Spotify has decided that running to the EU and crying in public on their blog (which I refuse to link here. If you want to see it, use Google) is the best course of action to protect themselves from the big, bad Apple. In case you can’t tell, I do not care for their arguments or any that currently relate to Apple and anti-trust laws as they stand today. As you can also probably tell, I won’t be voting for Elizabeth Warren in 2020, either. I’ll have more on her insanity in a future post.
I will begin this by being up front- I am a Libertarian. As such, I have a real problem with the needless restricting of free markets. I won’t push my own views further on that score except to say that, if you think the United States currently has a free market economy, guess again. You would have to roll back the clock to the end of the 18 century to see that at work on this soil. I would like to protect the vestiges of it that remain.
Even though I want to see consumers able to make their own decisions and dictate how successful companies can be and how their products are shaped, I also absolutely understand the need for anti-trust laws and limited regulation to prevent abuse of power. Many Libertarians would disagree with me on this point, but it is easy to find examples of what corporations will do if left completely to their own devices. My point is that anti-trust laws and regulations in the US today are not up to date with the digital age, which definitely needs to be addressed. That said, what we need is a scalpel in the hands of a skilled surgeon to do this right. Using a sledgehammer, or in Elizabeth Warren’s case, a nuclear warhead, is absolutely ridiculous and needs to be called out, in my opinion.
So now on to Spotify. First off, I have no problems with Spotify’s music streaming service. I used to use it and liked it. I switched to Apple Music when it came out because it had a Family Plan and offered Parental Controls. Spotify and Google has little to none at the time and I had young children, so the decision to switch was easy. That said, Spotify is successful and still has a large edge in the streaming game because they offer a good service. I don’t dispute that or say that Apple Music is better. I honestly wouldn’t know at this point because I haven’t used Spotify for several years.
Home field advantage
Again, feel free to go look at what their CEO Daniel Ek wrote, but it boils down to the fact that they don’t want to pay 30% for app subscriptions made through the App Store. The other claims he makes about HomePod and Siri are just filler. It comes down to the fact that they don’t want Apple taking that much of a cut on their subscriptions when they compete with Apple on its own platform.
Here are my problems with what Spotify is doing. First of all, the way Apple conducts itself on its platform does not rise to the level of anti-trust in any way, shape or form according to current US law (which is EXACTLY why Spotify filed this grievance in the EU). Apple does not have a monopolistic position in any market that they do business in. Not one. They do not prevent their competitors from access to the App Store. They haven’t kicked those who have bypassed fees for subscriptions by removing them from their iOS apps, such as Amazon and Netflix, out of the App Store. Apple’s App Store is also not the largest such market available, nor is Apple’s iOS anywhere close to being the largest smartphone platform in the world. None of what Apple is doing today comes even remotely close to the trust-buster days of Standard Oil and Ma Bell. This argument just doesn’t hold a drop of water.
A little history
Let’s boil this down to the main argument, then. Spotify doesn’t like having to compete with Apple on its own field, where they are naturally at a disadvantage. Ok, I can understand that from their point of view. However, let’s introduce some historical perspective into this debate. Spotify was available on iOS in Europe, and then later in the US once it made its deals with the record companies for streaming rights here. They grew quickly and became the dominant player in streaming music. Naturally, all of the companies involved in digital music sales had to react as their market shares inevitably dwindled.
Google, Amazon and Apple all eventually rolled out their own streaming music offerings to stay up to date in the changing digital music landscape. It’s a good thing too, as a recent report put Apple’s sales of music via iTunes under sales of vinyl. That market went from successful to non-existent in just a few years, and Spotify was the primary driver of that change. Again, do not overlook the fact that they used Apple’s own App Store platform to drive said change. That cannot be ignored.
So now Apple is successful in the music streaming business in their own right. They haven’t come close to overtaking Spotify in worldwide subscriptions, though. In fact, as successful as Apple Music has been, it really hasn’t even closed the subscription gap with Spotify except in the US. So far, Apple isn’t kneecapping Spotify, even with the natural advantage that comes with being the default option on their own platform. This also can’t be ignored.
Now, I do not deny that Apple has an advantage over Spotify on iOS and macOS devices. However, that alone does not rise to anti-trust activity. If Apple bent its App Store rules to keep Spotify off of its devices, then this situation would be problematic. That isn’t the case, though. Now, Spotify does accuse Apple of holding up app updates to “punish them’ for complaining and competing with them. If this is the case, it is really the only thing Apple is doing in regards to Spotify that I would take real issue with. If so, Tim Cook needs to put his foot on this and quickly.
All about the money
Forget the pleas for fair play. Now let’s get to the real heart of the matter- the money. The one solid argument that Ek has, in my opinion, is that Spotify is left to either make less money by losing a 30% cut to Apple on every subscription made via the App Store, or up their price to recoup that money, but then be more expensive than Apple Music on its home field. I acknowledge that this is problematic for Spotify and that they have to look out for their own corporate interests the same that Apple does. I still don’t see antitrust here, especially since Android presents a much larger market opportunity than Spotify does.
