In a lengthy response, Apple has addressed many of the allegations leveled against it by Spotify earlier this week. As we reported, Spotify has filed a complaint with the European Commission alleging that Apple’s treatment of the music streaming service is unfair and anti-competitive. Today, Apple fired back with a response to many of Spotify’s contentions.
Apple denies it has blocked access to its products and updates. To the contrary, the company says it has approved over 200 updates to Spotify’s app and reached out to inquire about the adoption of features like Siri and AirPlay 2. Apple says the only time it has requested changes to Spotify’s apps is when the company ‘has tried to sidestep the same rules that every other app follows.’
Apple also takes issue with what it characterizes as Spotify’s desire for the benefits of a free app without being free. Long gone are the days when apps were either free or paid. Spotify, like many other apps, offers a free music streaming tier. Spotify doesn’t pay Apple anything for those free users or users that sign up for streaming through other channels like mobile carriers. For Spotify’s paid subscribers, Apple receives 30% in year one and 15% after that for access to its platform and payment system, which the company says Spotify is unfairly trying to sidestep.
Finally, Apple claims that Spotify’s complaints against it are just one facet of a pattern of actions that are in Spotify’s economic interests but are damaging to musicians and the music industry. As evidence of this, Apple raises recent moves by Spotify against songwriters after the US Copyright Royalty Board required Spotify to increase royalty payments.
I don’t know whether Apple’s actions constitute unfair and anti-competitive behavior under EU law. Separate and apart from the legalities of the situation though, Spotify’s complaints have struck a chord because they come at a time when new online app stores are taking a significantly smaller cut of revenue. Spotify has other legitimate complaints, like its frustrations with App Review, but what seems to really be driving the dispute is how much Apple charges for access to the App Store and its payment system. Now more than ever, Apple’s 30% cut looks like a bad deal even when that cut is reduced to 15% for the second year of subscriptions.
What makes this dispute unique is that Spotify competes with Apple Music and is big enough to grab public attention and raise the stakes for Apple by getting European regulators involved. Usually, this sort of fight would play out privately, but by making their disagreement very public and involving regulators, Spotify may have taken the outcome out of its and Apple’s control.