Music wars: Spotify takes on Apple by directing buyers away from app

Companies running subscription-based apps privately complain that Apple is acting anticompetitively.

The relationship between Apple and Spotify could be headed for a rough patch after a report about emails from Spotify instructing its users not to buy their subscriptions through Apple's app store. It's a dispute that perfectly illustrates Apple's awkward relationship with digital media companies, which rely on its app store as a major source of distribution even as they compete with Apple's own media businesses.

The emails from Spotify, posted on the Verge yesterday, explained to users that they pay US$13 ($19) when they purchase subscriptions through the Apple app store, compared with US$10 on Spotify's website. The price difference is because Apple takes a 30 per cent cut of subscriptions purchased through its app store. The emails explained how to cancel the app store subscriptions and sign up on the Spotify website.

Apple doesn't encourage this kind of thing. The company forbids any buttons or links within apps that could allow people to buy things externally that they would otherwise purchase through the app.

While its guidelines forbidding this practice aren't clear, it's likely that Spotify's iOS app would be rejected if it had included its email as a page within its app.

The same restrictions don't apply for Android.

Companies running subscription-based apps privately complain that Apple is acting anticompetitively. It has had similar problems in the ebook market, where a federal judge recently upheld a ruling that it had conspired with publishers to inflate prices. Apple and Spotify declined to comment for this story.

The prohibition on developers telling consumers how to find products at lower prices is ripe for legal challenge, says Tim Wu, a professor at Columbia Law School and a prominent critic of anticompetitive business practices in the tech industry.

"I think Apple is getting close to the line, if it hasn't crossed it, in its dealings with Spotify," he says.

Apple's charge is ostensibly a service fee that developers pay to use its platform. But it doesn't take a cut of purchases in markets where it doesn't compete. GrubHub, for instance, allows users to purchase food directly through its apps without splitting the pie with Apple. United Airlines doesn't share revenue when it sells tickets through its iPhone app.

Last May, Daniel Ek, Spotify's chief executive officer, said that he was concerned about a company like Apple abusing its market position to cut off competition, but he also said he didn't see it happening yet.

Bloomberg