Spotify has filed a competition complaint against Apple to the European Commission, accusing the hardware producer and app ecosystem in being “a player and referee” in the music streaming space.
The iPhone maker takes a share of app income on its iOS operating system via the App Store, this has caused friction with the Swedish music start-up over due to the existence of Apple Music.
The California giant’s rival service recently reached 56 million paying subscribers globally, whereas Spotify has 96 million paying subscribers, up to 207 million monthly active users when incorporating the free tier. Apple's service launched in 2015 so it has gained good ground on the market leader.
Spotify is available on iOS but it will not offer a direct Premium subscription upgrade option through the app, as Apple would be entitled to a 30% cut of the £9.99 monthly fee. Instead, it directs users to enable the upgrade in their web browser to avoid funding a theoretically competing service. In 2016, it also ran a promotional advertising campaign urging users to do so.
Spotify founder and chief executive Daniel Ek said: “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.”
On the 30% fee, he added: “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.” Apple Music is also priced at £9.99 per month, the tax has the potential to advantage the first party app.
Globally, Apple’s iOS is used by more than one billion people, claimed Ek. In Europe it owns a more than a quarter of the mobile operating system market share in Europe (27%).
He said Apple punished Spotify for not opting into its payment system by imposing “a series of technical and experience-limiting restrictions on Spotify” such as restricting customer contact through the app and blocking its presence on Apple hardware such as Siri, the HomePod and the Apple Watch.
He claimed that Apple Music should be “subject to the same fair set of rules and restrictions” that Spotify is, that consumers should not be forced to “use systems with discriminatory tariffs” and that App Store communications should not be restricted unfairly.
Helping to get the public behind it in this competition conflict, Spotify is running a paid Google Search ad around Apple/Spotify queries leading to Time To Play Fair, a site claiming that Apple’s tax violates the law.
Just last month, Apple claimed that European app developers had earned $25bn through its platform since its launch in 2008, and $120bn globally. It will likely argue its role in creating the app ecosystem in the first place.
Meanwhile Android owner Google is subject to EU anti-trust investigations of its own.