everyone, from developers to consumers and even those same artists, because it's forced to compete on an uneven playing field.
Spotify's argument is fairly simple: 30% is a huge cut for developers, which have little choice in the matter, and it becomes a problem when Apple is competing with services in its own store. It's also miles away from what modern payment processors charge, around 1-3%, depending on the network—but developers are not allowed to use these or talk about them being available on their own websites for subscribers.
By raising the point, Spotify is giving developers who might usually be afraid of speaking out in fear of retribution a voice. What isn't clear is if Europe will listen, though Europe's antitrust commissioner did tweet about Spotify's request and attended an event to discuss the news.
If just the last few days have been any indication, it's about to get ugly out there. If the case is taken up, we'll finally understand whether or not it's 'fair' according to the law for platforms to compete using their own tools to their advantage, which is happening across the industry from Amazon to Google.
🎶 Spotify wants Apple to play fair [reCharged]
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