March 14, 2019 / 12:24 PM / 6 months ago

Breakingviews - Spotify pitches Apple lament to easy EU audience

Spotify illustration picture taken in Strasbourg, February 18, 2014. REUTERS/Christian Hartmann

LONDON (Reuters Breakingviews) - Spotify is pitching its complaint against Apple to a willing European audience. The Swedish music-streaming service has told antitrust regulators that its rival stifles competition. A case may take years. But the Stockholm-based group has adeptly timed its move to coincide with a broader backlash in Europe against U.S. Big Tech.

Daniel Ek’s $26 billion group on Wednesday said it had filed a case with the European Commission, alleging that Apple uses its dominance of smartphone operating systems to hurt rival music-streaming services. The nub of the issue is the $857 billion group’s restrictions on payment options for companies selling their wares through its app store.

Ek says that Apple charges his company a 30 percent fee for customers using the Apple payments system when they subscribe through the iPhone app. Spotify can avoid the charge by signing customers up in other ways, say through a web browser. But Apple’s system limits his company’s ability to direct customers away from the app, Ek says.  To meet the cost of Apple’s “tax”, Ek would have to hike prices above the level of its main rival, Apple Music.

Ek’s move is a little cheeky, since both Spotify and Apple are listed in the United States. But it makes sense.  Europe’s outgoing competition chief Margrethe Vestager said on Thursday she takes the complaint “very seriously”, and tweeted a picture of Ek endorsing his message. Last year she fined Google owner Alphabet 4.3 billion euros for using its dominant mobile operating system to promote other products like its web browser, which is conceptually similar to Ek’s allegations against Apple. The commission has also drawn up rules supposed to govern the behaviour of “platforms” like Apple’s App Store and to stop them from discriminating against rivals. Those rules were backed by the European Parliament and Council last month.

Vestager’s replacement as competition commissioner could be just as tough. Competition regulators in France and Germany have separately launched investigations into the dominance of Google and Facebook. The bloc’s two most powerful economies recently published a joint industrial strategy to promote home-grown champions over foreign giants from Silicon Valley and China. Ek has chosen the right moment to strike.

Breakingviews

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