Spotify and Apple: Music streaming war heats up

We’ve had the operating system and search engine wars. There was also the battle of the browsers and the patent standards fight.

The names change, as does the technology, but tech is in a constant struggle over who controls the pipeline.

Now we are in the midst of a music streaming conflict, with Spotify and Apple at each others’ throats.

In the most recent development, Spotify accused Apple of not approving the latest update of its streaming music app for Apple’s iOS, reported Recode.

In a letter to Apple, Horacio Gutierrez, Spotify’s general counsel (who used to work for Microsoft) raised the issue of anti-competitive behavior on Apple’s part:

This latest episode raises serious concerns under both U.S. and EU competition law. It continues a troubling pattern of behavior by Apple to exclude and diminish the competitiveness of Spotify on iOS and as a rival to Apple Music, particularly when seen against the backdrop of Apple’s previous anticompetitive conduct aimed at Spotify … we cannot stand by as Apple uses the App Store approval process as a weapon to harm competitors.

In a separate development, Sen. Elizabeth Warren gave a speech this week in which she criticized Apple, along with Amazon and Google, for locking out competition. The Democrat from Massachusetts, who is sometimes mentioned as a running mate for Hillary Clinton, said Apple is hurting competition among music streaming services:

While Apple Music is easily accessible on the iPhone, Apple has placed conditions on its rivals that make it difficult for them to offer competitive streaming services. The FTC is investigating those issues and deciding whether to sue Apple for antitrust violations.

Spotify is the No. 1 music streaming service worldwide with 30 million paying subscribers. Apple Music, which launched in 2015, has 15 million paying subscribers.

There’s a lot of history here.

Companies can’t get their apps on to the iPhone without going through Apple.

But subscription services like Spotify have bristled at Apple’s iTunes payment system within the app itself.

Apple takes as much as 30 percent of the revenue of an app. While it is possible to set up a payment system independent of iTunes, Apple doesn’t want alternatives used within the app or promoted from within the app.

A Spotify spokesman told Recode:

You know there’s something wrong when Apple makes more off a Spotify subscription than it does off an Apple Music subscription and doesn’t share any of that with the music industry. They want to have their cake and eat everyone else’s too.

Ouch.

Apple hasn’t liked how Spotify has promoted ways to get around Apple’s iTunes payment system such as giving new subscribers discounts if they signed up via Spotify’s own website.

Spotify did stop advertising the promotion after Apple threatened to remove the app from its store, Gutierrez said.

But then Spotify also turned off its Apple App Store billing option, essentially declaring war.

And now, Apple apparently has denied Spotify’s update to its app.

Lawmakers and regulators will surely be interested in the question of whether Apple’s control of the pipeline to the iPhone is anti-competitive.

Above: An ad for Apple Music.  (Andrew Burton/Getty Images)

 

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