Spotify boss Daniel Ek has called on lawmakers in Washington to stop the alleged anti-competitive behaviour of Apple within its App Store by voting through the Open App Markets Act. After all, he says in a new blog post on the matter, the American marketplace is meant to be one where the principle of fair competition “reigns supreme”.
Ek’s latest blog post – which accompanies a trip to Washington – is the latest attempt by Spotify to force a change to some of the rules Apple enforces on apps used on iOS devices. In particular, the rules governing in-app transactions.
Currently, many app makers are obliged to take any payments within their iOS apps via Apple’s commission-charging transactions system. Moreover, there are restrictions on sign-posting users to where they can make payments outside of the app, ie by providing a big button that would take the user to a web page.
Spotify argues that rules like this are anti-competitive, especially where Apple itself offers a rival service like Apple Music.
Because when it comes to iOS devices, Spotify either has to swallow Apple’s commission, which is basically its entire profit margin; or pass the commission on to the customer, making it look like Spotify is more expensive than Apple Music; or not allow in-app purchases, making it harder to sign up new premium subscribers and add pay-as-you-go content.
Epic Games, the maker of Fortnite, is another company that has been very vocal about the anti-competitive nature of Apple’s App Store rules. It has sought to force a change through the courts in multiple countries. For its part, Spotify has generally urged competition regulators and lawmakers to intervene.
In 2019, it called on the European Commission to instigate an investigation into the allegations of anti-competitive behaviour on Apple’s part. That investigation is still ongoing, with EC regulators recently confirming that their main concern at the moment are the rules that prevent the sign-posting of alternative payment options.
The EU’s recent Digital Markets Act also potentially helps, meanwhile there have been interventions by lawmakers in South Korea and a regulator in Japan, and the UK’s Competition & Markets Authority is busy investigating the key complaints against Apple’s App Store as well.
In the US, it was the Open App Markets Act – proposed in 2021 by senators Richard Blumenthal, Marsha Blackburn and Amy Klobuchar – that set out proposals that would force Apple to allow app-makers to use and sign-post alternative payment systems.
Those proposals were subsequently backed by the Senate Judiciary Committee, but have not yet progressed any further.
Hence Ek’s trip to Washington and the new blog post. Having moaned about and lobbied on all this for years now, the Spotify boss would obviously like to see some significant changes to Apple’s rules sooner rather than later.
Though it’s probably the streaming service’s current move into audiobooks that is making the need for such change all the more urgent, with Ek admitting that his platform’s audiobook experience isn’t great on iOS devices because of the restrictions put in place by Apple.
“As a Swedish entrepreneur, I’ve long admired the American marketplace, where principles like innovation, competition and initiative reign supreme”, his new blog post states. “It’s home to some of the most successful companies around the world because of these factors”.
“When I founded Spotify almost seventeen years ago, I believed in many of these same principles”, he goes on. “If you can build a better system and if you work hard enough and innovate like crazy, you might just have a real shot at changing an industry for the better – even one as long established as the music business”.
“But as any entrepreneur can tell you, building a business is full of twists and turns”, he adds. “While I expected some of these challenges, the one I didn’t anticipate is the ongoing fight for fair competition as the digital marketplace has taken shape”.
Going into the specifics, he continues: “Spotify and countless developers across the world want to be able to speak to our customers and compete fairly for their business. Apple prohibits competition by not allowing developers to discuss new products, features, and deals with their own users”.
“For instance”, he writes, “Apple promotes deals for Apple Music to Spotify customers, but denies us the same privilege. What’s even more unbelievable, is that we can’t even tell our users the basics of how to sign up for a Spotify subscription or how to purchase an audiobook. This leaves customers without the ability to make informed choices about the services and pricing options available to them”.
As for how lawmakers in Washington can help, he says: “Last year, Congress had an opportunity to address this very issue by passing the Open App Markets Act, which aimed to rein in clear abuses by gatekeepers like Apple”.
“Despite broad bipartisan support and overwhelming approval from the Senate Judiciary Committee”, he goes on, “Congress did not take it up before the end of the year. Today I’m in Washington to urge the new Congress to take a leadership role and pass the Open App Markets Act to promote competition by providing basic checks on the anti-competitive behaviour that’s harming both developers and consumers”.
It remains to be seen whether this latest charm offensive in Washington delivers the goods.