Spotify claims that Apple is treating the music streaming firm unfairly since the Cupertino tech company started to act not only as a platform but also as a music streaming competitor with Apple music. According to Spotify, Apple’s app store rules that take a 30% cut of subscriptions, impose restrictions on Spotify to offer promotions to its users and deny them the option to sign up for premium services from the app (iOS users need to use a browser to upgrade), it harms consumers and are anticompetitive.
The complaint resembles the Google Android case, where Google was fined for leveraging its market power on the Google app store to impose additional restrictions on manufacturers, namely, to pre-install Google Chrome browser and Google Search app on Android-powered devices. However, in this case, the market definition will be key to determine whether Apple is dominant and therefore, the concerned practices may be considered anticompetitive.
In the Apple-Shazam merger, the European Commission looked at two markets that may be relevant for this analysis: (i) software solution platforms and (ii) digital music distribution services. If we look at the latter, the European Commission concluded that the narrowest relevant market (for the merger analysis) was the one for digital music streaming services for smart mobile devices. The regulator didn’t further segmented the market by operating system -iOS and Android- eliminating the possibility that Apple could be considered a dominant player in this market.
In the second market relevant for this analysis, software solution platforms, EU regulators again didn’t find any indication which would suggest that they had to depart from its previous practice to define the market for OSs for PCs and OSs for smart mobile devices. No further segmentation by OS was needed, although the Commission left open the possibility to review the scope of the relevant market.
If the European Commission were to look at any of these markets, Apple’s conduct wouldn’t be anticompetitive because the company wouldn’t have market power and the company won’t infringe EU antitrust rules.
Alternatively, if the European Commission focuses only on iOS users and access to the Apple’s app store -similar to the Google Android case- , Spotify’s complaint may have more chances to proceed. Using the Google Android case as precedent, the European Commission could define the market as smart mobile operating systems non available for license. This would narrow the market to Apple devices (maybe blackberry too) and the Apple ecosystem, where Apple, yes you guess right, is dominant.
This would help Spotify to overcome the first hurdle, market dominance, but it would still have to prove the anticompetitive effect of Apple’s practices. This may also be hard given that Spotify has access to Apple’s app store and it doesn’t have to pay to Apple for its non-premium users. In other words, Spotify is not looking for access to Apple’s app store, but access in better terms. Apple, as a vertically integrated developer may have some efficiency defences that were not available to Google.
In summary, market definition and market power will be key to determine if Apple’s rules and restrictions are anticompetitive or not.
