Apple are directly competing with Spotify in the field of streaming music services via Apple Music. Apple's total control of the app store and their substantial share of the smartphone market means that they have a dominant market position within the meaning of Article 102 TFEU. Apple are using that dominant market position to advantage their own streaming service and disadvantage Spotify, for reasons set out at length in the original article. Apple are required under EU competition law to give Apple Music and Spotify an equal playing field, which they clearly aren't doing. Apple might have a partial defence if they allowed sideloading of apps, but they don't.
The obvious precedent is the European Commission's action against Google in 2018. Google were fined €4.34bn for using Android to unfairly advantage their search business. Android has a dominant market position within the mobile OS market - if you're a small mobile device manufacturer, you don't have many reasonable alternatives to using Android. Google didn't allow manufacturers to pre-install the Play Store app unless they also pre-installed Chrome and the Google Search app, which is an abuse of their dominant market position. They used their dominance of the mobile OS business to unfairly advantage their search business, which is blatantly illegal.
https://en.wikipedia.org/wiki/European_Union_competition_law...
Hmm! What about?
> Apple's behaviour in this instance is clearly an abuse of market power and I fully expect the European Commission to rule in Spotify's favour.
I'm not contesting that. I'm saying that I don't believe Apple is doing anything wrong. (The law and me may differ on that.)
> Apple [has] a dominant market position
Isn't the test for this substitutability in the event that the dominant force increases price? (This area is a total unknown to me so thanks for taking the time to explain!)
> to advantage their own streaming service and disadvantage Spotify
I think the he-said-she-said of the software updates thing is easily parked (unless you think it forms a substantive part of their complaint), so I will focus on the pricing issue. Again I'm drawing a distinction between the ethics of the situation and the law (although I assume that to some extent, the latter follows the former).
Spotify's P&L will have a bunch of rows in it for the costs associated with acquiring a paid user. Different channels have different costs. For example TV, radio, google/bing/alta vista PPC. Each of those will have a cost per install and some channels and keywords will convert better than others. For example if I look at the analysis frequently cited about iPhone vs. Android users, it's easy to believe that there is a greater propensity to pay money for apps on iOS vs. Android.
If Apple was the only place to get those users, I could understand totally the belief that this is unethical behaviour. But Spotify grew by four million paying subscribers in Q4 of last year, all of whom are evidence that they can grow their business by ~$500m of ARR without the app store.
So for me Apple charging Spotify 30% for their paying subscribers (who came to the App store because of a product and marketplace which Apple created, markets, and curates -- benefits which are at least conceptually worth paying for by app developers, even if some of them quibble the 30%). Is the argument that Spotify should not pay this 30% [but still benefit from all the great things which Apple foots the bill for]? And if Apple wasn't in music streaming, they'd be able to charge Spotify 30% Because that to me seems orthogonal to a common monopolistic argument: they are able to do significant harm to Apple (app store), which is a business unit, and remove all of the acquisition costs they'd ordinarily pay through hany channel.
Would it be acceptable legallyl/ethically if Apple effectively treated app store as an acquisition channel like any other, and the Music business unit paid the 30% to App store?
They probably could live with it but I can understand why it feels like an artificial cost that Apple came up with. It would be an understandable cost if they were selling the Spotify App through the App Store and using the actual store infrastructure for supporting Spotify... but they are not.
The app is nothing more than a portal to the entire Spotify infrastructure, it doesn't weight anything to Apple.
And then we have the subject of the direct competition, Apple Music doesn't need to have their profits cut in 30% because they are owned by Apple itself.
And it's even worse if they are using Siri, Homepad and Apple Watch to make Apple Music more appealing in comparison to Spotify.
Not so as I understand it. Only if you put the option to subscribe into your app in the app store. That cost doesn't exist for Mac or PC, but Apple doesn't heavily curate and have costs associated with the wild west of downloading apps from the web.
> it doesn't weight anything to Apple
There are significant costs associated with the app store, no? Part of the reason users gravitate towards the iPhone is because you can download high quality apps without malware, viruses, etc.
> Apple Music doesn't need to have their profitts cut in 30% because they are owned by Apple itself.
Conceptually I'm with you. This is an area I'm struggling with though. The Apple Online store charges accessory manufacturers a fee to be featured there. Should Apple also pay a fee to feature their own products there? I don't think so.
> it's even worse if they are using Siri, Homepod and Apple Watch to make Apple Music more appealing in comparison to Spotify
Why? They've made the hardware. Why should they have to let Spotify run on it in the exact way Spotify wants? (You can Airplay Spotify to Homepod.)
That should be covered by the one time fee that developers pay to Apple in order to publish apps into the App Store. I am not sure if a simple binary needs a 30% cut of the entire Spotify profit to keep up with the costs of hosting an app there.
