Increasing tensions between Spotify and Apple boiled over into the public eye this week as Spotify’s CEO, Daniel Ek, criticized Apple’s management of their app store and called the relationship between the two companies unsustainable. In a rare public rebuke of another company, Apple responded with a certain degree of intensity, publishing a lengthy and ultimately quite detailed statement published on their website, The Mac Observer reports.
The statement opens in a relatively typical Apple fashion, including egalitarian language about the true potential of technology and Apple’s commitment to deliver products to help artists and creators do what they do best. But after the flowery prologue, the statement takes a turn, honing on in Spotify in particular and enumerating Apple’s responses to each of Spotify’s claims.
“Spotify has every right to determine their own business model, but we feel an obligation to respond when Spotify wraps its financial motivations in 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,” Apple’s statement reads, before shifting into a point-by-point rebuttal of recent accusations.
Spotify’s complaints have mostly centered around the general claim that Apple, in pursuit of the success of their own streaming service, has made it deliberately difficult for other streaming platforms to do business within the Apple ecosystem.
With more than 300 million individual downloads of the Spotify app on Apple devices, the App Store is obviously a huge part of Spotify’s business. With Apple claiming a portion of every digital purchase facilitated by their secure in-app payment system, it also means that they are taking a notable chunk of Spotify’s profits when it comes to paid users.
— Philip Schiller (@pschiller) March 15, 2019
Apple points out, however, that the majority of Spotify’s users actually pay nothing, either to Spotify or Apple. That’s because most Spotify users take advantage of the ad-based free version of the platform. With no money paid to Spotify by the customer, there is no cut for Apple to take for themselves.
“Only a tiny fraction of their subscriptions fall under Apple’s revenue-sharing model. Spotify is asking for that number to be zero,” the statement reads.
While Apple’s point-by-point rebuttal seems to cover most of the key complaints made Spotify has made in public, there is one critique that goes unaddressed.
Ek has also pointed out that when comparing Apple’s streaming service to competitors, Apple is the only company which gets to keep all of the revenue generated from the service. As such, Spotify and any other company doing paid streaming will inevitably give a cut to Apple if they are using their platform.
That, Ek says, yields an unfair advantage and an ultimately uncompetitive landscape.