Spotify threatens to report Apple to competition regulators over App Store rejection

Apple has rejected Spotify's latest app for inclusion in the Ios App Store, citing its rules against app vendors processing their own payments; Apple requires software vendors to pay to use Apple's own payment processor — which collects hefty commissions — in their apps.

Spotify general counsel Horacio Gutierrez has written to Apple general counsel Bruce Sewell to complain about the action, saying it "raises serious concerns under both U.S. and EU competition law." He added that it continued "a troubling pattern of behavior by Apple to exclude and diminish the competitiveness of Spotify on iOS and as a rival to Apple Music, particularly when seen against the backdrop of Apple's previous anticompetitive conduct aimed at Spotify … we cannot stand by as Apple uses the App Store approval process as a weapon to harm competitors."

The letter was distributed to members of Congress, including Elizabeth Warren, who recently gave a major speech criticizing Apple, Google, Amazon and other tech giants for monopolistic, anti-competitive practices.

Apple's Ios platform uses DRM to prevent its customers from choosing to install software from third parties. Under section 1201 of the DMCA, reconfiguring your Ios device to use a third-party store is a felony punishable by a five year prison sentence and a $500,000 fine for a first offense (international laws, promulgated by the US Trade Representative, mirror these provisions in almost all industrialized nations). These provisions are repeated in the Trans Pacific Partnership and the
Transatlantic Trade and Investment Partnership, which Apple and other tech companies have endorsed through their industry bodies.

In the summer of 2015, the US Copyright Office granted a three-year exemption to this ban for smartphones and tablets, but this exemption doesn't cover "tools," meaning that it is legal to jailbreak your Ios device and install a third-party app store, but it is not legal to share or sell a tool to accomplish this (each Ios user is expected to write their own jailbreaking tool — even sharing information that might help someone make a tool like this is still illegal).

Having state-backed control over which apps can run on a platform and using that control to limit vendors that compete with your core business is textbook anti-competitive behavior. However, state competition regulation has been anemic since the Reagan years and shows little sign of rallying, Elizabeth Warren notwithstanding.

For the past year, Spotify has argued publicly, and to various regulators in the U.S. and Europe, that Apple's subscription policies effectively punish third-party music services that use Apple's platform, while boosting Apple Music, the home-grown service it launched in June 2015.

Apple doesn't require subscription services to use its iTunes billing service, but it doesn't allow them to use an alternate payment system within the app, as Google does. Apple charges a monthly fee of up to 30 percent for those that do use its billing system — and it doesn't want app makers to use the apps to promote alternate subscription options outside the apps. (And, of course, app makers like Spotify can't distribute their apps onto iPhones outside of Apple's store.)

Those policies created lots of drama when Apple introduced them in 2011, but most publishers have ended up agreeing to use Apple's in-app billing option and paying Apple its fee.

A handful that don't, like Amazon, offer more limited versions of their apps in Apple's app store; Amazon CEO Jeff Bezos recently suggested that Apple's subscription rules led Amazon to stop selling the Apple TV box in its store.

Spotify says Apple won't approve a new version of its app because it doesn't want competition for Apple Music
[Peter Kafka/Recode]