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Apple Fires Back at Spotify for Asking for 'Preferential Treatment'

72 points by coloneltcb 10y ago

fhood 10y ago
Who is the bad-guy here? (Both probably, but who is the worse bad-guy?) Obviously Apple's letter makes it seem as though they are being perfectly reasonable, but neither of the articles that I read have provided much analysis.
- pboutros 10y ago
  Neither are being bad, but Spotify is clearly trying to force the issue around the App Store generally. Spotify is clearly at fault here (and the way it's been handled in the media suggests some machination, perhaps), but Apple's revenue model with App Store is just as good or bad as it has always been (or maybe better, now that there's the 85/15 split option).
  - mackey 10y ago
    But remember that the 85/15 split only occurs after a year, so Spotify would still need to charge more. I also don't know if the app store is flexible enough to lower the customer's price after that year cut goes into affect.
    - oddevan 10y ago
      The cut happens automatically, and it's in place now for all subscriptions. So any Spotify subscriptions that started through the app at least a year ago are now getting the 85/15 split, without Spotify having to do anything.
      - k-mcgrady 10y ago
        I think his point is that if Spotify charges users 30% extra on iOS to cover the split there is no way for them to reduce that to 15% extra for users registered more than a year. So Spotify will get more money but the user will still pay 30% extra for signing up via iOS.
        MBCook 10y ago
        True. Or Spotify could choose to charge something else, say 10% more, so that on average it worked out to be roughly even for users based on how often they unsubscribe. Where they could charge 15% and eat the other 15% until the subscriber has been around for a year.
- mhomde 10y ago
  Apple is being a bit greedy when it comes to subscriptions for high-grossing services IMO. Spotify already has razor thin margins and paying out minuscule licensing fees to content producers, it's not viable to pay out 15-30% off the top to Apple. However, Apple clearly should be able to require a fee for providing the marketplace and payment framework, and you can see their point in not wanting apps to circumvent that to make it simpler for users to be able to manage their subscriptions easily. Some kind of cap and/or transaction fee seems more reasonable and would be win-win in the long run. You get a bad taste in your mouth when it feels like Apple is using their walled garden to strong arm competition. You can't compete when your largest rival eliminates your profits. In the end I think it's to Apple's detriment to play aggressively with content providers in their ecosystem when they're in such fierce competition with Android.
  - shostack 10y ago
    I think we can expect more of this increased rent seeking behavior from Apple as they continue their shift to a "services" business.
  - fhood 10y ago
    my understanding is that this only applies to subscriptions paid through the app though right? What percentage of the total subscriptions does that represent.
    - mhomde 10y ago
      Yeah, but that combined with that it's forbidden to circumvent paying inside the app puts app providers in a weird position. For somewhat technical savvy I guess it's not much of problem but I can imagine my mom would be confused why they couldn't pay for the service. Also, every user that is acquired through the app would potentially be a drain on Spotify due to the draconian fee's and there's no feasible way to wean them off the the app store. I'm not sure of the actual percentage, don't think they're public. Spotify have been desperately trying to sign-up people outside of the App store which I guess is what started this debacle. If the fee's are so high that you can't go through the app store it feels like it should be lose-lose for everyone.
- ageitgey 10y ago
  Who is the bad guy? It depends on your point of view. Both sides have valid arguments and are "right" from their own point of view. But in my personal opinion, Apple is the anti-competitive / anti-consumer party here. Apple's point of view is that they created the iPhone and spent a lot of money to build the app store, so they get to set the rules of the store. And further more, they treat every dev in the store exactly the same - whether you are Google or Spotify or an indie dev. Everyone pays the same fees to use the store. Since Spotify has decided to break the well-established store rules that apply to everyone, of course their app should be rejected. Apple is just applying their rules. From that very micro point of view, Spotify is 100% wrong and the app should be rejected. Except that totally ignores the larger competition issue and conveniently forgets to mention that Apple itself isn't subject to it's own rules. Spotify's point of view is that Apple's App Store is the ONLY way to sell apps to iOS users (to users who own their own devices!) so Apple has a de facto monopoly over iOS software sales. As such, they should by subject to antitrust law which provides limits on what a monopoly is allowed to do. Specifically, they say the rule that Spotify has to pay 30% of all subscription fees to Apple just to allow user sign-ups in their app is unfair. It's unfair because Apple has a directly competing product called Apple Music. Apple Music has an unbeatable advantage over Spotify on iOS because they don't have to pay 30% of subscription fees to a third party. In a low margin business, no one can possibly compete with Apple if they have a 30% price advantage. I tend to agree with Spotify. Apple is trying to cripple their competition by giving themselves a huge, unfair price advantage by using their monopoly over iOS software sales. It would be fine for Apple to take a 30% subscription fee cut if Spotify chose to use Apple's subscription billing service. But it's not a choice - iOS apps aren't allow to use any other subscription billing service and aren't allowed to even mention other ways to sign up outside of the app. They can't even say the words "go to our website to sign up" without getting kicked out of the store. That seems evil to me. That's the crux of the issue. IMO, Apple created those censorship rules specifically to kill competition with their own products. It's very similar to Yelp's complaints against Google. Yelp complains that even if they have the #1 search result for a restaurant, Google shows their own giant restaurant widget above all organic search results. You don't even see any organic search results "above the fold" anymore. Thus, it's impossible for Yelp to fairly compete with Google in the area of restaurant recommendations because Google controls the user's point of access. The key factor in both the Apple and Google cases is if you believe the companies have a monopoly. Monopolies have more rules to follow than normal companies because they have the superpower to keep the market noncompetitive if they want to. Normal companies don't have that power in a fair market, so they are allowed to be more vicious in how they compete.
tunesmith 10y ago
I was disappointed to see Elizabeth Warren get in on this. Music consumers aren't the little guy here, it's the songwriters etc.
- DominikR 10y ago
  I believe we should all rather strive for fairness, rather than asking for preferential treatment for the so called "little guys" If you think about this it's basically the same as saying: We don't want competition, everyone should be a winner. (because you would weaken the big guys to artificially improve the situation for the little guys, even if the big guys didn't play unfair in any way) This wouldn't ever work as we as a species are competitive by nature. I also want to note that I would never apply this to all areas of life, I'm talking strictly about competition between businesses. Of course you should help the little guys with a social system if they are unable to survive on their own.
- burkaman 10y ago
  She wasn't really commenting on the music industry, it was a larger point about major technology companies using their platforms to lock out competition. And that in turn was part of a larger speech about anti-competitive practices in general, not just in technology.
WayneBro 10y ago
You mean kind of like how Apple asks for preferential treatment from every other entity? You know, for things like: - Being able to install updates without asking the ISP. - Fast lanes for their services with ISPs. - Special or even FREE rent for their physical store fronts (see Grand Central Terminal and many others.) - Making illegal deals with book publishers so they get preferential pricing. Same for music. The list goes on and on and on. Apple has always tried to work it so they get preferential treatment from every angle.
- coldtea 10y ago
  >- Being able to install updates without asking the ISP. Why the fuck should they "ask the ISP"?
  - a_small_island 10y ago
    I'm also curious what OP meant by that point
  - Avernar 10y ago
    I think he meant cell carrier, not ISP. But I disagree with him on this one. I'm glad Apple was able to get "special treatment" for many things from the carriers. They were more draconian than Apple with their rules. Now Android can also install firmware and applications without the carriers saying no so that was a good thing.
    - MBCook 10y ago
      Can Android install firmware without carrier approval? I know that they've structured things so many updates can be installed without a true firmware update but I was under the impression the carrier restrictions still existed in some form.
      - Avernar 10y ago
        For the carrier specific models, yes. But you can get a non-carrier specific one. Nexus models get updates direct from Google. Otherwise you have to wait for the manufacturer to do their customizations. Or you just install one of the many other firmwares out there.
dirkdk 10y ago
Regardless of pricing, this is Windows/Internet explorer vs. Netscape all over. Easy to see Apple introduce features tied to Apple Music that Spotify can't because it doesn't have the same control over iOS
- endlessvoid94 10y ago
  Like what features?
  - mackey 10y ago
    Siri in iOS 10 is a pretty major one.
    - st3v3r 10y ago
      You mean the same OS that opened up the Siri API?
      - Me1000 10y ago
        The Siri API doesn't support music.
        MBCook 10y ago
        I imagine it will it some point, but you're right right now that's only available for Apple. That means the question is: is the lack of Siri integration a big enough hindrance that it should be considered unlawful interference with competition?
  - pen2l 10y ago
    Funny you ask -- because boy do I have an answer. Last week I officially switched (reluctantly and with a bad taste in my mouth) from Spotify to Apple Music. Why? Simply because when I'm driving I want to dictate by voice command what song I want to play. I could not do this with Spotify, that's why I switched. Next time I won't get an iphone because of the bad taste this experience has left me (the worst part is apple's voice transcription technology is so bad compared to Google's... so half the time even that doesn't work)
DominikR 10y ago
I believe that in this specific case Spotify makes a very compelling argument. App publishers that do not directly compete with Apple have a level playing field although the Apple tax certainly hurts. But Spotify directly competes with Apple, and while Apple does not have to pay this tax as they can (probably) use their own billing services cheaper, Spotify couldn't do the same even if they implemented their own billing service or used a cheaper alternative. It'll be interesting to see what comes out of this. I for one hope that we someday all get to choose which billing provider we want to use in our apps.
- basch 10y ago
  30% isnt a payment processing fee, its a commission + infrastructure tax. You make money off your app? Because apple made it discoverable in the app store! You make money off your app, pay a share back for os/api r&d!
  - DominikR 10y ago
    Where can I find more information about this infrastructure tax? Because I highly doubt that Apple actually needs 30% to pay for the app store infrastructure. And why are you mixing this with the OS API? I could just as well say that Apple needs some kind of OS anyways to be able to sell their expensive hardware. Also there are certain categories of apps that are allowed to use other billing providers. Why don't they have to pay for the OS API's and R&D?
    - zepto 10y ago
      The apps that use other billing providers are not selling digital goods.
      - DominikR 10y ago
        Of course you can, I have such an app in the store. A telephony app where you can access all features without the app. (You just dial one of our local numbers and that will be mapped to a foreign number) So this argument doesnt make sense.
cassieramen 10y ago
How exactly does Apple's payment system work for companies that are cross platform? If I have a Dropcam subscription and am using the ios app, is Dropcam paying Apple 15% of my subscription cost? That seems nuts.
- ludwigvan 10y ago
  Depends on from where you signed up. If you signed up inside the app, 30%. Outside, 0.
- iLoch 10y ago
  IIRC any subscriptions and/or purchases driven by apps downloaded from the App Store are subject to a fee paid to Apple. That's according to their (garbage) App Store rules.
  - coldtea 10y ago
    Are there many commercial stores (especially one pushing 50 billions of product) without such "garbage" (sic) rules?
    - Oletros 10y ago
      Google, for example
      - st3v3r 10y ago
        Nope. They have plenty of garbage rules of their own. Also, they have the same rule Apple does in this case.
        Oletros 10y ago
        No, they don't have the same rule, nor Spotify, nor Netflix nor Amazon music have to use Google payment system
cloudjacker 10y ago
Apple's App Store has always been an antitrust violation waiting to happen. and by happen, I mean filed in a court. There is nothing "applied equally" to other developers. Onlookers will say developers agreed to the contract, so no sympathy, a Federal Judge on the other hand will rip that contract to shreds and take a dim view on Apple's practices. And no, Google Play's robo rejector isn't exempt.
- coldtea 10y ago
  >Apple's App Store has always been an antitrust violation waiting to happen. There's nothing "antitrust" about the App Store operation, since Apple isn't a monopoly -- it's in fact a minority player in the mobile market. (And no, you can't be a "monopoly on your own platform" -- it has to be the overall market). In fact game console manufactures (among many other fields) have historically had much more draconian restrictions and cuts) that the quite liberal App Store. And it having 1 million apps and having pushed 50 billion dollars to developers doesn't really paint it as a "restricted area with tight controls where only Apple benefits" either.
  - teacup50 10y ago
    We really need to revisit the purely geographic definition of a "market" when it comes to antitrust law in a digital age.
    - coldtea 10y ago
      No, we really don't. The same things hold true for the non-digital age. If you open a store you can do everything you want in it (within the law of course, can't e.g. refuse to serve blacks), specify how you want it to be run, and sell or not sell whatever you like. Doesn't matter if it serves millions or billions (e.g. McDonalds), as long as there are other vendors with a large aggregated share selling the same goods, you're not a monopoly. Nor does it make sense to. This essentially boils down to: Apple built the iPhone, and they've built iOS SDK, and they've build the App Store, but I, who didn't have anything to do with creating those, want to go there are sell stuff and not be bound by any rules Apple dictates. Sure, one could say "that would be better for the customers", but it's not the customer's store. It's Apples (or Google's, etc). If you want to sell in it, it means you see value in what Apple built (and possible profit for you), but yet you don't want to pay the requested price for this value -- and you feel entitled that you don't have to either.
smpetrey 10y ago
It's really an infrastructure tax on Spotify. Bite the bullet, and take your 85/15 split revenue on subscriptions Spotify. Can't believe they re-submitted twice to circumvent the subscription model. Everybody's ego needs to chill.
addicted 10y ago
When Apple says Spotify is asking for preferential treatment over developers of other apps, does that include the developers of Apple Music? Does Apple Music go through the same sort of independent and opaque approval process Spotify does? Do they have to wait the same time? Do they get rejected for unapproved business models? Does Apple Music take 30% of it's cut and give it away to the rest of the company? While I am not entirely unsympathetic to Apple's position, I think the preferential treatment argument is BS when Spotify's biggest competitor is Apple Music.
- JohnTHaller 10y ago
  Of course not. Apple uses the setup of iOS to ensure that its first party apps have a better experience than third party providers. Apple has always done this on iOS. If you attempt to compete with Apple on their own platform where they have the keys and make (and change) the rules on a whim, you will lose. People choose Apple Books because it's more convenient to pay vs Amazon (since Amazon isn't allowed to let people buy content like they can on competing platforms unless they funnel payments through Apple and give up 30%). People were choosing Apple Music over Spotify because Spotify cost $3 a month more (since they had to charge that to Apple users to cover the Apple tax for payments and weren't allowed to direct Apple users to the Spotify site to sign up for the same price as Apple Music without the Apple tax). Firefox and Google had to give up using their own browser engine (and all the competitive features and functionality that went with it) and use the Mobile Safari engine in order to even participate on iOS. Up until recently, they were even forced to use a lesser and slower version of the engine to ensure that Safari was always the (artificially) fastest browser on iOS.
