Apple Fires Back at Spotify for Asking for 'Preferential Treatment'
buzzfeed.com
buzzfeed.com
and by happen, I mean filed in a court.
There is nothing "applied equally" to other developers. Onlookers will say developers agreed to the contract, so no sympathy, a Federal Judge on the other hand will rip that contract to shreds and take a dim view on Apple's practices.
And no, Google Play's robo rejector isn't exempt.
There's nothing "antitrust" about the App Store operation, since Apple isn't a monopoly -- it's in fact a minority player in the mobile market. (And no, you can't be a "monopoly on your own platform" -- it has to be the overall market).
In fact game console manufactures (among many other fields) have historically had much more draconian restrictions and cuts) that the quite liberal App Store.
And it having 1 million apps and having pushed 50 billion dollars to developers doesn't really paint it as a "restricted area with tight controls where only Apple benefits" either.
The question then becomes not "does Apple have a monopoly," which it obviously does not, but rather "is Apple abusing its position in the marketplace," which leads to the much trickier question of where to draw the line between legitimately using a dominant position and abusing it.
Apple then leverages its monopoly in app stores on Apple's platform into other business (Apple Music, eBooks, digital video, etc). This is anti-competitive behaviour and illegal.
Only legal gap is declaring Apple's app store on its platform a monopoly, the second that is done then everything else naturally falls into place and Apple receives antitrust violations.
Not in the legal sense of the word, so no.
To put it simply, monopoly is not "only a company dictates the rules/has near total share/control of their own marketplace/platform".
It's "only a company dictates the rules/has near total share/control of the general market".
Since that hasn't been ruled on, we won't know that until it has.
> It's "only a company dictates the rules/has near total share/control of the general market".
That's a strange definition, but even taking it, the market has yet to be defined by a court. As I've said elsewhere courts have already expanded competition law into securities, they literally declared it a market allowing them to use anti-monopoly controls.
1. "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal."
which is, extremely vague.
I think you are right, intuitively, creating a mobile platform on which only your approved vendors may sell is not breaking anti-trust because you created that platform and there was conspiracy or anti-trade sentiment involved in just the platform getting popular. Certainly we can agree it would not be a monopoly if the iphone only had a market of a few thousand people and apple controlled the app store.
At the same time, the law is so vague that it could easily be applied to Apple. All the Sherman anti-trust act seems to require is some kind of interstate or foreign trade (to bring it under Federal Jurisdiction) and a large control of any kind of Trade, which it seems to me could be applied against Apple on the whim of the Feds.
The question a judge would ask if this came to court is does the app store constitute a monopoly and is apple using that monopoly to it's advantage to crush competition. And I think the app store is a monopoly and of course when you have a monopoly you are going to use it to prevent people from competing with you.
No, it isn't. There is Google Play, Microsoft, Amazon, and a whole host of other app stores out there. Remember, the market is mobile devices altogether, not just iOS devices.
"Only legal gap is declaring Apple's app store on its platform a monopoly, the second that is done then everything else naturally falls into place and Apple receives antitrust violations."
Which will not happen, because you can't have a monopoly on your own platform.
Apple has banned all of those from iOS. It allows no third party app stores.
> Remember, the market is mobile devices altogether, not just iOS devices.
You cannot just tack on the word "remember" to make something an established fact. We don't know what the scope of future legal decisions will be until they're in fact made.
> Which will not happen, because you can't have a monopoly on your own platform.
You, nor I, have any way of knowing or proving that. This will likely go to SCOTUS in our lifetime, until that happens we won't know the scope of what is a monopolistic market.
Which is irrelevant, as Spotify can still sell apps through those stores. Remember, the market is mobile as a whole, not just iOS.
"You cannot just tack on the word "remember" to make something an established fact. We don't know what the scope of future legal decisions will be until they're in fact made."
It is currently an established fact. If that changes, then we will have to revisit. But as of now, it stands.
It hasn't been ruled on. So, no, it hasn't been established.
> Remember, the market is mobile as a whole, not just iOS.
Why are you copying and pasting? I won't reply to this again, you already posted this above.
Rephrasing the same thing, while refusing to understand terms with clear formal definitions, is not that different from copying and pasting.
It was a copy/paste, they changed literally one word, and ignored my response to that same point above.
Yet, you continue to say the same thing in every one of your comments, trying to define the market so as to ignore other mobile OSes. If you're going to post the same thing, then expect to get the same responses.
Play your purchased iTunes movies locked with Fairplay DRM?
Read your purchased iBooks?
Read your personal documents, passwords, and data locked into iCloud?
Synchronize with your other Apple iCloud-only devices?
At some point, product tying results in lock-in far more costly to escape than, say, a video game console with platform-only titles.
TiL
There were 6 factors considered in establishing the relevant market in the Microsoft case (paraphrasing Court's Findings of Fact, §2)[0].
A) Servers were not cost-effective replacements for consumer hardware and were excluded from the relevant market. It's not clear whether the discrimination also goes the opposite way (e.g. instead of "smartphones" we compare "flagship smartphones"). If so, that kind of market definition would really make iOS look gigantic.
B) PowerPC and other non-Intel-compatibles were excluded from the relevant market since consumers could not install the competing OS on their hardware (that's right, "the relevant market" was constructed so as to exclude Apple, MS's only serious competitor). It is an interesting question whether the fact that you can't run Android on your iPhone for non-ISA reasons would be viewed similarly to an ISA difference in the hardware, but the way I read the ruling, it seems likely to be viewed similarly, or perhaps much worse. The reasoning all stems from whether consumers have choices to install their own OS, nothing to do with ISAs per se.
