As the streaming wars rage on, Spotify and Apple have clashed once again. This time, however, it’s not over exclusivity or user numbers, but billing practices. Spotify has lodged a complaint with members of Congress that Apple has blocked the latest update to the Spotify app because it doesn’t force users to use Apple’s billing system.
Basically, Apple charges a 30% fee for all subscriptions or purchases made within an app like Spotify. That inflates the cost a monthly Spotify subscription from $10 to $13, unless you sign up through the streaming giant’s website. Currently, the Spotify iOS app actually doesn’t given users the option to subscribe through the app, thus circumventing Apple’s billing system. They allege this is why the App Store has blocked the latest update.
Though neither company has publicly comment commented on the reports, it would appear that this is one tricky way Apple is trying to bring users to its own streaming platform, Apple Music, which costs $9.99 a month. The idea being that if music streamers either don’t have the option to subscribe through the Spotify app or notice that it’s actually more expensive to do so, they may decide to switch over to the built-in Apple Music service and spend their money there.
In a letter to Apple general counsel Bruce Sewell and distributed to members of Congress, Spotify general counsel Horacio Gutierrez said Apple’s behavior is “causing grave harm to Spotify and its customers.”
“This latest episode raises serious concerns under both U.S. and EU competition law,” Gutierrez wrote. “It continues a troubling pattern of behavior by Apple to exclude and diminish the competitiveness of Spotify on iOS and as a rival to Apple Music, particularly when seen against the backdrop of Apple’s previous anticompetitive conduct aimed at Spotify … we cannot stand by as Apple uses the App Store approval process as a weapon to harm competitors.”
The disagreement may not be as petty as it seems, as even lawmakers like Massachusetts Senator Elizabeth Warren are suggesting a closer look be taken at Apple’s practices. At a conference in Washington, DC on Wednesday, Warren argued that corporations like Google, Apple, and Amazon, while providing an important resource for many smaller companies, can also use their platforms and powers “to snuff out competition.” She specifically mentioned that Apple has stacked the deck against Spotify in its battle to complete with Apple Music. Penalizing Spotify for not wanting to force its user base to give them extra money certainly seems like a double backhanded move.
Update: In a letter obtained sent to Spotify and obtained by Buzzfeed, Sewell denied that Apple’s behavior was inappropriate. “There can be no doubt that Spotify has benefited enormously from its association with Apple’s App Store,” Sewell wrote. “Since joining the App Store in 2009, Apple’s platform has provided you with over 160 million downloads to your app, resulting in hundreds of millions of dollars in incremental revenue to Spotify. That’s why we find it troubling that you are asking for exemptions to rules we apply to all developers, and are publicly resorting to rumors and half-truths about our service.”
Read the letter in full below: