This week, Apple and Spotify are going head to head over music streaming and profits after Spotify’s general counsel, Horacio Gutierrez, sent Apple a letter claiming Apple blocked the music-streaming company’s recent attempts to update its iOS app, “causing grave harm to Spotify and its customers,” Recode reports.
It’s a move designed to call attention to Spotify, but its complaint is one with broad ramifications. The crux of the issue is Apple’s billing system. If Spotify wants “to use the app to acquire new customers and sell subscriptions,” the company has to use Apple’s system at Apple’s price: an additional 30 percent fee for using the company’s billing system. (This is why a Spotify subscription purchased through the Apple store costs $13, rather than the usual $10. Those $3 cover Apple’s fees.)
Also there’s that whole “Spotify is Apple Music’s main competitor” thing.
From Spotify:
It continues a troubling pattern of behavior 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 … we cannot stand by as Apple uses the App Store approval process as a weapon to harm competitors.
Earlier this spring, Spotify brought back a promotion wherein users could purchase a three-month subscription priced at $0.99 per month — so long as they subscribed through the website and not through the Spotify iPhone app. The promotion has since been shut down, Spotify’s letter explained, because Apple threatened to kick Spotify out of the app store entirely if the deal was not discontinued. Spotify complied, but fired back by turning off the Apple billing system on the app. Hence, drama. “We cannot stand by as Apple uses the App Store approval process as a weapon.”
In its broadest terms, this is a familiar fight, and one that will only get more familiar. As tech platforms at various levels — from hardware, to operating systems, to social media, to retail — increasingly dominate the tech economy, smaller businesses that want to operate on those platforms while also competing with certain features will always be held hostage by the terms of the giants. The terror and contempt with which digital publishers regard Facebook is different from Spotify’s anger with Apple only in degree, not in kind. If you want access to Apple’s (or Facebook’s, or Google’s) audience, you need to play by Apple’s (or Facebook’s, or Google’s) rules. And rule number one is: Don’t threaten our business.
