Spotify files complaint against Apple’s ‘unfair’ App Store fees

Spotify files complaint against Apple’s ‘unfair’ App Store fees

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Spotify is adding 2x as many monthly subscribers as Apple Music
Spotify is adding 2x as many monthly subscribers as Apple Music
Photo: Spotify

Spotify has filed a legal complaint against Apple for what it believes is anti-competitive behavior.

The music streaming service, like many others, has an issue with the 30 percent cut Apple charges on App Store revenue. Spotify says Apple makes it very difficult to avoid the fee, which makes some services more expensive.

If you subscribe to Spotify in your web browser, it’ll cost you $9.99 a month — the same as Apple Music.  If you subscribed on an iOS device (before Spotify removed this option), you’ll be paying $12.99 a month.

Spotify was forced to raise its subscription fee on iOS to make up for the 30 percent cut Apple was charging on every sale. This made its service more expensive than Apple Music, and Spotify isn’t happy about it.

Spotify takes aim at App Store fees

Spotify started encouraging customers to boycott in-app purchases for its own Premium subscription in 2015. It sent out emails to its customers urging them to subscribe directly through its website instead to save $3 a month.

The Swedish firm has since removed the option to subscribe on iOS. But it hasn’t dropped its grudge against Apple. In a new complaint filed in Europe this week, Spotify accuses the iPhone-maker of anti-competitive behavior.

Spotify says that Apple’s hefty cut of App Store revenues, which forces many developers to increase prices, is unfair. It prevents its service from competing with Apple Music on a level playing field.

Spotify tried to reach an agreement with Apple

“In recent years, Apple has introduced rules to the App Store that purposely limit choice and stifle innovation at the expense of the user experience — essentially acting as both a player and referee to deliberately disadvantage other app developers,” writes Spotify CEO Daniel Ek in an open letter.

“If we pay this tax, it would force us to artificially inflate the price of our Premium membership well above the price of Apple Music … After trying unsuccessfully to resolve the issues directly with Apple, we’re now requesting that the EC [European Commission] take action to ensure fair competition.”

Spotify used to make a lot of money for Apple. Before it stopped selling Premium subscriptions through the App Store in 2016, it had one of the highest-grossing apps in the U.S. and around the world.

Spotify isn’t the only company ditching in-app purchases

Sensor Tower data indicates Spotify raked in around $22.2 million through App Store subscriptions in November 2015. That would have earned Apple approximately $6.6 million. Even those who chose Spotify over Apple Music were making Apple a pretty penny, then.

Spotify couldn’t avoid that 30 percent cut, or negotiate a smaller fee with Apple. So it decided to remove App Store billing altogether. And it’s not the only major service provider to make this move.

Netflix announced it would no longer be selling subscriptions through the App Store back in January. New subscribers have to sign up directly through the Netflix website instead.

Big fees aren’t good for Apple customers

Many of those who do continue to sell subscriptions and items through the App Store tend to charge more for them to make up for Apple’s cut. This means that iOS users, not just app developers, are suffering, too.

Fortnite, the hit title from Epic Games, charges players $7.99 for 1,000 V-Bucks (its in-game currency) on console and PC. Buy the same amount of coins on iOS and you’ll have to fork out $9.99.

Epic has been able to avoid these fees on Android by circumventing Google Play. Android users can download its game directly from the Epic website. Apple doesn’t allow this on iOS.

What Spotify wants from Apple

“We aren’t seeking special treatment,” Ek explains. “We simply want the same treatment as numerous other apps on the App Store, like Uber or Deliveroo, who aren’t subject to the Apple tax and therefore don’t have the same restrictions.”

Spotify wants all apps to be treated fairly. Ek believes “we should all be subject to the same fair set of rules and restrictions” — including Apple Music. It also wants consumers to have a “real choice” of payment systems and not be locked in to using “discriminatory tariffs such as Apple’s.”

Finally, Spotify wants to see changes that prevent app stores from being allowed to control the communications between services and users, “including placing unfair restrictions on marketing and promotions that benefit consumers.”

It will be incredibly interesting for developers and Apple users how the EC responds to Spotify’s complaint. The vast majority will feel that it’s about time someone really fought back against Apple’s fees.