Spotify is pulling out all the stops in its battle with Apple(AAPL) - Get Report over the 30% cut the latter takes on subscriptions purchased via iOS apps. And the fallout from the spat could extend well beyond the two companies.
To recap: On June 30, Spotify accused Apple of "causing grave harm to Spotify and its customers" by rejecting an updated version of Spotify's iOS app that uses the online music giant's own billing system rather than Apple's, and thus presumably sidesteps Apple's typical 30% cut. Spotify went as far as to accuse Apple of trying to "diminish the competitiveness of Spotify on iOS and as a rival to Apple Music."
Apple quickly responded by declaring it sets the same rules for Spotify as it does for everyone else, and that Spotify's updated app violated age-old App Store rules. "Our guidelines apply equally to all app developers, whether they are game developers, e-book sellers, video-streaming services or digital music distributors; and regardless of whether or not they compete against Apple," wrote general counsel Bruce Sewell.
Spotify naturally wasn't going to let that be the end of it. The company has been making its case in Washington, and has received sympathetic comments from a handful of politicians. And today, Politico Europe reports Spotify is also lobbying EU regulators, some of whom have taken hard-line stances towards U.S. tech giants. Reuters reported back in July 2015 the FTC is more broadly probing Apple's treatment of rival streaming music services.
It's worth noting Apple is set to soften its subscription billing policies a bit. Marketing and App Store chief Phil Schiller recently said Apple will lower its in-app subscription cut to 15% after the first year, while subscription support will be added for games and other types of apps. Soon afterwards, Re/code reported Google plans to halve its cut to 15% from the start of a subscription. However, Google already allows developers to handle payments on their own.
Spotify, which lost $194 million in 2015 thanks in part to huge payments to artists and music labels, clearly wants Apple's policies to look more like Google's. With Spotify now claiming over 30 million paid subscribers, and a large portion of this base doubtlessly on iOS, there's quite a lot at stake for the company.
The stakes could also be high for many other companies. Web radio leader Pandora (P) is prepping an on-demand music service, and will be in the same boat as Spotify when the service launches. Like Spotify, Pandora has struggled to turn a profit thanks to steep licensing payments; content acquisition costs equaled 58% of the company's first-quarter revenue.
Amazon (AMZN) - Get Report, meanwhile, has chafed at Apple's iOS billing policies for some time, turning to workarounds to avoid giving Apple a 30% cut on e-book sales. Obtaining the right to use its own billing system could bolster not only its e-book sales, but also Amazon's ability to sell other digital content and Prime subscriptions through its apps.
Others who might avidly welcome the chance to avoid giving Apple a 30% cut include newspapers and magazine publishers, video service providers such as Netflix (NFLX) - Get Report, and owners of gaming subscription services such as Activision (ATVI) - Get Report and Electronic Arts (EA) - Get Report.
For Apple, there could ultimately be billions on the line in this battle. And regulators might have the final say.