C) Various "borderline formfactors" were excluded from the relevant market. In the 90s this was e.g. WebTV, thin clients and game consoles. Today this might be things like tablets, VR platforms, chromebooks, etc. These are (today) all Android form factors, and excluding them to focus on "traditional" formfactors makes iOS look a bit larger than it does in Netcraft surveys.
D) The court observed that market conditions create a feedback loop, e.g. more people write apps for the dominant platform, that make the dominant platform more attractive to write apps for, round and round it goes, etc. This is obviously true for the smartphone market.
E) The court was concerned that nobody could realistically enter the market and "in less than a few years, present a significant percentage of consumers with a viable alternative to incumbents." This seems probable for the smartphone market, based on Mozilla and Canonical's misadventures, RIM and Nokia's inability to make a comeback, and even Windows Phone.
F) There was also a discussion about why "portals" (like today's cloud computing and/or webapps, basically) are not an effective substitute for doing computing locally and should not be in the relevant market, as well as a discussion of why Java is not a substitute for Windows (obvious to us, but not to lawyers)
All of this to say, it is really not so obvious from a legal POV why Apple are not a monopoly or are in any way different fro the Microsoft case. The real reason is probably nobody wants to sue them; I have seen estimates of the Microsoft case that suggests MS spent more than $500M defending it, and the taxpayers (with much cheaper lawyers) spent more or less $100M to prosecute it and didn't get much for their money.
Then there is the question of who gains by spending that money: Apple is well-loved by their customers so it doesn't have the election appeal for politicians that the Microsoft case did. Google would prefer to implement Apple-like policies in their store and don't want them found to be illegal. That leaves bit players like Canonical or Mozilla, and for them the legal costs are likely prohibitive.
[0] https://www.justice.gov/atr/us-v-microsoft-courts-findings-f...
Is it? Android dominates mobile marketshare. Yet iOS is not hurting for apps.
Everything else considered, you would have to make an extreme stretch to say that the app market does not include Android.
Windows phone is dead. BlackBerry is dead. Palm OS. The previous versions of Windows Phone. The Sidekick. Amazon Fire Phone. Canonical's phone, the Firefox phone, whatever other Linux phones I can't think of.
It doesn't matter how big the company backing it is, even if they actually do a good job (like supposedly the recent Windows Phones). At this point the first mover advantage for Android and iOS are too big. Even if you spend all the time to make a great platform no one's going to buy it because the top hundred or thousand apps aren't available. Because no one's gonna Byatt know it's gonna make apps for because there's no one to buy the apps. You're stuck in a cycle.
Microsoft tried to buy their way out of it, and blackberry did too to a degree. But it doesn't matter if you pay to get the top 40 apps from iOS, because nobody uses all of them. They use some percentage of the top hundred apps. Or 500 apps. So every users going to have a couple of apps that they really want that are unavailable and will never get ported. The apps that do exist (like Twitter and others) often don't get updates, and if a game or something does come out for the platform it's not until years after the big two.
Until something very different comes along, or some HUGE external force appears, we're only going to have two big phone OSes. The only thing that slightly possible (in my eyes) would be someone as big as Samsung pushing their own OS in other countries and possibly getting a good foothold there. Maybe Xaiomi.
https://gigaom.com/2013/08/23/in-ebook-case-doj-claims-apple...
Except Spotify for example start to spent millions to push it.
Spotify shouldn't have to spend millions to push it. It's a criminal matter not a civil case. The DOJ is duty-bound to investigate complaints.
The same things hold true for the non-digital age. If you open a store you can do everything you want in it (within the law of course, can't e.g. refuse to serve blacks), specify how you want it to be run, and sell or not sell whatever you like.
Doesn't matter if it serves millions or billions (e.g. McDonalds), as long as there are other vendors with a large aggregated share selling the same goods, you're not a monopoly.
Nor does it make sense to.
This essentially boils down to: Apple built the iPhone, and they've built iOS SDK, and they've build the App Store, but I, who didn't have anything to do with creating those, want to go there are sell stuff and not be bound by any rules Apple dictates.
Sure, one could say "that would be better for the customers", but it's not the customer's store. It's Apples (or Google's, etc).
If you want to sell in it, it means you see value in what Apple built (and possible profit for you), but yet you don't want to pay the requested price for this value -- and you feel entitled that you don't have to either.
The geographic model is based on the obvious notion that it's unreasonable to expect people to simply pack up and move to a different city to get access to a different vendor.
Given the amount of lock-in inherent in these platforms, it seems pretty clear that people can't simply drop their current platform and switch to another one just to access to a different vendor.
Spotify, if they allow subscriptions purchased in app, is paying Apple for a service. They're free to think that price is way the hell to high and not sell there.
What if Spotify got their way? What if any app could embed their own payment system minute? Now Apple has hundreds of millions of users who could easily be defrauded and have their credit card stolen from stuff downloaded from their store. They get sued.
As a user, I wouldn't use any of them. The reason I buy so much on iOS is because I trust Apple. I know that if I signed up for a subscription for something it turns out to be a piece of junk, I can easily cancel it with one click. No weird cable company style negotiations. No worrying if some unscrupulous company is going to steal my credit card. Apple has some pretty reasonable reasons for this policy (besides all the obvious selfish/monetary ones).
