The music streaming world has been on fire with controversy and news this week. Today, Spotify has filed an official complaint against Apple in the European Union over the rules in its Apple Store, which it says stifles competition and harms consumer choice.
Spotify is launching a full on PR campaign with animated videos and a blog post from CEO Daniel Ek alleging Apple’s business practices in the app store are anti-competitive. This has been a complaint of companies for years; it is noteworthy though that Spotify is the first to lodge an official compliant, possibly because everyone else felt scared. Also because Spotify is in a special position where if they are kicked off the store that would prove their point and force regulators to take action.
The complaint can be broken down into a few categories:
The first is the most notable – the “Apple Tax,” a 30% commission that Apple takes on all sales through the store. There is no way around it.
As Ek says in the post, “If we pay this tax, it would force us to artificially inflate the price of our Premium membership well above the price of Apple Music. And to keep our price competitive for our customers, that isn’t something we can do.”
Obviously consumers can still pay the normal price by upgrading online, but this is just for those who upgrade through the app store.
In addition to this, and potentially more damaging is what Apple does to lock Spotify out of its other devices.
Ek alleges that Spotify, and other services, are locked out of Siri, Homepod and Apple Watch. It has been news when some services become compatible with the Amazon Echo, but Amazon Prime Music is still the first choice. Ek alleges that Spotify and other services can’t be streamed on specific Apple devices.
Ek also says that he isn’t allowed to run marketing on the app store, which seems doesn’t seem like a competitor would really want to do.
The CEO claims this isn’t an Apple versus Spotify issue, but an issue of competition in the marketplace.
“We want the same fair rules for companies young and old, large and small. It is about supporting and nurturing the healthy ecosystem that made our two companies successful in the first place.”
Spotify has also launched a website TimeToPlayFair.com to assist with the campaign.
Spotify is the global leader in music streaming, but Apple Music according to the most recent estimates has overtaken it in the United States. Spotify could be using this as a way to dent Apple Music’s advance in Europe or distract from its current PR nightmare regarding songwriter payments in the United States, which Apple Music seems to be on the right side of the PR coin.
There are concerns with Apple’s ecosystem that forces customers to buy into its products by making using outside devices harder to use. It has been able to get away with this up until this point, but Spotify if trying to find cracks in its armor for the app store, which has been problematic for app owners since the store was launched in 2011. A fee would be expected to keep the store operational and regulated, but 30% may be high.
It is also very important to note that this is being lodged with the EU, who have been on an antitrust regulatory tear recently, including against Apple. The EU ruled that Apple evaded billions in taxes as part of its fiscal deal with Ireland. It isn’t clear how far this will go. A spokesperson for the European Commission told The Wall Street Journal that it had received Spotify’s complaint and was “assessing [it] under our standard procedures.”
Apple has not responded yet, but this fight could get ugly and take some time as these sort of legal battles do. Expect a lot of other companies to be very interested in how this plays out.