Spotify, this ain’t it chief

By now, most of you must be familiar with the growing legal battle between Spotify and Apple. It’s nothing new, Spotify’s antitrust lawsuit has been going on for years now. But do their claims actually hold up?

Some context before we get to the fun stuff.

The Spotify Apple Beef

On March 13th, 2019, Spotify filed an antitrust complaint against Apple with the European Union. Their claim; Apple’s 30% tax cut is stifling innovation and limiting consumer choice.

Spotify isn’t the only company that has brought up concerns. Netflix is among the major companies that are stepping aside from iTunes payments.

What’s included in Apple’s 30% tax cut

Apple takes a 30% revenue cut whenever you sell a product through an in-app purchase. This applies to four kinds of products:

Consumables: The stuff you buy in games like gems, lives, golden jellybeans, or whatever the add-ons that are on candy crush, that sort of stuff. The kind of add-ons that you can use once.

Non-consumables: These are stuff you can purchase as a premium add-on. They don’t expire. This is something like additional filters in a camera app.

Subscriptions: These include subscriptions like your Spotify Premium, Netflix, Medium, etc. These even include subscriptions that don’t renew automatically, for example, your seasonal streaming passes.

But if you sell a physical product, like items on eBay, you are not subject to the tax cut. This also doesn’t include tickets you may buy for events or public transport.

So Apple is the bad guy?

After hearing everything I said so far, you might get the idea that Apple is actually the bad guy here. How it's this big player in the game who makes the rules as well.

That’s actually what Spotify claims Apple is doing. They think that Apple is a monopoly that dictates developers and app companies on how to practice their business models. That they’re both the player AND the referee.

But wait until you hear their side.

Why I’m with Apple on this

Apple replied to these claims in the most non-Apple way possible. They didn’t hold anything back. They went all-in 💅.

In addition to addressing most of these claims, Apple even called out Spotify for not paying the artists enough:

“Just this week, Spotify sued music creators after a decision by the US Copyright Royalty Board required Spotify to increase its royalty payments. This isn’t just wrong, it represents a real, meaningful, and damaging step backward for the music industry.”

Why Apple can afford to demand that 30% tax

Think about everything Apple brings to the table. Not just for Spotify, but to all other app companies out there.

They built them a platform. A platform with a user base of millions. This userbase is not just like any other. iPhone users are more likely to buy subscriptions and premium apps. They can afford to do that. The market they got access to is a very valuable one.

They spend a ton of resources to maintain its Appstore. Apple needs to hire hundreds of designers and developers to maintain their Appstore. Their salaries need to be paid. They spend hundreds and thousands on storing these apps and services on servers around the world. They don’t maintain themselves either.

They gave their users a secure payment platform. A user is not going to be inclined to pay for a service if they can’t trust the payment platform. Apple built that trust with their users. They gave them a secure payment method to use to pay for these apps.

Apart from these, Apple also provides a set of tools and guidelines for developers around the world, including the ones at Spotify, to build apps like it.

Think about what Spotify is asking for here. They want all of these benefits. The premium market they got access to. The tools to develop apps. The secure payment platform. All of these features completely free of charge.

Imagine this scenario…

You decide to rent out your house. Each room will have teams of your competitor’s products building their apps. You are also building your own product in your room.

Your competitor’s product is slightly pricey because they have to cover up the rent fee too. Is it fair for them to ask you to wave off the rent just to make it a level playing field?

Apple deserves that advantage they have with Apple Music. It’s only logical.

You don’t see Phil Spencer go on stage, get on his knees, and scream at the roof demanding Sony to release Uncharted for XBOX because it's sTifLinG iNnOvAtIon.

Having said that…

There are still other scenarios where I too question Apple’s decisions. For example, Apple doesn’t let other apps promote alternative methods of payment for their in-app services.

That is, Spotify can’t add a button in their app that will direct you to a page where you can sign up for their services with a different payment method. I just can’t see any fair reasoning behind it.

Another allegation they have is that Apple doesn’t allow Spotify to run promotional campaigns within their app. I couldn’t find any proof of this so take it with a pinch of salt.

No company is perfect. We shouldn’t jump into conclusions without having a clear idea about what's actually happening. I love Spotify. It’s one of the very few apps I use every day. But this is just one of those times I couldn’t find a lot of reasoning behind what they claimed.

Please feel free to carry on the debate in the comments. I’d love to hear your side 😉