No, they don't get sued.
> As a user, I wouldn't use any of them. The reason I buy so much on iOS is because I trust Apple. I know that if I signed up for a subscription for something it turns out to be a piece of junk, I can easily cancel it with one click. No weird cable company style negotiations. No worrying if some unscrupulous company is going to steal my credit card. Apple has some pretty reasonable reasons for this policy (besides all the obvious selfish/monetary ones).
Then Apple should let you as a user decide whether to use those apps. Apple should let other users decide if they prefer Spotify's billing/tracking in-app. After all Apple would still control the iOS App Store so they can ban any unscrupulous companies that try to steal credit cards. It's absurd though that Apple insists that beforehand that they are the only billing/subscription company that their iOS customers can trust; Amazon for example has been handling ecommerce longer than Apple
¯\_(ツ)_/¯ because it's anti-competitive and anti-consumer?
There used to be a type of monetization strategy in the USA known as 'company towns': https://en.wikipedia.org/wiki/Company_town
The company owned the land, built the stores, so it only seemed right that they payed their workers in scrip and only allowed merchants to accept scrip in the town, yes? Eventually the country decided that such monetization platforms were too controlling and unfair...
Would you disagree if this was a startup whom had built an app store over a decade and was getting violated?
I am not a fan of jagurnaut tech companies but the rules are the rules. They built it and from what I can see (I am an IOS developer) the payment system is indeed in violation.
The guidelines clearly say that apple payment system MUST be used. It doesn't matter if you are Spotify or an indie game dev.
is 30% steep? absolutely! But hey if it was my business I would love it its a great margin - so would you.
Bottom line is Spotify is in violation and they don't want to pay the 30% which Is understandable but Apple will not budge because they don't half too.
TLDR; "Apple to Spotify: Kiss my Ass".
Apple is saying "we're providing a value-add, pay us" but not allowing developers to price it in to their balance sheet.
You use them to advertise your site where customers can get a discount if you bail from the app store and buy from you directly. So many developers would try that oh so clever trick that they already know better in advance.
Unless you're one of the anomalies who actually does a better job at driving traffic to your apps than they can, it makes no sense to complain about this.
If you call the shop and mention using Groupon, most of the time they ask you not to purchase the Groupon. They still honor the discount, but avoid a 50% take by Groupon.
That's not true at all. In fact, Spotify did have IAP in the app, and they charged an extra $3 for it.
The specific, supposed violations weren't mentioned in the article. It was just mentioned, as an aside, that Spotify claims Apple is pressuring them into forcing all iOS Spotify users through Apple's pricing scheme.
If the violation were that Apple was forcing Spotify to pay Apple 30% for subscriptions, then that would be a very clear breach of the spirit of anticompetitive laws in the United States, considering the existence of Apple Music, and considering that it would force Spotify to either raise its prices and reduce its consumer appeal or take a substantial, perhaps fatal, revenue cut.
Spotify is trying to have it both ways here.
I trusted Spotify enough to sign up directly via their website, but for many apps I do not, and prefer to pay via the app store as I trust Apple.
In my personal opinion, this experience is pro-consumer. I can make an informed choice. Hence I don't take any issue with Apple requiring developers to a) pay a cut for the privilege of using their store, and b) impose publishing requirements to maintain the standard of apps.
Windows Phone is dead (even if its market share is >1%, I believe the project has been abandoned) and BlackBerry OS is hanging on but holds a trivial share of the market.
Duopoly? No, more like Apple and Google are the only good companies out there.
And that didn't came from anti-competitive behaviors, but from HARD WORK.
Things like Google Maps and Apple Stores are cold hard work that are really meaningful for people's quality of life.
Amazon and others don't give any of this to the consumer, that's the reason nobody wants to go with their platforms.
I wonder if this is also a reflection on broader society too
because it is very very inaccurate.
It is over .25 which means the government will scrutinize it.
The difference with the App Store (full disclosure: I don't think there's anti-trust issues here) is that it's THE ONLY place to buy apps for iOS. There's no place to get a substitute (HTML isn't competitive).
The case against the app store is far more compelling in the one against the iTunes Music Store.
Well what makes the case compelling to the original parent point is not exclusive access but market share. Apple's iPod (hardware players) and iTunes Store (digital music store) had a dominant 70%+ USA market share for most of the past decade. In comparison the iPhone has been between 40%-50% USA market share for the past 5 years (the iPad though has 60%-70%+ market share).
What makes a case compelling for Anti-trust issues though is not market share per se but ABUSE of that market share. A compelling case can be made that Apple is using their market share to muscle in from the digital music downloads business to the digital music streaming business (preferential links between iTunes and Apple Music etc) with unfair tactics against Spotify and other competitors (Rdio for one has already been driven out of business)
A better analogy would be if Microsoft opened an app store on the XBox (which they have/do) and then blocked Sony from selling apps there, or charged Sony a premium rate.
Microsoft has a store for the Xbox, and they decide what they sell on that store. If Sony submits a game for the Xbox store Microsoft can reject it without giving them any reason. And it is perfectly legal.
In Amazon's app store the developers don't even get to set their own prices.
Microsoft did far less and still got hit with anti-trust on Windows just for bundling IE. Now we have app stores which hold monopolies on their platform and restrict competition yet further for the consumer's detriment.
As to what should be allowed and disallowed, companies should hold their own services and products to the same standard as their competitor's services and products. So if you're going to disallow a Sony branded music streaming service then you also have to disallow a Microsoft branded music streaming service, otherwise you're using your monopolistic position abusively.
