Apple Disputes Spotify Anti-Competitive Claims
Apple dismissed Friday Spotify's accusations of anti-competitive behavior, saying the Swedish music streaming giant was trying to enjoy the benefits of its online market without paying the cost of its upkeep.
Spotify filed on Wednesday a formal complaint with the EU Commission that took issue with restrictions that Apple places on apps that don't use the payment system on its App Store, from which Apple takes a 30 percent cut.
"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," said Apple in a statement, adding that the same set of rules applies to all firms.
"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," it added.
Spotify complained that paying the fee to Apple made the price it then has to charge to paying premium subscribers uncompetitive compared to Apple's own service Apple Music.
But if it circumvented payments via the App Store, Spotify said that it faced technical restrictions that limit the atractiveness of its user experience with Apple blocking updates and use of the Siri vocal assistant, the HomePod connected speakers or Apple Watch.
Apple noted that the 30 percent share of revenue applies only for the first year, and then drops to 15 percent, and that it makes Spotify's free app available to consumers free of charge.
It added that it had made nearly 200 app updates on Spotify's behalf, resulting in more than 300 million downloads of Spotify's app. It said that Spotify is the top Apple Watch app since Spotify submitted it in September last year.
"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," said Apple. "We think that’s wrong."
There is no guarantee that the EU's executive arm will actually investigate following Spotify's complaint, or even be quick about a decision whether to do so. It receives around 40 formal complaints per year and only a handful end up in fines or measures being imposed on companies.
However, EU competition chief Margarethe Vestager tweeted on Thursday following an appearance of Spotify CEO Daniel Ek at a conference: "Strong message by @eldsjal CEO of @Spotify: We need a level playing field for fair competition..."
Apple has been in the crosshairs of EU authorities for its tax strategy of routing income through low-tax Ireland.
In 2016, it was ordered by the European Commission to pay 13 billion euros in back taxes to Ireland.
The European Commission said Apple paid an effective corporate tax rate of just 0.005 percent on its European profits in 2014 -- equivalent to just 50 euros for every million.