Spotify, the popular music streaming service from Sweden, has filed an official antitrust complaint against Apple at the European Commission. In a blog post announcing the move, Spotify CEO Daniel Ek writes:
It’s why, after careful consideration, Spotify has filed a complaint against Apple with the European Commission (EC), the regulatory body responsible for keeping competition fair and nondiscriminatory. In recent years, Apple has introduced rules to the App Store that purposely limit choice and stifle innovation at the expense of the user experience—essentially acting as both a player and referee to deliberately disadvantage other app developers. After trying unsuccessfully to resolve the issues directly with Apple, we’re now requesting that the EC take action to ensure fair competition.
Apple operates a platform that, for over a billion people around the world, is the gateway to the internet. Apple is both the owner of the iOS platform and the App Store—and a competitor to services like Spotify. In theory, this is fine. But in Apple’s case, they continue to give themselves an unfair advantage at every turn.
I don’t think I have to explain to anyone here why Spotify’s CEO is right. In the App Store, Spotify can only make use of Apple’s payment system, and for every Spotify subscription purchased through the iOS application, the company is forced to hand over 30% to Apple. To make matters worse, Spotify is not allowed to include a link to, say, a website where users can sign up for Spotify, nor can the company include any language even hinting at where users can sign up.
On top of this, Spotify also states that Apple has blocked new features Spotify wanted to introduce including “locking Spotify and other competitors out of Apple services such as Siri, HomePod, and Apple Watch”. Furthermore, Apple limits the ways in which Spotify and other App Store developers can communicate with their users.
This seems like the perfect moment to go after the big technology giants, and I hope something comes of this complaint. Any handle we can use to limit the power of megacorporations is a handle we should grab with both hands.
Thom Holwerda,
I don’t really know why it took so long for these corporations to be investigated, but at least there’s growing momentum for them to be investigated now. Here’s another investigation into the companies involved with facebook’s user data sharing scandal.
https://www.nytimes.com/2019/03/13/technology/facebook-data-deals-investigation.html
I’d really like to see more rigorous data protections for users. Opting out of some obscure data sharing legalize hidden among dozens of pages of terms & conditions is just not acceptable. I’d even say it’s in bad faith. The general public are not lawyers and they shouldn’t have to be in order to have their privacy respected. If they want to allow companies to share their data, then that’s fine, but it needs to be explicitly opt in! Explicitly opting in should become a legal standard everywhere.
I realise the EU isn’t everywhere, but the GDPR makes this not just bad faith, but illegal. The wording says “the request for consent shall be presented in a manner which is clearly distinguishable from the other matters, in an intelligible and easily accessible form, using clear and plain language.” I don’t think the law could be more explicit.
This is another GDPR requirement (article 6), so it can be done, and I really hope other places follow this lead. The damage that’s done to privacy is corrosive, but often hard to pinpoint, so I think this is an area where the law has to be ahead of public opinion.
I’m probably being pretty naive, but I don’t see a problem with what Apple is doing. While I don’t agree with the restrictions Apple places on its platform, are they really doing anything illegal? I look at it as being similar to renting an apartment; if the owner of the apartment complex tells you that you can’t have a gill because it’s too much of a fire hazard, even though the fire marshal says it’s OK and the main office building at the complex has a grill. You have a choice of abiding by the owner’s rules or finding a different apartment. If Spotify doesn’t like the rules put in place by the platform holder, go to a different platform. Spotify’s problem is that they are making too much money on Apple devices to just leave the platform. Consumers also made a choice when they purchased an Apple device. Most people know that when you buy an Apple device, everyone involved is required to play by Apple’s rules, and app developers definitely know that. In my eyes, what Apple is doing isn’t right, but it’s not my place to tell them what they can and can’t do with THEIR platform, a platform that consumers apparently LIKE how Apple is managing (at least enough for consumers to keep buying their devices). App developers have the choice to petition to Apple requesting a change to the rules, or move to a different platform (Android or Progressive Web Apps). To be on Apple’s store is a privilege that Apple grants, not a right.
This… THIS is what I came here to say but you said it so more eloquently than what I would have said. You are correct.
haus,
It sounds like Supercompman and I mostly agree on the negative aspects of restricting users, his point is more about how the law may support the legality of apple’s actions. He doesn’t claim apple’s actions are morally right. This is different from your position in our discussion earlier that what they’re doing is not abusive in the first place…
https://www.osnews.com/story/129580/heres-how-we-can-break-up-big-tech/
You didn’t respond to my last post, did I manage to change your mind a little bit? Is it possible that we can all agree now that apple’s actions can be legal and still be harmful too?
On a side note, you really dropped the ball on your user name… it could have been supercomphuman.
It just rolls off the tongue.
