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Spotify just turned up the volume on its latest fight with Apple

Spotify for the iPhone

by Rob Pegoraro

Spotify is unhappy with Apple. Again.

But this time, the streaming-music service has turned up the volume on its latest gripe by alleging that the Cupertino, Calif., company rejected an update to its iOS app. The supposed defect in that release? It will no longer let listeners sign up for Spotify’s premium service through iOS’s in-app purchasing system, a mechanism that gives Apple 30 percent of the proceeds for the first year of a subscription.

And the London-based service seems cranky enough to have circulated its letter of complaint to Apple (AAPL) among Capitol Hill types, Recode’s Peter Kafka reported Thursday. Sen. Elizabeth Warren (D.-Mass.) may be among them. In a speech Wednesday about the economic power of some tech companies, she said, “Apple has placed conditions on its rivals that make it difficult for them to offer competitive streaming services.”

How things are supposed to work

The first rule of the App Store is that Apple makes the rules for the App Store. As the introduction to its app-review guidelines states: “We will reject apps for any content or behavior that we believe is over the line. What line, you ask? Well, as a Supreme Court Justice once said, ‘I’ll know it when I see it’. And we think that you will also know it when you cross it.”

(The quote—actually, “I know it when I see it”—came from Justice Potter Stewart in a case that involved alleged pornography, which is one of the categories of apps that Apple bans.)

But those guidelines contain specific rules about apps that provide access to subscription content, and they don’t forbid what Spotify allegedly did. Section 3.1.1 says that if you sell a subscription in an app, “you must use in-app purchase.” It also says you can’t steer customers to an offsite signup: “Apps may not include buttons, external links, or other calls to action that direct customers to purchasing mechanisms other than [in-app purchases].”

But historically, Apple has not objected to apps that don’t offer any way to open a new subscription. That’s how Amazon (AMZN) and Netflix (NFLX) ensure Apple can’t take 30 cents out of every dollar of a new video subscription—their apps only let you log into an existing account.

Apple announced last month that it would take only 15 percent of an in-app subscription after a year. But Spotify and other developers say that Apple’s policy of standing in the middle of an in-app transaction gives them no way to implore a canceling subscriber to stick around.

Spotify does, however, do one thing that Apple once said it wouldn’t allow. It charges $12.99 when customers sign up for a subscription in the iOS app, not the usual $9.99, to compensate for Apple’s cut. When Apple launched in-app subscriptions in 2011, it said developers had to offer the same price in or off the app.

Spotify declined to comment to Yahoo Finance, and Apple publicists did not answer an e-mail sent early Friday morning.

Update: Later that day, Apple shared a letter from its general counsel Bruce Sewell to Spotify general counsel Horacio Gutierrez with BuzzFeed. In it, Sewell said Spotify first submitted a version of its app with a feature to sign up for an account but not open a subscription (arguably a clear violation of the ban on a “call to action”), then responded with a version that invited users only to submit their e-mail address (not so clear). But Sewell then adds that the currently available version of Spotify “is still in violation of our guidelines” but doesn’t explain how it breaks the rules or why that one slipped through.

The real issue is arbitrariness

What complicates matters here is that Apple competes directly with Spotify, in the form of the Apple Music app that comes preinstalled on every iOS device. Spotify can’t be too amused by that, or by the fact that in less than a year Apple Music has picked up 15 million subscribers, half of the 30 million paying subscribers Spotify now claims.

One might look at that and the fact that the Spotify iOS app’s higher rate ensures the company loses no money on the subscription deal, and conclude that Spotify is trying to pick a fight to get the government in its corner. See, for instance, the conclusion by Daring Fireball blogger Jon Gruber: “The real message here is that Apple Music is kicking Spotify’s ass.”

THE APPLE MUSIC APP

I have never been a fan of Apple taking 30 percent of each subscription when the work involved amounts to processing a credit-card payment. (Google takes the same cut for Android apps but also lets developers stick with their own subscription system.) But Apple has at least offered developers the ability to reserve their apps for existing subscribers.

As long as Apple is going to present the App Store as a curated platform that nevertheless remains open to competitors, it can’t abuse its app-review authority to punish competitors. That is the sort of thing that gets the government interested—or, I should say, already has, since the Federal Trade Commission started looking into Apple’s treatment of competing music apps last year.

You can hate Spotify (although if you’re going to complain about what it pays artists, you should also think about how much those artists’ record labels keep), but Spotify isn’t the only subscription app that could run afoul of Apple.

If what we’re hearing about here really does represent a policy change banning apps from inviting users to contact developers in any way that could lead to them signing up for a subscription, Apple needs to update its review guidelines so all of those other developers can make their own decisions. It might also want to rethink this line in its review guidelines: “We’re really trying our best to create the best platform in the world for you to express your talents and make a living, too.”

Email Rob at rob@robpegoraro.com; follow him on Twitter at @robpegoraro.