Apple's 30% app store commission unfair, Spotify claims

Music service files complaint with European commission over subscription ‘tax’

Spotify has filed a complaint with European regulators arguing that Apple limits choice and competition in its app store, giving its own music streaming service an unfair advantage over rivals.

Apple’s app store is an important distribution platform for Spotify. But Apple takes a 30% commission on all sales made through the app store – including music streaming subscriptions – which Spotify and many other third-party app developers have long complained is an unfair “tax”.

“Apple requires that Spotify and other digital services pay a 30% tax on purchases made through Apple’s payment system, including upgrading from our free to our premium service,” said Daniel Ek, Spotify co-founder and chief executive, in a blog post.

“If we pay this tax, it would force us to artificially inflate the price of our premium membership well above the price of Apple Music. And to keep our price competitive for our customers, that isn’t something we can do.”

Spotify ran an ad campaign in 2016 to try and get users to sign up for its premium service directly on its own site, bypassing the app store.

However, Ek said he has now been forced to officially lodge a complaint with the European commission after Apple introduced what he claimed were wider anti-competitive practices that has made it “both player and referee to deliberately disadvantage other app developers”.

He said that if Spotify chooses not to use Apple’s payment system, to avoid paying the commission, the company applies “a series of technical and experience-limiting restrictions” on consumers running its streaming service on the rival tech company’s devices.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

Examples cited include limiting communications with Spotify customers and “routinely” blocking app upgrades.

“In recent years, Apple has introduced rules to the app store that purposely limit choice and stifle innovation. They continue to give themselves an unfair advantage at every turn,” Ek said. “After trying unsuccessfully to resolve the issues directly with Apple, we’re now requesting that the European commission take action to ensure fair competition.”

Spotify argues that its complaint to regulators is not about seeking “special treatment” in its global music battle against Apple but the same treatment as numerous other apps such as Uber and Deliveroo, which are not subject to the 30% app store charge.

Daniel Ek, Spotify co-founder and CEO
Daniel Ek, Spotify co-founder and CEO: ‘Apple has introduced rules to the app store that purposely limit choice.’ Photograph: Shannon Stapleton/Reuters

“This is not a Spotify vs Apple issue,” he said. “We should all be subject to the same fair set of rules and restrictions, including Apple Music.”

Spotify’s general counsel, Horacio Gutierrez, said the company’s action against Applewas limited to Europe but did not rule out expanding its complaint to the US.

Last week US Senator Elizabeth Warren, who is aiming to win the Democrat nomination for next year’s presidential election, outlined proposals to break up big technology companies. On Apple, she said: “Either they run the platform or they play in the store. They don’t get to do both at the same time.”

Spotify has 207 million global users, of whom 96 million are paying subscribers. The Canadian rapper Drake was the most popular artist on Spotify last year, as he was in 2015 and 2016, with 8.2bn streams. The most popular female artist was Ariana Grande, whose music amassed more than 3bn streams in 2018.

Apple, which made its move into music streaming by buying Dr Dre’s Beats for $3bn (£2.27bn) in 2014, last reported 56 million streamers, of whom about 48 million were paying subscribers.

“Apple’s App Store is that perplexing mix of company product and industry marketplace,” said Mark Mulligan, analyst at MIDiA Research.

“Without Apple companies like Spotify would not have much of a business. But that relationship becomes complicated by the fact that Apple also competes with some of the companies it acts as a platform for. It is this fusing of roles that makes this issue so complex.”

Apple had not responded to a request for comment at the time of publication.

Spotify is also challenging a ruling in the US that would result in it having to increase its royalty payments to songwriters by more than 40%.


Mark Sweney

The GuardianTramp

Related Content

Article image
Is Spotify really worth $20bn?
Music service will soon have its IPO and investors think it can be as big as Netflix. Are they right?

Alex Hern

02, Mar, 2018 @3:53 PM

Article image
Shaken it off! Taylor Swift ends Spotify spat
Singer ends three-year boycott of streaming service over royalties and makes entire back catalogue available to celebrate 10m sales of 1989 album

Mark Sweney

09, Jun, 2017 @4:21 PM

Article image
Britons break £100m-a-week digital streaming milestone
Digital video continues to power entertainment growth with gaming spend slightly up

Mark Sweney

08, Aug, 2019 @1:09 PM

Article image
Paul McCartney and Kate Bush lead call for change to music streaming payments
Open letter to Boris Johnson signed by 156 musicians including Led Zeppelin and Annie Lennox aims to reword 1988 Copyright Act

Ben Beaumont-Thomas

20, Apr, 2021 @1:25 PM

Article image
Spotify credits podcast popularity for 24% growth in subscribers
Strategic shift beyond music content helps streaming service to grow advertising income by 29% to €281m

Mark Sweney

03, Feb, 2021 @5:29 PM

Article image
Spotify at 10: men dominate streaming service's most-played artists
Sheeran’s single Shape of You is the music platform’s most-streamed song since it launched

Laura Snapes

10, Oct, 2018 @12:15 PM

Article image
Bad Bunny most-streamed artist on Spotify for second year running
The Puerto Rican star beats Taylor Swift and Drake, while Olivia Rodrigo continues meteoric rise as Spotify and Apple Music announce stats

Ben Beaumont-Thomas

01, Dec, 2021 @2:05 PM

Article image
Is streaming killing the radio star?
As more young listeners switch off, broadcasters are having to ring the changes

Mark Sweney

08, Feb, 2019 @1:05 PM

Article image
Spotify CEO speaks out on Taylor Swift albums removal: 'I'm really frustrated'
Daniel Ek defends free streaming: ‘Here’s the key fact: more than 80% of our subscribers started as free users’. By Stuart Dredge

Stuart Dredge

11, Nov, 2014 @1:58 PM

Article image
Drake and Ed Sheeran most streamed artists on Spotify this decade
Sheeran’s Shape of You is most streamed song, with 2.3bn plays, while Drake is most popular artist with 28bn streams

Ben Beaumont-Thomas

03, Dec, 2019 @9:06 AM