Spotify accuses Apple of abusing its power over the App Store

Mae Love
March 14, 2019

When Apple (NASDAQ:AAPL) launched its music service in the European Union, they were able to be both the platform holder as well as a competitor to Spotify.

The second issue is a 30 per cent fee introduced in 2011 that applied to Spotify and all other digital content providers for using the Apple payment system, while other apps such as Uber and Deliveroo are not subject to the fee.

Spotify has filed a complaint against Apple with European Commission regulators, alleging the so-called "Apple tax" gives Apple an "unfair advantage" over rival companies.

"In recent years, Apple has introduced rules to the App Store that purposely limit choice and stifle innovation at the expense of the user experience - essentially acting as both a player and referee to deliberately disadvantage other app developers", Daniel Ek, Spotify founder and CEO, wrote of the complaint. "And to keep our price competitive for our customers, that isn't something we can do".

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In the post, Ek claims that Apple's App Store rules make it hard for Spotify to compete with Apple's own Apple Music on a level playing field. The Spotify CEO said that ignoring Apple's payment system could cause serious damages to their communication with customers. It can include limitations around outreach to users, delays or blocks to app updates, and preventing Spotify from integrating with devices and services like HomePod and Siri. Ek insists that Spotify isn't seeking special treatment in filing this motion. Spotify is forced to choose either to charge Apple customers extra when they sign up for subscriptions through their iPhone apps or to take a hit on the revenue for every app-based subscriber that Apple Music doesn't have to pay, he said. But this is the first time someone has publicly filed a complaint over it to the European Commission.

There are no regulations for how long this initial assessment can take, and the time frame depends on a series of factors, the spokesperson said.

Apple didn't immediately respond to a request for comment. He reckons the Apple-licensed "App Store" should remain objectively unbiased with the market place should remain inconquerable.

The primary issues here are the 30 percent cut that Apple takes from nearly every transaction that goes through its system, and the alleged preferential treatment that Apple gives to its first-party streaming option (and direct competitor to Spotify), Apple Music. "We should all be subject to the same fair set of rules and restrictions, including Apple Music". That's what competition on the merits is all about.

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