Step-by-step analysis of Apple's eloquent response to Apple's two-way speech to Spotify's antitrust complaint


Apple remained silent for two whole days after Spotify accused it of unfair practices, seemingly stunned by the sudden turn of events. Now, he responded to Spotify's claims, saying nothing substantive: he solved Spotify's problems, but none of his real problems.

I find myself reading the long letter, which tries to reprimand each of Spotify's arguments, thinking that the double-talk of public relations is incredibly eloquent. Apple avoids touching one of the problems of the ecosystem, while sometimes inadvertently reinforcing Spotify's point of view: it controls much of the destiny of the ecosystem, with a minimum of monitoring.

Below, I included the letter and some thoughts on each relevant part immediately after, as it was so difficult to summarize otherwise.

We believe that technology realizes its true potential by endowing it with human creativity and ingenuity. Since our inception, we have built our devices, software and services to help artists, musicians, creators and visionaries do what they do best.

Sixteen years ago, we launched the iTunes Store with the idea that there should be a place of trust where users discover and buy good music and every creator is treated equitably. The result has revolutionized the music industry and our love of music and the people who compose it are deeply rooted in Apple.

Well, it may not be a good example.

iTunes decimated competition in the music buying sector and resulted in a monopoly that was difficult to compete with as artists had little choice in selling their music. Then he began to wield power over the artists: threatening to exclude them from signing new contracts, eventually ending up in court for pricing after artists and competitors complained. The artists did not really like this service, which paid very little and limited most of its music to Apple devices like the iPod.

Eleven years ago, the App Store brought the same passion for creativity to mobile applications. Over the past ten years, the App Store has helped create millions of jobs, generated more than $ 120 billion for developers and created new industries through businesses created and developed entirely in the business. 39, ecosystem of the App Store.
Basically, the App Store is a secure platform where users can trust the applications they discover and the transactions they make. And developers, from junior engineers to large companies, can rest assured that everyone follows the same rules.

Unless, of course, you have billions of dollars. There are many examples of how this "same set of rules" is applied inconsistently, whether in the interest of Apple or in the interests of third parties with billions of dollars.

In 2015, Apple was accused of playing its own "best apps" to prefer its results. In 2017, Facebook gave up negotiating with Apple about an anti-pay wall feature that it added to news agencies because Apple demanded a complete reduction in its revenue.

We can really see it in the way that prominent application developers, such as Marco Arment, have expressed the fear of publicly speaking about Apple's practices, for fear of damaging this relationship, which could make them happen or ignore them when the company wants to launch new phones and provide quick access to the lucky few or intentionally delay future applications updates.

That's how it should be. We want more applications companies to thrive, including those that compete with certain aspects of our business because they make us better.

What Spotify requires is something very different.

After using the App Store for years to dramatically expand their business, Spotify wants to retain all the benefits of the App Store ecosystem, including the substantial revenues generated by the customers of the company. 39; App Store, without making any contribution to this market. At the same time, they distribute the music you love while making a smaller and smaller contribution to the artists, musicians and songwriters who create it – even going so far as to bring these creators to justice.

Spotify does not require anything different: they require the same business model as Apple Music and the same rules as all other users of the platform, including Apple. S "attacking Spotify to make" ever smaller "contributions here is contrite because their margins are squeezed by Apple's price pressure.

Service-generated revenue is critical for enterprise applications, and Apple is fundamentally needed to survive. She finds herself in a position where, if she can not win this debate, she may well have a hard time developing her services business as easily as today … and I believe that 's not the best. she tries to position herself as the savior here, rather than the bad actor.

Spotify is perfectly entitled to determine its own business model, but we feel compelled to react when Spotify summarizes its financial motivations in a misleading rhetoric about who we are, what we have built and what we do to support independent developers, musicians, writers and composers. creators of all bands.
We therefore want to touch on a few key points:

Apple only supported musicians, very unhappy with Apple Music after Taylor Swift asked for something better. Ignoring this is a misrepresentation of the aggressiveness of Apple that has tried to exploit them to increase its own margins compared to the users on the test.

Spotify says we're blocking their access to product and app updates. Let's see that right away. We approved and distributed nearly 200 application updates on behalf of Spotify, which allowed to download more than 300 million copies of the Spotify application. The only time we asked for adjustments, is when Spotify tried to bypass the same rules as all other applications.

