Spotify filed a complaint with the European Commission over Apple’s stewardship of its App Store earlier this week, but now Apple has hit back with a statement criticising Spotify’s “misleading rhetoric” – including jabs at the streaming service’s recent appeal against new songwriter-royalty rates in the US.
“At its core, the App Store is a safe, secure platform where users can have faith in the apps they discover and the transactions they make. And developers, from first-time engineers to larger companies, can rest assured that everyone is playing by the same set of rules,” claimed Apple’s statement.
“That’s how it should be. We want more app businesses to thrive — including the ones that compete with some aspect of our business, because they drive us to be better.”
Apple’s statement got straight to the point. “What Spotify is demanding is something very different. After using the App Store for years to dramatically grow their business, Spotify seeks to keep all the benefits of the App Store ecosystem — including the substantial revenue that they draw from the App Store’s customers — without making any contributions to that marketplace. At the same time, they distribute the music you love while making ever-smaller contributions to the artists, musicians and songwriters who create it — even going so far as to take these creators to court.”
That’s seemingly a reference to the appeal against the new Copyright Royalty Board (CRB) rates for songwriters, although describing that as taking creators to court is a stretch.
“Spotify has every right to determine their own business model, but we feel an obligation to respond when Spotify wraps its financial motivations in misleading rhetoric about who we are, what we’ve built and what we do to support independent developers, musicians, songwriters and creators of all stripes,” continued Apple.
Spotify launched a website earlier this week laying out its accusations against Apple, including claims of app-update rejections. Now Apple has taken a similar point-by-point approach in its rebuttal.
“We’ve approved and distributed nearly 200 app updates on Spotify’s behalf, resulting in over 300 million downloaded copies of the Spotify app. The only time we have requested adjustments is when Spotify has tried to sidestep the same rules that every other app follows,” claimed Apple.
Its statement added that Apple has “reached out” to Spotify about support for its Siri and AirPlay 2 features “on several occasions”, and that Spotify has “told us they’re working on it, and we stand ready to help them where we can”. It also hits back at Spotify’s claim that Apple blocked it from launching an Apple Watch app in the past.
“When Spotify submitted their Apple Watch app in September 2018, we reviewed and approved it with the same process and speed with which we would any other app. In fact, the Spotify Watch app is currently the No. 1 app in the Watch Music category.”
Apple has also hit back at Spotify’s claim that its in-app subscriptions should be treated like payments for apps like Uber and Deliveroo, which happen entirely outside the App Store’s system of in-app purchases.
“The only contribution that Apple requires is for digital goods and services that are purchased inside the app using our secure in-app purchase system. 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.”
(This is true, as we pointed out the other day. Spotify only referred to the 30% share in its claims of an “app tax”, but the drop to 15% after someone has been signed up for a year was introduced in 2016.)
Apple’s statement continued by claiming that “the majority of [iOS] users” are using Spotify’s free, ad-supported service “which makes no contribution to the App Store”; that a significant portion of its customers come through partnerships with mobile operators which “generates no App Store contribution, but requires Spotify to pay a similar distribution fee to retailers and carriers” (an interesting claim that deserves further digging) and that “even now, only a tiny fraction of their subscriptions fall under Apple’s revenue-sharing model”.
(This, again, has the ring of truth: Spotify has been steering subscribers away from Apple’s in-app purchases and towards direct subscriptions for some time. Indeed, its desire to message iOS users encouraging this is part of its complaint.)
“Let’s be clear about what that means. Apple connects Spotify to our users. We provide the platform by which users download and update their app. We share critical software development tools to support Spotify’s app building. And we built a secure payment system — no small undertaking — which allows users to have faith in in-app transactions. Spotify is asking to keep all those benefits while also retaining 100 percent of the revenue,” continued Apple.
“Spotify wouldn’t be the business they are today without the App Store ecosystem, but now they’re leveraging their scale to avoid contributing to maintaining that ecosystem for the next generation of app entrepreneurs. We think that’s wrong.”
But the gloves really came off at the end of Apple’s statement. “Underneath the rhetoric, Spotify’s aim is to make more money off others’ work. And it’s not just the App Store that they’re trying to squeeze — it’s also artists, musicians and songwriters,” claimed Apple.
“Just this week, Spotify sued music creators after a decision by the US Copyright Royalty Board required Spotify to increase its royalty payments. This isn’t just wrong, it represents a real, meaningful and damaging step backwards for the music industry.”
Apple Music accepted the new CRB rates, while Spotify, Amazon, Pandora and Google appealed against them. While Apple will still benefit if their appeal is successful and lower rates are set, the company has nevertheless taken a stand appreciated by publishers in the US.
Apple’s statement concludes: “We’re proud of the work we’ve done to help Spotify build a successful business reaching hundreds of millions of music lovers, and we wish them continued success”. But it’s clear that this battle has several more skirmishes in store – and perhaps not just in Europe.
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