Spotify claims Apple anti-competitively blocking Spotify app update

Spotify has claimed that Apple is blocking the latest update of its iOS music streaming app because it competes with Apple Music, Re/code reports. A letter sent by Spotify to Apple’s general counsel Bruce Sewell accused Apple of “causing grave harm to Spotify and its customers” as a result of its rejection to an update to its iOS app. While Apple has not publicly commented on the reasons for rejecting the update, Spotify’s letter claims the company cited “business model rules” and demanded that the app use Apple’s billing system — which requires Spotify to give a 30 percent cut of subscription revenue to Apple — if “Spotify wants to use the app to acquire new customers and sell subscriptions.”

We cannot stand by as Apple uses the App Store approval process as a weapon.

The comments in Spotify’s letter are similar to a public statement the company made earlier this week in response to Senator Warren’s speech accusing Apple and other tech giants of locking out competition. It appears that Spotify will be using this latest standoff to bolster its ongoing fight over Apple’s longstanding in-app subscription rules, which require iOS apps to either use the in-app purchasing system to sell subscriptions — and give Apple a 30 percent cut — or rely on outside purchase methods, such as web-based signups, that cannot be linked to nor even advertised from within the iOS app. In the letter to Sewell, Spotify general counsel Horacio Gutierrez stated that “This latest episode raises serious concerns under both U.S. and EU competition law,” and “continues a troubling pattern of behavior by Apple to exclude and diminish the competitiveness of Spotify on iOS and as a rival to Apple Music, particularly when seen against the backdrop of Apple’s previous anticompetitive conduct aimed at Spotify … we cannot stand by as Apple uses the App Store approval process as a weapon to harm competitors.”
According to the report, Spotify appears to have run afoul of Apple’s longstanding subscription policy by removing the in-app subscription option from within its app after advertising a promotional subscription campaign. Spotify ran a campaign earlier this month that offered new subscribers a chance to get three months of Spotify service for $0.99 via Spotify’s own site, at which point Apple threatened to remove the app from the App Store unless Spotify stopped advertising the campaign within the app. Spotify complied, but also disabled in-app subscription purchases completely. It’s unclear whether the rejected version of the Spotify app included any reference to the promotion or information on how to sign up for Spotify from outside of the app.

Apple first rolled out in-app subscriptions on the App Store in early 2011, initially requiring that developers make any and all subscriptions available via in-app purchase at the same price. In other words, while developers were free to sell subscriptions outside of the iOS app, any company doing so was also required to allow users to purchase those subscriptions from within the app, and give up a 30 percent share of the revenue from those subscriptions to Apple in the process. Further, developers were not allowed to sell in-app subscriptions at a higher price than they would be offered elsewhere. Following no small amount of controversy from developers, Apple eventually backpedaled a bit, removing the requirement for all subscriptions to be available via in-app purchase, as well as the requirement for in-app subscriptions to match pricing available elsewhere. But the company remained firm on the requirement that apps contain no advertising, buttons, or external links to allow the user to subscribe outside of the app.