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Spotify calls Apple's App Store tax anticompetitive

Spotify calls Apple's App Store tax anticompetitive

Apple's Competitors
May 7, 2015

Things are heating up in the streaming music niche, as Apple flexes its muscles in an attempt to force services like Spotify to do away with free subscription tiers. Apple is being investigated for anticompetitive behavior by the likes of the Department of Justice, the Federal Trade Commission, and the European Union’s Competition Commission. Meanwhile, a report from The Verge says that streaming service Spotify has added another complaint of anticompetitive behavior.

Apple charges a 30 percent fee on any sales through its App Store, including subscription services. Spotify says that amounts to a tax that Apple’s own products aren’t subject to, giving Cupertino an unfair advantage over the competition. When Spotify sells its premium subscription service, which usually costs $9.99 a month, through the App Store, it has to raise the price to $12.99 to earn the same revenue. Apple, on the other hand, can offer Beats at the lower price of $9.99 and keep all of the revenue.

Compounding the problem is the fact that Spotify and other streaming music services can’t just point customers to their Web page for lower pricing. In Apple’s App Store review guidelines, Cupertino includes a clause stating that “Apps that link to external mechanisms for purchases or subscriptions to be used in the app, such as a ‘buy’ button that goes to a web site to purchase a digital book, will be rejected.”

Spotify is not alone in this treatment, of course. We’ve already pointed out that new streaming music rival Tidal is subject to the same 30 percent cut, as are others like Rdio. However, Apple has recently muddied the waters even more by allowing certain premium content providers, like HBO Now, to only pay a 15 percent cut. Quite frankly, Apple needs to ditch the requirement that prohibits external links for purchases and let the success of the upcoming relaunch of Beats Music be determined on how good the service is compared to its competition, not which one can get an unfair pricing advantage.

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