
Apple Fires Back at Spotify for Asking for 'Preferential Treatment' - coloneltcb
https://www.buzzfeed.com/johnpaczkowski/apple-fires-back-at-spotify-for-asking-for-preferential-trea?utm_term=.urkGrnXgV5#.xq0vGP7O9z
======
cloudjacker
Apple's App Store has always been an antitrust violation waiting to happen.

and by happen, I mean filed in a court.

There is nothing "applied equally" to other developers. Onlookers will say
developers agreed to the contract, so no sympathy, a Federal Judge on the
other hand will rip that contract to shreds and take a dim view on Apple's
practices.

And no, Google Play's robo rejector isn't exempt.

~~~
coldtea
> _Apple 's App Store has always been an antitrust violation waiting to
> happen._

There's nothing "antitrust" about the App Store operation, since Apple isn't a
monopoly -- it's in fact a minority player in the mobile market. (And no, you
can't be a "monopoly on your own platform" \-- it has to be the overall
market).

In fact game console manufactures (among many other fields) have historically
had much more draconian restrictions and cuts) that the quite liberal App
Store.

And it having 1 million apps and having pushed 50 billion dollars to
developers doesn't really paint it as a "restricted area with tight controls
where only Apple benefits" either.

~~~
UnoriginalGuy
The app store itself is a monopoly.

Apple then leverages its monopoly in app stores on Apple's platform into other
business (Apple Music, eBooks, digital video, etc). This is anti-competitive
behaviour and illegal.

Only legal gap is declaring Apple's app store on its platform a monopoly, the
second that is done then everything else naturally falls into place and Apple
receives antitrust violations.

~~~
coldtea
> _The app store itself is a monopoly._

Not in the legal sense of the word, so no.

To put it simply, monopoly is not "only a company dictates the rules/has near
total share/control of their own marketplace/platform".

It's "only a company dictates the rules/has near total share/control of the
general market".

~~~
UnoriginalGuy
> Not in the legal sense of the word, so no.

Since that hasn't been ruled on, we won't know that until it has.

> It's "only a company dictates the rules/has near total share/control of the
> general market".

That's a strange definition, but even taking it, the market has yet to be
defined by a court. As I've said elsewhere courts have already expanded
competition law into securities, they literally declared it a market allowing
them to use anti-monopoly controls.

------
dirkdk
Regardless of pricing, this is Windows/Internet explorer vs. Netscape all
over. Easy to see Apple introduce features tied to Apple Music that Spotify
can't because it doesn't have the same control over iOS

~~~
tdkl
Except Apple/iOS doesn't have the majority market share as MS did. (not that I
don't despise this, just stating).

~~~
UnoriginalGuy
Apple have 100% of the market share in distributing apps in the Apple
ecosystem. If you define the "market" as the ecosystem then Apple is in
monopolistic control of it, and by extension violates competition law.

~~~
xemoka
In that case, Facebook has a 100% monopoly on its website, I want it to be
opened up so anyone can add pages without oversight! Or Twitter! Or hacker
news! Why should we have to follow the rules of the platform as chosen by its
creators? (Straw man and all that)

~~~
UnoriginalGuy
You're conflating a website owned and operating by the company, and consumer's
personal devices owned and operated by the consumer.

~~~
redial
Should Microsoft be forced to let Sony sell Playstation games on the XBox?

~~~
UnoriginalGuy
If Microsoft chooses to operate a store on the XBox, it should give its own
services and competing services an even playing field. It is anti-consumer to
do otherwise, which is why competition laws exist.

A better analogy would be if Microsoft opened an app store on the XBox (which
they have/do) and then blocked Sony from selling apps there, or charged Sony a
premium rate.

~~~
redial
What law forces a store to carry items/services they do not want to sell?

Microsoft has a store for the Xbox, and they decide what they sell on that
store. If Sony submits a game for the Xbox store Microsoft can reject it
without giving them any reason. And it is perfectly legal.

In Amazon's app store the developers don't even get to set their own prices.

~~~
UnoriginalGuy
We're discussing competition law.

Microsoft did far less and still got hit with anti-trust on Windows just for
bundling IE. Now we have app stores which hold monopolies on their platform
and restrict competition yet further for the consumer's detriment.

As to what should be allowed and disallowed, companies should hold their own
services and products to the same standard as their competitor's services and
products. So if you're going to disallow a Sony branded music streaming
service then you also have to disallow a Microsoft branded music streaming
service, otherwise you're using your monopolistic position abusively.

~~~
redial
You are discussing competition law, because you have redefined the market.

Microsoft was found guilty of abusing its position because it had a monopoly
on the _entire_ PC OS market. They didn't, and don't have a monopoly on the
Windows market because there is no such thing.

