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Spotify says Apple is making it harder for the streaming music company to compete by blocking a new version of its iPhone app.
In a letter sent this week to Apple's top lawyer, Spotify says Apple is "causing grave harm to Spotify and its customers" by rejecting an update to Spotify's iOS app.
The letter says Apple turned down a new version of the app while citing "business model rules" and demanded that Spotify use Apple's billing system if "Spotify wants to use the app to acquire new customers and sell subscriptions."
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The letter, sent by Spotify general counsel Horacio Gutierrez to Apple general counsel Bruce Sewell on June 26, suggests that Spotify intends to use the standoff as ammunition in its fight over Apple's rules governing subscription services that use its App store. (Correction: An earlier version of this story incorrectly reported the date Spotify sent the letter.)
"This latest episode raises serious concerns under both U.S. and EU competition law," Gutierrez wrote. "It 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 anticompetitive conduct aimed at Spotify … we cannot stand by as Apple uses the App Store approval process as a weapon to harm competitors."
Spotify has distributed copies of the letter to some Congressional staff in Washington, D.C. Yesterday, Senator Elizabeth Warren criticized Apple, Amazon and Google for what she called anticompetitive practices; Warren said that "Apple has long used its control of iOS to squash competition in music."
Spotify declined to comment; Apple hasn't responded to request for comment.
For the past year, Spotify has argued publicly, and to various regulators in the U.S. and Europe, that Apple's subscription policies effectively punish third-party music services that use Apple's platform, while boosting Apple Music, the home-grown service it launched in June 2015.
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 — and it doesn't want app makers to use the apps to promote alternate subscription options outside the apps. (And, of course, app makers like Spotify can't distribute their apps onto iPhones outside of Apple's store.)
Those policies created lots of drama when Apple introduced them in 2011, but most publishers have ended up agreeing to use Apple's in-app billing option and paying Apple its fee.
A handful that don't, like Amazon, offer more limited versions of their apps in Apple's app store;Amazon CEO Jeff Bezos recently suggested that Apple's subscription rules led Amazon to stop selling the Apple TV box in its store.
In Spotify's case, the company has used Apple's billing system for years, but passed on Apple's fee to customers by charging $13 a month instead of the $10 a month the service sells for outside Apple's store. Last year, after Apple launched its own music service, Spotify became more vocal about encouraging users to pay for the service outside of iTunes.
Last fall, Spotify started a new end-run via a promotional campaign offering new subscribers the chance to get three months of the service for $0.99 — if they signed up via Spotify's own site. This month, Spotify revived the campaign, but Gutierrez says Apple threatened to remove the app from its store unless Spotify stopped telling iPhone users about the promotion.
Spotify stopped advertising the promotion. But it also turned off its App Store billing option, which has led to the current dispute.
Spotify still has a commanding lead in the subscription music race. In March, it said it had 30 million paying subscribers; this month, Apple said it has 15 million paid subscribers for Apple Music.
— By Peter Kafka, Recode.net.
CNBC's parent NBCUniversal is an investor in Recode's parent Vox, and the companies have a content-sharing arrangement.