Apple hits back against Spotify’s App Store ‘tax’ complaint

PARIS, FRANCE – JANUARY 06: In this photo illustration, the logo of the Swedish music streaming service Spotify is displayed on the screen of an iPhone on January 06, 2017 in Paris, France. Spotify announced, via a tweet published Thursday, that it now has 70 million paid subscribers. As a comparison, in September, Apple Music claimed 30 million subscribers and Deezer had fewer than 10 million subscribers. Spotify, the world’s largest streaming music company, is expected to be listed on the Wall Street stock market in the first quarter of 2018. (Photo by Chesnot/Getty Images)

Apple has fired back against Spotify in an unusual press release that argues the music streaming service “wants all the benefits of a free app without being free.” Spotify filed an antitrust complaint against Apple in Europe earlier this week, with CEO Daniel Ek arguing that App Store policies give Apple an “unfair advantage at every turn.” But Apple’s statement makes the case that Spotify’s claims are misleading.

“The only contribution that Apple requires is for digital goods and services that are purchased inside the app using our secure in-app purchase system,” Apple’s statement says in retort. “As Spotify points out, that revenue share is 30 percent for the first year of an annual subscription — but they left out that it drops to 15 percent in the years after.” Ek had complained about the 30 percent “tax” that Apple levies on subscriptions made from within the app.

Apple further notes that most Spotify customers use the free version of the app and that many premium subscribers are on plans promoted by mobile carriers, neither of which makes any money for Apple. “A tiny fraction of their subscriptions fall under Apple’s revenue-sharing model,” Apple says. “Spotify is asking for that number to be zero.”

The statement continues:

Let’s be clear about what that means. Apple connects Spotify to our users. We provide the platform by which users download and update their app. We share critical software development tools to support Spotify’s app building. And we built a secure payment system — no small undertaking — which allows users to have faith in in-app transactions. Spotify is asking to keep all those benefits while also retaining 100 percent of the revenue.

Spotify wouldn’t be the business they are today without the App Store ecosystem, but now they’re leveraging their scale to avoid contributing to maintaining that ecosystem for the next generation of app entrepreneurs. We think that’s wrong.

Apple also says it finds Spotify’s allegations of Apple Watch app rejections “surprising,” claiming it “reviewed and approved [the app] with the same process and speed with which we would any other app” in September 2018. (The app was released in November of that year.) Spotify’s arguments do make it sound like it wanted to develop an app beyond the scope of what Apple would allow third-party developers to create for early versions of watchOS.

Apple’s statement is descriptive of its own policy, but it doesn’t address all of Spotify’s concerns. For example, while it acknowledges that the “only contribution that Apple requires is for digital goods and services that are purchased inside the app using our secure in-app purchase system,” it doesn’t explain why a subscription to Spotify’s “digital goods” should be subject to a transaction fee when a “physical” Uber ride or Seamless delivery aren’t, or why Spotify shouldn’t have the same option to handle payments itself within the app. Apple also repeats the technically dubious claim that Spotify is “suing music creators” to avoid paying higher royalties.

This week’s PR blitz from both Spotify and Apple has been unprecedented, and it’s unlikely that today’s statement will settle the matter. If anything, it’s likely to inflame it.

Source: The Verge

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