Apple Says Spotify Only Pays 15% Fee on About 0.5% of Subscribers in Response to App Store Complaint

Apple has filed a response to Spotify's anticompetitive complaint about the App Store in Europe, noting that Spotify pays Apple a 15 percent commission for only about 0.5 percent of its paying subscribers, according to CNET.


That figure equates to around 680,000 users who subscribed to Spotify through its iOS app, via Apple's in-app purchase system, between 2014 and 2016. This is because Apple only collects a 30 percent commission for the first year of a subscription, at which point the fee drops to 15 percent.

Apple's response comes three months after Spotify announced it had filed an antitrust complaint against Apple with the European Commission over unfair App Store practices. Spotify took particular issue with Apple charging a 30 percent "tax" on App Store purchases, calling it "discriminatory":
Apple requires that certain apps pay a 30% fee for use of their in-app purchase system (IAP) – as is their prerogative. However, the reality is that the rules are not applied evenly across the board. Does Uber pay it? No. Deliveroo? No. Does Apple Music pay it? No. So Apple gives the advantage to its own services.
Apple only charges a commission on in-app purchases tied to digital goods, which is why apps like Uber and Deliveroo are exempt.

Apple also forbids Spotify and other developers from alerting users that they can sign up for a subscription or complete a purchase outside of its iOS app, and disallows Spotify from advertising deals to its customers in the app or by email, as these practices would circumvent Apple's in-app purchase system.

Apple has faced increasing scrutiny as of late over the way it runs its App Store. In response, Apple said the App Store "welcomes competition," noting that it was created to be "a safe and trusted place for customers to discover and download apps" and "a great business opportunity for all developers."

Apple previously labeled Spotify's complaint as "misleading rhetoric" and claimed that "Spotify wants all the benefits of a free app without being free."

European Commission regulators will now review Apple's response as part of its probe.


This article, "Apple Says Spotify Only Pays 15% Fee on About 0.5% of Subscribers in Response to App Store Complaint" first appeared on MacRumors.com

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European Regulators Awaiting Response From Apple After Spotify Called the App Store a Monopoly

The European Commission is awaiting a response from Apple after Spotify accused the iPhone maker of anticompetitive business practices in relation to its App Store, said the European Union's antitrust chief Margrethe Vestager.


"We are looking into that and we have been asking questions around in that market but of course also Apple themselves, for them to answer the allegations. And when they come back, we will know more," said Vestager, speaking on the sidelines of an economic conference, according to Reuters.

In March, Spotify announced it had filed an antitrust complaint against Apple with the European Commission over unfair App Store practices. Apple responded two days later, labeling the complaint as "misleading rhetoric" and arguing that "Spotify wants all the benefits of a free app without being free."

In a blog post, Spotify founder and CEO Daniel Ek took particular issue with Apple charging a 30 percent "tax" on App Store purchases. This results in Spotify charging existing subscribers $12.99 per month for its Premium plan via the App Store just to collect nearly the $9.99 per month it charges normally.

Apple also forbids developers from alerting users that they can sign up for a subscription or complete a purchase outside of an app, which would bypass Apple's commission on in-app purchases tied to digital goods.

Spotify later said "every monopolist will suggest they have done nothing wrong" and that Apple's response was "entirely in line" with its expectations.

Apple has faced increasing scrutiny as of late over the way it runs its App Store, beyond Spotify's complaint. In the United States, for example, the Supreme Court recently ruled that a class action lawsuit accusing Apple of operating an App Store monopoly can proceed to trial in a lower court.

Parental control app developers have also petitioned Apple to release a public API for its Screen Time feature to ensure a fair playing field on the App Store, while the Netherlands is investigating whether or not Apple favors its own apps.

In response, Apple added a new page to the App Store section of its website titled Principles and Practices, noting that the App Store was created with two goals: to be "a safe and trusted place for customers to discover and download apps" and "a great business opportunity for all developers."


Apple emphasized that the App Store "welcomes competition" and listed many examples of third-party apps that compete with its own apps, such as Spotify versus Apple Music and Google Maps versus Apple Maps.
We believe competition makes everything better and results in the best apps for our customers.

We also care about quality over quantity, and trust over transactions. That's why, even though other stores have more users and more app downloads, the App Store earns more money for developers. Our users trust Apple — and that trust is critical to how we operate a fair, competitive store for developer app distribution.
The deadline for Apple's response to the European Commission is unclear.


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EU to Investigate Apple Over Spotify’s Antitrust Complaint

Apple is to be formally investigated by the European Commission after Spotify accused the company of using the App Store to deliberately disadvantage other app developers.


According to a report by the Financial Times, EU competition commission has decided to launch a formal antitrust investigation into Apple's conduct "in the next few weeks" after surveying customers, rivals and others in the market.

Spotify in March filed an antitrust complaint against Apple with the EU in which it argued that the iPhone maker enforced App Store rules that "purposely limit choice and stifle innovation at the expense of the user experience."

Apple swiftly hit back at the accusation, labeling it as "misleading rhetoric" and arguing that "Spotify wants all the benefits of a free app without being free."

