Spotify versus Apple: Just Not Spot On

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You may have been following the spat that has been going on between Spotify and Apple, regarding the state of the App Store, and how Spotify has taken Apple to the EU Commission regarding Apple’s 30% tax. Spotify’s complaint is that Apple takes 30 percent of all transactions on the App Store, for the first year, then drops to 15% in subsequent years. 

Apple has responded back today with an official statement, stating that Spotify had taken advantage of the App Store, and had “used the App Store for years to dramatically grow their business, Spotify seeks to keep all the benefits of the App Store ecosystem — including the substantial revenue that they draw from the App Store’s customers — without making any contributions to that marketplace.” 

This to me is a rediculous complaint by Spotify, and akin to someone setting up shop in a Westfield mall, and then complaining that Westfield has a monopoly and is charging them a lot. Firstly, no one is stopping Spotify from leaving the App Store, so either they accept the terms, or leave.  Secondly, as Apple put it quite well, Spotify has been screwing its own artists, giving them a fraction of the contributions they deserve, with a higher tax-rate.

 Another point Apple made in their statement was:

 Another point Apple made in their statement was:

A significant portion of Spotify’s customers come through partnerships with mobile carriers. This generates no App Store contribution, but requires Spotify to pay a similar distribution fee to retailers and carriers. Even now, only a tiny fraction of their subscriptions fall under Apple’s revenue-sharing model. Spotify is asking for that number to be zero.

And yes, Apple does have the advantage of getting full revenue from Apple Music, but once again it’s Apple’s platform. They can tax themselves 30% and pay themselves the 30%, but they have a right to be in their own stores. Apple sells its own accessories, as well as third party accessories in the physical Apple Stores. Many other companies do the same. Whole Foods have their own brand as well as other brands which are taxed. It’s a reality. Having said that, if the EU has an issue of monopoly, it can look at itself as its a continent of unions and massive government, the pure definition of monopoly and collusion. 

Doron KatzApple, Commentary