Spotify Files an EU Antitrust Complaint Over Apple’s 30% “Tax”
According to Spotify, Apple unfairly stifles creativity and innovation. But, with the streaming music giant’s refusal to accept a royalty increase for songwriters, isn’t Daniel Ek’s company basically doing the same thing?
In the United States, Spotify currently faces a lot of heat.
The streaming music giant – along with Pandora, Google, and Amazon – has undertaken the process of appealing a Copyright Royalty Board (CRB) ruling. For the first time in 110 years, the CRB has unilaterally granted songwriters a 44% royalty increase from streaming music service.
Despite the company’s attempt to spin the negative press, songwriters and music organizations in the US aren’t too happy with Spotify.
Most notably, David Israelite, President of the National Music Publishers’ Association, has forcefully spoken out against the streaming music giant’s appeal.
In a recent statement, he wrote,
“What can we expect from Spotify? We can expect them to attack songwriters to cut what it pays them, and then try to deceive you about what it is doing.
“Yes – Spotify’s mission IS clear. And for songwriters, and those who care about songwriters, our mission is clear too. This fight has just started.”
Now, as the company fails to persuade American songwriters and the industry in general, the streaming music giant has set its sights on a rival overseas.
Filing an antitrust complaint in the EU.
In a blog post titled Consumer and Innovators Win on a Level Playing Field, Daniel Ek, Spotify’s Co-Founder and CEO, confirmed that the company has filed an antitrust complaint against Apple in the EU.
According to Ek, the Cupertino giant has introduced rules to the App Store which “purposely limit choice and stifle innovation at the expense of the user experience.” Apple, he continues, deliberately acts as both a player and a referee to deliberately disadvantage app developers.
As Spotify has failed to resolve these issues with the Cupertino company, they’ve now filed the complaint. The streaming music giant hopes the European Commission (EC) takes action “to ensure fair competition.”
For years, Apple has taxed all iOS developers, taking a 30% cut of all in-app purchases and subscriptions. Ek says paying this tax would force his company to “artificially inflate the price” of Premium.
“To keep our price competitive for our customers, that isn’t something we can do.”
If Spotify creates a workaround, Ek continues, Apple then deliberately applies a series of technical and experience-limiting restrictions.
“For example, they limit our communication with our customers—including our outreach beyond the app.
“In some cases, we aren’t even allowed to send emails to our customers who use Apple. Apple also routinely blocks our experience-enhancing upgrades.”
Spotify’s CEO also spoke out against the company’s decision to lock out competitors from Siri, HomePod, and Apple Watch.
In the blog post, Ek detailed three petitions his company has made to the EC.
First, developers shouldn’t automatically be “locked in” to Apple’s payment platform and subject to the 30% tax. Second, all apps should compete on ‘merits,’ and not just on who owns the App Store. Third, the App Store shouldn’t control the communication between developers and users. This, writes Ek, includes “placing unfair restrictions on marketing and promotions that benefit consumers.”
But, will Spotify come out on top? Maybe.
In recent years, the European Union has ruled against companies engaging in antitrust behavior. Most notably, for example, Google received a $2.7 billion fine two years ago for locking companies out of its shopping business. Then, last year, the search giant received $4.9 billion fine for curbing the competition on Android.
A spokesperson for the EC has confirmed it has received Spotify’s complaint. The Commission is now “assessing [the complaint] under our standard procedures.”
Unedited featured image by Hans Splinter (CC by 2.0).