The relationship between Apple and Spotify could be headed for a rough patch after a report about e-mails from Spotify instructing its users not to buy their subscriptions through Apple’s app store. It’s a dispute that perfectly illustrates Apple’s awkward relationship with digital media companies, which rely on its app store as a major source of distribution even as they compete with Apple’s own media businesses.
The e-mails from Spotify, posted on the Verge on Wednesday, explained to users that they pay $13 when they purchase subscriptions through the Apple app store, compared with $10 on Spotify's website. The price difference is because Apple takes a 30 percent cut of subscriptions purchased through its app store. The e-mails explained how to cancel the app store subscriptions and sign up on the Spotify website.
Apple doesn’t encourage this kind of thing. The company forbids any buttons or links within apps that could allow people to buy things externally that they would otherwise purchase through the app. While its guidelines forbidding this practice aren't clear, it’s likely that Spotify’s iOS app would be rejected if it had included its e-mail as a page within its app. The same restrictions don’t apply for Android.
Companies who make subscription-based apps privately complain that Apple is acting anticompetitively. It has had similar problems in the e-book market, where a federal judge recently upheld a ruling that it had conspired with publishers to inflate prices. Apple and Spotify declined to comment for this story.
The prohibition on developers telling consumers how to find products at lower prices is ripe for legal challenge, says Tim Wu, a professor at Columbia Law School and a prominent critic of anticompetitive business practices in the tech industry. “I think Apple is getting close to the line, if it hasn’t crossed it, in its dealings with Spotify,” he says. “It’s a different game when you have market power and you have a direct competitor you’re telling can’t advertise their prices. That’s pretty gnarly.”
Apple’s charge is ostensibly a service fee that developers pay to use its platform. But it doesn’t take a cut of purchases in markets where it doesn’t compete. GrubHub, for instance, allows users to purchase food directly through its apps without splitting the pie with Apple. United Airlines doesn’t share revenue when it sells tickets through its iPhone app.
Last May, Daniel Ek, Spotify’s chief executive officer, told me that he was concerned about a company like Apple abusing its market position to cut off competition, but he also said that he didn’t see it happening yet. The company has steadily taken a harder line since then. Spotify has been talking to policymakers in Washington about what it calls “platform neutrality,” and state and federal regulators have been looking at Apple’s behavior in the music market.
By sending these e-mails to its users, Spotify is essentially poking Apple in the eye. If Apple really did cut off access to the App Store, the smaller company would be in big trouble. But provoking a government crackdown could be Spotify’s best chance of getting Apple to change the rules of its game.