pfg 10y ago
Whenever this pops up, I keep wondering if there's any precedent for antitrust rulings against companies in industries where they don't exactly hold a monopoly, but have essentially created their own market-like structure while also competing in that market themselves. Do comparable concepts even exist in other industries?
erikpukinskis 10y ago
I'm curious, for the people in this thread who think Apple is within their rights, would you buy a DVD player that only played DVDs purchased through their own store, charged 30% to list in the store, and disallowed companies setting a different price that covers the 30% fee?
- peteretep 10y ago
  I buy films through the Apple Store; that's equivalent?
- forthefuture 10y ago
  Isn't this kind of the point? Just stop buying Apple shit. If there is no Spotify app on iPhone, and everyone has to use iTunes and Apple Music, the iPhone platform becomes less valuable. Of course Apple is allowed to do what they're doing. They are begging people to stop buying their products. Anyone buying an Apple product today deserves that money less than Apple.
- scarface74 10y ago
  Would you buy a game console that could only play games approved by the console manufacturer?
- wodenokoto 10y ago
  I'm pretty sure that brick and mortar stores retain more than 30% of the sales price of DVD's.
  - deleted 10y ago
    [deleted]
- MBCook 10y ago
  The problem with your analogy is that in that situation Apple would be doing all the customer billing, billing support, collections, etc. It's not that Apple made the DVD player, the store also outsourced a large chunk of their finance department to Apple. And that's what they're paying for. Maybe they're paying too much, but they're getting more than just the ability to appear on Apple DVD players.
dr1337 10y ago
If the claims made by Spotify that Apple was threatening to kick Spotify out of the AppStore for not taking down its $0.99 offsite signup promo then this is certainly more anti-competitive than MSIE vs Netscape. At least back in the day, if you didn't get Netscape installed but still wanted it, all you had to do was download the EXE file and install it. Now if Spotify were to be banned from the AppStore, how else would you receive its service?
- metachor 10y ago
  "Now if Spotify were to be banned from the AppStore, how else would you receive its service?" The Spotify Web Player works perfectly fine on iPhone's mobile Safari. No, it's not a native app, but it exists as an alternative delivery method for the service.
abalone 10y ago
What's weird is that Apple has a lovely, convenient system for in-app payments called Apple Pay that has a great pricing model that everyone is happy with (usually 2-3%). They just don't allow it to be used for subscriptions. Why? What is their goal here? Let's survey the possibilities... 1. To make a ton of money by extracting revenue from developers and content providers. This is the "obvious" goal everything immediately thinks of, but I think it's actually unlikely. Apple makes MUCH more money from device sales. It makes more financial sense to have a robust offering of content and apps. They are making good margins on their own services, but their business model in terms of the app/music stores is to run them just above break even. 2. Convenient payment. Not the reason, because Apple Pay would do that at a lower price. 3. Customer service. Since Apple is technically the merchant here reselling a digital good, they can also provide refunds and customer service. But I doubt they need a 15-30% margin for this. They could just contractually require that developers refund in-app Apple Pay transactions under certain conditions. 4. Privacy. Now here's a real reason. To offer a 2-3% fee, payment processors need to control for fraud. One way they do this is by verifying contact info. Now, for physical goods there is no way around asking for the billing address, so Apple Pay supports that. But it's not necessary for digital goods. Apple would not be able to offer Apple Pay for subscriptions without degrading user privacy.
- MBCook 10y ago
  Apples and oranges. Apple Pay has no fee to the user or the company receiving the money, it's paid by the bank and is EXTREMELY small. Normal credit card fees still apply, but those don't go to Apple. For all intents and purposes it is a single bank transaction almost like any other. Apple has almost no part in it except helping verify security. In-app purchases are different. Apple takes a cut because Apple provides a real service. They host the app, they do the billing, they do the collections, they do the license tracking. They handle taxes in all sorts of countries in different states. They make sure their store complies with all local laws. They handle security and try to stop piracy. In short, they're providing a lot of services.
  - abalone 10y ago
    > Apple takes a cut because Apple provides a real service. They host the app, they do the billing... Those benefits are irrelevant to subscription content. Apple does not host Spotify's content. Spotify does not need Apple to handle monthly billing. If Apple merely wanted to offer a convenient worldwide billing service, they could make it opt-in for smaller developers, and Spotify would happily handle their own billing, tax calculations, etc. No, the goal here must be something more.

