Spotify Files Complaint Against Apple With European Commission Over App Store

Thomas Trutschel/Photothek via Getty Images
The Spotify logo displayed on a smartphone on Dec. 17, 2018.

In a blog post today (March 13), Spotify CEO Daniel Ek wrote that his company has filed a complaint with the European Commission against Apple, alleging that rules governing its App Store "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."

The European Commission, Ek notes, oversees fair and nondiscriminatory competition in business practices. Ek acknowledges that Apple Music is a direct competitor to Spotify, yet through its App Store, "they continue to give themselves an unfair advantage at every turn." While the two companies attempted to work it out directly, he says, those efforts were unsuccessful, leading to today’s action.

Ek points to several examples as reasoning for the complaint, including Apple’s requirement that Spotify and other digital services pay a 30 percent tax when using Apple’s payment system, which comes into play when users of Spotify’s free tier attempt to upgrade to its premium subscription model, which Spotify has to pay itself in order to avoid passing the cost along to its customers. If the service doesn’t use Apple’s payment system, he says, Apple limits its ability to interact with its users -- including in sending messages to its free users about promotions or discounts for its premium tier.

"We aren’t seeking special treatment," Ek says. "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."

In the post, Ek lays out three requests that Spotify is asking of Apple: that all apps compete fairly with the same set of rules and restrictions; that consumers be allowed to choose which payment systems they use; and that all app stores be restricted from controlling communications between an app and its customers.

This is hardly the first time this issue has arisen over Apple's App Store; Spotify itself has been pushing back on this point for some three years now, and Spotify and Netflix have been directing their users to sign up in ways other than through Apple's App Store to avoid the exact same fees since at least last August. In 2016, the company sent a letter to Apple's top attorney and some lawmakers on Capitol Hill in Washington, D.C. for blocking an app update that would help users bypass such fees, saying Apple was "causing grave harm to Spotify and its customers." In August, the U.S. Supreme Court agreed to hear an antitrust lawsuit against Apple over its App Store practices, as well. (This differs from the Google Play store, which offers users a choice in payment methods.)

"[L]et me be clear that this is not a Spotify-versus-Apple issue," Ek writes. "We want the same fair rules for companies young and old, large and small. It is about supporting and nurturing the healthy ecosystem that made our two companies successful in the first place.

"Consumers win and our industry thrives when we’re able to challenge each other on fair footing. That’s what competition on the merits is all about."

This is not the first legal proceeding that has seen Spotify in the headlines in the past week. On March 7, Spotify, along with Google, Pandora and Amazon, filed notices that they plan to appeal the Copyright Royalty Board's (CRB) rate determinations, finalized last month, a plan that has received massive pushback from songwriter groups including the NMPA. Apple, notably, did not join that plan to appeal. In a conference call this morning, Spotify general counsel Horacio Gutierrez said the two issues were not related.

Gutierrez also noted that Spotify's relationship with Apple goes back a decade, to when it first debuted in the Apple Store in 2009, but noted that issues began two years later, when Apple introduced its payment system restrictions. Spotify fought against those restrictions until 2014, when they were forced to comply or be faced with expulsion from the App Store; Apple, he noted, was at that point in the process of creating Apple Music, which would debut in 2015 and is now Spotify's biggest global competitor.

"We’ve consistently tried to play by the rules," he said, adding that the company even conveniently put together a timeline -- via a website called Time To Play Fair -- of Apple's changing restrictions. "It’s clear why they’ve changed: Spotify is a competitor to Apple Music. Full stop. ... All these actions by Apple have made it untenable to us as a competitor."

So far, Spotify is the only company challenging Apple in court over these practices, though Gutierrez said that "we know others feel equally frustrated," and that during the process before the EC, there will be opportunity for other companies to submit opinions, should the EC seek them. And though Deezer is not joining the litigation or issuing its own legal challenge, a spokesperson for the company confirmed it is in a similar position.

"Streaming is one of the most competitive industries in the world," the Deezer spokesperson told Billboard. "We support Spotify in wanting a level playing field so companies have to compete through innovation, content and customer focus. At the moment, this is not the case. We look forward to the European Commission’s response to Spotify and will follow this issue closely."

"We’ve reached the point where we believe, in absence of regulatory intervention, conditions will hurt Spotify and other developers who want to be on the app under the same restrictions," Gutierrez said on the call. "But we believe we have no other choice."

Additional reporting by Richard Smirke.

Spotify also released a video on YouTube spelling out their complaints, which can be seen below.

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