LOL, you’re probably right. This is a user name I’ve gone under for over 20 years (I wasn’t being particularly creative back then), so I figured why change now?
supercompman,
I don’t think anyone can deny that it’s detrimental to competition, but who knows if doing so is actually illegal in the EU? The courts may soon tell us. A win for spotify could be transformative to the rights of all indy software developers to do direct to customer business in the tech industry (at least in that jurisdiction). If apple thinks it might loose, it would probably be much better to settle and keep the terms of settlement gagged so it’s business of controlling the app market can continue as usual.
I’m going to stop you right there…this comparison breaks down immediately because you don’t rent your phone from apple. If you did, then apple’s position to control what goes on the phone would be as it’s legal owner. However you *bought* the phone and now you are the legal owner. As a non owner apple should not have the right to tell you what you can do with your phone.
From a pure property law perspective, apple looses this case hands down. However, they’re going to make the case when it comes to IOS restrictions, your a licensee rather than an owner and you agree to their terms of use. In other industries such as car manufacturing that doesn’t fly because the laws explicitly favor the owners over post sale restrictions by the manufacturers. However those laws don’t cover computer & phone owners, hopefully some day they will and any license terms that block owners from installing apps from competing channels will be deemed illegal. Until then, owner rights against manufacturer restrictions are kind of in limbo – even when manufacturers are deliberately restricting owner freedoms to hurt competition.
You sate that “you don’t rent your phone from Apple”… and you’re partly right. You purchase the hardware, but you do not own the software. You are provided a limited license to use the software and that’s it, which include the App Store. Don’t get me wrong, I completely see what you’re saying, but at least in the US, Apple would have already shut this line of thinking down. You mention that in other industries this “doesn’t fly”, but it does. Why do you think there is a massive legal battle over the right to repair? Again, I can’t speak for the EU, but most industries in the US are actively fighting to make sure that you cannot modify the software that is embedded in products that a person has purchased. Additionally, even if a person has a right to modify the software on hardware they’ve purchased, that doesn’t mean that Apple must accept apps into THEIR store that they don’t want there. That’s the fundamental problem with the closed-market model: Apple is the perpetual gatekeeper. At least on Android, Google is gracious enough to let users install apps outside of the Play Store, but honestly, I hate that even there we have to rely on the kindness of Google which may evaporate at any moment.
I really hate the direction that modern mobile platforms have gone. And yes, I feel that Apple (and other closed platforms for that matter) is on the wrong side of morality, but morality and legality rarely intersect. As a business, Apple has no moral obligations. It’s up to consumers to speak with their wallets, and what their wallets have been saying is that they’re OK with a benevolent dictator.
The next logical question is, should laws force businesses to act morally? That’s a MUCH more complicated question, and a road I don’t even want to start going down. The laws should exist to protect citizens, but when the citizens are satisfied with the compromises they’ve made, particularly when they have viable options, should the legal system intervene?
supercompman,
You don’t own the software copyright, but you do own that instance of the software and it’s your to do with as you please. If you own a book, copyright applies to *copies* of that book, but beyond that you legally own your copy to do with what you please. The copyright owner can’t take it away from you. You can resell it, burn it, write in it’s margins, or rip out pages and rearrange them with other works. You even have some fair use rights that allow you to make actual copies. The law is on your side until you start making unauthorized copies without the permission of the copyright holder. But copyright law does not grant the copyright holder any rights whatsoever over *your* legal copy.
I recognize that the DMCA is US specific law. Nevertheless reading the specifics can be be enlightening. Congress had no intention for copyright law to create software barriers and in fact they added provisions in the law to clarify that end users are legally entitled to circumvent the mechanisms for the purposes of interoperability.
https://www.copyright.gov/legislation/pl105-304.pdf
Congress made clear that creators do not have blanket rights to enforce technological restrictions against users in all cases. Apple’s restrictions for the purposes of blocking independently created computer programs are not supported by copyright law. Alas, the law doesn’t give any specific remedies for a corporation abusing restrictions to deliberately block independently created computer programs.
Also, apple’s lawyers could argue that users waived their rights by agreeing to click wrapped EULAs. My understanding of these is that they aren’t specifically supported by law, but they aren’t specifically prohibited either. It’s a gray area that courts have sided on both sides of the issue.
https://en.wikipedia.org/wiki/Shrink_wrap_contract
I agree, this is where we are at.
This assumes a free market with lots of competition, but it doesn’t work so well under monopoly/duopoly/oligopoly conditions. Unfortunately other than anti-trust, which IMHO is too reactive and ineffective, corporations don’t really have much incentive to compete on merit when they’re big enough to manipulate the market instead.
Well, I don’t think we can force businesses to act morally, as you put it here. But that doesn’t mean we can’t give them better incentives and outlaw some of the abusive practices that they use to interfere with free market competition.
