Spotify Hits Apple With Antitrust Complaint

Apple is facing an antitrust investigation after its music streaming rival Spotify filed a complaint with the European Commission.

The central thrust of Spotify’s complaint is that Apple unfairly limits rivals to its own Apple Music streaming service, and the large fee that Apple charges for all purchases via its app store.

Apple launched its Music streaming service back in 2015, and it competes directly against the music streaming goliath that is Spotify, which was launched back in 2007 in Sweden.

Apple tax?

But Apple’s app store remains an important distribution platform for Spotify. But Spotify feels that it is competing in an unfair ecosystem.

“My goal for Spotify is and has always been to reimagine the audio experience by giving consumers the best creativity and innovation we have to offer,” explained Spotify founder and CEO Daniel Ek in a blog post. “For that to be a reality, it is my firm belief that companies like ours must operate in an ecosystem in which fair competition is not only encouraged, but guaranteed.”

“It’s why, after careful consideration, Spotify has filed a complaint against Apple with the European Commission (EC),” he wrote. “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.

“After trying unsuccessfully to resolve the issues directly with Apple, we’re now requesting that the EC take action to ensure fair competition,” he added.

Spotify’s boss then explained that as Apple is both the owner of the iOS platform and the App Store – and a competitor to services like Spotify, they “continue to give themselves an unfair advantage at every turn.”

“To illustrate what I mean, let me share a few examples,” wrote Ek. “Apple requires that Spotify and other digital services pay a 30 percent tax on purchases made through Apple’s payment system, including upgrading from our Free to our Premium service. 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.”

“As an alternative, if we choose not to use Apple’s payment system, forgoing the charge, Apple then applies a series of technical and experience-limiting restrictions on Spotify,” wrote Ek. “For example, they limit our communication with our customers – including our outreach beyond the app. In some cases, we aren’t even allowed to send emails to our customers who use Apple. Apple also routinely blocks our experience-enhancing upgrades. Over time, this has included locking Spotify and other competitors out of Apple services such as Siri, HomePod, and Apple Watch.”

Ek insisted that Spotify is not seeking special treatment, but wants to be treated like other apps on the App store such as Uber or Deliveroo, “who aren’t subject to the Apple tax and therefore don’t have the same restrictions.”

Fair competition

Spotify alleged that Apple pressured it into using Apple’s billing system in 2014, but that would have meant increasing the premium cost from 9.99 to 12.99 euros a month.

Spotify then ceased using Apple payment system, so now Spotify users either have to use a laptop or go directly to its own website for example to upgrade their streaming service to a premium edition.

It should be noted that Spotify has 207 million global users, 96 million of which have opted for the premium option (i.e paying subscribers).

Spotify’s boss is asking the European Commission to ensure that apps are able to compete fairly on the merits, and not based on who owns the App Store.

He also wants consumers to have a real choice of payment systems. And finally, app stores should not be allowed to control the communications between services and users.

There has so far not been any response from Apple.

Spotify went public last year on the New York Stock Exchange, not to raise funds, but as a way for existing shareholders (mostly staff) to sell their shares on the open market.

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