News April 26, 2021

Spotify attacks Apple App Store, Google Play, in US Senate hearing

Spotify attacks Apple App Store, Google Play, in US Senate hearing

Spotify was among tech companies which testified at a US Senate inquiry into potentially anticompetitive conduct by Apple’s App Store and Google’s apps marketplace Google Play.

They used the hearing in Washington DC last week as a platform to vent their long-time frustration with the companies.

They called for the antitrust committee to properly investigate, and stop, alleged practises such as using their positions to squeeze maximum profit and squashing competition.

Google Play had at last count 2.7 million apps to choose from, with the App Store at 1.82 million.

But in terms of turnover, App Store is out front with US$70 billion and Google Play at $40 billion.

“Apple abuses its dominant position as a gatekeeper of the App Store to insulate itself from competition and disadvantage rival services like Spotify,” Horacio Gutierrez, Spotify’s chief legal officer, told lawmakers.

Those also testifying included Match Group Inc., which is behind dating app Tinder, and Tile Inc., which makes a tracking device for consumers.

App developers have long complained Apple and Google force them to surrender too high a portion of the revenue they make from app sales.

They also have to face strict and inconsistent restrictions, which Gutierrez described as “nothing more than an abusive power grab and a confiscation of the value created by others”.

Gutierrez pointed out how Apple’s so-called “gag order” prevented Spotify from telling app developers they could sign up for Spotify at lower prices elsewhere.

Match’s chief legal officer Jared Sine related to the Senate hearing how a few years back Apple stopped it from introducing an ID verification feature in its app in Taiwan.

When she took this up with an Apple executive, he “disagreed with our assessment of how to run our business and keep our users safe”.

“He added that we just should be glad that Apple is not taking all of Match’s revenue, telling me ‘You owe us every dime you’ve made,’” she added.

Sine described the charges by App Store and Google Play as “iron-fisted monopoly control”.

Tile’s general counsel Kirsten Daru said: “We welcome competition but it has to be fair competition and Apple’s idea of competing is patently unfair.”

The hearing before the Senate Judiciary Committee’s antitrust panel, is thought to be the first step in making it easier for Congress to clamp down on digital companies which bolster up market share by crowding out or buying rivals.

The committee’s chair Senator Amy Klobuchar was concerned that Apple and Google alone decide which apps could get to consumers.

“Capitalism is about competition,” she said. “It’s about new products coming on. It’s about new competitors emerging.

“This situation, to me, doesn’t seem like that’s happening when you have two companies really each dominating in different areas.”

Representatives from Apple and Google argued that their commissions declined over the years.

In March 2021, Google said that from July 1, it would slash its current 30% commission to 15% for the first $1 million made in app sales in 12 months.

Apple took a similar route last November. But it only offers a 15% rate if a developer’s net sales fall below $1 million.

Once they go over, it automatically swings back to 30%.

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