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Spotify boss warns of price rises in Apple antitrust dispute

Spotify will raise prices if Apple continues to charge it a 30 per cent fee for using its ubiquitous App Store, the music-streaming service’s chief executive has said.

The warning from Daniel Ek comes just days after Spotify filed an antitrust complaint with the EU accusing Apple of unlawfully abusing its App Store dominance to favour its own Apple Music service.

“You can see us having no other choice than to accept the 30 per cent fee put in place, which essentially would mean we would have to raise our prices for consumers all over the world,” Mr Ek said in an interview.

Apple [would get] an unfair benefit of being able to compete at much lower prices,” he added. “I obviously think our service is superior to theirs, but a 30 per cent price difference is a lot.”

In its EU complaint, Spotify said that Apple had required all iPhone app makers exclusively to use the Apple payment system for the past eight years.

Apple has introduced a 30 per cent fee, applied to Spotify and all other digital content providers in the first year after users download their app, for using the payment system. Other apps, such as Uber and Deliveroo, are not subject to the fee, which drops to 15 per cent after a year.

Mr Ek’s comments are the latest in a long-running battle between the two companies, which the Spotify chief said became “untenable” a year ago.

“At that time we said, ‘what are our true options here?’ We have no other options but to raise our prices, because Apple’s not giving us a choice when we can’t compete fairly.”

Daniel Ek, Spotify chief executive. The music-streaming service has previously rejected calls from investors to raise prices © AFP

He added that leaving the App Store was not a realistic choice for Spotify, or “any competing internet service in this day and age”.

Mr Ek’s rebuke of his chief rival comes less than two weeks before Apple is set to make its biggest push into media distribution in years, with a lavish event expected to kick off a video streaming service to rival Netflix.

Spotify, which listed on the New York Stock Exchange last year, has previously rejected calls from investors to raise prices as it sought to add subscribers quickly. Apart from a test in Norway last year, Spotify has kept to a standard $10 or €10 a month for a premium subscription in the US and Europe, its two largest markets.

Last year, Barry McCarthy, Spotify’s chief financial officer, said the idea of raising prices was “one of the really dumb questions I get”.

On Thursday, Mr Ek declined to estimate the financial damage suffered by Spotify as a result of Apple’s pricing strategy, but said the company “would have been way better off” without Apple’s App Store policies.

While Spotify remains the global leader in music streaming by a wide margin, Apple recently overtook Spotify’s subscriber count in the US, where the iPhone dominates.

Thursday, 3 January, 2019

Earlier on Thursday, the Spotify chief had launched a blistering attack on Apple’s business practices in a speech to antitrust experts in Berlin.

“We worked hard to meet their rules and guidelines, even though, over time, they became more and more extreme — to the point of being ridiculous,” Mr Ek said. “What initially felt like a mutually beneficial partnership increasingly felt very one-sided.”

Apple, he said, “shouldn’t be permitted to impose restrictions that break the law and cause consumers harm in the process, for the sole purpose of disadvantaging competitors”.

Mr Ek added: “It’s like inviting you to a match on our ping pong table and then forcing you to play blindfolded while we change the rules throughout the game. No one here would think that’s fair.”

Additional reporting by Madhumita Murgia in London and Rochelle Toplensky in Brussels


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