Apple Slams Spotify, Claims App Store Tax Only Collected From 0.5% Of Users
Apple is firing back back at Spotify's antitrust claims in the European Union, saying the streaming music service only pays a 15 percent "app tax" in the App Store on around 680,000 premium tier customers. That works out to just 0.5 percent of Spotify's 100 million premium tier subscribers.
Back in March, Spotify filed an official complaint against Apple in the EU, in part because of the company's 30 percent royalty rate for purchases made through the App Store. According to Spotify, if left unchecked, it would be forced to raise its subscription rate for premium subscribers.
"Apple requires that Spotify and other digital services pay a 30 percent tax on purchases made through Apple’s payment system, including upgrading from our Free to our Premium service. If we pay this tax, it would force us to artificially inflate the price of our Premium membership well above the price of Apple Music. And to keep our price competitive for our customers, that isn’t something we can do," Spotify explains.
In total, Spotify has around 217 million subscribers, around half of which utilize the free, ad-supported tier or are in a free trial of the premium service. Apple has countered that Spotify's claims are essentially misleading, noting that the fee for in-app purchases are cut in half to 15 percent for subscriptions after the first year. But that is not all.
According to Apple, Spotify only used its payment system from 2014 to 2016. Every single one of the 680,000 premium subscribers who joined during that time have been paying for more than a year, for which Spotify forks over a 15 percent royalty rate, not 30 percent, Apple stated in its response.
For the past three years, the royalty rate has not even come into play. That's because Spotify has moved away from using Apple's in-app purchase mechanism. In essence, Apple's retort is that Spotify is grossly exaggerating the situation and leaving out pertinent details about the actual numbers, as it pertains to the streaming music service's complaint.
Spotify has not issued a response to Apple's latest retort. However, the original complaint goes beyond the royalty rate. Spotify also has taken umbrage with certain technical limitations that it says do not exist for Apple's own competing streaming music service.
"For example, they limit our communication with our customers—including our outreach beyond the app. In some cases, we aren’t even allowed to send emails to our customers who use Apple. Apple also routinely blocks our experience-enhancing upgrades. Over time, this has included locking Spotify and other competitors out of Apple services such as Siri, HomePod, and Apple Watch," Spotify previously said.
This is not the first time that Apple has clapped back at Spotify. It did so shortly after Spotify filed its complaint, saying at the time that Spotify shares a similar cut of revenue with mobile carriers. Apple also accused Spotify of "trying to squeeze" artists, musicians, and songwriters after it objected to the US Copyright Royalty Board's requirement to increase royalty payments.