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You are here: MacNN Forums > News > Mac News > Spotify claims app update rejection by Apple 'raises serious concerns'

Spotify claims app update rejection by Apple 'raises serious concerns'
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NewsPoster
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Jun 30, 2016, 04:00 PM
 
Apple is abusing its position as gatekeeper to the App Store by blocking the latest version of Spotify's iOS app, according to a letter allegedly sent from the streaming company to Apple general counsel Bruce Sewell. A report claims Spotify general counsel Horacio Gutierrez is "causing grave harm to Spotify and its customers" by rejecting the iPhone app update, with Apple's billing system being at the heart of the complaint.

The letter received by Recode notes Apple declined the app citing "business model rules," and urging Spotify to use Apple's own billing system if "Spotify wants to use the app to acquire new customers and sell subscriptions." It is noted that the letter, sent to Sewell on June 26, has also been distributed to some Congressional staff in Washington, leading to Senator Elizabeth Warren yesterday criticizing major tech companies over such anticompetitive practices.

Gutierrez claims the denial of the latest update "raises serious concerns under both US and EU competition law. It continues a troubling pattern of behavior by Apple to exclude and diminish the competitiveness of Spotify on iOS and as a rival to Apple Music, particularly when seen against the backdrop of Apple's previous anticompetitive conduct aimed at Spotify. We cannot stand by as Apple uses the App Store approval process as a weapon to harm competitors."

Spotify has been a long-time critic of Apple's policy, which forces all in-app purchases, including subscriptions, to use its payment system, with Apple taking a cut as a transaction fee. To counter this, Spotify charges more for its subscriptions started on iOS than on other platforms, and has previously taken to contacting app users to convince them to change payment methods, something Apple bans services from advertising within the apps themselves.

A recent attempt to revive a promotion, where new subscribers can use Spotify for three months for $1 via Spotify's website instead of an in-app subscription, is thought to be one of the reasons behind the latest quarrel. While Apple threatened to pull the Spotify app if the music-streaming service continued telling iPhone users they could save money using the promotion, Spotify later complied with the demand, but then turned off App Store billing completely.
( Last edited by NewsPoster; Jun 30, 2016 at 04:03 PM. )
     
Inkling
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Jul 1, 2016, 08:10 AM
 
Glad to see Spotify raising its voice on this one. The Amazon-inspired, Obama-administration-led attack on Apple for ebook price fixing was ridiculous. Companies with a zero percent marketshare can't fix prices. But Apple's attempt to charge a 30% fee on what amounts to a 3% credit card transaction has long been worthy of serious federal action.
Author of Untangling Tolkien and Chesterton on War and Peace
     
DiabloConQueso
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Jul 1, 2016, 09:50 AM
 
You're off your rocker.

Apple provides a suite of services much greater than simply something that "amounts to a 3% credit card transaction."

They provide free bandwidth and a robust distribution channel.

They provide millions or billions of consumers, money in hand, ready to purchase products on a storefront that's provided for a mere $100 per year. Anyone who has ever started a business knows that getting eyeballs on your product and cultivating an audience is a gigantic endeavor. Some companies spend up to half their revenue doing that and that alone.

If you think Apple is nothing more than a credit card transaction service with regards to the App Store, you've got your head firmly planted up... in the clouds.

Spotify basically wants to pay Apple $100 per year to list their app on Apple's App Store, and then circumvent the subscription process so that Spotify keeps 100% of the revenue, even though they're using Apple's bandwidth, storefront, and leveraging Apple's captive app audience.

Spotify is asking for this to be completely and unfairly biased in their favor. I'd tell them to go pound sand if it were up to me.
     
jmonty12
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Jul 1, 2016, 11:49 AM
 
Fight the good fight, Spotify. Your phone is your computer in your pocket. No one would accept these kinds of rules if Microsoft tried to enforce them on Windows. More and more people are using tablets instead of computers. How ironic that Apple has become the very company they warned about in 1984.
     
DiabloConQueso
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Jul 1, 2016, 12:22 PM
 
Uhhh... Microsoft takes a 30% cut, too, of apps sold through their app store, so I'm not sure what your point is. Microsoft's app store is also "curated" in a similar fashion to how Apple's app store is "curated" (meaning apps are reviewed and must be approved for sale through the storefront).

Microsoft is enforcing virtually the exact, same rules that Apple is enforcing, and to very similar degrees and percentages.
     
DiabloConQueso
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Jul 1, 2016, 12:33 PM
 
And the reason Apple forbids subscriptions outside of the App Store subscription model is this:

1) Developer makes an app, wants to sell it and make money off of it.

2) Developer decides that instead of selling it on the App Store and having Apple take their fair 30% cut, the developer will release the app on the App Store for free so Apple gets nothing (30% of $0.00 is $0.00).

