American and Swedish flags fly below Spotify Technology SA signage displayed outside New York Stock Exchange (NYSE) during the company’s first day of trading in New York, U.S. (Photographer: Michael Nagle/Bloomberg)

Apple Says App Store Helped Spotify Become Business It Is Today

(Bloomberg) -- Apple Inc. fired back at Spotify Technology SA’s antitrust complaint, saying the music streaming giant wants all the benefits of its app store without contributing to the marketplace.

The iPhone maker said the App Store contributed to Spotify becoming the business it is today, a public company that generates over a billion dollars of revenue per quarter, according to a statement on Friday.

Spotify, which offers both free and paid services, complained to the European Union’s powerful antitrust agency that Apple’s 30 percent cut of revenue was effectively a tax on competitors.

The feud comes as Apple expands by launching new services, moving into new business areas that compete with third-parties on its platform. Its 2014 acquisition of Beats came as the iPhone maker moved into music streaming and on March 25, the Cupertino, California-based company plans to unveil a new video streaming and magazine services.

In its response to Spotify’s complaints, Apple said it doesn’t charge for distributing free apps and only takes the 30 percent from paid subscriptions on its platform. It also said that rate drops to 15 percent for subscriptions of more than a year.

“The majority of customers use their free, ad-supported product, which makes no contribution to the App Store,” Apple said. “Even now, only a tiny fraction of their subscriptions fall under Apple’s revenue-sharing model. Spotify is asking for that number to be zero.”

Apple said its revenue share is in exchange for connecting a third-party’s services to its users, using the App Store billing system, and its developer tools that allow Spotify to build its iPhone and iPad applications.

“Developers, from first-time engineers to larger companies, can rest assured that everyone is playing by the same set of rules. That’s how it should be. We want more app businesses to thrive -- including the ones that compete with some aspect of our business, because they drive us to be better,” Apple said.

The Stockholm-based music streaming service also said Apple "routinely blocks" some of its product upgrades, such as integration with the Siri digital assistant and the Apple Watch. Apple described Spotify’s claims as "surprising," pointing out that the Swedish company has an Apple Watch app that’s ranked as the top app in the wearable App Store’s Music section.

Apple said Spotify has informed it of plans to integrate the music streaming service with Siri and that Apple is "ready to help" as appropriate.

©2019 Bloomberg L.P.