This deliberately misses the problem regarding Spotify's claims to distract attention: Spotify does not want the rules to be changed exclusively for its benefit, it's the only company that has been willing to talk about it. a relationship that is not fair. each app. A trial just last year The same was requested because the applicants believe that Apple's 30% reduction is almost always passed on to the consumer, who suffers.

It is unprecedented to block the monetization of services via any other payment method, with the exception of theirs, and even prohibit them from mentioning that it is possible to pay online. But hey, we can ignore this fact by simply saying that everyone must follow the rules.

What is it? really What's interesting about this rule is that Apple, just a few years ago, was forcing developers to sell their subscriptions at the "same price or less" than when that service was available elsewhere, even if they had to somehow swallow the 30% reduction addition, or rejection of the face:

Previously, Apple was asking developers who sell content in its apps to do it "at the same price or at a lower price than the one offered outside of the app," that is, the Apple price could not be higher than anywhere else. Now this language has disappeared from Apple's rules.

The existence of rules and their widespread application do not nullify any claim of monopoly. This only reinforces the few choices that developers have in the ecosystem: either accept it or let it pass.

We have frequently collaborated with Spotify to help them offer their service on more devices and platforms:

When we contacted Spotify about Siri and AirPlay 2 support several times, they told us they were working on it and we are ready to help as much as we can.

Spotify is deeply integrated with platforms such as CarPlay, and they have access to the same tools and application development resources as other developers.

We found Spotify's claims about Apple Watch particularly surprising. When Spotify submitted its Apple Watch app in September 2018, we reviewed and approved it with the same process and speed as any other application. In fact, the Spotify Watch app is currently the # 1 app in the Watch Music category.

Spotify is free to build applications and compete with our products and platforms, and we hope they will.

Translation: we help Spotify when it suits us. It also reminds that Apple gives priority to application developers whose use cases are not competitive when launching a new product and offers quick access to new products, which helps them to launch the first day by way of incentive. Spotify has never received this treatment.

This paragraph is a master stroke to avoid the actual complaint: that Apple delays or intentionally breaks the features that competitors could use to actually play in the same game of baseball. HomePod is a good example: Airplay is a much worse experience, and Apple Music does not use it for nothing – because native music streaming is better.

I find the Watch debate a little strange, since Spotify did not try (publicly) to create an app for the watches, but I also noted that they claimed that Apple would not engage with them about the creation of until Apple Music suddenly appears. 🤷♀️

Spotify wants all the benefits of a free app without being free. 84% of apps from the App Store pay nothing to Apple when you download or use the app. It's not discrimination, as Spotify claims; it's by design:

1) Free apps for you are not charged by Apple.
2) Apps generating revenue exclusively through advertising, such as some of your favorite free games, are not billed by Apple.
3) Business transactions in which users subscribe or purchase digital products outside of the app are not billed by Apple.
4) Applications that sell physical goods, including food transportation and food delivery services, to name a few, are not billed by Apple.

Interesting data that reinforces any argument that Apple should instead charge using the services of the store instead, if many free apps benefit from its tools. The rationale for physical assets is an example of a hands-on exception that benefits Apple because it is not competitive at all in this space and probably never will.

This part also ignores the current problem of Spotify: Apple claims not to accept a reduction of digital assets acquired outside of its store, but does not mention the fact that applications are not even allowed to mention that it's possible or to link to their own website.

The Kindle application of Amazon is a great example here: it's an arid wasteland when you download it for the first time, and you have to infer that it's because you have to first visit in the browser because it is not allowed to Amazon to mention that you have to buy books. via other means.

The only contribution required by Apple is for digital goods and services purchased in the application with the help of our secure integrated purchase system. As Spotify points out, this revenue share is 30% for the first year of an annual subscription – but they have left out that it will fall to 15% in the following years.

This is not the only information left by Spotify about how their business works:

The majority of customers use their free advertising-funded product, which does not contribute in any way to the App Store.
A significant portion of Spotify's customer base comes from partnerships with mobile operators. This does not generate any contributions from the App Store, but forces Spotify to pay similar distribution fees to retailers and operators.
Even now, only a tiny fraction of their subscriptions fall under Apple's revenue sharing model. Spotify requests that this number be zero.