Now, if Daniel Ek had made this a public plea to its subscribers to put pressure on Apple and let it be know that they want Spotify to get a better rate than 30% and access to Siri and HomePod, I would be ALL FOR IT. They are notoriously slow, but time has proven that they do respond to market forces. They moved to streaming music in response to Spotify. They actually did restructure some of their App Store policies and percentages for subscription-based apps not too long ago. When Apple’s money, market share or reputation are threatened, they do change in response.
That isn’t the road Spotify is taking, and I think there is a reason why. It’s the money. They don’t want to pay less than 30%. They want to pay nothing. They want to have their cake and eat it, too. They quite literally want a free ride in someone else’s vehicle. I have absolutely no doubt whatsoever that Ek, his board and his shareholders decided that they could get more by cashing in on the current backlash against big tech companies by crying to the EU.
This is the part of what Spotify is doing here that really grinds my gears. They used Apple’s App Store to grow their business. They have continued to use it even since Apple released their own streaming service. Now they want to regulators to hit Apple or attempt to break up parts of their business so that they don’t have to pay them anything to use their App Store.
Some of you disagree with me. You will ask yourselves why I am shilling for one of the largest companies in the world. Apple is huge and super rich, so why should I bother standing up for them? In my opinion, it isn’t right or fair to any company to change the rules for them because they are very successful and because public opinion currently allows it. That is what this WHOLE THING boils down to. Some of our politicians and the public are asking big tech companies to play by a different set of rules than other successful businesses that are less visible.
For example, are we now going to tell Walmart, Target and pretty much every every other brick and mortar retailer that they can no longer sell private labels? They sell their own wares in their own stores cheaper than other goods. I have mentioned before that my wife works at our local Kroger store. Kroger has private labeled EVERYTHING. They are usually pretty comparable to name brands, are almost always less expensive and they go on sale more often. My wife also gets an employee discount on them, so we get Kroger brand stuff all the time. Should these retailers be allowed to do something that Apple isn’t? There’s no public or political outcry against them right now.
People need to wake up and realize that the prevailing sentiment right now is to treat big tech companies differently than their peers in other industries. Apple isn’t being hit as hard as some others, such as Amazon and Facebook, but they are still being called out over how they run the App Store. And they are being targeted for a practice that every major retail outlet in the United States also engages in EVERY DAY. Are you ready to roll them back, too? If big tech gets regulated this way, it will set a precedent that can definitely be applied to them down the road.
For me, it doesn’t matter how big Apple is. I want to see the same rules applied across the business landscape. I don’t think they, or any other large tech company should have to play by a different set of rules just because they are in a certain field. I also don’t think they are necessarily more evil than any other publicly held company just because they are large and are based in the tech field. The laws and regulations that govern them and all other businesses DO need to be brought up to date. However, the fact that they haven’t been isn’t an excuse for overreaction. It may feel good to knock a rich company down a peg, but that isn’t right. It’s mob mentality, pure and simple.
You may find this surprising, but I want to see Apple do some of the very things Spotify is asking for. I think they need to address their 30% cut in the App Store. People who don’t remember what buying apps was like before it existed would do well to research and see how few there were and how very expensive they used to be. Apple changed things so radically so quickly (like Spotify did in streaming), and it can be hard to remember how mobile apps used to work. When the App Store appeared, developer’s weren’t concerned with a 30% cut because Apple was handling all of the mess that they used to have to deal with themselves. That 70%/30% split wasn’t a problem in 2009. It was great!
Times change, and Apple needs to change with them. Fees across other online stores have come down and they need to respond more than they have in the App Store to keep the peace. They also need to hurry up and give other apps more access across iOS. Siri Shortcuts is a great start, but there is still plenty more for them to do. While I want Apple to do these things, I want them to do it because we ask them to. Because we demand that they do. Because people are free to leave their services and their platforms altogether if they don’t like the way they do things.
Apple is slow, they are huge and boy can they be stingy. However, none of that equates to anti-trust or means they should now have to offer the App Store as a free service for their competitors. Apple absolutely should be able to run their own App Store, sell their own services on it along with others, and make money in the process. Elizabeth Warren is dead wrong, and Spotify isn’t just looking for “fair play” here. I’m calling it like I see it. One is looking for clicks for a campaign and the other for a free leg up. Neither is right or good.
Beware the bureaucrat
What I really don’t want to see is Apple or any other company that isn’t engaging in true anti-trust activity forced to make arbitrary changes by a tech-illiterate Washington or EU bureaucrat. Unfortunately, that is the present course we are on. If you want to see a big tech company change, let them know and encourage others yo join you. If, like me, you don’t agree with this current political climate, then speak up about it. It’s time for the mob out for big tech blood to settle down and for the changes we want to occur because we, the customers of the comapnies drove them- not the government.