72 points by coloneltcb 10y ago

fhood 10y ago

Who is the bad-guy here? (Both probably, but who is the worse bad-guy?) Obviously Apple's letter makes it seem as though they are being perfectly reasonable, but neither of the articles that I read have provided much analysis.

pboutros 10y ago
Neither are being bad, but Spotify is clearly trying to force the issue around the App Store generally. Spotify is clearly at fault here (and the way it's been handled in the media suggests some machination, perhaps), but Apple's revenue model with App Store is just as good or bad as it has always been (or maybe better, now that there's the 85/15 split option).
- mackey 10y ago
  But remember that the 85/15 split only occurs after a year, so Spotify would still need to charge more. I also don't know if the app store is flexible enough to lower the customer's price after that year cut goes into affect.
  - oddevan 10y ago
    The cut happens automatically, and it's in place now for all subscriptions. So any Spotify subscriptions that started through the app at least a year ago are now getting the 85/15 split, without Spotify having to do anything.
    - k-mcgrady 10y ago
      I think his point is that if Spotify charges users 30% extra on iOS to cover the split there is no way for them to reduce that to 15% extra for users registered more than a year. So Spotify will get more money but the user will still pay 30% extra for signing up via iOS.
      - MBCook 10y ago
        True. Or Spotify could choose to charge something else, say 10% more, so that on average it worked out to be roughly even for users based on how often they unsubscribe. Where they could charge 15% and eat the other 15% until the subscriber has been around for a year.
mhomde 10y ago
Apple is being a bit greedy when it comes to subscriptions for high-grossing services IMO. Spotify already has razor thin margins and paying out minuscule licensing fees to content producers, it's not viable to pay out 15-30% off the top to Apple. However, Apple clearly should be able to require a fee for providing the marketplace and payment framework, and you can see their point in not wanting apps to circumvent that to make it simpler for users to be able to manage their subscriptions easily. Some kind of cap and/or transaction fee seems more reasonable and would be win-win in the long run. You get a bad taste in your mouth when it feels like Apple is using their walled garden to strong arm competition. You can't compete when your largest rival eliminates your profits. In the end I think it's to Apple's detriment to play aggressively with content providers in their ecosystem when they're in such fierce competition with Android.
- shostack 10y ago
  I think we can expect more of this increased rent seeking behavior from Apple as they continue their shift to a "services" business.
- fhood 10y ago
  my understanding is that this only applies to subscriptions paid through the app though right? What percentage of the total subscriptions does that represent.
  - mhomde 10y ago
    Yeah, but that combined with that it's forbidden to circumvent paying inside the app puts app providers in a weird position. For somewhat technical savvy I guess it's not much of problem but I can imagine my mom would be confused why they couldn't pay for the service. Also, every user that is acquired through the app would potentially be a drain on Spotify due to the draconian fee's and there's no feasible way to wean them off the the app store. I'm not sure of the actual percentage, don't think they're public. Spotify have been desperately trying to sign-up people outside of the App store which I guess is what started this debacle. If the fee's are so high that you can't go through the app store it feels like it should be lose-lose for everyone.
ageitgey 10y ago
Who is the bad guy? It depends on your point of view. Both sides have valid arguments and are "right" from their own point of view. But in my personal opinion, Apple is the anti-competitive / anti-consumer party here. Apple's point of view is that they created the iPhone and spent a lot of money to build the app store, so they get to set the rules of the store. And further more, they treat every dev in the store exactly the same - whether you are Google or Spotify or an indie dev. Everyone pays the same fees to use the store. Since Spotify has decided to break the well-established store rules that apply to everyone, of course their app should be rejected. Apple is just applying their rules. From that very micro point of view, Spotify is 100% wrong and the app should be rejected. Except that totally ignores the larger competition issue and conveniently forgets to mention that Apple itself isn't subject to it's own rules. Spotify's point of view is that Apple's App Store is the ONLY way to sell apps to iOS users (to users who own their own devices!) so Apple has a de facto monopoly over iOS software sales. As such, they should by subject to antitrust law which provides limits on what a monopoly is allowed to do. Specifically, they say the rule that Spotify has to pay 30% of all subscription fees to Apple just to allow user sign-ups in their app is unfair. It's unfair because Apple has a directly competing product called Apple Music. Apple Music has an unbeatable advantage over Spotify on iOS because they don't have to pay 30% of subscription fees to a third party. In a low margin business, no one can possibly compete with Apple if they have a 30% price advantage. I tend to agree with Spotify. Apple is trying to cripple their competition by giving themselves a huge, unfair price advantage by using their monopoly over iOS software sales. It would be fine for Apple to take a 30% subscription fee cut if Spotify chose to use Apple's subscription billing service. But it's not a choice - iOS apps aren't allow to use any other subscription billing service and aren't allowed to even mention other ways to sign up outside of the app. They can't even say the words "go to our website to sign up" without getting kicked out of the store. That seems evil to me. That's the crux of the issue. IMO, Apple created those censorship rules specifically to kill competition with their own products. It's very similar to Yelp's complaints against Google. Yelp complains that even if they have the #1 search result for a restaurant, Google shows their own giant restaurant widget above all organic search results. You don't even see any organic search results "above the fold" anymore. Thus, it's impossible for Yelp to fairly compete with Google in the area of restaurant recommendations because Google controls the user's point of access. The key factor in both the Apple and Google cases is if you believe the companies have a monopoly. Monopolies have more rules to follow than normal companies because they have the superpower to keep the market noncompetitive if they want to. Normal companies don't have that power in a fair market, so they are allowed to be more vicious in how they compete.