~~~
UnoriginalGuy
> Microsoft was found guilty of abusing its position because it had a monopoly
> on the entire PC OS market.

And Apple has a monopoly on the entire Apple app store market.

> You are discussing competition law, because you have redefined the market.

Law is expansive. When competition laws were written several securities didn't
really exist, but the law expanded to encompass them. There's no specific
reason why the law cannot expand into protecting consumers from monopolies
within an artificially created digital marketplace.

Ultimately competition law exists as a concept to protect consumers, it is
clear as day that Apple is abusing its monopolistic control of its app store
in a way that hurts consumers. Even if existing law wasn't able to expand to
encompass that situation, new law could and should.

PS - I love the people who turn up late and downvote every comment on one side
of a discussion.

------
fhood
Who is the bad-guy here? (Both probably, but who is the worse bad-guy?)
Obviously Apple's letter makes it seem as though they are being perfectly
reasonable, but neither of the articles that I read have provided much
analysis.

~~~
mhomde
Apple is being a bit greedy when it comes to subscriptions for high-grossing
services IMO. Spotify already has razor thin margins and paying out minuscule
licensing fees to content producers, it's not viable to pay out 15-30% off the
top to Apple.

However, Apple clearly should be able to require a fee for providing the
marketplace and payment framework, and you can see their point in not wanting
apps to circumvent that to make it simpler for users to be able to manage
their subscriptions easily.

Some kind of cap and/or transaction fee seems more reasonable and would be
win-win in the long run. You get a bad taste in your mouth when it feels like
Apple is using their walled garden to strong arm competition. You can't
compete when your largest rival eliminates your profits.

In the end I think it's to Apple's detriment to play aggressively with content
providers in their ecosystem when they're in such fierce competition with
Android.

~~~
fhood
my understanding is that this only applies to subscriptions paid through the
app though right? What percentage of the total subscriptions does that
represent.

~~~
mhomde
Yeah, but that combined with that it's forbidden to circumvent paying inside
the app puts app providers in a weird position. For somewhat technical savvy I
guess it's not much of problem but I can imagine my mom would be confused why
they couldn't pay for the service. Also, every user that is acquired through
the app would potentially be a drain on Spotify due to the draconian fee's and
there's no feasible way to wean them off the the app store.

I'm not sure of the actual percentage, don't think they're public. Spotify
have been desperately trying to sign-up people outside of the App store which
I guess is what started this debacle.

If the fee's are so high that you can't go through the app store it feels like
it should be lose-lose for everyone.

~~~
MBCook
You're allowed to charge a higher price on the App Store than you do outside
of it (to make up for the fee), Spotify did that for years. But you can't
point that out inside the app.

------
WayneBro
You mean kind of like how Apple asks for preferential treatment from every
other entity? You know, for things like:

\- Being able to install updates without asking the ISP.

\- Fast lanes for their services with ISPs.

\- Special or even FREE rent for their physical store fronts (see Grand
Central Terminal and many others.)

\- Making illegal deals with book publishers so they get preferential pricing.
Same for music.

The list goes on and on and on. Apple has always tried to work it so they get
preferential treatment from every angle.

~~~
coldtea
> _\- Being able to install updates without asking the ISP._

Why the fuck should they "ask the ISP"?

~~~
SyneRyder
I think they meant how Apple is able to update iPhones without first getting
permission from the phone carriers, whereas on Android & Windows Phone the OS
updates for devices can be delayed by the carrier imposing a certification
process before it is released.

For example, here's an Australian phone carrier / ISP blocking updates to
Google Nexus devices on their network:

[http://ausdroid.net/2014/12/04/yes-telstra-is-blocking-
your-...](http://ausdroid.net/2014/12/04/yes-telstra-is-blocking-your-nexus-
updates/)

~~~
boodm
Is it not true Google pushes updates to their Nexus line without going through
the carrier?

~~~
SyneRyder
The Google support pages say "Based on your carrier, it may take longer than
two weeks after release to get an update." See the section marked Timing For
Android Software Updates and click on Nexus devices.

[https://support.google.com/playedition/answer/4457705](https://support.google.com/playedition/answer/4457705)

------
cassieramen
How exactly does Apple's payment system work for companies that are cross
platform? If I have a Dropcam subscription and am using the ios app, is
Dropcam paying Apple 15% of my subscription cost? That seems nuts.

~~~
dandelany
Yes - and it's 30%. Previously, Spotify would charge $9.99/month for a
subscription through their website, or $12.99 for a subscription purchased
through the iOS app, to cover this cost. In the most recent version of the iOS
app, they decided to disallow in-app subscriptions entirely and push all
subscriptions to the web app. IIUC this is the app update that has been
blocked by Apple...

(disclaimer: I work for Spotify)

~~~
k-mcgrady
>> "In the most recent version of the iOS app, they decided to disallow in-app
subscriptions entirely and push all subscriptions to the web app."

