August 4, 2016 | Maddalena Rinaldi

Competition is hardly ever a negative for the consumer. If we relied on a single company to provide us with services, then the potential for unfair business practices would skyrocket. However, in the world of streaming music, this has become a significant concern from companies and consumers alike.

 

In June this year Apple refused to update competitor Spotify’s app on their mobile App Store, citing their own business rules. If Apple had their own way, Spotify would be forced to use Apple’s own billing service when customers subscribe to their ‘Premium’ service. Sound fair enough? Well the issue here is that Apple isn’t just concerned about its app store. The entertainment giant has its own streaming service ‘Apple Music’ that would love to have its subscriber base of 15 million bolstered by consumers jumping ship from Spotify’s gargantuan base of 100 million users, with 30 million of those paying monthly.

 

So from this perspective, it appears that Apple isn’t just attempting to make Spotify follow simple rules. According to Recode, “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.” Spotify passes this fee onto their consumers by charging more for the service, but has become increasingly vocal about its desire for new subscribers to sign up on their own site and avoid the extra fee. Since iPhone users can’t access a download of the app from anywhere other than the Apple App Store, a potential decision by Apple to remove it from the store would be a harmful business decision, along with a likely huge PR disaster.

 

Spotify’s general counsel Horatio Gutierrez officially stated that the demand by Apple “continues 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 anti-competitive conduct aimed at Spotify … we cannot stand by as Apple uses the App Store approval process as a weapon to harm competitors”.  Senator Elizabeth Warren also slammed companies like Google and Apple’s practices, particularly citing Apple’s tendency to place “conditions on its rivals that make it difficult for them to offer [a] competitive streaming service”. This type of practice would likely fall under an element of ‘unconscionable conduct’, which is prohibited under Australian law. Unconscionable conduct comprises of an activity that “must be more than simply unfair—it must be against conscience as judged against the norms of society.” Restricting competition for an underlying desire to reduce/poach their consumer base such as Apple has allegedly attempted would likely fall under this definition.

 

In such a new world of easily accessible digital streaming, it would appear that even in legal avenues, the music industry is not out of the convoluted woods yet.

 

Article written by Jonty Simmons