Last week the EU narrowed in on the charges it wants to focus on regarding the restrictions Apple imposes on its app developers who upload apps to its app store. Spotify claims these “unfair practices” have harmed consumers and disadvantaged application developers. While TMV does agree, Apple’s terms effectively limit competition. We would go further and state they not only limit competition and damage consumers in the music sector, but we could also go as far as saying they hurt all mobile application developers globally.
Apple’s restrictions prevent developers from informing iPhone and iPad users of alternative music subscription options at lower prices outside the app are illegal and anti-competitive. Going further, Apple’s 30% commission and insisting developers have to use its payment platform and terms are 100% anti-competitive and anti-consumer.
A 30% commission charge rate is extortionate. Name me one other payment provider who charges 30% transactions charges apart from Google, who, let’s be frank, just followed Apple’s move in the early days when no regulator worked back in 2008/9 to prevent such extortion tactics from monopoly players. Since then, those rates just became the norm, and consumers have subsequently been getting ripped off for 15 years – this is despite their explicit anti-competitive nature and has suffered severe financial harm since doing so.
Let’s do some calculations on a per-consumer basis per year if Spotify charges $9.99 USD per user account on average per month. Apple’s 30% monthly subscription commission equates to USD $3 per month. So, Apple makes $36 per user yearly, while Spotify only makes $84 per user per month. But let’s remember; it is Spotify that has the ongoing costs of App maintenance and, most importantly, paying royalties to labels and performing rights societies so an artist can get paid.
So, an average subscriber to Spotify has been overcharged by $540 over the last 15 years due to Apple’s disgusting anti-competitive and anti-consumer behavior. Considering Spotify’s 100,000,000’s subscribers globally, that extrapolates to over $54 billion that consumers have lost and from being harmed by Apple’s terms for Spotify subscribers only. Now apply that across every SaaS app in the Apple App Store, and it could bring Apple to the brink of bankruptcy.
TMV’s question then follows why is the EU not focusing on the outrageous 30% commission/transaction charge rate Apple charges all app developers? The largest payments business outside Apple and Google is arguably Stripe which charges a maximum of 2.5% per transaction and $0.30. So how can Apple and/or Google justify their extortionate 30% for transactions?
Yes, Apple and Google host the apps and facilitate downloading them from their App stores, but what other value do they deliver other than that? Hosting costs have come down year-on-year since then. As such, TMV’s view means another 1% per transaction charge on top of Stripe’s 2.5%, so a total of 3.5% maximum. So, why are they charging 30% per transaction? Indeed the EU has the cajones to focus on this aspect. If they do not, Apple will be let off the hook for the most significant rip-off scam in the digital world.
On another note, while TMV agrees current per-stream rates are appalling, it could be argued Spotify would have more room to move in terms of paying higher per-stream rates if Apple’s extortionate 30% commission for payment services was at a rate similar to that of global payments juggernaut Stripe. So how about it, folks? Let’s ensure consumers are refunded the amount Apple has ripped them off over 15 years. Moving forward, ensure Apple cannot continue to rip off consumers and developers. This way, streaming services will have more money to pay royalties per stream. Just a thought!