> Why? They've made the hardware. Why should they have to let Spotify run on it in the exact way Spotify wants? (You can Airplay Spotify to Homepod.)
Because Apple is using a completely different market, which they have a strong presence on, to increase the value of Apple Music and consequently devaluing any other competing music streaming services.
This is the core issue. Apple using their dominant market position in the hardware/operating system markets to push anticompetitive practices for their product in a different market (Apple Music).
I don't see how this is much different than IE. Maybe even worse in some ways. But regardless, it is very clearly manipulating the market artificially in Apple's favor.
Allegedly anticompetitive.
Amazon, Google, Microsoft, Facebook all engage in similar behavior by giving preferential treatment of their products/features/services.
Remember it's my device, but theirs. Not apples. If they are going to allow third party apps then do so, but there's no technical reason to not allow the service.
Imagine Ford says you can only use a certain brand of tires on your new car, or can only buy tires through the dealership. That's what's going on here.
It's your device that you bought, which quite clearly doesn't support the things you want, so why did you buy it?
That's the reason I don't buy Apple stuff to begin with.
We're now into the murky world of trying to tell other people what their cost base or margins should be.
> Because Apple is using a completely different market, which they have a strong presence on, to increase the value of Apple Music and consequently devaluing any other competing music streaming services.
Another view is that Apple fairly charges a consistent 30% to all customers in the app store. In the same way as Amazon doesn't pay to list its own products on Amazon, and Google doesn't pay to advertise Chrome on google.com, Apple should not have to pay to market its own services on its own marketplace.
As a developer I can push a hundred updates per day if I want to, and they all have to be reviewed by a human. How large of a "one time fee" should be expected to cover the cost of that review?
That seems quite unrealistic. Apple certainly has recurring costs to keep the app store running. Taking a one time publishing fee wouldn't be sustainable long term.
I perfectly understand why Apple would be as anti-competitive as they can away with on their plateform. It benefits them tremendously.
What I don't understand is why some comsumers, who are definitely loosing from the situation - even if you prefer the Apple solution competition tends to bring price down - are systematically defending Apple. It's not like we are talking about a small and endearing company here.
Out of curiosity, do people really view using Apple products as a life style choice ? I liked my iphone but as far as I am concerned it's a mass market device.
Maybe you haven't considered that some consumers don't feel like they're losing from the situation. Maybe some consumers feel like they are winning because Apple's interests align with their own, and the interests of Apple's competitors are not aligned with their own?
I like having an app store I can trust to not have malware, I like knowing the apps I download have had a human review them for quality. I like having hardware with an OS where the developer of the OS controls when I get updates, not a carrier or manufacturer who are not affiliated with the developer. I like getting security and feature updates for my OS for 5 years. I like paying the developer of my software so the developer has a profit structure that doesn't necessitate spying on me. I like knowing that every piece of software pre-packaged on my device was put there by the developer of the OS with their explicit approval, and not sold to the highest bidder. I like knowing that the software on my phone is exactly how the developer planned it, and not modified by an unaffiliated device manufacturer to the point where multiple websites exist for the sole purpose of creating ROMs that mimic the developer's intended software, necessitating that I now either trust the unaffiliated hardware manufacturer or trust some random person on the Internet to deliver me a clean ROM.
There are platforms that are open and free to use however you see fit. They exist and they are great options. Very modern and easy to use and as open as you want them to be. I prefer the option that isn't open to modification. Products exist for both use cases.
And none of that has anything to do with what we are discussing. Apple could still do all this thing while allowing more competition on the plateform. For example could you explain to me how allowing apps competing with the system ones or allowing other streaming service to cast and use the watch would prevent any of what you listed ?
It is not an either/or situation between two opposite situations. There are plenty of inbetween possibilities.
> feel like they are winning because Apple's interests align with their own
Apple interests is selling you phone and apps so they can make money. Unless you are a stockholder, I don't see how their interests can align with yours. Unless you take pleasure in paying more, you are clearly losing from the situation.
The cost is there whether or not you pay through the App Store mechanisms. You have to pay it, even if you provide your own payment mechanism.
> There are significant costs associated with the app store, no? Part of the reason users gravitate towards the iPhone is because you can download high quality apps without malware, viruses, etc.
Sure. Then charge all apps for the cost of being in the App Store. It doesn't excuse a situation where Apple directly competes with Spotify and then charge Spotify 30% they don't charge for Apple Music. Thats a textbook violation of antitrust law.
> Conceptually I'm with you. This is an area I'm struggling with though. The Apple Online store charges accessory manufacturers a fee to be featured there. Should Apple also pay a fee to feature their own products there? I don't think so.
