The war of words between Spotify and Apple continues. Addressing Spotify’s complaint with European Commission (EC) on Apple’s rules on the App Store that “purposely limit choice and stifle innovation at the expense of the user experience”, Apple has said that Spotify wants “all the benefits of a free app without being free”.
However, Spotify counter-argued and called Apple a “monopolist”. According to media outlets, Spotify said that Apple “believes” that Spotify’s users on iOS are Apple customers and not Spotify’s. Marketing has reached out to Spotify for comment.
Founder and CEO of Spotify Daniel Ek lashed out last week through a blog post after an unsuccessful attempt to resolve the issues directly with Apple. Titled “Time to Play Fair”, Spotify also launched a press against Apple that explains Apple’s “anti-competitive” behaviour through a dedicated micro-site and two-minute video on YouTube.
Calling out Apple for “acting as both a player and referee to deliberately disadvantage other app developers”, Ek cited in the blogpost the example of the 30% tax imposed on Spotify and other digital services purchases made through Apple’s payment system. This includes the upgrades to Spotify’s Premium service.
Apple clarified that apps which are free, earn revenue exclusively through advertising, sell physical goods including ride-hailing and food delivery services as well as when users sign up or purchase digital goods outside the app, are all not charged by Apple itself. The only contribution that Apple requires is for digital goods and services that are purchased inside the app using its own secure in-app purchase system.
In an earlier media statement, Apple said that 84% of the apps in the App Store “pay nothing” to Apple when it is downloaded or used. “That’s not discrimination, as Spotify claims; it’s by design,” the statement added.
Spotify had pointed out that revenue share is 30% for the first year of an annual subscription, however Apple rebutted saying that the amount drops to 15% in the years after. Apple also said that Spotify’s business model works in a way that majority of customers use its free, ad-supported product, which makes no contribution to the App Store. In addition, a “significant” portion of Spotify’s customers come through partnerships with mobile carriers. This generates no App Store contribution, but requires Spotify to pay a similar distribution fee to retailers and carriers.
As such, Apple said:
Even now, only a tiny fraction of their subscriptions fall under Apple’s revenue-sharing model. Spotify is asking for that number to be zero.
It added that it shares software development tools to support Spotify’s app building and has built a secure payment system, which allows users to “have faith” in in-app transactions. However, Spotify is asking to keep all those benefits while also retaining 100% of the revenue, Apple said.
“Spotify wouldn’t be the business they are today without the App Store ecosystem, but now they’re leveraging their scale to avoid contributing to maintaining that ecosystem for the next generation of app entrepreneurs. We think that’s wrong,” Apple added.
In the same media statement, Apple said that it has approved and distributed nearly 200 app updates on Spotify’s behalf, resulting in over 300 million downloaded copies of the Spotify app although Spotify claimed that its access to products and updates are blocked. Apple also said that it has however requested adjustments when Spotify “tried to sidestep” the same rules that every other app follows.
The multinational technology company added that it has worked with Spotify previously to bring its services to more devices and platforms. It highlighted that when Spotify submitted its Apple Watch app last year, the submission was reviewed and approved with the same process and speed with which any other app would have been provided with.
“When we reached out to Spotify about Siri and AirPlay 2 support on several occasions, they’ve told us they’re working on it, and we stand ready to help them where we can. Spotify is deeply integrated into platforms such as CarPlay, and they have access to the same app development tools and resources that any other developer has,” the statement further said.