For years now, Spotify and its co-founder and CEO, Daniel Ek, have been embroiled in a dispute with Apple over what the music streaming service says is anti-competitive behavior by the App Store.
At the heart of the matter are issues that are crucial to Spotify’s success: The fee it pays to Apple whenever someone makes a purchase through the Spotify app downloaded via the App Store, and the restrictions Apple places on the marketing that apps in its store can engage in.
These aren’t small details; Apple is known to charge third-party app developers as much as 30% in fees on sales made through its App Store, and regulators have accused it of engaging in “anti-steering” practices, which prevent services like Spotify from informing iPhone and iPad users about services they can purchase outside the App Store. In Spotify’s case, those services are in direct competition with Apple’s own Apple Music.
In the latest salvo in this war, Ek is in Washington, DC, this week, to lobby lawmakers to pass a law that would prevent Apple from engaging in “anti-steering” behavior.
Such a proposed law has been floating around the halls of Congress since last year: The Open App Markets Act, a bipartisan bill sponsored by Democratic Sen. Richard Blumenthal of Connecticut, Sen. Amy Klobuchar of Minnesota, also a Democrat, and Republican Sen. Marsha Blackburn of Tennessee.
“Apple prohibits competition by not allowing developers to discuss new products, features, and deals with their own users.”
Daniel Ek, Spotify
Both Apple and Google – which runs its own Play Store on Android devices – publicly opposed the bill, and it stalled in last year’s congressional session when the Senate Majority Leader, Democratic Sen. Chuck Schumer of New York, chose not to bring the bill to the floor for a vote.
Now, Ek is calling on congressional leaders to bring the bill back and pass it into law.
“Apple prohibits competition by not allowing developers to discuss new products, features, and deals with their own users,” Ek said in a statement issued Wednesday (April 19).
“For instance, Apple promotes deals for Apple Music to Spotify customers, but denies us the same privilege. What’s even more unbelievable, is that we can’t even tell our [iPhone and iPad] users the basics of how to sign up for a Spotify subscription or how to purchase an audiobook.
“This leaves customers without the ability to make informed choices about the services and pricing options available to them. And we aren’t the only ones feeling this impact. I talk to developers daily [who are] being disadvantaged by the small number of gatekeepers controlling the internet.”
Ek’s fight against Apple goes back nearly a decade, but the conflict ramped up in 2019 when Spotify filed an anti-trust complaint with the European Commission, arguing that Apple’s “app tax” and its anti-steering measures were harming competition and giving Apple an unfair advantage.
Apple shot back, arguing that Spotify actually paid a 15% commission to Apple on sales through the Apple Store – and it paid this only on a small subset of its entire paid user base.
All the same, the EU launched an investigation into the Apple Store’s business practices in 2020, which is still ongoing today. But earlier this year, it narrowed the scope of that investigation, essentially dropping its probe into allegations about the “app tax,” and focusing exclusively on the anti-steering practices.
And the EU isn’t the only body looking into the Apple Store: The US Justice Department has been investigating since 2019, and according to a report in the Wall Street Journal this past February, the department is drafting a potential anti-trust complaint against Apple.
So while Spotify seems to have made little progress in the fight against Apple Store commissions, its fight against Apple’s anti-steering practices seem to have gained some traction.
In Washington this week, Ek met with Schumer, as well as with Commerce Secretary Gina Raimondo and Republican House Speaker Kevin McCarthy, according to a report at LiveMint.
Ek told the news source that audiobooks will play a major role in Spotify’s business going forward, but so far, the experience of buying Spotify audiobooks on Apple devices has been “pretty horrible.”
But for all the bad blood between Spotify and Apple, it seems possible that the two companies could yet come to an agreement – much like Spotify did with Google over commissions it had to pay the tech giant for in-app purchases.
Under an agreement announced last year, users who downloaded the Spotify app through the Google Play store are given an option to pay either through Spotify’s payment system or through Google Play’s payment system.
“This will give everyone the freedom to subscribe and make purchases using the payment option of their choice directly in the Spotify app,” Spotify said in a statement.
“Spotify will continue to freely communicate with users about our Premium subscription service, promote discounts and promotions, and give listeners on our Free tier the ability to convert to Premium directly in the app.”Music Business Worldwide