You can buy your accessories other places as well. Apple's Online store doesn't have a monopoly on selling accessories to iPhone users. The App Store on the other hand is the only mechanism to sell to iPhone users. The alternative is to allow competing App Stores on their platform.
Yes, they get 30% only if you subscribe through the app store. That's already too much for a service that doesn't use Apple's infrastructure, but Spotify played along for a while. Their main complaint however is that Apple is outright censoring the Spotify app so that it makes no mention to other options for upgrading to Premium.
That's clearly foul play in my book. I wonder if you would still defend it if instead of Apple, it was e.g. Microsoft using Windows Defender to block Chrome downloads.
> There are significant costs associated with the app store, no?
You pay a $99 per year fee as a developer to Apple. That should cover their costs for general QA. If they feel that popular apps need to pay more, they can still set a higher fixed price. But claiming that 30% is to cover Apple's QA costs is ridiculous.
> Why should they have to let Spotify run on it in the exact way Spotify wants?
Because of the way they market Homepod. They present Homepod as interoperable with your iPhone, but it turns out they place artificial limits to interoperability. I wonder, what would Apple do in case of a mass-return of Homepods from customers unhappy by the lack of interoperability with Spotify or other apps?
They can do the purchases on their own website, but its against App Store rules for an app to tell users that they have the option of upgrading outside of IAP.
Can you even subscribe through the app? Spotify could simply yell you so go to your web browser to subscribe. That’s what Amazon does for its video etc and it doesn’t seem to cause them any problems.
I subscribed to Spotify via their web site and it works fine on my phone. I’m sure they pay nothing to Apple in order for me to listen. That makes me feel that this is a publicity play by Spotify no matter what the more general (non-Spotify) merits of the issue might be.
To put this in 19th century anti-trust terms, the manufacturing company owns the railways and charges the competition a toll to transport their goods. It's a clear cut case for Spotify, from a legal perspective.
To repeat my question asked of someone else in this thread: Apple charges e.g. Mophie a fee to feature their products on the Apple Store online. Should Apple be required to pay the same fee for featuring their own products there?
What Apple is doing is a direct violation of the Sherman Act of 1890, specifically Section 1, in regards to artificially raising prices by restricting trade or supply:
> Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.
Apple is big enough to pull their products from Amazon. Taking it back to the 19th century, Apple owns their own "railway". The real quandary comes in if Amazon gets so big that there's no way for a small supplier to sell a product in mass without going through Amazon and paying their premium. I don't think we're anywhere near there yet.
Amazon also built their own Amazon store, to get away from the fees of Google's equally Sherman Act violating store, and in the process potentially violated the act themselves (Prime Music).
Edit: I just thought of another, slam dunk case, this time for Amazon, because Apple restricts purchasing Audible books in the app, even when using existing book credits.
I am genuinely curious, does Google Play violate the Sherman Act in the same way that the Apple App store does or is it a different clause?
It seems like allowing users to fairly easily side-load apps (ex. Fortnite) and the presence of competing app stores (Amazon App Store, F-Droid, etc.) should alleviate some concerns.
Exxon doesn't force Shell sell their gas in Exxon stations.
And if you don't, you're out of luck due to the increasingly hostile restrictions on what you're allowed to even mention in the app - at least according to the website.
Can't say I'm 100% on Spotify's side, but to me it doesn't seem like Apple has anything stand on here, ethics-wise. Microsoft and the IE case comes to mind.
But Spotify's argument seems to be "you have to pay the same price as everyone else ... except Apple itself."
And why should it change just because Apple introduced a competitor? Apple charges Spotify the same before and after they launched Apple Music.
I see your point but you could flip that a 3rd way:
"Consumers pay for their hardware - they own the device - so why should manufacturers tell consumers what they can or cannot install on their hardware?"
I grew up in an era when hardware wasn't so tightly coupled with software. In fact you could go further than that and mod your hardware with custom chips and so on without violating anything more than your warranty. So I find this current era where consumers are expected to pay high prices for hardware and still not have any rights over that platform to be a massive con.
Ultimately there isn't a single consumer handset out there that has the same principles of "now you own the device it's yours to do with as you like". Consumer tech just doesn't operate that way any more.
Also I’d already acknowledged that it was easier and cheaper to sideload apps on Android.
Before you jump in and say something like “why should OEMs / Google offer you all this stuff for free etc”, I do completely agree. This isn’t a rant at Google (nor Apple) specifically but just at the state of technology these days. It’s not just an issue about geeks like us having ownership of our devices, it’s also creating a problem for environmental waste since it’s becoming increasingly hard to upgrade or replace parts. Laptops have components soldered in and old phones often end up in landfills. It’s such a shame to see.
