There’s a big problem with building a business on the back of other companies’ businesses: You have to play by their rules.
There are countless examples of companies losing their cool when a free ride comes to an end. Twitter is an example that instantly comes to mind. Developers spent so long building apps and services utilizing free access to Twitter’s APIs and its users’ data. They made money — a whole lot of money — with these services and paid nothing to Twitter as they did. Then, when Twitter made some changes to its model that impacted many developers’ products, they flipped.
Fast forward to this week, when Spotify’s general counsel sent a letter to Apple’s lawyers, basically slamming the company for not giving Spotify a free ride while it pulls in millions in fees from iPhone and iPad users.
The App Store was a game-changing idea that moved mobile software portals onto mobile devices. Those of us old enough to recall what app distribution was like before the iOS App Store will know just how important it was to the evolution of mobile devices. Of course, Apple didn’t create the App Store solely out of the kindness of its heart. Apple is a for-profit company.
Recode is now reporting that Spotify is pissed. Why? Because Apple is allegedly refusing to approve Spotify’s latest app update unless Spotify uses Apple’s billing system. This way, Apple will be entitled to 30% of all subscription fees paid by users who sign up through Spotify’s iOS app.
The horror! I wonder what percentage of Spotify’s customer base use the app mainly on an iOS device…
In the letter obtained by Recode, Spotify’s head lawyer says that Apple is “causing grave harm to Spotify and its customers” by rejecting the company’s latest app update. Apple’s app review team apparently says that Spotify should use Apple’s billing system if it “wants to use the app to acquire new customers and sell subscriptions.”
The letter continued, “This latest episode raises serious concerns under both U.S. 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 did support App Store billing for a period of time, opting to charge customers who signed up through its iOS app an extra $3 each month to cover Apple’s cut. The company has since disabled the App Store billion option in its app, instead prompting users to sign up through the Spotify website. Apparently, Apple shouldn’t be compensated for giving Spotify access to tens of millions of potential subscribers.