Spotify's complaint focuses on Apple's policy of charging a 30 per cent fee on App Store purchases, which means Spotify has to charge existing subscribers $12.99 per month for its Premium plan via the App Store just to collect its standard $9.99 per month charge.

Spotify CEO Daniel Ek claimed that the policy gives Apple an "unfair advantage," since Spotify is unable to fairly compete with Apple Music's standard $9.99 per month price within the App Store.

Alternatively, if Spotify chooses not to collect payments via the App Store, Ek said that Apple "applies a series of technical and experience-limiting restrictions" on the company. Over time, this has also included "locking Spotify and other competitors out of Apple services such as Siri, HomePod, and Apple Watch."

The EU can force companies to change business practices they deem unlawful and levy fines of up to 10 per cent of a company's global turnover. However, investigations by the European Commission can take years to resolve unless the companies involved offer to settle the probes by making legally binding agreements to change their behavior.

For further details on each company's stance on the issue, see Spotify's Time to Play Fair website and Apple's press release addressing Spotify's claims.


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Spotify Files Complaint Against Apple With European Regulators Over ‘Unfair’ App Store Practices

Spotify has filed a complaint against Apple with the European Commission, accusing the iPhone maker of enforcing App Store rules that "purposely limit choice and stifle innovation at the expense of the user experience" and "acting as both a player and referee to deliberately disadvantage other app developers."


In a blog post, Spotify founder and CEO Daniel Ek took particular issue with Apple charging a 30 percent "tax" on App Store purchases. This results in Spotify charging $12.99 per month for its Premium plan via the App Store just to collect nearly the $9.99 per month it charges outside of the App Store.

Ek believes this gives Apple an "unfair advantage," since Spotify is unable to fairly compete with Apple Music's standard $9.99 per month price within the App Store. This is a big deal given there are over a billion active iOS devices.

As an alternative, if Spotify chooses not to collect payments via the App Store, Ek notes that Apple "applies a series of technical and experience-limiting restrictions" on the company. Over time, this has also included "locking Spotify and other competitors out of Apple services such as Siri, HomePod, and Apple Watch."


Ek stresses that this is "not a Spotify-versus-Apple issue" and simply about seeking "the same fair rules for companies young and old, large and small."

Apps like Uber and Deliveroo, for example, are allowed to collect payments directly from customers since they offer "goods or services that will be consumed outside of the app," according to Apple's App Store guidelines. Unlike Spotify, this allows these apps to bypass Apple's 30 percent commission.

Ek summarized what he is asking for into three points:
  • "First, apps should be able to compete fairly on the merits, and not based on who owns the App Store. We should all be subject to the same fair set of rules and restrictions—including Apple Music."
  • "Second, consumers should have a real choice of payment systems, and not be 'locked in' or forced to use systems with discriminatory tariffs such as Apple's."
  • "Finally, app stores should not be allowed to control the communications between services and users, including placing unfair restrictions on marketing and promotions that benefit consumers."
Ek notes that Spotify tried "unsuccessfully" to resolve the issues directly with Apple, leading to its carefully considered complaint with the European Commission. Spotify is based in Stockholm, Sweden.

Spotify has launched a "Time To Play Fair" website and shared a companion video to inform customers about its complaint.


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European Regulators Concerned Apple’s Proposed Shazam Acquisition Could Hurt Competitors Like Spotify

The European Commission today announced it has opened an in-depth investigation into Apple's proposed acquisition of Shazam.


The regulators are concerned that the merger could reduce choice for users of streaming music services in Europe. In particular, they believe that Apple could gain access to sensitive data that could allow Apple to directly target its competitors' customers and encourage them to switch to Apple Music.

While the European Commission did not name any specific services, Apple Music's biggest rival in Europe is Spotify, headquartered in Stockholm, Sweden. Other competitors include Deezer, Tidal, and Google Play Music.

European Commission competition chief Margrethe Vestager:
The way people listen to music has changed significantly in recent years, with more and more Europeans using music streaming services. Our investigation aims to ensure that music fans will continue to enjoy attractive music streaming offers and won't face less choice as a result of this proposed merger.
In addition, the European Commission said it will investigate whether Apple Music's competitors would be harmed if Apple were to discontinue referrals from the Shazam app to them following the acquisition. Shazam's app currently integrates with multiple services, including Spotify and Deezer.

The regulators have set a September 4, 2018 deadline to reach a decision, delaying an Apple-Shazam merger for at least 90 days.

Apple announced its plans to acquire Shazam in December, describing the two companies as a "natural fit" with "exciting plans" ahead. In February, the European Commission received requests from Austria, France, Iceland, Italy, Norway, Spain, and Sweden to assess the deal under European merger law.

Shazam is a popular service that can identify the name and lyrics of songs, music videos, TV shows, and more. It has apps across iPhone, iPad, Apple Watch, iMessage, and Mac, while the service has been built into Siri since iOS 8.


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European Regulators Set April 23 Deadline to Decide on Apple’s Proposed Shazam Acquisition

The European Commission today announced it has set a provisional deadline of April 23 to decide on Apple's proposed acquisition of Shazam.