Anyhow, I’ve drifted way off topic. Sorry for that
This will be fine for HN folks but will result in the erasure of security and privacy for normal users.
Can you?
> Why do I have to allow you to develop software for my proprietary hardware, just because it's technically possible?
Of course if you were Apple, you would not want to do it. But, that’s what antitrust laws are for. As a consumer they are valuable: how long have people been waiting to use Spotify their Apple Watch?
It's not that you have to, but if you do and you become one of only two or three platform oligopolists worldwide, then you better make sure it's a level playing field or you risk getting regulated as a utility.
https://www.cnbc.com/2019/03/11/sen-elizabeth-warren-wants-t...
[1] - https://stratechery.com/2018/antitrust-the-app-store-and-app...
Monopolies can have negative effects without trying to extract monopoly rents.
The competition between BT and Sky massively increased the TV rights price for e.g. the premier league, so the clubs got much more money. In theory, they used this to buy better players etc and increase the quality of the league.
Although you now have to pay twice, the quality of the product has gone up. So it's not a zero-sum game. You can argue that you don't think it's worth it, but that's an opinion, it's not true that it's an inherently worse situation.
Until they entered into a rights sharing agreement.
Also worth noting that the rights sharing arrangement on Sky's end is... <drumroll> ...mandated by a settlement from a previous anti-trust case!
On iOS unless everything else is only partiality supported. iTunes in comparison to Spotify was a joke when it was first released and they're shoving it down our throats constantly.
Never really used Siri until I bought a pair of AirPods. How am I not able to tell it to play music via Spotify?
Because Apple+Android = de facto monopoly.
As a user of an iPhone/Mac/etc, but who loves Spotify, this whole thing just sours me on Apple a bit. Spotify works great with my webOS TV, and just about everything else for that matter. It supports everything. Its networking/streaming model is brilliant. The interface is much better than Apple music (with its bizarre integration with iTunes). That I can't use Siri to play a song is just obnoxious and turns me off of Siri, and whatever middle managers in Apple are pushing this are just doing themselves harm in the longer run.
Secondarily, the expectation that Spotify buck the labels AND expect to bring the concept of 'all music for one price' is a non-starter, so I don't understand that criticsim.
I don't think we have a clear ethic yet, for these situations. There's obviously a ton of economic power in platforms. Since the msft-vs-netscape days, it's been controversial.
Ultimately... these are marketplaces, important ones and, considering their size, scope and influence... I think there is a strong case that "my house, my rules" is not a reasonable way of doing things.
Apple/Google's app & content stores are huge bottlenecks and being locked out of them is on the same scale as being locked out of the financial/banking system for certain companies.
Does "free market" mean anything useful, if the free market consists of a handful of unfree "platforms?"
There's a similar question for FB and Twitter. They are such big media channels that being locked out of one could (for example) make it impossible to run for elected office.
Things have different implications at large scale.
But on the other hand, Apple is stepping into a market (music streaming) from which they control top to bottom and has a advantage no one has (no IAP transactions fee, they basically pay themselves for it), which in a way is unfair.
If they want to remain fair to competition, they should waive IAPs costs or reduce them significantly in market they engage themselves in which they are direct competitors.
Spotify knowingly built a low margin business living in the pocket of the labels (who force Spotify towards razor thin margins) and Apple/Google (who have, since before Spotify launched, operated app stores for their platforms which are to some extent curated and which are not free market economies).
Spotify feels aggrieved that Apple does not allow it to develop software for certain of their hardware lines, such as Homepod or Apple Watch. Why do I have to allow you to develop software for my proprietary hardware, just because it's technically possible?
The crucial line in their argument is this:
> giving up 30% was too much for us to keep our prices low for our fans. Unfortunately, the end result is that you can no longer upgrade to Premium through the app.
How is this Apple's fault and not your fault? Every market place takes a cut from the vendor. Your business not being able to sustain the cost of doing business is nobody's fault except your own.
Apple should not be allowed to send push notifications about products or services they prohibit other apps from sending. They shouldn't arbitrarily restrict Spotify from updating the app (virtually no information is provided about what infractions Apple saw, and history suggests that companies are great at presenting one side of the argument and then we find that Apple has a legitimate grievance). They should not be able to charge Spotify more because of their competition.
But to suggest that Apple should be forced to allow Siri integration with Spotify? Homepod? Apple Watch? Ridiculous.
Monopolies where prices rise are bad news. But look at UK football coverage. On top of my free-to-air channels (£150 p.a. TV licence) I need a Sky Sports subscription (minimum £25 per month) and a BT Sport subscription (which necessitates one of BT Broadband - gross - or Sky) which I think is around £5-£10 per year. The top flight football is fragmented across all three providers. Is that better for me?