Spotify has filed a complaint with the European Commission against Apple for using their leverage unfairly and stifling digital competition.
In a blog, Daniel Ek, founder and CEO at Spotify said Apple required Spotify and other digital services to pay a 30% charge on purchases made through its payment system.
Ek said: “If we pay this tax, it would force us to artificially inflate the price of our Premium membership well above the price of Apple Music.
“And to keep our price competitive for our customers, that isn’t something we can do.”
However, he claimed that choosing not to use Apple’s system meant a series of technical and “experience-limiting restrictions” would be applied on Spotify.
He said: “Over time, this has included locking Spotify and other competitors out of Apple services such as Siri, HomePod and Apple Watch.”
EC to decide on fair competition
The EC exists to regulate to keep competition fair and non-discriminatory. It told The Telegraph it had received a complaint by Spotify and was assessing it under its standard procedures.
Spotify claims that Apple’s rules over the last few years have, as Ek said: “Purposely limit choice and stifle innovation at the expense of the user experience – essentially acting as both a player and referee to deliberately disadvantage other app developers.”
Apple owns the platform and App Store used by a significant chunk of the world’s population, and so it is in an arguably unfair position to give itself advantages that cement its leadership.
“Competition on the merits”
In his blog, Ek claimed the Spotify complaint is “about supporting and nurturing the healthy ecosystem that made our two companies successful in the first place”.
He called for “competition on the merits” and outlined three points:
- Apps should be able to compete, not based on who owns the app that lets users buy the app they want. “We should all be subject to the same fair set of rules and restrictions – including Apple Music,” wrote Ek.
- Consumers should be able to choose their payment system.
- App stores should not be allowed to control communication between the users and the service, with Ek implying that Apple currently places restrictions on marketing and promotions from Spotify.
UK Government’s digital competition report
Spotify’s complaint followed the Digital Competition Expert Panel’s report to the UK Treasury.
The central conclusion of the report, which was spearheaded by US President Barack Obama’s chief economic advisor Professor Jason Furman, appeared to support Spotify’s position.
It said: “Digital markets will only work well if they are supported with strong pro-competition policies that open up opportunities for innovation, and counter the forces that can lead to high concentration and a single winner.”
The report said merger and antitrust enforcement creates delays and uncertainty that are “bad for large incumbents and small entrants alike”.
It concluded that this was poor for competition and restricted consumers’ ability to move and control their data, and “for new digital businesses to interoperate with established platforms”.
The report recommended the creation of a “digital markets unit” backed by legislative powers. This would enforce a code of competitive conduct for tech companies deemed to have “strategic market status”, which would certainly include Apple.
The report also discussed the importance of enabling data portability between platforms, so that consumers could more effectively control their own data and could move it between competing services. This would, for example, enable users to move contacts and uploads from Facebook onto another social media site.