Apple fires back at Spotify over music streaming claims

[July 02, 2016]  By Julia Love and Mia Shanley
 
 SAN FRANCISCO/STOCKHOLM (Reuters) - Apple Inc fought back on Friday against Spotify's claims that the U.S. tech giant had hampered competition in music streaming by rejecting an update to the Swedish service's iPhone app.

The two companies have gone head to head in the battle for music streaming customers since Apple Music was launched in more than 100 countries last year.

Apple's entry into the field sparked concerns from music streaming companies such as Spotify, which have argued that the 30 percent cut Apple takes of subscriptions in its App Store give its own service an unfair advantage. Spotify General Counsel Horacio Gutierrez reiterated those concerns in a letter to Apple first reported on Thursday as he protested the rejection of the latest version of the Spotify app.

But Apple General Counsel Bruce Sewell countered that the company deserves a cut of transactions in the App Store for its work operating the marketplace, according to a copy of a letter to Gutierrez seen by Reuters. Sewell insisted that Apple was treating Spotify as it would any other app maker, in keeping with antitrust law.

"We understand that you want special treatment and protections from competition, but we simply will not do that because we firmly adhere to the principle of treating all developers fairly and equitably," Sewell wrote.

Gutierrez claimed Apple's rejection of Spotify's app raised "serious concerns" under competition law in the United States and Europe and the move was causing "grave harm to Spotify and its customers," according to technology publication Recode.

A Spotify spokeswoman confirmed the accuracy of the report. A spokesman for Apple declined to comment.

Launched a decade ago, Spotify is the world's biggest paid music streaming service with about 30 million paying users in 59 markets while Apple Music has some 13 million.

The Apple Inc. logo is shown outside the company's 2016 Worldwide Developers Conference in San Francisco, California, U.S. June 13, 2016. REUTERS/Stephen Lam

Companies such as Spotify have sought to sidestep Apple's App Store cut by encouraging consumers to sign up for their services online. Apple forbids developers from promoting alternative payment methods within their apps.

In late May, Spotify submitted a version of its app that removed the in-app purchase feature, which triggers Apple's cut, and included an account sign-up feature that violated Apple's rules, Sewell wrote. Apple rejected the app and asked Spotify to submit again, but the new version had the same problems, Sewell said.

Music streaming is a crowded field. Alphabet's Google Music and YouTube also compete with Spotify and Apple Music to attract users prepared to pay for music, as does Pandora Media Inc and rapper Jay Z's Tidal.

Amazon.com Inc is also preparing a standalone streaming service, sources have told Reuters.

(reporting by Mia Shanley in Stockholm and Julia Love in San Francisco; Editing by Alistair Scrutton and Tom Brown)

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