Spotify & Apple engage in war of words over legal battle
At the end of last week, we reported that music streaming market leader Spotify was filing an antitrust complaint against tech giant Apple. In brief, the complaint centred around Apple’s dual role as Spotify’s competitor as a music streaming service (through Apple Music) and Spotify’s facilitator as a sales platform (if you sign up subscriptions via the App Store, you owe Apple 30% - as a result, Spotify makes its app downloadable via the store, but requires users leave Apple’s eco-system to purchase a subscription – a clunky and sub-optimal customer journey).
You can read more about this issue in last week’s article (see here) if you’re so inclined, but the potted version is this: Spotify alleges that Apple has become a monopoly which is unfairly leveraging its power over competitors. In the days that followed that article, the war of words between the two companies has escalated dramatically.
Spotify’s share price has appreciated by 27% in the first three-and-a-half months of the year
Source: Yahoo Finance
On Thursday, Apple issued a public response to Spotify’s complaint, saying that the company was hiding its “financial motivations” behind “misleading rhetoric about who we are, what we’ve built and what we do to support independent developers, musicians, songwriters and creators of all stripes.” It also sought to turn the tables on Spotify, accusing the company of “leveraging their scale to avoid contributing to maintaining [the App Store] for the next generation of app entrepreneurs,” adding: “we think that’s wrong.”
In further assaults on the company, Apple claimed that Spotify wanted “the benefits of a free app without being free,” and accused it of “making ever-smaller contributions to the artists, musicians and songwriters,” who create the music they distribute, adding that Spotify had “even” gone so far “as to take these creators to court.”
While Apple certainly writes a good blog post, the general feeling among commentators online is that it’s in the wrong. You don’t have to be a genius to see why: Apple is one of the world’s most valuable companies (not, at time of writing the most valuable, but that’s a position it occupied for a long time). And its multiple roles do give it a massive, and unfair, advantage over its competitors. If Spotify were to opt-in to App Store agreements, it would end up passing the fees on to consumers, which would inflate its subscription price “well above” that of Apple Music, according to Spotify CEO Daniel Ek. Regulators in the European Union tend to take a dimmer view of United States tech giants than their domestic authorities, and a slew of news outlets, such as the Wall Street Journal, seem to think Spotify is in the right.
Spotify has gone on to create a dedicated website about Apple’s anti-competitiveness (check it out here if you want more info). In direct response to Apple’s allegations, Spotify issued the following statement:
“Every monopolist will suggest they have done nothing wrong and will argue that they have the best interests of competitors and consumers at heart. In that way, Apple's response to our complaint before the European Commission is not new and is entirely in line with our expectations.
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. We respect the process the European Commission must now undertake to conduct its review.”
Dominion holds Spotify in its Global Trends Luxury Fund.
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