tunesmith 10y ago

I was disappointed to see Elizabeth Warren get in on this. Music consumers aren't the little guy here, it's the songwriters etc.

DominikR 10y ago
I believe we should all rather strive for fairness, rather than asking for preferential treatment for the so called "little guys" If you think about this it's basically the same as saying: We don't want competition, everyone should be a winner. (because you would weaken the big guys to artificially improve the situation for the little guys, even if the big guys didn't play unfair in any way) This wouldn't ever work as we as a species are competitive by nature. I also want to note that I would never apply this to all areas of life, I'm talking strictly about competition between businesses. Of course you should help the little guys with a social system if they are unable to survive on their own.
burkaman 10y ago
She wasn't really commenting on the music industry, it was a larger point about major technology companies using their platforms to lock out competition. And that in turn was part of a larger speech about anti-competitive practices in general, not just in technology.

WayneBro 10y ago

You mean kind of like how Apple asks for preferential treatment from every other entity? You know, for things like: - Being able to install updates without asking the ISP. - Fast lanes for their services with ISPs. - Special or even FREE rent for their physical store fronts (see Grand Central Terminal and many others.) - Making illegal deals with book publishers so they get preferential pricing. Same for music. The list goes on and on and on. Apple has always tried to work it so they get preferential treatment from every angle.

coldtea 10y ago
>- Being able to install updates without asking the ISP. Why the fuck should they "ask the ISP"?
- a_small_island 10y ago
  I'm also curious what OP meant by that point
- Avernar 10y ago
  I think he meant cell carrier, not ISP. But I disagree with him on this one. I'm glad Apple was able to get "special treatment" for many things from the carriers. They were more draconian than Apple with their rules. Now Android can also install firmware and applications without the carriers saying no so that was a good thing.
  - MBCook 10y ago
    Can Android install firmware without carrier approval? I know that they've structured things so many updates can be installed without a true firmware update but I was under the impression the carrier restrictions still existed in some form.
    - Avernar 10y ago
      For the carrier specific models, yes. But you can get a non-carrier specific one. Nexus models get updates direct from Google. Otherwise you have to wait for the manufacturer to do their customizations. Or you just install one of the many other firmwares out there.

dirkdk 10y ago

Regardless of pricing, this is Windows/Internet explorer vs. Netscape all over. Easy to see Apple introduce features tied to Apple Music that Spotify can't because it doesn't have the same control over iOS

endlessvoid94 10y ago
Like what features?
- mackey 10y ago
  Siri in iOS 10 is a pretty major one.
  - st3v3r 10y ago
    You mean the same OS that opened up the Siri API?
    - Me1000 10y ago
      The Siri API doesn't support music.
      - MBCook 10y ago
        I imagine it will it some point, but you're right right now that's only available for Apple. That means the question is: is the lack of Siri integration a big enough hindrance that it should be considered unlawful interference with competition?
- pen2l 10y ago
  Funny you ask -- because boy do I have an answer. Last week I officially switched (reluctantly and with a bad taste in my mouth) from Spotify to Apple Music. Why? Simply because when I'm driving I want to dictate by voice command what song I want to play. I could not do this with Spotify, that's why I switched. Next time I won't get an iphone because of the bad taste this experience has left me (the worst part is apple's voice transcription technology is so bad compared to Google's... so half the time even that doesn't work)

DominikR 10y ago

I believe that in this specific case Spotify makes a very compelling argument. App publishers that do not directly compete with Apple have a level playing field although the Apple tax certainly hurts. But Spotify directly competes with Apple, and while Apple does not have to pay this tax as they can (probably) use their own billing services cheaper, Spotify couldn't do the same even if they implemented their own billing service or used a cheaper alternative. It'll be interesting to see what comes out of this. I for one hope that we someday all get to choose which billing provider we want to use in our apps.

