Spotify has filed a complaint with European regulators arguing that Apple limits choice and competition in its app store, giving its own music streaming service an unfair advantage over rivals.
Apple’s app store is an important distribution platform for Spotify. But Apple takes a 30% commission on all sales made through the app store – including music streaming subscriptions – which Spotify and many other third-party app developers have long complained is an unfair “tax”.
“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,” said Daniel Ek, Spotify co-founder and chief executive, in a blog post.
“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.”
Spotify ran an ad campaign in 2016 to try and get users to sign up for its premium service directly on its own site, bypassing the app store.
However, Ek said he has now been forced to officially lodge a complaint with the European commission after Apple introduced what he claimed were wider anti-competitive practices that has made it “both player and referee to deliberately disadvantage other app developers”.
He said that if Spotify chooses not to use Apple’s payment system, to avoid paying the commission, the company applies “a series of technical and experience-limiting restrictions” on consumers running its streaming service on the rival tech company’s devices.
Examples cited include limiting communications with Spotify customers and “routinely” blocking app upgrades.
“In recent years, Apple has introduced rules to the app store that purposely limit choice and stifle innovation. They continue to give themselves an unfair advantage at every turn,” Ek said. “After trying unsuccessfully to resolve the issues directly with Apple, we’re now requesting that the European commission take action to ensure fair competition.”
Spotify argues that its complaint to regulators is not about seeking “special treatment” in its global music battle against Apple but the same treatment as numerous other apps such as Uber and Deliveroo, which are not subject to the 30% app store charge.
“This is not a Spotify vs Apple issue,” he said. “We should all be subject to the same fair set of rules and restrictions, including Apple Music.”
Spotify’s general counsel, Horacio Gutierrez, said the company’s action against Applewas limited to Europe but did not rule out expanding its complaint to the US.
Last week US Senator Elizabeth Warren, who is aiming to win the Democrat nomination for next year’s presidential election, outlined proposals to break up big technology companies. On Apple, she said: “Either they run the platform or they play in the store. They don’t get to do both at the same time.”
Spotify has 207 million global users, of whom 96 million are paying subscribers. The Canadian rapper Drake was the most popular artist on Spotify last year, as he was in 2015 and 2016, with 8.2bn streams. The most popular female artist was Ariana Grande, whose music amassed more than 3bn streams in 2018.
Apple, which made its move into music streaming by buying Dr Dre’s Beats for $3bn (£2.27bn) in 2014, last reported 56 million streamers, of whom about 48 million were paying subscribers.
“Apple’s App Store is that perplexing mix of company product and industry marketplace,” said Mark Mulligan, analyst at MIDiA Research.
“Without Apple companies like Spotify would not have much of a business. But that relationship becomes complicated by the fact that Apple also competes with some of the companies it acts as a platform for. It is this fusing of roles that makes this issue so complex.”
Apple had not responded to a request for comment at the time of publication.
Spotify is also challenging a ruling in the US that would result in it having to increase its royalty payments to songwriters by more than 40%.
