And, now, a bit of disharmony in the music streaming business.
As reported Wednesday (March 13), Spotify, the music streaming juggernaut, has filed an antitrust complaint in Europe against another tech giant with a foothold in music streaming – that would be Apple, of course.
We’ll refrain from a refrain about music, and sour notes, and the growing drumbeat against Apple and other tech giants coming from regulators, etc.
The gist of the complaint focuses on allegations that Apple has abused its control of the Apple App Store in such a way that it restricts competition from other music streaming services.
The Wall Street Journal reported the complaint was filed with the European Union’s antitrust division on Monday (March 11), and alleges that Apple has restrictions in place limiting the apps that appear in the App Store, and thus limiting the services that compete with Apple Music.
The Spotify allegations state, a bit more granularly, that Apple has made it “difficult” for those competitors to reach App Store users without using Apple’s own payment option, which, it has been widely reported, takes a significant percentage of transactions, at about 30 percent.
As always, pricing matters in the world of business, and seems to have been a spur for Spotify to file its suit. Spotify has said it was pressured to use the Apple billing system (see the 30 percent cut mentioned above), which means the company had to boost its price in Europe from 9.99 euros to 12.99 euros.
Spotify eventually walked away from the in-app payment setup, which meant users had to upgrade through other means, such as laptops, as Reuters noted. Spotify also said apps could not link to pages with promotional information, a feature tied to Apple phones but not to Android phones.
By way of competitive – or anti-competitive – actions, Spotify has also said Apple had on occasion rejected security updates.
As quoted by The Journal, Horacio Gutierrez, Spotify’s general counsel, has said “apps should compete on merits, not who owns the app store.” The EU, for its part, has said the complaint is being assessed, so we might assume the legal machinery is grinding on. Added Gutierrez: “Once Apple became not only a platform provider, but also a direct competitor, their incentive to disadvantage rival services, like Spotify, became even greater, and their restrictions started to become more frequent and extreme.”
For Apple, the complaint is the first one that has come to the EU and is focused on the App Store. It’s the latest bit of news that shines a spotlight on debates over the business practices of marquee tech names across social media, data, commerce, hardware and software, such as Google, Facebook, Amazon … well, you name it. The fines have been significant when it comes to competitive issues, as illustrated by Google, which over the last few years has been fined $7.7 billion for alleged anticompetitive actions.
Might the complaint – and the legal aftermath – have a ripple effect on platforms in general? The EU is reportedly “close,” stated the report, to putting new rules in place that would force tech giants to be a bit more transparent in how they operate with the companies that use those platforms. Spotify has said Apple had created “obstacles” for those rivals that were allegedly unjustified or arbitrary, in effect favoring Apple.
The allegations come as Apple, of course, has been moving away from a reliance on hardware (such as iPhones) and more toward an ecosystem that relies on recurring revenues and services. As Karen Webster noted in this space late last year, firms like Spotify have had to pay the fees if the consumer is acquired through the App Store, even if most of the service’s consumption takes place away from the platform.
It’s too early to tell what the actions of the EU might be, as the antitrust suit has just been filed – but the spotlight, we note, shines a little brighter.