Spotify Wants Benefits of Free App Without Being Free, Apple Responds
Spotify “seeks to keep all the benefits of the App Store ecosystem -- including the substantial revenue that they draw from the App Store’s customers -- without making any contributions to that marketplace,” responded Apple Friday about Monday's antitrust complaint to the European Commission (see 1903130064). “They distribute the music you love while making ever-smaller contributions to the artists, musicians and songwriters who create it -- even going so far as to take these creators to court.”
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Addressing Spotify’s claim Apple blocks access to products and updates to its app, Apple said it has approved and distributed nearly 200 app updates on Spotify’s behalf, resulting in 300 million downloaded copies of the app: “The only time we have requested adjustments is when Spotify has tried to sidestep the same rules that every other app follows.”
Apple maintained it contacted Spotify about Siri and AirPlay 2 support “on several occasions,” and that Spotify said it’s working on it. Spotify is “deeply integrated” into CarPlay and has the same app development tools and resources other developers have, said Apple. Spotify’s claims it was repeatedly denied the ability to stream directly from Apple Watch were “especially surprising,” said Apple, saying it “reviewed and approved” Spotify’s Watch app in September “with the same process and speed with which we would any other app.” Spotify’s is the No. 1 selling app in the Watch music category, it said.
The Apple platform connects Spotify to iPhone users and is the means by which users download and update their app, it said. “We share critical software development tools to support Spotify’s app building,” it said, “and we built a secure payment system." Spotify is "asking to keep all those benefits while also retaining 100 percent of the revenue.” Apple said Spotify "wants all the benefits of a free app without being free,” and most Spotify customers use the free ad-supported app, “which makes no contribution to the App Store.”
Responding to Spotify CEO Daniel Ek’s observation Apple requires other digital services to pay a 30 percent tax on purchases made through its In-App Purchase payment system, including when Spotify's customers upgrade from the free tier to premium, Apple concurred. It said that fee is for the first year of an annual subscription, falling to 15 percent in subsequent years.
Spotify “wouldn’t be the business they are today without the App Store ecosystem,” said Apple. “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 took a separate swipe at Spotify for its relationship with music creators, saying it sued music creators after a Copyright Royalty Board decision required the music streamer boost royalty payments: That's "a real, meaningful and damaging step backwards for the music industry."
A Spotify spokesperson responded: “Every monopolist will suggest they have done nothing wrong and will argue that they have the best interests of competitors and consumers at heart.” The response was “not new.” Spotify complained because Apple’s actions “hurt competition and consumers“ and "are in clear violation of the law,” she said: “This is evident in Apple’s belief that Spotify's users on iOS are Apple customers and not Spotify customers, which goes to the very heart of the issue with Apple.”