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Tag Archives: European commission

The spat between Spotify and Apple is going to be the focus on a new investigation from the EU, according to a report from the FT.

The paper reported today that the European Commission (EC), the EU’s regulatory body, plans to launch a competition inquiry around Spotify’s claim that the iPhone-maker uses its position as the gatekeeper of the App Store to “deliberately disadvantage other app developers.”

In a complaint filed to the EC in March, Spotify said Apple has “tilted the playing field” by operating iOS, the platform, and the App Store for distribution, as well as its own Spotify rival, Apple Music.

In particular, Spotify CEO Daniel Ek has said that Apple “locks” developers and their platform, which includes a 30 percent cut of in-app spending. Ek also claimed Apple Music has unfair advantages over rivals like Spotify, while he expressed concern that Apple controls communication between users and app publishers, “including placing unfair restrictions on marketing and promotions that benefit consumers.”

Spotify’s announcement was unprecedented — Ek claimed many other developers feel the same way, but do not want to upset Apple by speaking up. The EU is sure to tap into that silent base if the investigation does indeed go ahead as the FT claims.

Apple bit back at Spotify’s claims, but its response was more a rebuttal — or alternative angle — on those complaints. Apple did not directly address any of the demands that Spotify put forward, and those include alternative payment options (as offered in the Google Play store) and equal treatment for Apple apps and those from third-parties like Spotify.

The EU is gaining a reputation as a tough opponent that’s reining in U.S. tech giants.

Aside from its GDPR initiative, it has a history of taking action on apparent monopolies in tech.

Google fined €1.49 billion ($1.67 billion) in March of this year over antitrust violations in search ad brokering, for example. Google was fined a record $5 billion last year over Android abuses and there have been calls to look into breaking the search company up. Inevitably, Facebook has come under the spotlight for a series of privacy concerns, particularly around elections.

Pressure from the EU has already led to the social network introduce clear terms and conditions around its use of data for advertising, while it may also change its rules limiting overseas ad spending around EU elections following concern from Brussels.

Despite what some in the U.S. may think, the EU’s competition commissioner, Margrethe Vestager, has said publicly that she is against breaking companies up. Instead, Vestager has pledged to regulate data access.

“To break up a company, to break up private property would be very far-reaching and you would need to have a very strong case that it would produce better results for consumers in the marketplace than what you could do with more mainstream tools. We’re dealing with private property. Businesses that are built and invested in and become successful because of their innovation,” she said in an interview at SXSW earlier this year.

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Two days after Spotify announced that it had filed a suit against Apple with the European Commission over anticompetitive practices, Apple today issued its own response of sorts.

In a lengthy statement on its site called “Addressing Spotify’s Claims”, Apple walks through and dismantles some of the key parts of Spotify’s accusations about how the App Store works, covering app store approval times, Spotify’s actual cut on subscription revenues, and Spotify’s rise as a result of its presence on iOS.

At the same time, Apple carefully sidesteps addressing any of Spotify’s demands: Spotify has filed a case with the European Commission to investigate the company over anticompetitive practices and specifically to consider the relationship between Apple and Spotify (and by association any app maker) in terms of whether it is really providing a level playing field, specifically in the context of building and expanding Apple Music, its own product that competes directly with Spotify on the platform that Apple owns.

In fact, Apple doesn’t mention the European Commission, nor the suit, even once in its 1,100+ word statement. Here is what it does cover:

App Store updates. Spotify has accused Apple of dragging its feet on updates to its apps and deliberately doing to so impacts its ability to distribute its service effectively. The company made 173 updates to its apps on iOS, and while Apple doesn’t speak to any transparency on just how long it takes to approve changes, it notes that Spotify has had more than 300 million downloads of its app, and “the only time we have requested adjustments is when Spotify has tried to sidestep the same rules that every other app follows.” 

It also says it’s worked with Spotify to bring it to more platforms and devices. It did not address one of Spotify’s specific claims, that Apple’s HomePod is the only home speaker where Spotify is currently not available, but it did note that it can be listened to via AirPlay with limited controls. For example, you can control the volume, or ask questions about a track respectively via Siri and Musicologist, Apple services built into the device, even if you cannot search the catalogue or playlists.

