Spotify drops antitrust bomb on the "Apple tax"

Spotify CEO Daniel Ek

The investment firm said such interference "holds no practical goal other than to force competitive services into higher cost structures and unfairly tax service activity on the iOS platform".

Apple wields its App Store as a cudgel to stifle innovation, weaken competition and unfairly tax its rivals, Spotify CEO Daniel Ek said in a post Wednesday, after the world's biggest music streaming service filed a complaint with European regulators.

Apple's app store is an important distribution platform for Spotify. Complicating things, there are plenty of transactions that flow through iOS that Apple doesn't extract it's 30 percent from - rideshare services and food delivery apps, for instance (the most obvious distinction is that these apps facilitate physical purchases, not just the purchase of digital goods and services).

At the time, Spotify's then-Head of Global Head of Communications and Public Policy, Jonathan Prince, said: "You know there's something wrong when Apple makes more off a Spotify subscription than it does off an Apple Music subscription and doesn't share any of that with the music industry".

The primary issues here are the 30 percent cut that Apple takes from nearly every transaction that goes through its system, and the alleged preferential treatment that Apple gives to its first-party streaming option (and direct competitor to Spotify), Apple Music.

"As an alternative, if we choose not to use Apple's payment system, forgoing the charge, Apple then applies a series of technical and experience-limiting restrictions on Spotify", he said.

For example, they won't let us market to our customers who use our app on iOS.

"To keep our price competitive for our customers, [this price inflation] isn't something we can do", Spotify CEO Daniel Ek said in a statement. Ek adds that Apple also "routinely blocks our experience-enhancing upgrades".

Ek said that Spotify is not asking for special treatment but would like Apple to treat it like other apps that are not subject to the 30 percent fee.

Apple hasn't as of the time of this writing responded to requests for comments about Spotify's action, while a spokesperson for the European Commission told The Wall Street Journal that Spotify's complaint has been received and is being reviewed. When Apple (NASDAQ:AAPL) launched its music service in the European Union, they were able to be both the platform holder as well as a competitor to Spotify.

Ek called for apps to be able to compete on their merits, not based on who owns the App Store.

But the obvious question is why Spotify isn't also going after Google, which also charges a levy for apps on its app store and has a music-streaming service. He also wants customers to have "a real choice of payment systems".

We've reached out to both companies and will update if we hear back. We want the same fair rules for companies young and old, large and small.



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