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The already difficult relationship between Apple (NASDAQ: AAPL) and Spotify (NYSE: SPOT) worsens. Spotify has filed an antitrust complaint against Apple in the European Union. Apple fought back with a statement accusing Spotify of wanting "all the benefits of a free app without being free." Spotify quickly returned to the war of words, calling Apple a "monopolist".
What is all this? Why can not we all hear each other?
The "apple tax" and beyond: what Spotify wants
Spotify's anger – and its lawsuit – stem from the considerable mass of subscription payments that Apple receives when users subscribe to services via its App Store. The so-called Apple tax takes 30% of users' subscription fees for the first year and 15% of fees thereafter.
This represents a big chunk of the money spent by users, even if all Spotify users do not register via the Apple App Store. But Spotify's complaints go beyond the Apple tax.
In fact, Spotify has launched a web page to detail its beef with Apple. Spotify paints a portrait of a company that uses different types of resources and strategies to minimize its competitors. Siri does not play well with Spotify, for example (it works well with Apple Music, of course). And Spotify said that Apple would not let it inform its customers via the iOS app of any other method to upgrade to Spotify Premium: it would be payments via the App Store ( and the corresponding Apple tax) or nothing. Spotify claims that Apple has also blocked its attempts to create an application for Apple Watch and has blocked updates to its application for unexpected and arbitrary reasons.
The Apple side of the story
Apple, of course, rejects the idea of engaging in unfair competition. In an unusually conflicting statement, Apple argued that Spotify's position was misleading:
After using the App Store for years to grow their business dramatically, Spotify wants to retain all the benefits of the App Store ecosystem, including the substantial revenue generated by customers from the App Store, without making any contribution to this market. At the same time, they distribute the music you love while contributing more and more to the artists, musicians and songwriters who create it – even going so far as to bring these creators to justice.
Apple has disputed Spotify's claims regarding the refusal of arbitrary updates and the setting up of arbitrary partitions, essentially defining these elements of the Spotify case as a smokescreen designed to mask the lens. "real" of Spotify which consisted of getting special treatment in the App Store. Apple's statement also argued that "only a tiny fraction of [Spotify’s] subscriptions fall under Apple's revenue sharing model. "
Why is this happening in Europe?
Spotify is suing Apple in Europe because the laws could be more favorable to its case. The treaties that make up and govern the EU include rules against companies that abuse their "dominant position in the market" to make their competition ineffective.
It may be argued that European laws support Spotify's position, but that the venue may not be ideal for the facts. Apple's iOS market position is considerably less "dominant" in Europe than in the United States – Android holds about 70% of the market share in Europe (the iOS of D & # 39; 39, Apple accounts for less than 30% of the market in Europe, while it holds about 40%) US market).
All eyes on Apple and Spotify
Spotify is clearly leading its war in the public opinion court as well, but the legal consequences seem to be more important. Apple is not the only company to want to make a lot of money by "taxing" the services on its platform. Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) uses its operating systems and Google Play Store in the same way, and Amazon (NASDAQ). : AMZN) has its own platform "taxes". If the European Union starts to crack down on Apple's use of its payment systems, platforms and hardware to free itself from competition, it will surely sooner or later Alphabet and Amazon.
This article originally appeared in the Motley Fool.
John Mackey, CEO of Whole Foods Market, an affiliate of Amazon, is a board member of The Motley Fool. Suzanne Frey, an executive member of Alphabet, is a board member of The Motley Fool. Stephen Lovely owns shares in Amazon and Apple. Motley Fool owns shares and recommends Alphabet (A shares), Alphabet (C shares), Amazon and Apple. The Motley Fool is long January 2020 calling $ 150 on Apple and January 2020 small calls $ 155 on Apple. Motley Fool has a disclosure policy.
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