Spotify is going to war with Apple, filing an antitrust complaint over fears it is crushing competitors

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Spotify has filed an antitrust complaint against Apple with the European Commission.
In an open letter, Spotify CEO Daniel Ek said Apple is acting ‘as both a player and referee to deliberately disadvantage other app developers.’
He took particular issue with Apple’s 30% tax on purchases made through the App Store.

Spotify is going to war with Apple after submitting an antitrust complaint with the EU.

Spotify CEO Daniel Ek wrote an open letter explaining the reasoning behind the complaint, which was filed after talks broke down between the two companies.

"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," he said.

Apple owns both the App Store, through which people can download Spotify, and competing music streaming service Apple Music.

Ek gave an example of an Apple policy, which he views as quashing competition — a 30% tax Apple levies on purchases made through its payment system. This applies to Spotify upgrades from free to premium service.

"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," Ek wrote.

He added that if Spotify eschews Apple’s payment system, Apple can impose technical restrictions, which in some cases has prevented Spotify from emailing its customers.

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Apple did not immediately respond to a request for comment.

Ek said Spotify was filing the complaint after talks with Apple failed to produce a resolution. "After trying unsuccessfully to resolve the issues directly with Apple, we’re now requesting that the EC [European Commission] take action to ensure fair competition," he said.

Spotify is not the only tech firm to take a stand against Apple. Netflix in January figured out a workaround for Apple’s taxation. It prevented people watching on Apple devices from joining Netflix through iTunes.

The European Commission does not shy away from punishing Silicon Valley’s tech giants. In July last year, the European Commission slapped Google with a record-breaking $5 billion fine for abusing the dominance of its Android platform. Google is appealing the penalty.

Here’s Daniel Ek’s full blog:

My goal for Spotify is and has always been to reimagine the audio experience by giving consumers the best creativity and innovation we have to offer. For that to be a reality, it is my firm belief that companies like ours must operate in an ecosystem in which fair competition is not only encouraged, but guaranteed.

It’s why, after careful consideration, Spotify has filed a complaint against Apple with the European Commission (EC), the regulatory body responsible for keeping competition fair and nondiscriminatory. 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.

Apple operates a platform that, for over a billion people around the world, is the gateway to the internet. 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.

To illustrate what I mean, let me share a few examples. 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. 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.

As an alternative, if we choose not to use Apple’s payment system, forgoing the charge, Apple then applies a series of technical and experience-limiting restrictions on Spotify. For example, they limit our communication with our customers—including our outreach beyond the app. In some cases, we aren’t even allowed to send emails to our customers who use Apple. Apple also routinely blocks our experience-enhancing upgrades. Over time, this has included locking Spotify and other competitors out of Apple services such as Siri, HomePod, and Apple Watch.

We aren’t seeking special treatment. We simply want the same treatment as numerous other apps on the App Store, like Uber or Deliveroo, who aren’t subject to the Apple tax and therefore don’t have the same restrictions. What we are asking for is the following:

First, apps should be able to compete fairly on the merits, and not based on who owns the App Store. We should all be subject to the same fair set of rules and restrictions—including Apple Music.
Second, consumers should have a real choice of payment systems, and not be “locked in” or forced to use systems with discriminatory tariffs such as Apple’s.
Finally, app stores should not be allowed to control the communications between services and users, including placing unfair restrictions on marketing and promotions that benefit consumers.

As I recently shared, competition pushes us to evolve and improve both the customer and creator experience. It’s not something we ever have—or will—shy away from. So, let me be clear that this is not a Spotify-versus-Apple issue. We want the same fair rules for companies young and old, large and small. It is about supporting and nurturing the healthy ecosystem that made our two companies successful in the first place.

Consumers win and our industry thrives when we’re able to challenge each other on fair footing. That’s what competition on the merits is all about.

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Source: Business Insider – feedback@businessinsider.com (Isobel Asher Hamilton)