Microsoft was found guilty of abusing its position because it had a monopoly on the entire PC OS market. They didn't, and don't have a monopoly on the Windows market because there is no such thing.
And Apple has a monopoly on the entire Apple app store market.
> You are discussing competition law, because you have redefined the market.
Law is expansive. When competition laws were written several securities didn't really exist, but the law expanded to encompass them. There's no specific reason why the law cannot expand into protecting consumers from monopolies within an artificially created digital marketplace.
Ultimately competition law exists as a concept to protect consumers, it is clear as day that Apple is abusing its monopolistic control of its app store in a way that hurts consumers. Even if existing law wasn't able to expand to encompass that situation, new law could and should.
PS - I love the people who turn up late and downvote every comment on one side of a discussion.
Which Apple is not doing.
That wouldn't prove either way whether Apple is being mean to Spotify. Kind of a moot point.
Last week I officially switched (reluctantly and with a bad taste in my mouth) from Spotify to Apple Music.
Why? Simply because when I'm driving I want to dictate by voice command what song I want to play. I could not do this with Spotify, that's why I switched.
Next time I won't get an iphone because of the bad taste this experience has left me (the worst part is apple's voice transcription technology is so bad compared to Google's... so half the time even that doesn't work)
Compare this with being able to play a song by simply saying "Hey Siri play Beatles' Rain"... and that is it.
Compare this with "hey Siri play bob Dylan's blowing in the wind" and it working just with this
Apple should have opened Siri to spotify.
So, I have an iphone 6s -- and I use Siri a _lot_. Mostly I use it when I'm talking to friends or family... e.g. today someone told me he didn't know any of Dylan's songs... and I went "oh, well let me tell you of some!"
Usually when you're talking to someone, and you spend half the time on your device suddenly disconnected from the person you're talking to, that makes things tough. Generally one should optimize for a friction-free experience. Generally, that means trying to do whatever in the least amount of steps.
When Apple refuses to open up siri, it makes things really difficult.
I mean really, this is from direct personal experience. My decision to quit spotify recently was literally this. (another was driving -- I need to go hands-free and least-steps there too for my own sake)
However, Apple clearly should be able to require a fee for providing the marketplace and payment framework, and you can see their point in not wanting apps to circumvent that to make it simpler for users to be able to manage their subscriptions easily.
Some kind of cap and/or transaction fee seems more reasonable and would be win-win in the long run. You get a bad taste in your mouth when it feels like Apple is using their walled garden to strong arm competition. You can't compete when your largest rival eliminates your profits.
In the end I think it's to Apple's detriment to play aggressively with content providers in their ecosystem when they're in such fierce competition with Android.
I'm not sure of the actual percentage, don't think they're public. Spotify have been desperately trying to sign-up people outside of the App store which I guess is what started this debacle.
If the fee's are so high that you can't go through the app store it feels like it should be lose-lose for everyone.
So any Spotify subscriptions that started through the app at least a year ago are now getting the 85/15 split, without Spotify having to do anything.
Apple's point of view is that they created the iPhone and spent a lot of money to build the app store, so they get to set the rules of the store. And further more, they treat every dev in the store exactly the same - whether you are Google or Spotify or an indie dev. Everyone pays the same fees to use the store. Since Spotify has decided to break the well-established store rules that apply to everyone, of course their app should be rejected. Apple is just applying their rules.
From that very micro point of view, Spotify is 100% wrong and the app should be rejected. Except that totally ignores the larger competition issue and conveniently forgets to mention that Apple itself isn't subject to it's own rules.
Spotify's point of view is that Apple's App Store is the ONLY way to sell apps to iOS users (to users who own their own devices!) so Apple has a de facto monopoly over iOS software sales. As such, they should by subject to antitrust law which provides limits on what a monopoly is allowed to do. Specifically, they say the rule that Spotify has to pay 30% of all subscription fees to Apple just to allow user sign-ups in their app is unfair. It's unfair because Apple has a directly competing product called Apple Music. Apple Music has an unbeatable advantage over Spotify on iOS because they don't have to pay 30% of subscription fees to a third party. In a low margin business, no one can possibly compete with Apple if they have a 30% price advantage.
I tend to agree with Spotify. Apple is trying to cripple their competition by giving themselves a huge, unfair price advantage by using their monopoly over iOS software sales. It would be fine for Apple to take a 30% subscription fee cut if Spotify chose to use Apple's subscription billing service. But it's not a choice - iOS apps aren't allow to use any other subscription billing service and aren't allowed to even mention other ways to sign up outside of the app. They can't even say the words "go to our website to sign up" without getting kicked out of the store. That seems evil to me. That's the crux of the issue. IMO, Apple created those censorship rules specifically to kill competition with their own products.
It's very similar to Yelp's complaints against Google. Yelp complains that even if they have the #1 search result for a restaurant, Google shows their own giant restaurant widget above all organic search results. You don't even see any organic search results "above the fold" anymore. Thus, it's impossible for Yelp to fairly compete with Google in the area of restaurant recommendations because Google controls the user's point of access.
The key factor in both the Apple and Google cases is if you believe the companies have a monopoly. Monopolies have more rules to follow than normal companies because they have the superpower to keep the market noncompetitive if they want to. Normal companies don't have that power in a fair market, so they are allowed to be more vicious in how they compete.
- Being able to install updates without asking the ISP.
