Spotify Says Apple Unfair, Apple Says Spotify Doesn’t Want to Play by the Rules

Spotify and Apple are having a public spat, and it’s not exactly going well for Spotify. Spotify has publicly accused Apple of rigging the game for streaming music, and it even ginned up a situation it could hang a whinge on. It was a transparent ploy and Apple called the company on it. In Public.

The Setup

The short version of what happened is that Spotify removed the in-app purchase option from its iOS app. In its place was a signup process that directed customers to the Spotify website, but it technically did so through an email sent after users tapped something in-app.

This is a direct violation of App Store guidelines, rules that have been in place for years. While Apple doesn’t require an in-app purchase option for apps that deliver subscriptions, if an app has such an option it must go through Apple’s billing system. Apple gets 30% of purchases that go through its system. After one year that cut drops to 15%.

Spotify either hoped the email-thing would be a loophole through Apple’s guidelines, or it planned to use the inevitable rejection as a source for public protest. Spotify was already complaining to regulators in Europe and the U.S. about Apple’s cut. The company argued that cut gives Apple an unfair advantage when competing with Apple Music.

Spotify also wrote and leaked a letter to Apple General Counsel Bruce Sewell making similar arguments. From that letter, according to Re/code:

This latest episode raises serious concerns under both U.S. and EU competition law. 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.

The Problem

The problem is that Spotify’s app broke rules it knows well. There should have been—and probably was—no doubt within Spotify the app would get rejected. That leaves those complaints feeling self-aggrandizing, self-pitying, and hollow.

It’s like a school kid deliberately doing an assignment wrong, turning it in knowing it would get an “F,” and then holding up the grade to the principal as proof the teacher has it out for her.

TMO reenactment of Spotify being majorly, and totally upset

The question is, will anyone buy it? Regulators in the EU have been paying attention to Spotify’s complaints. In the U.S., Senator Elizabeth Warrens (D-MA) recently criticized Apple for what she considers anticompetitive behavior in this industry, too. So far, though, no governments have sanctioned Apple for its App Store billing practices.

Next: Apple’s Response and The Solution

Page 2 – Apple’s Response and The Solution

Apple’s Response

Apple—the principal in my scenario—wasn’t impressed with Spotify’s complaint. General Counsel Bruce Sewell wasted little time writing and leaking his own letter. According to Buzzfeed, which posted the letter in full, Mr. Sewell accused Spotify of demanding special treatment, and said every developer plays by the same rules in the App Store.

From that letter:

There can be no doubt that Spotify has benefited enormously from its association with Apple’s App Store. Since joining the App Store in 2009, Apple’s platform has provided you with over 160 million downloads of your app, resulting in hundreds of millions of dollars in incremental revenue to Spotify. That’s why we find it troubling that you are asking for exemptions to the rules we apply to all developers, and are publicly resorting to rumors and half-truths about our service.

[…]

Shortly after Spotify submitted its app on May 26, our team identified a number of issues, including that the in-app purchase feature had been removed and replaced with an account sign-up feature clearly intended to circumvent Apple’s in-app purchase rules. That feature exists only for the purpose of avoiding having to pay Apple for your use of the App Store by emailing customers within hours, directing them to subscribe to Spotify on its website. A clear violation of the terms every other developer adheres to.

During a number of discussions between our team and Spotify, we explained why this sign-up feature did not comply with our guidelines and requested you resubmit a compliant version of the app. On June 10, Spotify submitted another version of the app which again incorporated the sign-up feature directing App Store customers to submit an email address so they could be contacted directly by Spotify in a continued attempt to get around our guidelines. Spotify’s app was again rejected for attempting to circumvent in-app purchase rules, and not, as you claim, because Spotify was simply seeking to communicate with its customers.

That really does read like a principal calling a lazy student on the carpet, doesn’t it?

The Solution

I’ve long argued Apple should make concessions for business models that simply don’t have an extra 30% built into them. Losing a few commission dollars to make iPhone the premier platform for services would be worth it.

That’s not my call, of course, but Apple recently made a huge concession to subscription services. The company announced a reduction of its cut on subscriptions after the first year, from 30% to 15%.

That’s a significant discount that still rewards Apple for providing the App Store and maintaining a billing system. It also offers a major incentive to developers to keep their customers subscribed. That’s a solid compromise for subscription-based services.

And it kind of makes you wonder why we’re still witnessing this playground spat play out.

TMO artist’s rendition of Spotify letter

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