@post by supercompman 2019-03-14 3:23 pm
If they’re “on the wrong side of morality”, they’re not benevolent…
Laws do force businesses to act morally / they acted much worse in the past (see for example links about phossy jaw that I posted in https://www.osnews.com/story/129537/how-ibm-became-the-poster-child-of-operating-system-failure-during-the-90s/ )
It’s more like; you rent an apartment and want to buy a car, but the owner of the apartment makes it almost impossible for anyone to sell you a car so that you have no choice but to buy a car from them.
For fair competition, someone that is dominant in one area (smartphones) can’t use their dominant position to block competitors in a completely different area (online music). Ownership of the hardware or the OS is completely irrelevant.
Note that this basic rule has existed for hundreds of years and is present in every capitalist country. Without this; capitalism would fail (by now, we’d just have a “de facto communism” where a single mega-company destroyed all competition and owns everything).
I would agree with you actually, but “dominant” is the key word here. While Apple is influential and even has a substantial amount of the market, they are not dominant and there are absolutely viable alternatives. People choose Apple products anyway because they like what Apple does and how they do it.
supercompman,
You could be right within the framework of current antitrust laws. I don’t know if any courts have the legal authority today to impose antitrust against the second biggest player in a market duopoly.
I did a search about this, and I did find proposals to make antitrust apply to companies holding significant market power with less than 50% market share.
https://www.barlaw.co.il/client-updates/the-israel-antitrust-authority-is-proposing-comprehensive-amendments-to-the-restrictive-trade-practices-law/
I think it makes sense to protect the free markets from anti-competitive behavior, even when the company responsible has less than 50% share. There’s just too much at stake to allow huge private companies to erode free markets and not be able to do anything about it because of a 50% market share technicality.
I think the EU’s laws are more advanced than the laws in some other countries (e.g. USA), and doesn’t define “dominant” in terms of market share at all. Instead, a company is dominant if it can do what it likes without worrying much about competitors or consumers (in other words; Apple is deemed “dominant” if they don’t have worry about losing iPhone market share if/when they screw Spotify).
This is a false analogy. For your analogy to apply to Apple, and for antitrust laws to apply, this would have to be the scenario:
Lots of people want to be landlords, but because of your landlord’s ruthless and anticompetitive behavior, he’s the only landlord in your entire country. So, if you want a roof over your head, you must rent an apartment from him.
In your country, a competitive automotive industry is thriving. There are so many great cars out there, and you’d like to buy one. Unfortunately, because your landlord only allows you to park HIS cars at his buildings, you have to buy from him, and of course, you’d prefer not to.
The issue you miss is that for the behavior to be monopolistic, you have to not be able to rent from anyone else. Obviously, if you could rent from other landlords, you could choose whether his draconian requirement to buy a car from him is worth the price/quality of the apartment he rents to you. Your choice. Only if you have no other choices AND your lack of choices is the landlord’s fault (as opposed to competitors’ lack of interest or their belief they wouldn’t be profitable) would an anticompetitive monopoly exist.
Apple has a huge competitor in Google, who, on a global scale, is kicking Apple’s butt in the cell phone department. It also has a recently retired competitor in Microsoft, which decided no one wants what they were selling. It has a competitor in Symbian, for people who don’t want smart phones. So, they aren’t a monopoly or even a duopoly. It’s not Apple’s fault people don’t want to buy the phones from Microsoft or Nokia. They didn’t engage in behavior that prevented those companies from fairly competing. Unlike Microsoft of the 1990s, Apple didn’t tell developers that they would only approve apps for the iOS App Store if the developers refused to make Android apps.
You have to remember that making software that doesn’t work the way you want it to ≠ anticompetitive. It may = foolish, it may cause Apple to lose money, but it’s not anticompetitive. If you don’t like Apple’s business practices, don’t buy Apple products. Don’t sell apps in its App Store. You can develop apps for Android and reach 80% of the world market. You can buy excellent phones for LESS money from competitors. Just because you wish you could make more money from Apple or side load apps because you want to doesn’t mean Apple’s behavior is anticompetitive.
You’re making the mistake of thinking “zero competitors” is necessary for antitrust.
For USA I think it is “monopoly” but you can still have 50% market share and 50 different competitors with 1% each. For EU I think it’s not “monopoly” but “dominant position”, and you only need to be successful enough to bully people (and if you can do that with only 1% market share then it’s still antitrust even though you aren’t a monopoly).
beosforever,
I have no idea who you were responding to, but you need to consider Brendan’s point that they can still abuse their powerful position in one market to harm free market competition in other markets (like Spotify).
Apple has ~45% mobile market share in the US, which they exploit to gain unfair (aka unmerited) advantages over Spotily. Apple uses it’s market share in one market to demand payments from companies in other markets. They do nothing to deserve it, but controlling nearly half the market gives them that leverage. Independent services are forced to pay into the apple racket or loose access to 45% of the market because apple blocks owners from being able to install their software.
