Apple Inc. is making it difficult for the streaming music firm to compete by blocking a new version of its app, says market leader – Spotify. By rejecting an update to Spotify’s iOS app, the Cupertino-based firm is causing harm to Spotify and its customers, says the music service in a letter sent to Apple’s top lawyer this week.
Spotify vs. Apple
Apple Inc. turned down a new version of the Spotify app citing business module rules, says the letter. It further says, the iPhone maker demanded Spotify use Apple’s billing system if it wants to use the app to sell subscriptions and acquire new customers.
The letter was sent to Apple’s general counsel – Bruce Sewell – by Spotify’s general counsel – Horacio Gutierrez – on June 26. This suggests that the music service wants to use the standoff as its weapon in its battle over Apple’s rules, which govern subscription services for the App store.
Gutierrez wrote that the latest episode raises serious concerns under both EU and U.S. competition law. “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,” Gutierrez said.
Also, Spotify has distributed copies of the letter to some Congressional staff in Washington, D.C. Recently, Apple, Google and Amazon were criticized by Senator Elizabeth Warren over using their control to phase out competition.
Forcing terms on rivals
Spotify has argued publicly, and to various regulator in Europe and the U.S., that Apple’s subscription policies are in favor of Apple Music, and punish third-party music services that use its platform.
Apple Inc. does not require subscription services to use its iTunes billing service, but it does not let them use an alternate payment system within the app. The iPhone maker charges a monthly fee of up to 30% for those that use its billing system. In 2011, when Apple introduced these policies, they created a lot of drama, but many publishers eventually ended up agreeing to use Apple’s in-app billing option and pay Apple’s fee.
For years, Spotify has used Apple’s billing system, but later passed on the fee to the consumers by charging $13 a month. Outside Apple store though, the music service charges only $10 a month.
Spotify began a new end-run via a promotional campaign last fall, offering new subscribers the chance to get three months of the service for $0.99, on the condition that they sign up via Spotify’s own site. Apple threatened to remove the app from its store unless Spotify stopped telling the iPhone users about the promotion, says Gutierrez.
On Thursday, Apple shares closed up 1.27% at $95.60. Year to date, the stock is down almost 11% while in the last one-year, it is down almost 25%. the stock has a 52-week high of $132.97 and a 52-week low of $89.47.