Apple and Spotify trade bitter words over fees
Spotify has filed antitrust complaints against Apple to the European Union, accusing the company of “locking Spotify and other competitors out of experience-enhancing upgrades.” Although it is yet to be known whether the European Commission will go through a formal investigation, the growing tension between Apple and Spotify led to dissent among users of the services worldwide.
This helps explain why Daniel Ek, Spotify’s chief executive officer, wrote the statement laying out unfair treatment by Apple. In his post, Ek discussed a few examples of what Apple required of Spotify and other digital services.
“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.”
Spotify is striving to provide users with the best audio experience, keeping their price as low as possible for consumers. However, under Apple’s restrictions, Spotify would have to increase the price of Spotify Premium for Apple users. Spotify is consistent in reinforcing a healthy ecosystem in which a win-win negotiation is fulfilled.
In response to Spotify’s antitrust claims, Apple, which has brought a dramatic change in the mobile-phone industry, said something very different.
“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,” said Apple on its website.
Apple emphasized that all the transactions to purchase digital goods outside the app are not charged by Apple and the company is aiming to build a successful ecosystem that will benefit both businesses and users.
By saying, “Spotify is asking to keep all those benefits while also retaining 100 percent of the revenue,” Apple makes clear that Spotify has been wrong for claiming that there is no fair competition.
In the meantime, Apple pointed out Spotify's unfair treatment of artists. Since Spotify put a heavy emphasis on keeping their price competitive, they are also “making money off others’ work,” leading to regression in the music industry.
A dispute between Apple and Spotify has aroused concerns from users.
“The iPhone users, including lead plaintiff Robert Pepper of Chicago, filed the suit in a California federal court in 2011, claiming Apple’s monopoly leads to inflated prices compared to if apps were available from other sources,” according to Andrew Chung of Business Insider.
Spotify and many other makers of apps are at risk of losing more than 100 million iPhone users if they withdraw from the App store. Spotify claimed that Apple is trying to harm their business. If Spotify’s complaint is accepted for an investigation, Apple is likely to be fined by the European Commission. The ultimate goal is to cultivate a healthy ecosystem that works in the best interests of both companies.