Between the music streaming service Spotify and the Apple Group, a bitter dispute intensified. A possible decision by the European Commission could be the definition of trends.
For the leader in streaming music, Spotify, Apple's competitive practices are unfair. Therefore, the Swedish company filed a complaint against the US company with the European Commission last week. If competition holders agree to Spotify's assessment, Apple is threatening the reverse wind: because iCompany's growing importance to the hardware sales service business can be mitigated.
Signature rates at sights
Specifically, it is the claim of the music streaming service for the subscription fees charged by Apple in its App Store. IKonzern not only earns by selling apps – 70% of features go to Apple, App Maker gets 30% – but also for in-app purchases. So if Spotify customers close a subscription to an app they loaded in the Apple App Store, the US group also gets a share here. The bone of contention between Apple and Spotify in this context is the fact that Spotify needs to use Apple's payment system to process payments. In the Google PlayStore, Spotify, however, may use alternative payment methods.
But Spotify's claims go even further because the company is particularly at a disadvantage by Apple's business practices: Finally, Apple, even with Apple Music, has a competing service for Spotify in the beginning. While the Swedes were forced to raise their prices from 9.99 to 12.99 euros in view of the high fees, Apple's own service with a monthly price of 9.99 euros could undermine the competitor's bid price.
Apple in a dual role: how unfavorable is the competition?
Spotify is in particular the dual role of Apple as a platform operator for services and service providers such a monstrosity. According to the Swedes, the US giant plays in terms of competition with unfair means: While Apple over Apple Music shares via push notifications iOSDevices, the use of the resource by other promotions providers is prohibited. In addition, Spotify claims, its application update lines do not enter the App Store – Apps for Apple's own products, such as HomePod or Apple Watch, iKonzern is also not allowed, says the claims in. A company is in a conflict of interest when it acts simultaneously as a platform operator and competitor.
Is the service at risk?
The European Commission takes the Spotify own complaint complaint according to very seriously. And if competition watchers agree on the music streaming service's assessment that Apple's dual role is leading to unfair handling of direct competitors, that could affect Apple's service division. Because Apple is not just with Spotify in direct competition, and the series of planned movies and streaming services should establish itself as a rival of existing services: Netflix and Amazon. Their apps are also listed on the Apple platform. Netflix has responded by banning signatures on mobile apps from Apple's Appstore. Spotify also resorted to a similar regulation, meanwhile, to prevent customers from completing streaming subscriptions through the Apple ecosystem, to free up cash for Apple coffers and escape the corresponding revenue application providers.
Spotify & Co. has more to lose
The venture capital firm Loup Ventures was clear. Because disabling subscription models in Apple applications should affect Apple's business only marginally, experts calculated. Apple's service revenues would be reduced as a result of long-term measures by 0.4%, total revenue would be minus 0.07%. For a corporate giant like Apple, a pretty decent figure.
So it seems clear who has more to lose in the fight for revenue services, Apple or Spotify and Netflix. Spotify needs any revenue, because 2019 will probably write the company again in the red. The expectation is an operating deficit between 200 and 360 million euros, the company recently announced. Swedes are forced to invest heavily in growth and subscriber growth. Apple, however, despite a hardware sector weakening billions in profits and sits on a mountain of money worth $ 250 billion. If it is difficult, Apple may simply stay out of the streaming dispute and, at worst, just forego the subscription revenue of the affected competitors.
Does Apple threaten a cartel penalty?
However, it will be difficult if the European Commission fundamentally questions Apple's dual role as operator of an application platform and provider of competing product applications in the app store. Then iKonzern may be forced to take action, which guarantees fair competition. Excluding competing applications from the app store is almost impossible from a competition point of view.
EU competition watchers have previously investigated, in other cases, a possible distortion of competition when companies operate in a dual role. The Google Alphabet subsidiary was already under the spotlight of the authority, specifically on the disadvantage of competitors in Google's online product research. Google has abused its market power to direct users to Google's in-house price comparison platform, Google Shopping, instead of price comparison sites from competing vendors that can offer lower prices if better targeted. This led Google to a penalty of 2.42 billion euros.
And Amazon, the mall giant, has recently been given a double role by the competition guard. The US group is Germany's largest online retailer and also operates an Internet market where products from other suppliers are sold.
It remains to be seen whether the EU Commission will be as tough on Apple as it is on Google 2017.