I don’t think there’s any question this is exactly the kind of abusive behavior antitrust is designed to stop. The saving grace for apple could end up being the 50% monopoly technicality, but as Brendan pointed out, I’m not sure which legal jurisdictions use the 50% market share line.
There is literally no market in which Apple holds a dominant position. The only way Apple is dominant is that they make the majority of *profit* of mobile phone sales, despite selling a small minority of units, compared to Android phones. Their products are in no way competitively priced, and yet enough people are willing to pay the Apple Tax that they are a hugely profitable company. It’s really hard to see how Apple is in a “dominant” position.
Your statement that Apple “do nothing to deserve [its 30% cut]” is really the heart of the issue. Everyone knows Apple makes a huge profit from its cut of App Store revenue. But how are you going to regulate that? Is a government really going to tell a business how much it can mark up the cost of a digital good? And if it can tell Apple what percentage of profit is acceptable, given Apple doesn’t “deserve” it, why wouldn’t that government also tell the app developer how much it can charge consumers for the app? After all, what really matters from an antitrust perspective is whether consumers are hurt by Apple’s practices. If Apple said they’d take a 0% cut of the cost of the sale or allow developers to accept their own in-app purchases, rather than going through Apple’s store, would the cost of the app or service go down 30%? No way. The developers would keep that 30%. That doesn’t benefit consumers. So why wouldn’t the government then regulate the pricing developers set for their goods, in order to protect consumers?
You talk about “free market competition,” but you don’t really want a free market. That’s what you have right now. A free market doesn’t mean developers get to play by the rules they want to play by. That’s government regulation. A free market means demand for products and services will dictate the costs and rules companies live by. Apple is living in a free market world and winning, basically because rich people want their products, are willing to buy apps and services, and are willing to play by Apple’s rules. They have spoken with their wallets.
Lastly, Spotify’s claim that Apple deliberately prevented them from bringing features to Apple products is just bull. Apple hasn’t created APIs to let ANY developer integrate with the HomePod. It has nothing to do with Spotify. Amazon wanted to create a super open platform and let everyone in. Apple wants to let no one in. How’s that market share working out for Apple? They have like 1% of the smart speaker market, right? Until watchOS 5, no developer could create a streaming music app for the Apple Watch. Spotify wasn’t singled out. Partly, the device wasn’t powerful enough. But really, Apple just hadn’t written the APIs for it. Would that stop Spotfiy from writing an app anyway? Nope. They waited for the APIs like everyone else, and now those apps are there.
Spotify is the worldwide leader in paid music subscriptions. Their numbers have increased dramatically since Apple Music debuted. But I guess somehow they are getting bullied here.
beosforever,
…Yeah, and? I said they have 45% market share in the US. We can talk about more abusive and less abusive, but we still have to contend with the fact that competitors can still be abused by entities with less than 50%+ of the market.
You’re ignoring the distinction between dominant and abusive that’s been brought up several times now. Why would you think abuse is ok just because the entity responsible isn’t dominant??
Seems like a strawman since nobody is telling apple how much they can charge. The issue lies entirely with whether or not apple blocks competitors, not about how much they charge.
Government regulation is needed to maintain balance. A free market comprised of a couple players is not what most people are thinking when they think of healthy free markets. There needs to be lots of competition in order for free markets to thrive. The companies at the top should not be allowed to dictate the stores that device owners are allowed to buy from, that’s anti-competitive and bad for free markets.
Sure, apple would stand to loose both customers and fees to many competitors including Spotify Just think, the amount that apple’s collected through fees on 3rd party apps must be in the hundreds of billions of dollars. With so much at stake, apple will absolutely fight to continue blocking owners from having the ability to buy from competing app stores. Hopefully though sanity will prevail in the courts and some day all users will have the explicit right to buy apps from whatever stores they damn well choose.
I’m really not against the “store” concept as a place from where you can get software and updates but the restrictions of competition is beyond tolerable, it is an abjection.
Also, content, and that is what music, movies, books and similar types of data are, should never, ever, be allowed to be restricted the way Apple wants, or anyone else, for the matter. Content is customer to creator business and not something anyone else should have a hand in, unless, of course, if you want to use their services as intermediate, i.e., if you want to use their cloud to store things or something in this line. Be it the case, fine, they may have a slack, otherwise, please, keep your hand out of my pocket, thank you very much.
@post by beosforever 2019-03-14 7:20 pm
Hm? Symbian is dead …and Symbian devices are also smartphones.
~Nokia sells Android phones now… (and Apple does make in PR a point that their is the best choice …even when it isn’t or wasn’t)
@post by Brendan 2019-03-14 4:55 pm
Hm, that would be as much “de facto absolute monarchy” as “communism”… you just use it as a codename for “something bad”?