We should be clear about this though as doing that is not against the rules.
Take the Kindle app for example. You can buy books through the Amazon website
and use them in the app. Apple doesn't get a cut. Spotify can do the same
thing. The issue is that there are very specific rules around it - for example
I don't believe you can include a 'sign up' button that throws the user out of
the app to your payment page. It sounds like Spotify was trying to get around
this by sending the user an email when they signed up through the app, and
telling them to look in the email for a link to the payment page. At least
this is what I've read over the last couple of days.

~~~
dandelany
Thanks, this is an important point. I'm not sure exactly what Apple
allows/disallows in terms of informing users about other payment options, or
what Spotify is doing that would be in violation of these rules, but this is
the crux of the disagreement.

~~~
MBCook
My understanding is that you're allowed to sell things however you want, but
inside the app you have to use Apple's purchase methods. You can't use your
own, and you can't put directions in the app to go to a website or something
else to purchase content. So in the app you have to do what Amazon does and
never show it by button or a "how to buy" button.

And just for extra clarity, Apples policies only apply to digital goods. If
you buy a real world service or physical item through an app Apple does not
take a cut, but they also don't handle the payment. That's why Amazon doesn't
have to pay Apple 30% when you buy a new TV from them.

~~~
Oletros
Tell me what's the difference between selling physical goods and digital
services when none of them are stored or distributed by Apple

------
dr1337
If the claims made by Spotify that Apple was threatening to kick Spotify out
of the AppStore for not taking down its $0.99 offsite signup promo then this
is certainly more anti-competitive than MSIE vs Netscape. At least back in the
day, if you didn't get Netscape installed but still wanted it, all you had to
do was download the EXE file and install it. Now if Spotify were to be banned
from the AppStore, how else would you receive its service?

~~~
metachor
"Now if Spotify were to be banned from the AppStore, how else would you
receive its service?"

The Spotify Web Player works perfectly fine on iPhone's mobile Safari. No,
it's not a native app, but it exists as an alternative delivery method for the
service.

------
tunesmith
I was disappointed to see Elizabeth Warren get in on this. Music consumers
aren't the little guy here, it's the songwriters etc.

~~~
burkaman
She wasn't really commenting on the music industry, it was a larger point
about major technology companies using their platforms to lock out
competition. And that in turn was part of a larger speech about anti-
competitive practices in general, not just in technology.

------
addicted
When Apple says Spotify is asking for preferential treatment over developers
of other apps, does that include the developers of Apple Music?

Does Apple Music go through the same sort of independent and opaque approval
process Spotify does? Do they have to wait the same time? Do they get rejected
for unapproved business models?

Does Apple Music take 30% of it's cut and give it away to the rest of the
company?

While I am not entirely unsympathetic to Apple's position, I think the
preferential treatment argument is BS when Spotify's biggest competitor is
Apple Music.

~~~
JohnTHaller
Of course not. Apple uses the setup of iOS to ensure that its first party apps
have a better experience than third party providers. Apple has always done
this on iOS. If you attempt to compete with Apple on their own platform where
they have the keys and make (and change) the rules on a whim, you will lose.
People choose Apple Books because it's more convenient to pay vs Amazon (since
Amazon isn't allowed to let people buy content like they can on competing
platforms unless they funnel payments through Apple and give up 30%). People
were choosing Apple Music over Spotify because Spotify cost $3 a month more
(since they had to charge that to Apple users to cover the Apple tax for
payments and weren't allowed to direct Apple users to the Spotify site to sign
up for the same price as Apple Music without the Apple tax). Firefox and
Google had to give up using their own browser engine (and all the competitive
features and functionality that went with it) and use the Mobile Safari engine
in order to even participate on iOS. Up until recently, they were even forced
to use a lesser and slower version of the engine to ensure that Safari was
always the (artificially) fastest browser on iOS.

------
smpetrey
It's really an infrastructure tax on Spotify. Bite the bullet, and take your
85/15 split revenue on subscriptions Spotify. Can't believe they re-submitted
twice to circumvent the subscription model. Everybody's ego needs to chill.

------
pfg
Whenever this pops up, I keep wondering if there's any precedent for antitrust
rulings against companies in industries where they don't exactly hold a
monopoly, but have essentially created their own market-like structure while
also competing in that market themselves. Do comparable concepts even exist in
other industries?

------
DominikR
I believe that in this specific case Spotify makes a very compelling argument.

App publishers that do not directly compete with Apple have a level playing
field although the Apple tax certainly hurts.

