Spotify says Apple is making it harder for the streaming music company to compete by blocking a new version of its iPhone app. In a letter sent this week to Apple’s top lawyer, Spotify says Apple is “causing grave harm to Spotify and its customers” by rejecting an update to Spotify’s iOS app. The letter says Apple turned down a new version of the app while citing “business model rules” and demanded that Spotify use Apple’s billing system if “Spotify wants to use the app to acquire new customers and sell subscriptions.” The letter, sent by Spotify general counsel Horacio Gutierrez to Apple general counsel Bruce Sewell on June 26, suggests that Spotify intends to use the standoff as ammunition in its fight over Apple’s rules governing subscription services that use its App store. (Correction: An earlier version of this story incorrectly reported the date Spotify sent the letter.) “This latest episode raises serious concerns under both U.S. And EU competition law,” Gutierrez wrote.
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“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.” Spotify has distributed copies of the letter to some Congressional staff in Washington, D.C. Yesterday,; Warren said that “Apple has long used its control of iOS to squash competition in music.” Spotify declined to comment; Apple hasn’t responded to request for comment. For the past year, Spotify has argued publicly, and to various regulators in the U.S.
And Europe, that Apple’s subscription policies effectively punish third-party music services that use Apple’s platform, while boosting Apple Music, the home-grown service it launched in June 2015. Apple doesn’t require subscription services to use its iTunes billing service, but it doesn’t allow them to use an alternate payment system within the app, as Google does.
Apple charges a monthly fee of up to 30 percent for those that do use its billing system — and it doesn’t want app makers to use the apps to promote alternate subscription options outside the apps. (And, of course, app makers like Spotify can’t distribute their apps onto iPhones outside of Apple’s store.) Those policies created lots of drama when, but and paying Apple its fee.
A handful that don’t, like Amazon, offer more limited versions of their apps in Apple’s app store; that Apple’s subscription rules led Amazon to stop selling the Apple TV box in its store. In Spotify’s case, the company has used Apple’s billing system for years, but passed on Apple’s fee to customers by charging $13 a month instead of the $10 a month the service sells for outside Apple’s store. Last year, after Apple launched its own music service,.
Last fall, Spotify started a new end-run via a promotional campaign offering new subscribers the chance to get three months of the service for $0.99 — if they signed up via Spotify’s own site. This month, Spotify revived the campaign, but Gutierrez says Apple threatened to remove the app from its store unless Spotify stopped telling iPhone users about the promotion. Spotify stopped advertising the promotion. But it also turned off its App Store billing option, which has led to the current dispute. Spotify still has a commanding lead in the subscription music race.
In March, it said it had 30 million paying subscribers; this month, Apple said it has 15 million paid subscribers for Apple Music.
Apple is planning major changes for Mac, should buyers wait? Rumors that Apple is planning an architecture switch away from Intel chips to its own silicon have been circulating for some time now, but recent reports suggest that Apple's revamping will be widespread, and bring even tighter integration between iPhone, iPad, and the Mac. Read more: has hit back against Spotify after the latter filed a complaint against the iPad and iPhone maker with the EC, alleging that Apple's App Store is anti-competitive and limits customer choice. Earlier this week, Spotify founder and CEO Daniel Ek, filed with the European Commission (EC), which is based on the premise that new rules introduced by Apple impact the App Store and have caused the platform to 'purposely limit choice and stifle innovation at the expense of the user experience.'
Featured. Ek claimed that Apple's App Store now acts as a means to 'deliberately disadvantage other app developers'. 'Apple operates a platform that, for over a billion people around the world, is the gateway to the Internet,' the CEO said. 'Apple is both the owner of the iOS platform and the App Store - and a competitor to services like Spotify. In theory, this is fine. But in Apple's case, they continue to give themselves an unfair advantage at every turn.'
According to the executive, Spotify and Apple were unable to directly resolve their dispute, which led to the complaint. Ek used the example of the App Store payment system to illustrate his complaint. The executive said that Spotify and other digital services are required to pay a 30 percent tax on purchases, which includes the Spotify Free to Premium upgrade.
'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,' Spotify said. 'And to keep our price competitive for our customers, that isn't something we can do.' TechRepublic: Apple, however, has strongly refuted these claims and says that while the 30 percent levy is in place, the music streaming service failed to mention that this drops to 15 percent after the first year. Spotify also said that the company is not seeking 'special treatment' but wants to be on the same playing field as companies such as Uber and Deliveroo which do not pay the 'Apple tax.' The iPad and iPhone maker has dismissed the idea of discrimination and says that far from it, a total of 84 percent of apps in the App Store are exempt from levies 'by design.' Apps which are free to consumers, apps which earn revenue through adverts, those which sell digital goods outside of the app, and apps which sell physical goods - which Apple notes include ride-hailing services and food delivery such as Uber and Deliveroo - are all exempt from the revenue model. The alternative, then, is to not use Apple's payment service to avoid these fees, which then results in app limitations, including the blockage of 'experience-enhancing upgrades' and sometimes even the 'sending of emails to our customers who use Apple,' according to Spotify.
'Over time, this has included locking Spotify and other competitors out of Apple services such as Siri, HomePod, and Apple Watch,' the company added. CNET: Apple has also refuted these allegations and says that close to 200 app updates have been distributed on Spotify's behalf, and 'the only time we have requested adjustments is when Spotify has tried to sidestep the same rules that every other app follows' - although no details on these incidents have been released. The tech giant added that Spotify's mention of the Apple Watch was 'especially surprising' as the Spotify Watch app was reviewed and accepted back in 2018 and currently holds the top spot in the Watch Music category. Spotify says that 'apps should be able to compete fairly on the merits, and not based on who owns the App Store.'
Apple has responded by saying 'Spotify wants all the benefits of a free app without being free.' 'After using the App Store for years to dramatically grow their business, Spotify seeks to keep all the benefits of the App Store ecosystem - including the substantial revenue that they draw from the App Store's customers - without making any contributions to that marketplace,' the company added. Apple also noted that only a tiny fraction of Spotify subscribers currently fall under the 'Apple tax,' and while Spotify would like to see this number drop to zero, Spotify's only aim is to 'make more money off others' work' by squeezing the App Store as well as content creators. See also: A potential investigation conducted by the EC could prompt some interesting results into the App Store's licensing terms and the anti-competitiveness claims, but the timing of the complaint is somewhat ironic. Earlier this month, Spotify - alongside Google, Amazon, and Pandora - came under fire for ' in response to a Copyright Royalty Board (CRB) decision to increase the commission earned by content creators by 44 percent. Spotify said that the companies in question are as a wish to earn more 'cannot come at the expense of continuing to grow the industry via streaming.'
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