The Three Risks for Apple's Spotify Complaint on the App Store


Industry observers commented on three potential risks of Apple's complaint against Apple regarding the rules of its App Store.

An anonymous source close to Spotify also explained why the same complaint had not been filed against Google, which is also experiencing a reduction in in-app purchases …


The dispute could eventually lead Apple to a triple success:

  • Fines resulting from antitrust investigations
  • Loss of commissions on the App Store if it is forced to change its policies
  • Damage to reputation if the case becomes a big public battle

Investor Rating KeyBanc Capital Markets analysts reviewed by Internal business claims that the complaint represents a "significant financial risk" for Apple, as the policy of not allowing Spotify to indicate to users of the application of direct subscription options may be considered an unfair commercial practice .

"We believe this has no other practical purpose than to force competitive services to adopt higher cost structures and unfairly tax service activity on the iOS platform." said Andy Hargreaves and Tyler Parker of KeyBanc Capital Markets in the note published on March 13. The firm believes that Spotify's complaint is well founded and could "weigh heavy" in the eyes of regulators.

If Apple were to change its terms as a result of the complaint, the revenue generated by subscriptions and integrated purchases within Apple could result in a risk.

"We believe that the biggest financial risk for Apple would come from an obligation to allow payment processing by a first party or a third party from applications," the note said. "This would create competition for subscription and in-application payments, which would likely result in a substantial drop in the current 30% rate that Apple collects."

This would naturally affect Apple's service revenues at a time when the company is increasingly dependent on them, with hardware sales being flat or falling.

Business Insider Troy Wolverton claims that Spotify could win the argument because there was a precedent for supporting the company's complaint in Europe – and that a ruling in that country could lead to a similar antitrust investigation in the United States.

The streaming music company seems to have a legitimate complaint. In fact, what Apple is supposed to do is not so different from what brought Microsoft to problems with the antitrust authorities 20 years ago and what led to a $ 5 billion fine against Google's last year.

If history helps, Spotify's complaint could result in a similar fine against the iPhone maker. This could also lead to restrictions that could hinder Apple's service activity, which the electronics giant claims as its future. And the complaint could trigger a parallel antitrust investigation in the United States.

The two also believe that if the problem turned into a public battle, it could hurt Apple's reputation.

This could create a protracted period of negative Apple securities, which could "have a negative impact on Apple's retention rate at the margin," according to KeyBanc's note. […]

Perhaps more importantly, Spotify's claims – any investigation that actually analyzes them – could tarnish Apple's reputation with consumers. It could be extremely costly for a company that has long enjoyed public admiration and hundreds of millions of dollars in free advertising that goes with it.

To explain why Spotify is not complaining about the same complaint against Google, a source says that although the Play store also absorbs many subscriptions via the app, there is one crucial difference: Google does not prevent Spotify's Android app directs users to its own website to subscribe.

Arguments can certainly be presented on both sides of it. My colleague Bradley Chambers explained yesterday why he supports Apple in this area. But the previous point that supports Spotify, at least in Europe, is strong. And it's also fair to say that if the problem turns into a high-profile case, Apple potentially risks being seen as the villain, using the power of its own platform to disadvantage the biggest competitor in the world. Apple Music. This one definitely has the potential to become ugly for Apple.

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