But Spotify directly competes with Apple, and while Apple does not have to pay
this tax as they can (probably) use their own billing services cheaper,
Spotify couldn't do the same even if they implemented their own billing
service or used a cheaper alternative.

It'll be interesting to see what comes out of this. I for one hope that we
someday all get to choose which billing provider we want to use in our apps.

~~~
basch
30% isnt a payment processing fee, its a commission + infrastructure tax.

You make money off your app? Because apple made it discoverable in the app
store! You make money off your app, pay a share back for os/api r&d!

~~~
DominikR
Where can I find more information about this infrastructure tax?

Because I highly doubt that Apple actually needs 30% to pay for the app store
infrastructure.

And why are you mixing this with the OS API? I could just as well say that
Apple needs some kind of OS anyways to be able to sell their expensive
hardware.

Also there are certain categories of apps that are allowed to use other
billing providers. Why don't they have to pay for the OS API's and R&D?

~~~
zepto
The apps that use other billing providers are not selling digital goods.

~~~
DominikR
Of course you can, I have such an app in the store. A telephony app where you
can access all features without the app. (You just dial one of our local
numbers and that will be mapped to a foreign number)

So this argument doesnt make sense.

~~~
zepto
False. You don't charge people through the app.

~~~
DominikR
We do within a webview. Whats you problem that you believe you've got to
explain to me how our app works?

Seems like you don't have a clue what is actually possible.

Go read the TOS for Apple's in app billing.

~~~
zepto
Sure but you aren't charging for digital goods. You are charging for
infrastructure access, which is explicitly allowed.

Seems like you are trying to muddy the issue by pretending your case is
representative of anything we are taking about here.

~~~
DominikR
What we are doing is all digital. You buy credits on a website which you can
use to call someone on a landline/mobile phone number.

Our only infrastructure are VoIP servers.

The infrastructure is not different than Spotify's. It's all just servers.

~~~
zepto
Well that's clearly not correct.

The service you provide to the customer is _use of your VoIP infrastructure_.
That's what they pay for.

In the case of Spotify, the service is not access to infrastructure. It is
access to _digital goods_ in the form of licensed music files.

------
erikpukinskis
I'm curious, for the people in this thread who think Apple is within their
rights, would you buy a DVD player that only played DVDs purchased through
their own store, charged 30% to list in the store, and disallowed companies
setting a different price that covers the 30% fee?

~~~
wodenokoto
I'm pretty sure that brick and mortar stores retain more than 30% of the sales
price of DVD's.

------
abalone
What's weird is that Apple has a lovely, convenient system for in-app payments
called Apple Pay that has a great pricing model that everyone is happy with
(usually 2-3%). They just don't allow it to be used for subscriptions. Why?
What is their goal here? Let's survey the possibilities...

1\. _To make a ton of money by extracting revenue from developers and content
providers._ This is the "obvious" goal everything immediately thinks of, but I
think it's actually unlikely. Apple makes MUCH more money from device sales.
It makes more financial sense to have a robust offering of content and apps.
They are making good margins on their own services, but their business model
in terms of the app/music stores is to run them just above break even.

2\. _Convenient payment._ Not the reason, because Apple Pay would do that at a
lower price.

3\. _Customer service._ Since Apple is technically the merchant here reselling
a digital good, they can also provide refunds and customer service. But I
doubt they need a 15-30% margin for this. They could just contractually
require that developers refund in-app Apple Pay transactions under certain
conditions.

4\. _Privacy._ Now here's a real reason. To offer a 2-3% fee, payment
processors need to control for fraud. One way they do this is by verifying
contact info. Now, for physical goods there is no way around asking for the
billing address, so Apple Pay supports that. But it's not necessary for
digital goods. Apple would not be able to offer Apple Pay for subscriptions
without degrading user privacy.

~~~
MBCook
Apples and oranges.

Apple Pay has no fee to the user or the company receiving the money, it's paid
by the bank and is EXTREMELY small. Normal credit card fees still apply, but
those don't go to Apple. For all intents and purposes it is a single bank
transaction almost like any other. Apple has almost no part in it except
helping verify security.

In-app purchases are different. Apple takes a cut because Apple provides a
real service. They host the app, they do the billing, they do the collections,
they do the license tracking. They handle taxes in all sorts of countries in
different states. They make sure their store complies with all local laws.
They handle security and try to stop piracy. In short, they're providing a lot
of services.

~~~
abalone
_> Apple takes a cut because Apple provides a real service. They host the app,
they do the billing..._

Those benefits are irrelevant to subscription content. Apple does not host
Spotify's content. Spotify does not need Apple to handle monthly billing. If
Apple merely wanted to offer a convenient worldwide billing service, they
could make it opt-in for smaller developers, and Spotify would happily handle
their own billing, tax calculations, etc.

No, the goal here must be something more.