Last month, the regulatory body said it would consider whether Apple's purchase of the popular music identification service may lead to a significant adverse effect on competition in Europe, after Austria, France, Iceland, Italy, Norway, Spain, and Sweden requested the deal be assessed under European Union merger law.

The European Commission didn't specify how the deal could hurt competition, but Shazam does have partnerships with European companies like Spotify that could be affected by the acquisition. However, it's standard for major acquisitions to be subject to review, so the deal will likely be approved without any scrutiny.


Apple announced its plans to acquire Shazam in December in a statement provided to MacRumors and other publications:
We are thrilled that Shazam and its talented team will be joining Apple. Since the launch of the App Store, Shazam has consistently ranked as one of the most popular apps for iOS. Today, it's used by hundreds of millions of people around the world, across multiple platforms. Apple Music and Shazam are a natural fit, sharing a passion for music discovery and delivering great music experiences to our users. We have exciting plans in store, and we look forward to combining with Shazam upon approval of today's agreement.
Shazam is a popular service that can identify the name and lyrics of songs, music videos, TV shows, and more. It has apps across iPhone, iPad, Apple Watch, Mac, and iMessage, while the service has been built into Siri since iOS 8. The app is also integrated with streaming music services like Apple Music and Spotify.

In addition to Shazam, Apple this week announced it plans to acquire digital magazine subscription service Texture to be integrated into Apple News.


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European Regulators to Review if Apple Acquiring Shazam Will Significantly Hurt Competition

The European Commission today announced it has accepted requests from Austria, France, Iceland, Italy, Norway, Spain, and Sweden to assess Apple's proposed acquisition of Shazam. The agreement is still pending approval.


The regulatory body will consider whether the transaction may lead to a significant adverse affect on competition in Europe:
On the basis of the elements submitted by Austria and the countries joining the referral request, and without prejudice to the outcome of its full investigation, the Commission considers that the transaction may have a significant adverse effect on competition in the European Economic Area. The Commission has also concluded that it is the best placed authority to deal with the potential cross-border effects of the transaction.
Apple confirmed it plans to acquire Shazam in December in a statement provided to MacRumors and other publications:
We are thrilled that Shazam and its talented team will be joining Apple. Since the launch of the App Store, Shazam has consistently ranked as one of the most popular apps for iOS. Today, it's used by hundreds of millions of people around the world, across multiple platforms. Apple Music and Shazam are a natural fit, sharing a passion for music discovery and delivering great music experiences to our users. We have exciting plans in store, and we look forward to combining with Shazam upon approval of today's agreement.
Shazam is a popular service that can identify the name and lyrics of songs, music videos, TV shows, and more. It has apps across iPhone, iPad, Apple Watch, Mac, and iMessage, while the service has been built into Siri since iOS 8. The app is also integrated with streaming music services like Apple Music.

In September 2016, Shazam announced that its mobile apps had been downloaded more than one billion times since launching. Shazam's original iPhone app launched in 2008, and uses machine learning algorithms to identify audio clips. The app has since expanded into areas like augmented reality.


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E.U. to Take Ireland to Court For Failing to Claim Apple Tax

The European Commission said on Wednesday it will take Ireland to court for its failure to recover up to 13 billion euros ($15.3 billion) of tax due from Apple (via Reuters). Apple was ordered to pay the unpaid taxes in August 2016 after the Commission ruled that the company had received illegal state aid.

The Commission argued that Irish revenue commissioners gave Apple unfair advantage between 1991 and 2007 by allowing the company to move income from the European market through two "non-resident" head office subsidiaries based in Ireland. Ireland vowed to appeal the ruling.
“More than one year after the Commission adopted this decision, Ireland has still not recovered the money,” EU Competition Commissioner Margrethe Vestager said, adding that Dublin had not even sought a portion of the sum.

“We of course understand that recovery in certain cases may be more complex than in others, and we are always ready to assist. But member states need to make sufficient progress to restore competition,” she added.

The Commission said the deadline for Ireland to implement its decision had been Jan. 3 this year and that, until the aid was recovered, the company continued to benefit from an illegal advantage.
Ireland's finance ministry said it had never accepted the Commission's analysis in the Apple state aid decision, but would collect the money due pending Dublin's own appeal of the ruling.

"It is extremely regrettable that the Commission has taken this action, especially in relation to a case with such a large scale recovery amount," the ministry said in a statement.

Apple claimed earlier this year that the Commission made "fundamental errors" when it ruled that the company owed Ireland the unpaid taxes plus interest, and argued that the profits to those activities were attributable to the United States.

Apple CEO Tim Cook has called the EC's ruling "total political crap" and described the lower end 0.005 percent tax rate Apple is accused of paying as a "false number". The Apple CEO has previously said he believes the decision will be reversed.

In addition, Vestager announced a demand for Amazon to pay around 250 million euros in taxes to Luxembourg. Amazon denied it owed any back tax, and claimed it had not received any "special treatment" from Luxembourg.

"We will study the Commission's ruling and consider our legal options, including an appeal," an Amazon spokesperson said.

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