Apple and Spotify Face Off as Music Streaming Battle Heats Up (Updated)

A definitive timeline of events in the latest face off between Apple and Spotify:

Mar 13: Music streaming service Spotify files antitrust complaint against Apple in the European Union for abusing its power as the platform provider to demand 30 percent cut on subscriptions made via the App Store, a clause it deems "too expensive for our fans and our business"; says Apple operates an online marketplace that's not a level playing field in which it also compete against rivals, allowing them to set the rules in a way that benefits them at the expense of others.

• It is to be noted that while Apple has added integrations with ride-hailing and instant messaging apps on Siri, it has refrained from doing the same for music streaming services, thus making the feature an Apple Music exclusive. It launched HomePod home speaker without support for Spotify, while also disregarding its own App Store guidelines (section 4.5.4: Push Notifications ... should not be used for advertising, promotions, or direct marketing purposes) to send Apple Music related promotional push notifications, something it forbids its rivals from doing.

Apple vs. Spotify (Image: BCNN1)

Mar 15: Apple responds to the criticism by saying "Spotify wants all the benefits of a free app without being free," adding the revenue share for "digital goods and services that are purchased inside the app using our secure in-app purchase system" is "30 percent for the first year of an annual subscription, but .. drops to 15 percent in the years after." It also goes a step further, attacking Spotify for suing "music creators after a decision by the US Copyright Royalty Board required Spotify to increase its royalty payments," (Amazon, Google and Pandora are the other companies that have appealed the decision) and that "it's not just the App Store that they're trying to squeeze — it's also artists, musicians and songwriters."

• While all of Apple's claims are effectively true, it also conveniently sidesteps the fact that Apple Music has a clear advantage over Spotify simply by virtue of being a product of a platform that Apple tightly controls (the 30 percent/15 percent cut doesn't apply to itself), or that third-party iOS apps from Amazon, Netflix, Spotify and others cannot bundle any option that allows users to upgrade to a premium subscription. (This is also the reason why you can't purchase eBooks and other content directly from within the Amazon Kindle app on iOS devices.)
• Another point that bears noting here is that Spotify has about 96 million paid subscribers as of February 2019, with Apple Music coming a distant second with over 50 million paid subscribers, up from 83 million and 43.5 million respectively September last year. But the Swedish company, which turned in a profit for fourth quarter ending December of 2018, said it expects to post a loss of between US$ 228 million and US$ 410 million in 2019, citing heightened competition in the streaming space.

Mar 15: Spotify issues a statement to Variety, calling Apple a monopolist. "Every monopolist will suggest they have done nothing wrong and will argue that they have the best interests of competitors and consumers at heart ... We filed our complaint because Apple's actions hurt competition and consumers, and are in clear violation of the law. This is evident in Apple's belief that Spotify's users on iOS are Apple customers and not Spotify customers, which goes to the very heart of the issue with Apple."

Apr. 16: Nordic publishing giant Schibsted publishes an open letter in support of Spotify's allegations that Apple is abusing the power of its App Store to give it an "unfair advantage," adding "they take 15-30 percent of the revenue from all digital content, such as plus subscriptions, which are sold through the apps. Just at a time when some of our magazines are starting to find new digital business models, they use their dominant position to introduce this Apple Tax."

• With Apple recently launching a News subscription service and soon a video streaming service later this fall, it is very much likely that the tech giant will continue to attract more scrutiny over how it's using App Store and its wide iPhone userbase to enter new service-focussed verticals.

May 6: The European Commission, the EU's regulatory body, reportedly plans to launch a competition inquiry around Spotify's claim that the iPhone-maker uses its position as the gatekeeper of the App Store to "deliberately disadvantage other app developers," according to The Financial Times (paywall).

May 29: Apple updates its App Store policies following antitrust allegations from Spotify; says it "welcomes competition" but ignores the fact that App Store remains the only way to download iOS apps (unlike Android) and that none of the third-party apps can be chosen as the default.

Jun. 24: Apple responds to Spotify's antitrust complaint in Europe; says that it's currently taking a 15 percent cut of subscription fees for around 680,000 Spotify subscribers, representing 0.5 percent of Spotify's total subscribers, and that Spotify is not paying a 30 percent cut on anything.