Battle between Spotify and Apple intensifies

Apple / Business / iOS / Mobile / Tech

This is the inevitable thing that happens when two very large and very wealthy companies decide to battle it out as they try to clench as much money as possible while pretending they have the users, developers and basically anything but their wallets as a chief concern for their business decisions. As the month of June drew to a close, Spotify received a rejection from the Apple App store for their most recent app update. Apple’s claim was that Spotify had violated a core rule of the App store and tried leading users away from upgrading to Premium accounts via the app and using the Spotify website instead, circumventing Apple’s 30% fee. Spotify took the first shot and accused Apple of being anti-competitive and intentionally harming any competitors to their own Apple Music platform.

“We cannot stand by as Apple uses the App Store approval process as a weapon to harm competitors. This latest episode raises serious concerns under both US and EU competition law. It continues a troubling pattern of behaviour by Apple to exclude and diminish the competitiveness of Spotify on iOS and as a rival to Apple Music, particularly when seen against the backdrop of Apple’s previous anticompetitive conduct aimed at Spotify.” – Horacio Gutierrez, Spotify general counsel

The issue here is that every developer with an approved iOS app has the option to add in-app subscriptions. But in doing so agrees to give Apple 30% of the revenue. These rules are set to change later this year to be more developer-friendly at 15% after one year, but still seen by some as unacceptably high.  Amazon, for example, refuses to offer its service on iOS altogether due to these fees.

Spotify has now tried various methods of combating Apple’s policies. At first they passed the extra costs to the iOS users, informing them that they have to pay more than other users due to Apple’s “unfair” fees, painting Apple as the bad guy. After removing the price hike to stay competitive, Spotify put a link inside their iOS app trying to drive users to upgrade their accounts through their website instead of the app. That update was rejected. Their next approach was to collect users’ emails and then contact them directly with links to upgrade online. This too was rejected as Apple saw right through the ruse. Spotify, outraged, began firing accusations at Apple. Their basic argument is that Apple is simply trying to give an unfair advantage to their own music service.

Feeling slighted, Apple has now responded via a letter acquired by Buzzfeed News, from Apple general counsel Bruce Sewell accusing Spotify of using half-truths and demanding special treatment that other developers on the platform do not receive.

“Our guidelines apply equally to all app developers, whether they are game developers, e-book sellers, video-streaming services or digital music distributors; and regardless of whether or not they compete against Apple. We did not alter our behavior or our rules when we introduced our own music streaming service or when Spotify became a competitor… Ironically, it is now Spotify that wants things to be different by asking for preferential treatment from Apple… There is nothing in Apple’s conduct that ‘amounts to a violation of applicable antitrust laws.’ Far from it…  [with] hundreds of millions of dollars in incremental revenue to Spotify” – Bruce Sewell Apple general counsel

Wasting no time at all, Spotify reps have already taken to twitter to counterattack Apple’s claims.

So in case you thought this was going to be resolved quickly, it won’t be. This is what these companies do and will continue to always do. In the end, someone will win and someone will lose, but it hardly affects the end users unless Spotify decides to somehow leverage its 30 million users against the iOS platform altogether. But considering how many customers that may cost them, especially with Apple’s own aforementioned music service on the rise, the risk involved is probably too high and costly for the Swedish company.

Since I do not live inside the Apple ecosystem and am not a Spotify user, it is hard for me to take a side here. On one hand, Spotify may have a point that if Apple makes a product that is a direct competitor they should not do anything to tip the scales in their own favor. However, this IS Apple’s ecosystem and they have a right to make the rules, as long as those rules apply to all third party developers in the same manner. Spotify could also make the argument that there is no way in iOS to make anything but Apple Music the default option instead of Spotify or other players and services, but that is also not going to change any time soon. The truth is, Apple does take a very restricted approach to its mobile OS and if you want the exposure they provide to millions of potential customers, for the time being, you have to play by their rules and pay their fees.

What do you think about this tiff between Spotify and Apple? Tell us in the comment section below, or on Google+, Facebook, or Twitter.

  Source: BuzzFeed News
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