basch 10y ago
30% isnt a payment processing fee, its a commission + infrastructure tax. You make money off your app? Because apple made it discoverable in the app store! You make money off your app, pay a share back for os/api r&d!
- DominikR 10y ago
  Where can I find more information about this infrastructure tax? Because I highly doubt that Apple actually needs 30% to pay for the app store infrastructure. And why are you mixing this with the OS API? I could just as well say that Apple needs some kind of OS anyways to be able to sell their expensive hardware. Also there are certain categories of apps that are allowed to use other billing providers. Why don't they have to pay for the OS API's and R&D?
  - zepto 10y ago
    The apps that use other billing providers are not selling digital goods.
    - DominikR 10y ago
      Of course you can, I have such an app in the store. A telephony app where you can access all features without the app. (You just dial one of our local numbers and that will be mapped to a foreign number) So this argument doesnt make sense.

cassieramen 10y ago

How exactly does Apple's payment system work for companies that are cross platform? If I have a Dropcam subscription and am using the ios app, is Dropcam paying Apple 15% of my subscription cost? That seems nuts.

ludwigvan 10y ago
Depends on from where you signed up. If you signed up inside the app, 30%. Outside, 0.
iLoch 10y ago
IIRC any subscriptions and/or purchases driven by apps downloaded from the App Store are subject to a fee paid to Apple. That's according to their (garbage) App Store rules.
- coldtea 10y ago
  Are there many commercial stores (especially one pushing 50 billions of product) without such "garbage" (sic) rules?
  - Oletros 10y ago
    Google, for example
    - st3v3r 10y ago
      Nope. They have plenty of garbage rules of their own. Also, they have the same rule Apple does in this case.
      - Oletros 10y ago
        No, they don't have the same rule, nor Spotify, nor Netflix nor Amazon music have to use Google payment system

cloudjacker 10y ago

Apple's App Store has always been an antitrust violation waiting to happen. and by happen, I mean filed in a court. There is nothing "applied equally" to other developers. Onlookers will say developers agreed to the contract, so no sympathy, a Federal Judge on the other hand will rip that contract to shreds and take a dim view on Apple's practices. And no, Google Play's robo rejector isn't exempt.

coldtea 10y ago
>Apple's App Store has always been an antitrust violation waiting to happen. There's nothing "antitrust" about the App Store operation, since Apple isn't a monopoly -- it's in fact a minority player in the mobile market. (And no, you can't be a "monopoly on your own platform" -- it has to be the overall market). In fact game console manufactures (among many other fields) have historically had much more draconian restrictions and cuts) that the quite liberal App Store. And it having 1 million apps and having pushed 50 billion dollars to developers doesn't really paint it as a "restricted area with tight controls where only Apple benefits" either.
- teacup50 10y ago
  We really need to revisit the purely geographic definition of a "market" when it comes to antitrust law in a digital age.
  - coldtea 10y ago
    No, we really don't. The same things hold true for the non-digital age. If you open a store you can do everything you want in it (within the law of course, can't e.g. refuse to serve blacks), specify how you want it to be run, and sell or not sell whatever you like. Doesn't matter if it serves millions or billions (e.g. McDonalds), as long as there are other vendors with a large aggregated share selling the same goods, you're not a monopoly. Nor does it make sense to. This essentially boils down to: Apple built the iPhone, and they've built iOS SDK, and they've build the App Store, but I, who didn't have anything to do with creating those, want to go there are sell stuff and not be bound by any rules Apple dictates. Sure, one could say "that would be better for the customers", but it's not the customer's store. It's Apples (or Google's, etc). If you want to sell in it, it means you see value in what Apple built (and possible profit for you), but yet you don't want to pay the requested price for this value -- and you feel entitled that you don't have to either.

smpetrey 10y ago

It's really an infrastructure tax on Spotify. Bite the bullet, and take your 85/15 split revenue on subscriptions Spotify. Can't believe they re-submitted twice to circumvent the subscription model. Everybody's ego needs to chill.

addicted 10y ago

When Apple says Spotify is asking for preferential treatment over developers of other apps, does that include the developers of Apple Music? Does Apple Music go through the same sort of independent and opaque approval process Spotify does? Do they have to wait the same time? Do they get rejected for unapproved business models? Does Apple Music take 30% of it's cut and give it away to the rest of the company? While I am not entirely unsympathetic to Apple's position, I think the preferential treatment argument is BS when Spotify's biggest competitor is Apple Music.