- Fast lanes for their services with ISPs.
- Special or even FREE rent for their physical store fronts (see Grand Central Terminal and many others.)
- Making illegal deals with book publishers so they get preferential pricing. Same for music.
The list goes on and on and on. Apple has always tried to work it so they get preferential treatment from every angle.
Why the fuck should they "ask the ISP"?
But I disagree with him on this one. I'm glad Apple was able to get "special treatment" for many things from the carriers. They were more draconian than Apple with their rules.
Now Android can also install firmware and applications without the carriers saying no so that was a good thing.
Nexus models get updates direct from Google. Otherwise you have to wait for the manufacturer to do their customizations.
Or you just install one of the many other firmwares out there.
For example, here's an Australian phone carrier / ISP blocking updates to Google Nexus devices on their network:
http://ausdroid.net/2014/12/04/yes-telstra-is-blocking-your-...
That's why iPhones get regular updates, the carriers are involved. That's why Google has been moving Android to have most things in a piece of software they can update without actual carrier approval, so the phones don't get stuck in the Stone Age.
Is there a single benefit to the carriers getting to choose if an update should be approved?
But why should I have to buy a Nexus phone just to receive OS updates and not get crapware?
Spotify is doing another thing altogether by impugning Apple publicly.
In fact Apple IMPROVED the deal this year when they said that for people who have been a subscriber for over year they'll cut their fee to 15%. I believe it may even have been applied slightly retroactively.
Spotify's terms with Apple haven't gotten any worse, they've gotten slightly better. But NOW they're loudly complaining. It's not like iOS has become more of a monopoly in the last five years, I'd argue the opposite.
Actually Spotify has been privately complaining for years. Obviously Spotify are "loudly complaining" NOW because Apple launched a directly competing product to Spotify last year.
Sibling comment covers this perfectly.
- Fast lanes for their services with ISPs.
I haven't heard of this, it just seems like a good idea from the ISPs side given how big Apple is. Do you have any evidence they've actually forced someone to do this?
- Making illegal deals with book publishers so they get preferential pricing. Same for music.
You mean a pretty standard most-favored-nation clause? The kind that lots of goods are sold with? Or are you talking about getting rid of the right for Apple to undercut the price of the book and force the publishers to eat the loss?
It's not like Amazon had a ridiculous giant horrible stranglehold on the eBook industry right?
Which one? The one that asked if it was wrong for carriers to block updates in the first place? Right vs wrong isn't my concern here.
Here is the sum of my comment: Apple used their market pressure to make carriers (and others) change. Now they're whining about somebody trying to make them change.
That's all.
I didn't say that I have evidence that they force carriers to do anything through any means other than market pressure.
> You mean a pretty standard most-favored-nation clause?
No. I mean the illegal price fixing that they were convicted of 3 times. You can read the rulings here:
https://en.wikipedia.org/wiki/United_States_v._Apple_Inc.#Ru...
The final ruling - "In June 2015, the 2nd US Circuit Court of Appeals by a 2-1 vote concurs with Judge Cote that Apple conspired to e-book price fixing and violated federal antitrust law."
That case never made sense except as a way to generate headlines by attacking Apple.
Amazon had a TRUE monopoly in eBooks and WAS abusing it.
The fact of the matter is Amazon had a huge lion's share of the market for e-books (measured by $$$). They had such a huge monopoly position that they could dictate terms to all publishers, more than once they refused to carry a publishers e-books (effectively killing them) if a publisher didn't agreed to some terms that Amazon wanted. They would stop selling PHYSICALS books to push the contract. Since no one else old e-books in any reasonable quantity, Amazon was in the monopsony position of being the only real buyer.
So not only did they do that, what they really like doing with selling Kindles. And a great way to sell Kindles is to discount the books below the actual selling price; eating the loss and making the publishers e-books on other platforms (as well as physical books) worth less. To a fair degree it didn't matter to Amazon if the prices were unsustainable, it fueled growth in their devices which fueled growth in their profits.
And then they would do something like push Prime since you could get free books that way (more loss for publishers) and Amazon would make up the money. And the publishers could either choose to go along with it and get a small price for each book or say no and get all their e-books pulled.
Plus Amazon had cable direct, which was a publishing platform that anyone could access. This meant that they had TONS of content by authors who were willing to sell it dirt cheap. This put the publishers in the same position that the media is right now competing with YouTube. And of course some of those books were actually really really good (Silo series by Howey) and became great sellers. Maybe even books that the publishers had passed on. It wasn't all garbage. So Amazon could show the publishers that they weren't nearly as necessary as the publishers thought they were.
Apple NEVER did anything like that. When Apple sold music it was at a flat price. They never undercut the publisher. After a little while to even let the publishers raise prices. And the whole time selling on the iTunes Music Store was an option since you could still sell CDs or sell to other DRM music stores like Amazon.
Amazon was easily the standard oil of the e-book market. They WERE the e-book market. No one ever went after them.
Then Apple came along, is part of the deal with publishers that broke Amazons monopoly, and they got an antitrust suit. None of that makes any sense to me.
As does/did Apple with the iPod and the iTunes digital music store. Apple had 70%+ market share for over a decade and could dictate terms to publishers as well.
> They had such a huge monopoly position that they could dictate terms to all publishers, more than once they refused to carry a publishers e-books (effectively killing them) if a publisher didn't agreed to some terms that Amazon wanted. They would stop selling PHYSICALS books to push the contract.