— App store pricing. The crux of Apple’s belief is that Spotify wants to use the benefits of being a revenue-generating app on the store, without paying any dues to be there, living rent-free, as it were.

Apple points out that 84 percent of apps on the App Store are actually free to use (many of them will be ad-supported) and in those cases, they really do not pay anything to Apple. But it believes that if you are going to use its platform to make money, Apple should get a cut. The question has always been just how much of a cut Apple should get.

The company’s development of payments has been a tricky one for Apple. In some regards that is a blessing. It centralises your billing details in one trusted place, which ultimately makes for a secure experience. In others it’s a curse: it imposes a particularly strict set of rules and commissions that everyone must follow and doesn’t give developers or customers any choice for how to take and make payments within apps.

Apple notes that in the case of Spotify, the company is misrepresenting App Store commissions on a number of counts. For one, right now, Apple takes a 30 percent cut on subscriptions in the first year, but after that it brings that down to 15 percent. Spotify failed to mention that commission change, focusing only on the 30 percent figure that makes Apple look especially greedy. (Indeed, I’d say that both sides are fairly disingenuous in their public arguments so far.)

It also notes that a lot of Spotify’s customers are using the free version of the product, not paying for any subscriptions. And given that Spotify has tried to shift more of its billing to its site instead of within the app, claims of losing out money over Apple’s terms and a lack of choice for how to pay within it — you have to use Apple’s in-app payments to pay for subscriptions and other goods in apps — are not valid:

“Even now, only a tiny fraction of their subscriptions fall under Apple’s revenue-sharing model. Spotify is asking for that number to be zero,” it notes.

There is an argument to be made, nevertheless, for the convenience of giving users the option of paying in app. For exaple, it would allow Spotify to quickly upgrade free users to Premium tiers, and it reduces the risk of shopping cart abandonment. Spotify identifies a number of other apps that are given provisions to enable payments that do not run through Apple’s billing system. These essentially relate to physical goods — such as sales through Amazon — or other non-digital goods, such as rides through Uber. Spotify calls out these exceptions in-app payments to describe it as a “discriminatory tax.” In that regard, Apple believes that if they are consumed on the phone, they are fair game and taxable.

Apple Music versus Spotify. The suit filed with the European Commission and antitrust accusations are not the only two things that Apple does not cover in its response. It also fails to give even one mention of its own music product, Apple Music, which competes directly with Spotify. At the end of the day, this is likely Spotify’s biggest threat and its strongest card in a case it might try to make for anticompetitive behavior.

Apple does say that “We share Spotify’s love of music and their vision of sharing it with the world,” and instead goes directly after Spotify in the jugular: the music streaming service’s own issues with how it controls those wanting to do business on its own platform.

“Spotify’s aim is to make more money off others’ work. And it’s not just the App Store that they’re trying to squeeze — it’s also artists, musicians and songwriters,” it notes, pointing to a recent suit against music creators filed by Spotify after the US Copyright Royalty Board required Spotify to increase its royalty payments. “This isn’t just wrong, it represents a real, meaningful and damaging step backwards for the music industry,” Apple notes.

Trust in antitrust

Indeed, while the case is in progress and remains sealed, Spotify has summed up many of its key points in a site that it is promoting called Time to Play Fair. But to be very clear, some of us might be hard pressed to call Spotify exactly an underdog.

Apple is one of the biggest and most profitable companies in the world, and Spotify is still scrambling to prove out the long-term financial viability of music streaming as a business model. But Spotify is also the world’s biggest music streaming company, and in reality both have had their fair share of accusations related to how they leverage control over those using their platforms — app publishers for Apple; musicians and those in related fields for Spotify — for their better financial gain.

“Every monopolist will suggest they have done nothing wrong and will argue that they have the best interests of competitors and consumers at heart. In that way, Apple’s response to our complaint before the European Commission is not new and is entirely in line with our expectations,” Spotify said today in response to Apple’s statement. “We filed our complaint because Apple’s actions hurt competition and consumers, and are in clear violation of the law. This is evident in Apple’s belief that Spotify’s users on iOS are Apple customers and not Spotify customers, which goes to the very heart of the issue with Apple. We respect the process the European Commission must now undertake to conduct its review. Please visit for the facts of our case.”