JohnTHaller 10y ago
Of course not. Apple uses the setup of iOS to ensure that its first party apps have a better experience than third party providers. Apple has always done this on iOS. If you attempt to compete with Apple on their own platform where they have the keys and make (and change) the rules on a whim, you will lose. People choose Apple Books because it's more convenient to pay vs Amazon (since Amazon isn't allowed to let people buy content like they can on competing platforms unless they funnel payments through Apple and give up 30%). People were choosing Apple Music over Spotify because Spotify cost $3 a month more (since they had to charge that to Apple users to cover the Apple tax for payments and weren't allowed to direct Apple users to the Spotify site to sign up for the same price as Apple Music without the Apple tax). Firefox and Google had to give up using their own browser engine (and all the competitive features and functionality that went with it) and use the Mobile Safari engine in order to even participate on iOS. Up until recently, they were even forced to use a lesser and slower version of the engine to ensure that Safari was always the (artificially) fastest browser on iOS.

pfg 10y ago

Whenever this pops up, I keep wondering if there's any precedent for antitrust rulings against companies in industries where they don't exactly hold a monopoly, but have essentially created their own market-like structure while also competing in that market themselves. Do comparable concepts even exist in other industries?

erikpukinskis 10y ago

I'm curious, for the people in this thread who think Apple is within their rights, would you buy a DVD player that only played DVDs purchased through their own store, charged 30% to list in the store, and disallowed companies setting a different price that covers the 30% fee?

peteretep 10y ago
I buy films through the Apple Store; that's equivalent?
forthefuture 10y ago
Isn't this kind of the point? Just stop buying Apple shit. If there is no Spotify app on iPhone, and everyone has to use iTunes and Apple Music, the iPhone platform becomes less valuable. Of course Apple is allowed to do what they're doing. They are begging people to stop buying their products. Anyone buying an Apple product today deserves that money less than Apple.
scarface74 10y ago
Would you buy a game console that could only play games approved by the console manufacturer?
wodenokoto 10y ago
I'm pretty sure that brick and mortar stores retain more than 30% of the sales price of DVD's.
- deleted 10y ago
  [deleted]
MBCook 10y ago
The problem with your analogy is that in that situation Apple would be doing all the customer billing, billing support, collections, etc. It's not that Apple made the DVD player, the store also outsourced a large chunk of their finance department to Apple. And that's what they're paying for. Maybe they're paying too much, but they're getting more than just the ability to appear on Apple DVD players.

dr1337 10y ago

If the claims made by Spotify that Apple was threatening to kick Spotify out of the AppStore for not taking down its $0.99 offsite signup promo then this is certainly more anti-competitive than MSIE vs Netscape. At least back in the day, if you didn't get Netscape installed but still wanted it, all you had to do was download the EXE file and install it. Now if Spotify were to be banned from the AppStore, how else would you receive its service?

metachor 10y ago
"Now if Spotify were to be banned from the AppStore, how else would you receive its service?" The Spotify Web Player works perfectly fine on iPhone's mobile Safari. No, it's not a native app, but it exists as an alternative delivery method for the service.

abalone 10y ago

What's weird is that Apple has a lovely, convenient system for in-app payments called Apple Pay that has a great pricing model that everyone is happy with (usually 2-3%). They just don't allow it to be used for subscriptions. Why? What is their goal here? Let's survey the possibilities... 1. To make a ton of money by extracting revenue from developers and content providers. This is the "obvious" goal everything immediately thinks of, but I think it's actually unlikely. Apple makes MUCH more money from device sales. It makes more financial sense to have a robust offering of content and apps. They are making good margins on their own services, but their business model in terms of the app/music stores is to run them just above break even. 2. Convenient payment. Not the reason, because Apple Pay would do that at a lower price. 3. Customer service. Since Apple is technically the merchant here reselling a digital good, they can also provide refunds and customer service. But I doubt they need a 15-30% margin for this. They could just contractually require that developers refund in-app Apple Pay transactions under certain conditions. 4. Privacy. Now here's a real reason. To offer a 2-3% fee, payment processors need to control for fraud. One way they do this is by verifying contact info. Now, for physical goods there is no way around asking for the billing address, so Apple Pay supports that. But it's not necessary for digital goods. Apple would not be able to offer Apple Pay for subscriptions without degrading user privacy.

MBCook 10y ago
Apples and oranges. Apple Pay has no fee to the user or the company receiving the money, it's paid by the bank and is EXTREMELY small. Normal credit card fees still apply, but those don't go to Apple. For all intents and purposes it is a single bank transaction almost like any other. Apple has almost no part in it except helping verify security. In-app purchases are different. Apple takes a cut because Apple provides a real service. They host the app, they do the billing, they do the collections, they do the license tracking. They handle taxes in all sorts of countries in different states. They make sure their store complies with all local laws. They handle security and try to stop piracy. In short, they're providing a lot of services.
- abalone 10y ago
  > Apple takes a cut because Apple provides a real service. They host the app, they do the billing... Those benefits are irrelevant to subscription content. Apple does not host Spotify's content. Spotify does not need Apple to handle monthly billing. If Apple merely wanted to offer a convenient worldwide billing service, they could make it opt-in for smaller developers, and Spotify would happily handle their own billing, tax calculations, etc. No, the goal here must be something more.