The publishers decided to connect both physical books and eBooks rights in a contract. Amazon had to stop selling the physical books when those contracts expired.
> So not only did they do that, what they really like doing with selling Kindles. And a great way to sell Kindles is to discount the books below the actual selling price; eating the loss and making the publishers e-books on other platforms (as well as physical books) worth less. To a fair degree it didn't matter to Amazon if the prices were unsustainable, it fueled growth in their devices which fueled growth in their profits. And then they would do something like push Prime since you could get free books that way (more loss for publishers) and Amazon would make up the money. And the publishers could either choose to go along with it and get a small price for each book or say no and get all their e-books pulled. Plus Amazon had cable direct, which was a publishing platform that anyone could access. This meant that they had TONS of content by authors who were willing to sell it dirt cheap. This put the publishers in the same position that the media is right now competing with YouTube. And of course some of those books were actually really really good (Silo series by Howey) and became great sellers. Maybe even books that the publishers had passed on. It wasn't all garbage. So Amazon could show the publishers that they weren't nearly as necessary as the publishers thought they were. Apple NEVER did anything like that. When Apple sold music it was at a flat price. They never undercut the publisher. After a little while to even let the publishers raise prices. And the whole time selling on the iTunes Music Store was an option since you could still sell CDs or sell to other DRM music stores like Amazon.
The DOJ looked at Amazon's books and found that despite the sale prices for many bestsellers the Amazon ebook division made profit as whole so it wasn't unsustainable. The bestseller ebook sale prices were no different than the Walmart hardcover book sale prices or a grocery milk sale prices i.e. a standard retailer loss-leader retail strategy. And publishers didn't lose money on these ebook as they were paid a set amount no matter Amazon's sale price.
Amazon's preference for lower digital prices were no different from Apple's. Prior to the iTunes Store, music publishers sold singles for $3.99 and preferred to sell whole albums. Apple negotiated that $.99 per track and that the album be broken up so customers could buy any individual track. Apple also let indies upload their music to the iTunes Store. And Apple had their own free music promotions; Apple used to give away a free single on the iTunes Store every week. All in service of course of the iPod hardware profits as Apple infamously barely made back their margin with iTunes Store squeezing out other digital music store competitors.
It's worth pointing out that the book market was particularly perverse compared to the music market. The book publishers practiced a version of windowing (some still to this day) where books are released exclusively as expensive hardcovers for months before later being made available as paperbacks/ebooks. That would be the equivalent of the music publishers demanding everybody purchase vinyl versions if they want an album at launch! Amazon's fight to reduce the prices of books and make simultaneous release of all versions was a clear win for customers even if it reduced the worth of hardcovers and publishers inflated profits.
> Amazon was easily the standard oil of the e-book market. They WERE the e-book market. No one ever went after them.
Amazon was not the first to the ebook market (Sony released the first ebook reader) but they were the best for customers. Just like Apple was the best music player for customers and reduced music prices despite having a monopoly.
> Then Apple came along, is part of the deal with publishers that broke Amazons monopoly, and they got an antitrust suit. None of that makes any sense to me.
Well obviously even if you're right — Amazon was an evil monopoly bad for customers — that's does NOT give Apple and the publishers the right to break the law in order to take down Amazon. The Apple and publishers collusion was a textbook antitrust case and resulted in higher prices and poorer experiences for customers. It was a bad move by Apple and the publishers.
(disclaimer: I work for Spotify)
We should be clear about this though as doing that is not against the rules. Take the Kindle app for example. You can buy books through the Amazon website and use them in the app. Apple doesn't get a cut. Spotify can do the same thing. The issue is that there are very specific rules around it - for example I don't believe you can include a 'sign up' button that throws the user out of the app to your payment page. It sounds like Spotify was trying to get around this by sending the user an email when they signed up through the app, and telling them to look in the email for a link to the payment page. At least this is what I've read over the last couple of days.
And just for extra clarity, Apples policies only apply to digital goods. If you buy a real world service or physical item through an app Apple does not take a cut, but they also don't handle the payment. That's why Amazon doesn't have to pay Apple 30% when you buy a new TV from them.
The deciding factor is whether or not Apple handles the subscription and billing. If you sign up through the app (and therefore the iTunes Store), and Apple does the billing, you have to pay the cut.
If you sign up for a dropcam subscription OUTSIDE the App Store and then log into the app there is no cut.
Example: I subscribe to both Hulu, Netflix, Comcast, and a few other things. I pay all of them directly. They all have free apps. Apple gets exactly 0% of my bills to them because I didn't sign up in the app.
I get that in-app sign-up is INCREDIBLY convenient. But the fee does not apply regardless of where the subscription was purchased, which is what I read OP's question to be.
First time seeing this, but it's If I Understand Correctly for those who didn't know either.
You also can't advertise signing up for the subscription outside of the app.
IN THE APP.
This is why you can't buy kindle books in the Amazon app, because then they would have to pay the 30% tax. This is also why Amazon doesn't have links in that app to take you to a web browser where you can buy the books.
But if you don't want to pay the 30% tax and you have a subscription service, you are free to charge whatever you want on your own website. You just don't have to have people sign up inside the app or links to where to sign up inside the app.
This has ALWAYS been the rule. It's not new. Some companies charge extra to cover the fee, some company seem to eat the fee because they're happy to get that many extra sign ups.
I imagine if you open the Spotify app and it said that it's a subscription service and you must have a Spotify account to login and listen to music, and nothing else, the vast majority of people would figure out to check their website to sign up.