Spotify does not ask for anything to be bad. It requires the same treatment on a platform where Apple competes with similar services, but does not have to pay a huge discount to an intermediary. The way that Spotify actually generates revenue outside of the Apple Store is irrelevant in the scope of this article: this ignores that on other platforms, including Google Play, Spotify may use the payment gateway of his choice, which greatly accelerates the investment in the creation of customized solutions. payment systems on the Spotify side.

An argument of about 15% after the first year of Apple excludes the fact that these rules are applied inconsistently. According to Spotify's examples, Apple uses system notifications to push users to subscribe to Apple Music and promotional offers, but the same practice is prohibited in third-party developer development policies. 39; Apple.

As a sidenote: Spotify actually uses a pop-up web view on Android to sell subscriptions and avoid Google's 30% discount. This is because the rules allow, and while it's a more complicated solution, it allows Spotify to reduce its own costs and avoid using Google's infrastructure. In other words, it does have the choice and open web competition costs almost no 30%, let alone 15%.

It seems that Spotify uses Adyen for this, which charges between 0.5% and 3.0%, a huge difference in cost when we talk about a reduction of only $ 10 per user.

spot_screenshot_android.jpg Active #: 9223

Payment gateways are expensive to develop, of course, but that does not justify the huge difference in royalties between Stripe, Adyen, all other payment gateways … and Apple. Apple says that's because it encompasses the store's operating costs, but that means that the entire store's operating costs are concentrated on the small numbers make monetize. 🤔

Let's be clear about what that means. Apple connects Spotify to our users. We provide the platform by which users download and update their application. We share essential software development tools for creating Spotify applications. And we have built a secure payment system – not a small business – that allows users to trust transactions through the app. Spotify wants to keep all these benefits while retaining 100% of revenue.

Spotify would not be what they were today without the ecosystem of the App Store, but they are now taking advantage of their scale to avoid contributing to the preservation of this ecosystem for the next generation of application entrepreneurs. We think that is wrong.

I had to refrain from typing all capital letters here. Apple has basically explained why it holds the monopoly of getting users to an app and allowing their existence without apparently understanding the irony of this statement: there is no other choice about it, as Spotify said at the beginning.

Spotify would not exist today, if the App Store did not exist … except perhaps if the platform was open in the first place? To say that they do not contribute seems rather unfair at first: there is no other way to pay Apple for distribution, if it is not to be obliged to monetize via its own payment networks. If it's so unfair, correct it instead.

What does it have to do with music? A lot. We share Spotify's love of music and their vision to share it with the world. What sets us apart is how you reach that goal. Under rhetoric, Spotify's goal is to make more money from the work of others. And it's not just the App Store they're trying to squeeze, it's also artists, musicians and songwriters.

Just this week, Spotify sued music creators after a decision by the US Copyright Royalty Board forced Spotify to increase its royalties. It's not just wrong, it's a real, meaningful and damaging step backwards for the music industry.

It's skinny, largely because it's just finger-pointing. Spotify to avoid raising its royalties can be morally wrong, but it is also falsely proven. This literally compiles things that make Spotify look worse, because it's in the background, and you want to leave with a bitter taste at the end of this letter.

Even if it were true, it would reinforce Spotify's case, namely that it's also a problem. symptom of do not have as much leeway to work with because of the expense that he is literally trying to challenge.

Even more lightly, Apple says "try to make money with the work of others" while ignoring what the App Store does exactly that on an unprecedented scale by limiting the choice is really ironic.

Apple's approach has always been to grow the pie. By creating new markets, we can create more opportunities not only for our company, but also for artists, creators, entrepreneurs and all "crazy" people who have a great idea. It's our DNA, it's the right model for developing the next great application ideas, and ultimately it's better for customers.

We are proud of the work we have done to help Spotify create a thriving business that reaches hundreds of millions of music lovers. We wish them much success – after all, it was all about creating the App Store. .

Apple makes the cake grow when it can make a significant income. An excellent example can be found in his next news service: the company is requesting a reduction of up to 50% of the revenues of each news agency, which certainly gives the impression of "squeezing" the industry for everything what she has.

This is exactly the case with the way Apple treats segments, it's do not really inside, too: it just allows them to sit there, late, without much concentration. Podcasting, for example, has been largely ignored by Apple as it strives internally to understand how to monetize it at the scale of something like the App Store. He languished and Spotify saw the occasion in this ignorance.