Apple issues response to Spotify over anticompetitive accusation

macintoshpostLooks like the latest battle brewing in Silicon Valley is between Apple and Spotify. A letter was released recently where Spotify accused Apple of using app store policies and holding back a Spotify update in order to benefit its own Apple Music streaming service.

Apple has pushed back. Apple’s lawyer Bruce Sewell issues a three page letter in response and does not hold back:

“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.

Our guidelines help competition, not hurt it. The fact that we compete has never influenced how Apple treats Spotify or other successful competitors like Google Play Music, Tidal, Amazon Music, Pandora or the numerous other apps on the App Store that distribute digital music.”

What it does not mention is that Google Play Music subscribers are likely to be subscribing from their gmail account and not from users who try to sign up from the app. The same goes for Amazon Music, which requires Amazon Prime. Tidal is the only other service that will probably have the same complaints of Spotify. The difference is that Tidal does not have a free tier, which is ultimately what this is about. Spotify needs the revenue to cover the advertising shortfall for the free tier.

The letter also references the recent revenue split changes coming to subscription services. Although Apple recently changed their subscription split to 85/15 for subscriptions after two years, that still doesn’t help Spotify now, as it will take at least one more year from those subscribers to generate more revenue. The crux of the issue is that Spotify removed the in app purchase page and merely had an account sign up. Since they have a free tier, they then use the welcome email to encourage users to sign up for the paid subscription. This is a violation of the app store rules.

With Google already under investigation in Europe, this noise from Spotify could present trouble, hence the quick (and to the point) response from Apple.