I'll ignore the question of whether not what Apple is doing is right. There's nothing new here, so why is Spotify making noise now? Could it be because they're losing members and losing money and need someone to blame?
I'm not so optimistic. I'd presume a nontrivial number of people would be confused and leave a 1-star review. I can't imagine how many people are confused about how the Kindle iOS experience works.
I remember hearing somewhere that some apps have fantastic subscription conversion inside the app because payment to so convenient compared to doing it outside. I don't know if that was a dating app, or Netflix, or what. But Apple's payment system is so simple and frictionless that user seem to be very willing to spend money.
Amazon Prime does this, no. In the Amazon iOS app, you can browse, but cannot buy items. You can still login using your Prime account.
- link to a non-Amazon webpage
- provide buyers with a phone number or email address to reach them at
- or any other thing that could funnel sales outside of Amazon
Right there.
"Developers offering products within another category of app downloaded on Google Play must use Google Play In-app Billing as the method of payment"
The exceptions are for physical things, and for things that can be used outside of the app. You can't use a Spotify subscription outside of Spotify.
> Payment is for digital content that may be consumed outside of the app itself (e.g. songs that can be played on other music players).
As Spotify music can be used outside the Goole Play app, Google doesn't take a cute.
The same reason I can buy Kindle ebooks within the Android app
I use Aquamail: http://www.aqua-mail.com/?page_id=22
I paid the developer for a license and don't need a special "app store" to use it. What is all this talk about "rules" that specify which binary files I can run on a general purpose machine? Can you sideload apps in iOS?
Oh right. It is the current year again and everyone loves the iPhone because it is shiny, forgot you can install apps on your own, and prefer to have a gatekeeper do it for them. Carry on.
Apple is doing nothing to interfere with the scenario that you outline and will happily distribute millions of Spotify binaries in support of that.
Your anger is misplaced.
The Spotify Web Player works perfectly fine on iPhone's mobile Safari. No, it's not a native app, but it exists as an alternative delivery method for the service.
If you think about this it's basically the same as saying: We don't want competition, everyone should be a winner. (because you would weaken the big guys to artificially improve the situation for the little guys, even if the big guys didn't play unfair in any way)
This wouldn't ever work as we as a species are competitive by nature.
I also want to note that I would never apply this to all areas of life, I'm talking strictly about competition between businesses. Of course you should help the little guys with a social system if they are unable to survive on their own.
Does Apple Music go through the same sort of independent and opaque approval process Spotify does? Do they have to wait the same time? Do they get rejected for unapproved business models?
Does Apple Music take 30% of it's cut and give it away to the rest of the company?
While I am not entirely unsympathetic to Apple's position, I think the preferential treatment argument is BS when Spotify's biggest competitor is Apple Music.
App publishers that do not directly compete with Apple have a level playing field although the Apple tax certainly hurts.
But Spotify directly competes with Apple, and while Apple does not have to pay this tax as they can (probably) use their own billing services cheaper, Spotify couldn't do the same even if they implemented their own billing service or used a cheaper alternative.
It'll be interesting to see what comes out of this. I for one hope that we someday all get to choose which billing provider we want to use in our apps.
You make money off your app? Because apple made it discoverable in the app store! You make money off your app, pay a share back for os/api r&d!
Because I highly doubt that Apple actually needs 30% to pay for the app store infrastructure.
And why are you mixing this with the OS API? I could just as well say that Apple needs some kind of OS anyways to be able to sell their expensive hardware.
Also there are certain categories of apps that are allowed to use other billing providers. Why don't they have to pay for the OS API's and R&D?
So this argument doesnt make sense.
Seems like you don't have a clue what is actually possible.
Go read the TOS for Apple's in app billing.
Seems like you are trying to muddy the issue by pretending your case is representative of anything we are taking about here.
Our only infrastructure are VoIP servers.
The infrastructure is not different than Spotify's. It's all just servers.
The service you provide to the customer is use of your VoIP infrastructure. That's what they pay for.
In the case of Spotify, the service is not access to infrastructure. It is access to digital goods in the form of licensed music files.
If the argument is around billing... spotify is more than willing to take that on themselves, in fact that's what they're TRYING to do, and Apple is rejecting their app because of it.
That's a valid argument, and it's the reason why Apple is going to be reducing their cut to 15% on recurring subscriptions.
Apple stance is pretty simple, whenever they collect money they collect 30% (ignoring the discount for subscriptions over when you're). Whether that's a one time charge, where they collect money for a subscription every month, they charged a fee.
If someone signs up for a subscription outside the app (like I have for Netflix) then someone can use that subscription on an iOS device in the company doesn't have to pay apple a a dime.
There's an Apple developer fee ($99 per year) and of course you have to purchase Apple's hardware.
What infrastructure tax? Spotify is not using Apple's infrastructure to serve the music
> You make money off your app? Because apple made it discoverable in the app store! You make money off your app, pay a share back for os/api r&d!
Then why then don't have a cut from eBay, Amazon store (not the digital products), air companies, etc?
They're using Apple's infrastructure to distribute their app to millions of people globally. They're also getting access to Apple's payment infrastructure and the huge database of payment information Apple holds.
The reason Apple forced IAP in the first place was so that users on small phones didn't have to enter address and card information in dozens of apps. If they allow apps to use their own payment processing it'll worsen the user experience for Apple's customers.
