Documents reveal the behind-the-scenes battle between Spotify and Apple that lead to an antitrust investigation
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Apple (AAPL) and Spotify (SPOT) don’t have the best relationship. The two companies have clashed for years over how Apple handles Spotify’s apps, saying that the iPhone maker arbitrarily punishes the music streaming giant as a means to protect its own Apple Music and iTunes services.
That’s part of the reason Apple is now being investigated for potential antitrust violations by the Department of Justice, state attorneys general, and the House Judiciary Committee.
On Wednesday, Apple CEO Tim Cook, as well as the heads of Amazon (AMZN), Facebook (FB), and Google (GOOG, GOOGL), sat before the Judiciary Committee’s Subcommittee on Antitrust, Commercial, and Administrative Law to discuss those accusations and how it treats competing apps in its app marketplace.
Documents presented during the hearing provide a deeper look at the issues between the firms and why Spotify has become one of the key contributors to the testimony against Apple.
The files come in the form of a written exchange between Apple vice president and general counsel Bruce Sewell and Spotify general counsel Horacio Gutierrez. In the documents, Sewell tells Gutierrez that a then-recent update to the Spotify app doesn’t comply with App Store guidelines because it provides users with a link that takes users outside of the app to Spotify’s own website where users can sign up for Spotify’s premium paid service.
According to Apple’s App Store rules, developers are not allowed to provide users with links from their apps to their own websites for transactions. Apple created the rule to ensure that the tech giant could still capture a cut of subscription sign ups in apps.
App developers can provide so-called “reader” apps in which users can access content they’ve purchased outside of the app, but the app itself can’t give a direct way for users to make such purchases. There are exceptions for apps, however, that offer physical goods, such as ride sharing and food delivery apps.
Sewell explains Apple’s stance to Gutierrez, then threatens Spotify with having its app removed from the App Store if it doesn’t comply with Apple’s request.
“If our rules change I will let you know at once, but for now, and in the future, if Spotify wishes to continue to utilize the App Store, it must follow the rules that apply to every other app developer. Your failure to do so will result in removal from the App Store,” Sewell wrote.
But in his own correspondence, Gutierrez tells Sewell that Spotify isn’t pushing customers from its iOS app to its own website and payment portal, but rather, that the company was doing so through email campaigns outside of its app.