Beyond Spotify's competition with Apple's own subscription streaming service, Apple Music, at the root of the issue are Apple's App Store policies it launched in 2011 that prohibit participating iOS apps to use payment systems other than its own iTunes system within an app. Since Apple Music launched a year ago, Spotify has publicly argued that this subscription policy punishes third-party streaming services, such as its own, with a 30 percent monthly fee on apps that use its billing system, effectively giving its own native service a leg up.
Spotify had passed Apple's fee on to its customers by charging $13 a month through the App Store instead of the standard $10 it charges otherwise, while using a 99 cent promotional rate to further drive users to subscribe through its own website. But, most recently, Apple reportedly threatened to remove the Spotify app from its store altogether if the company continues to advertise that campaign. Spotify complied, but also turned off its App Store billing option.
Now matters have come to a head with an updated version of Spotify's app that has been blocked from the iOS App Store. Spotify's letter, which was sent by Spotify general counsel Horacio Gutierrez to Apple general counsel Bruce Sewell on Sunday, suggests this will be used to challenge Apple's "business model rules" for subscription services in its App Store.
Spotify Hits New Active User Milestone
"This latest episode raises serious concerns under both U.S. and EU competition law," Gutierrez's letter states. "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."
On Wednesday, Sen. Elizabeth Warren (D-Mass.) delivered a speech criticizing Apple and other mega-corporations' business practices, saying their consolidation and concentration of various business sectors "threatens our markets, threatens our economy, and threatens our democracy."
She continued, "Google, Apple and Amazon provide platforms that lots of other companies depend on for survival. But Google, Apple and Amazon also, in many cases, compete with those same small companies, so that the platform can become a tool to snuff out competition."
With Spotify's more than 30 million paying subscribers -- per a report in March -- Spotify by no means is a small company, but is taking this opportunity to its advantage in the ongoing streaming wars that show Apple Music has been making ground. This month, Apple Music reported 15 million subscribers of its own.