This is paid with the $99/year developers pay
> They're also getting access to Apple's payment infrastructure and the huge database of payment information Apple holds.
No, they are FORCED to use Apple payment infrastructure. Spotify has their own and they are very glad to use it if they are allowed
I signed up for Spotify through their website. I pay Spotify, not Apple, and maintain my account separately. In that transaction, Apple's only fee to Spotify was my minute share of their 99/year developer account. I have the same arrangement with Dropbox, Box, Harvest, etc.
However, if you want to allow user's to sign up through your iOS app directly, and you're solely delivering digital content, your only option is to use IAP. And with IAP, Apple gets 30%.
Why?
Because Apple feels that they are responsible for a. delivering a consumer to you, b. enabling you to deliver digital content to that user and c. ultimately that your relationship with that customer is predicated on that consumer's relationship with Apple.
For that, they ask for, in the first year, a 30% cut of your revenue.
If you feel that is too high, you are welcomed to get user's to sign up for an account for your service without using IAP. Many, many companies do that. And they do just fine.
Spotify, by trying to inject a "clever" "sign up" form, that doesn't actually collect money, but snags the consumers email address and THEN asks them for money, is attempting to leverage Apple's relationship and good works for free, without doing the requisite work themselves.
IF Apple did not allow service-based applications that did not utilize IAP on the store at all, people on Spotify's side of this would be right.
Apple incurs 100% of the costs of Apple Music. They develop the platform it is hosted on, they nurture the customer relationship, and they incur all costs in regards to support and infrastructure. Apple does not charge Apple Music a 30% fee because Apple is already paying that 30% fee through the ongoing costs of all their other business units.
I'm not a lawyer, but my understanding of the Sherman Antitrust Act (I wrote a paper on this in engineering law undergrad about the Intel/AMD case) is that whenever a company uses its dominant position in one market to attempt to restrict competition in an adjacent market, that's called "tying" and it's illegal.
And this seems like a pretty textbook case of it: Apple has a strong, powerful position in mobile devices, and they're making it harder for Spotify to compete with them for music streaming services.
Apple's argument would probably be "we do this to everyone, our behavior isn't specifically to reduce competition, it's standard commercial practice for all apps".
Ben Thompson of stretechery has been commenting on this recently, mentioning that US antitrust law is based more on how people compete (following rules) vs. EU antitrust, which is based more on consumer outcomes and harm. And the harm in this case seems pretty clear: Apple's behavior, though perhaps unintentionally, is making it very difficult for Spotify to compete with Apple Music -- EVEN THOUGH (in the US regulators' view) they aren't acting with any kind of malice, or illegal intent (their view).
The hard legal question is how to ensure competitive markets when tech platform operators make products that inevitably lead to monopolies, like the App Store. That one really should be legislated because it's a big, complex question that will come up with escalating frequency as more businesses exhibit tech-like winner-take-all dynamics.
But it doesn't have a dominant position. It definitely doesn't have one in mobile OS marketshare. It doesn't in app store usage.
"And this seems like a pretty textbook case of it: Apple has a strong, powerful position in mobile devices, and they're making it harder for Spotify to compete with them for music streaming services."
But they don't. Android has far, far higher marketshare.
Of course Apple is allowed to do what they're doing. They are begging people to stop buying their products. Anyone buying an Apple product today deserves that money less than Apple.
Maybe they're paying too much, but they're getting more than just the ability to appear on Apple DVD players.
1. To make a ton of money by extracting revenue from developers and content providers. This is the "obvious" goal everything immediately thinks of, but I think it's actually unlikely. Apple makes MUCH more money from device sales. It makes more financial sense to have a robust offering of content and apps. They are making good margins on their own services, but their business model in terms of the app/music stores is to run them just above break even.
2. Convenient payment. Not the reason, because Apple Pay would do that at a lower price.
3. Customer service. Since Apple is technically the merchant here reselling a digital good, they can also provide refunds and customer service. But I doubt they need a 15-30% margin for this. They could just contractually require that developers refund in-app Apple Pay transactions under certain conditions.
4. Privacy. Now here's a real reason. To offer a 2-3% fee, payment processors need to control for fraud. One way they do this is by verifying contact info. Now, for physical goods there is no way around asking for the billing address, so Apple Pay supports that. But it's not necessary for digital goods. Apple would not be able to offer Apple Pay for subscriptions without degrading user privacy.
Apple Pay has no fee to the user or the company receiving the money, it's paid by the bank and is EXTREMELY small. Normal credit card fees still apply, but those don't go to Apple. For all intents and purposes it is a single bank transaction almost like any other. Apple has almost no part in it except helping verify security.
In-app purchases are different. Apple takes a cut because Apple provides a real service. They host the app, they do the billing, they do the collections, they do the license tracking. They handle taxes in all sorts of countries in different states. They make sure their store complies with all local laws. They handle security and try to stop piracy. In short, they're providing a lot of services.
Those benefits are irrelevant to subscription content. Apple does not host Spotify's content. Spotify does not need Apple to handle monthly billing. If Apple merely wanted to offer a convenient worldwide billing service, they could make it opt-in for smaller developers, and Spotify would happily handle their own billing, tax calculations, etc.
No, the goal here must be something more.
And they handle it so poorly that you have to write them to get a proper invoice in order to recover your VAT.
If your customer buy your application through the app store, they ask "you" an invoice with VAT, and you have to tell them to contact Apple, that's so unprofessional. For a 30% cut, they could clearly put a download link or include a PDF in the sent email.