3) Developer then implements a "subscription" type service within the app, where the user can sign up for the subscription and unlock additional features inside the app -- except the subscription is funneled through a service of the developer's choice, instead of the App Store subscription service.

4) Now, said developer is collecting money from their app and the subscription, of which Apple sees $0.00 (because the developer circumvented the App Store subscription service).

5) Apple is now stuck using their own bandwidth to distribute the app to users, as well as having the App Store storefront available for people to search for and download the app. All while the developer pays Apple virtually $0.00 for those services (well, $100 per year, basically).

I'm not seeing how anyone could think that's fair. That's like wanting to put your product in a grocery store, but refusing to pay a dime toward the shelf space the product will take up, refusing to pay a dime toward the labor needed to stock and re-stock the items, and refusing to pay a percentage of sales to the store. The store is basically hosting the product for free and seeing absolutely no revenue going into their pockets at all.

If you think that's fair, let's do this: let me use your home internet bandwidth to run my online store for my product and pay you no money for that service at all. Still sound fair?
     
Charles Martin
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Jul 1, 2016, 10:13 PM
 
DCQ, right as rain yet again!
Charles Martin
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iBricking.com
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Jul 5, 2016, 03:46 PM
 
You can install the apk on android and go. Apple is good as it is.
     
WalterC
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Jul 23, 2016, 02:37 PM
 
Seems to me that a manufacturer can do whatever it choses regarding it's products, absent intended fraud, danger, etc.
     
besson3c
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Jul 28, 2016, 08:47 AM
 
Originally Posted by DiabloConQueso View Post
And the reason Apple forbids subscriptions outside of the App Store subscription model is this:

1) Developer makes an app, wants to sell it and make money off of it.

2) Developer decides that instead of selling it on the App Store and having Apple take their fair 30% cut, the developer will release the app on the App Store for free so Apple gets nothing (30% of $0.00 is $0.00).

3) Developer then implements a "subscription" type service within the app, where the user can sign up for the subscription and unlock additional features inside the app -- except the subscription is funneled through a service of the developer's choice, instead of the App Store subscription service.

4) Now, said developer is collecting money from their app and the subscription, of which Apple sees $0.00 (because the developer circumvented the App Store subscription service).

5) Apple is now stuck using their own bandwidth to distribute the app to users, as well as having the App Store storefront available for people to search for and download the app. All while the developer pays Apple virtually $0.00 for those services (well, $100 per year, basically).

I'm not seeing how anyone could think that's fair. That's like wanting to put your product in a grocery store, but refusing to pay a dime toward the shelf space the product will take up, refusing to pay a dime toward the labor needed to stock and re-stock the items, and refusing to pay a percentage of sales to the store. The store is basically hosting the product for free and seeing absolutely no revenue going into their pockets at all.

If you think that's fair, let's do this: let me use your home internet bandwidth to run my online store for my product and pay you no money for that service at all. Still sound fair?


You are right here, and I would add that given the cost of credit card chargebacks/fraud there are other hidden fees to credit card service, but I think your argument is a little one-sided.

Apple benefits from apps being on their store too in ways that are not shared. Apps on their store promote their platform and enhance their platform security. Having a prominent app like Spotify in their store also makes people more likely to buy an Apple device.

It would seem to me that what would be fair is some sort of negotiable and more flexible plan that recognizes that both parties benefit, and in turn consumers benefit. Perhaps an in-app subscription service would work with a standardized referral bonus for Apple, or perhaps Apple's subscription service would work if it was flexible enough to integrate into the Spotify ecosystem as desired, and they didn't completely eat Spotify's lunch as far as the fees go?
     
DiabloConQueso
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Jul 29, 2016, 09:40 AM
 
Perhaps. As it stands now, though, Spotify wants it to be completely and unfairly biased in their favor -- a standpoint I just don't understand. Spotify knows well about server fees and the cost of running an infrastructure that serves thousands upon thousands upon thousands of customers a day, so expecting Apple to host their app for free and then circumvent any kind of payment to Apple is just Spotify being downright ridiculous.

Perhaps a compromise would work for both Apple and Spotify, but Spotify's not going to get there by refusing Apple any cut of any revenue from helping them distribute and promote their app.

Perhaps this is just business as usual for companies as large as Spotify: demand ridiculous stuff, then slowly back off to a more acceptable agreement.

Apple's fine without Spotify, anyway, though -- they have their own very popular music streaming service (and it's good -- not awesome, but very good) that generates revenue. Yes, Spotify might be a draw for some users, but I'm certain that Apple wouldn't hurt or see any kind of mass exodus from their user base if Spotify wasn't available. Look at all the years that Spotify *wasn't* available on the App Store.
     
   
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