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Apple Hits Back At Spotify's Antitrust Complaint, Says Music Streamer Wants Free App Benefits While Charging Fee

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Apple Hits Back At Spotify's Antitrust Complaint, Says Music Streamer Wants Free App Benefits While Charging Fee

Apple Inc. (NASDAQ: AAPL) responded to an antitrust claim from streaming music provider Spotify Technology SA (NYSE: SPOT) in a Thursday statement, saying Spotify wants to reap all the benefits its App Store ecosystem offers without paying for them. 

What Happened

Spotify filed a legal complaint with the European Commission this week accusing Apple of engaging in unfair competition. Spotify argues Apple is acting as "both a player and referee" by simultaneously running its App Store and offering a rival streaming music service.

Apple charges Spotify and other apps a 30-percent fee on purchases made through its payment system, which Spotify said forces the company to charge a premium membership price compared to Apple Music. If Spotify or other apps attempt to bypass Apple's payment system, they receive "technical and experience-limiting restrictions."

The iPhone maker responded publicly Thursday and said Spotify used the App Store "to dramatically grow their business" over the years. But the Swedish tech company wants to "keep all the benefits" the App Store offers, especially the "substantial revenue that they draw," in Apple's view. 

Spotify's claims show it doesn't want to make "any contributions to that marketplace," according to Cupertino. 

Why It's Important

Spotify has "every right to determine their own business model," but a response is needed when it "wraps its financial motivations in misleading rhetoric about who we are," Apple said.

Apps that are free to users or generate revenue through ads aren't charged by Apple, the company said. Apple equally charges a fee to any company that sells digital goods and services.

"As Spotify points out, that revenue share is 30 percent for the first year of an annual subscription — but they left out that it drops to 15 percent in the years after," Apple said. 

What's Next

Spotify is asking the EU Commission to explore the following three demands: 

  • All apps should be subject to the same fair set of rules and restrictions, especially Apple Music. 
  • Consumers shouldn't be "locked in" to Apple's payment system.
  • App stores shouldn't have access to control communications between users and services.

Related Links:

Survey Hints At Strong Quarter For Spotify

Evercore: Spotify's Risk-Reward Profile Makes Bull Thesis 'Difficult' To Justify

Posted-In: App Store Apple Music European Commission Streaming musicNews Eurozone Legal Markets Best of Benzinga

 

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