Spotify has hit back at Apple’s response to the competition law complaint it has filed against its rival in Europe. It said that the tech giant’s counter-arguments are pretty much what is expected and that “every monopolist will suggest they have done nothing wrong”.
After Spotify filed its long-expected complaint with the European Commission last week – a filing accompanied by a blog post from founder Daniel Ek and a whole micro-site setting out the company’s arguments – Apple quickly published a reaction statement.
Disputing most of it’s rival’s allegations – including the key claim that Apple exploits its operating system and App Store to give Apple Music an unfair advantage – the tech giant said that Spotify simply wanted to make use of its platform and technologies without paying for the privilege.
It then connected its dispute with Spotify with its competitor’s concurrent run-in with the songwriters and music publishers of America, ie the one over the Copyright Royalty Board’s decision to increase the royalties streaming firms must pay for the song rights they exploit.
Apple is one of the few digital music companies not appealing that rate increase. This stance by Apple allowed it to include a sneaky extra dig in its response to the competition law complaint, to the effect that Spotify is keen to short change all of its key business partners.
The Apple statement last week concluded: “Spotify wouldn’t be the business they are today without the App Store ecosystem. But now they’re leveraging their scale to avoid contributing to maintaining that ecosystem for the next generation of app entrepreneurs. We think that’s wrong”.
Responding, Spotify said on Friday: “Every monopolist will suggest they have done nothing wrong and will argue that they have the best interests of competitors and consumers at heart. In that way, Apple’s response to our complaint before the European Commission is not new and is entirely in line with our expectations”.
Standing its ground, Spotify went on: “We filed our complaint because Apple’s actions hurt competition and consumers, and are in clear violation of the law. 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. We respect the process the European Commission must now undertake to conduct its review”.
Spotify vs Apple, What are we missing out?
Spotify claims that the 30% tax Apple issues for subscriptions are unfair. They also want to believe it stops them from lowering down the subscription prices for their customers.
An excerpt from the blog post, points out, “Apple requires that Spotify and other digital services pay a 30% tax on purchases made through Apple’s payment system, including upgrading from our Free to our Premium service.”
Now, here’s what Spotify conveniently misses out to divulge – an important bit of information. Apple only charges 30% taxes from a developer for its first year on the Appstore, while from the second year on, it slashes down in half bringing it down to 15%.
Not only Spotify’s blog reflects inconsistency but they also point out that ride-hailing apps on Apple like Uber are given more advantage as transactions on those apps are not taxed. This is quite misleading. The point to note here is that any transaction that does not go through Apple’s payment gateway is not taxed. When it comes to Uber, the rider pays through credit/debit cards or by cash, they don’t pay through iTunes.
Spotify must come to its senses and realise that Apple has built a secure payment system and provides critical software tools for maintaining apps. They surely must have spent thousands of dollars in the maintenance of the App Store. Engineers for Apple don’t work for free and hence greedily asking for benefits is downright unfair and unreasonable.