Looks like there’s a bit of a brouhaha going on between Spotify and Apple.
Spotify claims both it and its customers are enduring “grave harm” because Apple has rejected an update to Spotify’s iOS app. In a letter sent to Apple general counsel Bruce Sewell, Spotify general counsel Horacio Gutierrez says that Apple denied the app update because of “business model rules” and that Spotify was told by Apple that Spotify would need to agree to Apple’s billing system if “Spotify wants to use the app to acquire new customers and sell subscriptions.” Spotify also claims that this “raises serious concerns under both U.S. and EU competition law.”
Apple charges a 30 percent monthly fee for services that use its iTunes billing service, and it has since 2011. Some apps agree to do this, and many end up charging customers a few bucks extra every month to offset Apple’s fee. For example, Spotify has been charging $13 per month for its Premium service in its iOS app, up from its normal $10 per month price. Services aren’t required to use the iTunes billing system, though, but they can’t use their app to promote their subscription outside of the app. This policy has been in place since 2011.
Spotify recently kicked off a new promo that let new subs sign up for Premium service for $0.99 for three months if they sign up on Spotify’s site. Spotify’s Gutierrez says that Apple threatened to pull Spotify’s app unless it stopped telling iOS users about that promo in its app. Spotify did, but it also stopped using its iTunes billing option.
Apple’s Bruce Sewell has responded to Spotify’s complaint, saying that the App Store guidelines apply equally to all app developers and that Apple didn’t change its guidelines when it launched its own music streaming service that competes with Spotify. Sewell also says that there’s “nothing in Apple’s conduct that ‘amounts to a violation of applicable antitrust laws’” and that Apple won’t give Spotify “special treatment and protections from competition.” You can read Sewell’s full response to Spotify right here.
This battle is between two major players in the mobile space, and it’s going to be interesting to see how it plays out. It certainly doesn’t sound like Apple is going to budge, and so Spotify may have to reinstitute the iTunes billing system that it’s used before or stop promoting subscriptions inside of its app. Now that Apple has responded to Spotify, we’ll have to wait and see how Spotify answers Apple’s letter.
