Home Business Spotify accuses Apple of anti-competitive business practices

Spotify accuses Apple of anti-competitive business practices

Spotify’s dispute with Apple stretches well over a year over the latter’s business practices and app store guidelines. That, however, has taken on a new ugly turn with Spotify now openly accusing Apple of misusing its favorable position on iOS devices while making it a bit harder for third party apps to operate.

The latest spat came out in the open after Apple blocked an update to the Spotify app claiming that the said update is in violation of Apple’s “business model rules,” reports Recode.

Before that, Spotify had disabled the in-app billing system thereby forcing its free users to upgrade or for its existing Premium members to continue subscribing from outside the app. While that inconveniences Spotify’s iOS clients, what should irk Apple, even more, is that such a move is depriving them of the 30 percent share of the revenue.

Spotify had earlier run a campaign for its iOS client offering them the chance to try out Spotify for a three month period after agreeing to pay just $0.99. However, new users were required to sign up via the official Spotify site and not via the app. While Spotify withdrew the campaign after protests from Apple, it also disabled the in-app subscription option as well.

Spotify also charges $13 a month for iOS customers instead of the usual $10 that it costs outside of the Apple App Store. Spotify justified the higher rate claiming it goes towards paying the 30 percent fee it owes to Apple for being part of the App Store.

Spotify counts on a user base that is 30 million strong compared to the 15 million that subscribe to Apple Music. However, Spotify fears Apple’s way of handling third party apps could soon rob it of the edge it has over the rival music service.

“This latest episode raises serious concerns under both U.S. and EU competition law,” Spotify general counsel Horacio Gutierrez wrote in a letter to the Apple general counsel Bruce Sewell. “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.”

Notably, Spotify has been allowing in-app subscription on its Android app as well as the three-month promotional offer though it seems users can make the payment in a manner that circumvents the Google in-app subscription feature. While Google does not appear to have any issues with that even though that does deprive them of an active revenue stream, Apple has a more adamant stand on the issue and would allow none of it.

It was only recently that Apple changed its subscriptions rules wherein the revenue split has been changed to 85-15 from the previous 70-30 model. That means publishers would now have to pay 15 percent of the revenue cut to Apple though only after the subscriptions is active for more than a year. In essence, that means Apple will still earn 30 percent of subscription fee for the first years and will drop to 15 percent after that.