Spotify’s best approach, in my opinion, would be to keep this debate and make its case to the European Commission at as high a level as possible.

There have been a number of examples already of how regulators in Europe have broken up companies or business models, enforcing different practices in the name of promoting better competition: telecoms, internet access, computer and mobile operating systems, advertising and television are among the areas where it’s already proven that it will champion first not the platform, but those who are trying to use it, especially in cases where the platform companies also happen to directly compete with their customers: where those who own the playing field are forced to provide terms to visiting athletes that ensure they get the same treatment as the home team.

This case would be the first time that app stores are considered on the same terms, a mark of just how ubiquitous they have become.

In that regard, by going through some of Spotify’s claims to provide its own rebuttals, Apple seems to be trying to paint a very specific picture to the public — one that we imagine will also play out as it presents its case to regulators: Spotify is not exactly a small company and it has most definitely benefitted, not failed, by virtue of being in the Apple App Store. That’s a key image that — if successful — will help Apple deflect from being viewed as a monopoly, and subsequently forced to change its practices.

Updated with statement from Spotify, and more clarification on how non-digital goods are exempt from Apple’s in-app payment requirements.

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Measures are part of a series of planned European commission changes designed to strengthen rights of creators and publishers

News publishers would have stronger rights to demand payment from digital giants such as Google and Facebook in exchange for using their content, under proposed European rules that are designed to shore up the collapsing revenues of traditional media companies.

The measures are part of a series of reforms that the European commission plans to put out to consultation in September. They are designed to strengthen the rights of those who create and invest in original content, from authors and musicians to record labels, broadcasters and publishers.

The commission has come under increasing pressure from publishers to level the playing field. Google and Facebook have attracted a ballooning share of online advertising money, while revenues for news publishers have slumped despite their expanding online readerships.

In draft proposals setting out its preferred options, the commission says: The sustainability of publishing industries in the EU may be at stake, with the risk of further negative consequences on media pluralism, democratic debate and quality of information.

The digital groups have a strong bargaining position, which makes it difficult for publishers to negotiate with them on an equal footing, according to a version of the draft seen by the Guardian.

Brussels is looking at giving news publishers the exclusive right to make their content available to the public, and to reproduce it for digital purposes.

This would mean that Googles parent company, Alphabet, could face demands from publishers to pay to use extracts of their articles in services like Google News.

The protection, known as neighbouring rights, already exists for performers, record labels and broadcasters. The commission wants to extend it to the producers of news publishers who produce largely text-based journalism.

According to the draft proposal, publishers would like the protection to last for 50 years. The commission is asking whether a shorter period of as little as between one and five years would be more appropriate, given the perishable nature of news.

A spokesman for the commission said: Neighbouring rights are attributed to those that assist in making the original authors work available to the public at large, for example performers, producers and broadcasters. The commission is considering whether to grant such rights to news publishers. It would recognise their role as investors in content and give them a stronger position when negotiating with other market players.

However, there would be no obligation on publishers to make Google pay for using their content, and many may choose to continue making their journalism available at no cost in the hope of attracting more readers.

Previous attempts to force Google to pay for reproducing news stories have hit the buffers. When Spain introduced a mandatory levy, the search engine shut down its Spanish version of Google News. In Germany, after big drops in traffic, many publishers decided to stop charging the company.

The proposals are part of a drive to create a digital single market in Europe, first adopted in May 2015, which has the overall aim of reducing the differences between national copyright regimes and allowing for wider online access to films, television shows, sports broadcasts and music by users across the EU.

The working document also suggests imposing obligation on platforms like YouTube, Vimeo and Dailymotion, which host content uploaded by members of the public, to seek revenue-sharing agreements with rights holders.

These big brands have already negotiated multiple deals, but record labels in particular claim they are being short changed. Digital platforms say they are under no obligation to share revenues, and such deals are voluntary. And many lesser known distributors including pirate sites refuse to negotiate any compensation at all.

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