Time To Play Fair Vis-a-Vis Spotify vs Apple

By: Archit Jain and Vidhi Saxena


INTRODUCTION

Recently, with the European Commission (hereinafter ‘EC’) advancing its investigation in the matter of Spotify v. Apple, the dominance established by the few Big Technologies (hereinafter ‘Big Techs’) is surfacing again. These companies have garnered significant clout due to the users’ heavy dependence on them to satisfy most of their needs. This is possible only by the synchronisation offered by the technologies between devices and the people in a manner that often leads to ‘brand loyalty’. In simple words, users get easily caught in the web of services laid down by one particular brand or multiple interconnected brands.

However, the unfortunate reality is that the development of this superficial loyalty is progressing faster than the contemplation of regulatory authorities. The dynamic nature of the tech area makes it difficult for the regulators to predict and control it. Although, efforts have been made by the competition regulators in European Union, the United States, United Kingdom and India to reduce the dominance enjoyed by the Big Tech players but so far these efforts are mere abortive attempts. This article delves into the unsolved ambiguities in this area in the backdrop of the Spotify v. Apple case.

BACKGROUND OF THE CASE

Spotify filed an antitrust complaint against Apple with the European Union, asserting that the latter is interfering with consumer’s choice and smothering the former’s innovation by enforcing unilateral rules on the App Store. Spotify, through a website, has expressed its annoyance, especially about the 30 per cent cut Apple levies on subscriptions made via the App Store. This cut superficially harms the music streaming platforms that compete with Apple’s own services, making it an uneven application of these rules. In case of non-compliance with these rules, Apple bars Spotify from communicating with its customers via the Apple platform. Apple also hampers Spotify by creating multiple steps for iPhone users who want to upgrade their Spotify account and enhance their experience.  Furthermore, Spotify’s ubiquity is threatened by Apple because if a user wants to play music through Siri, then he/she will have to specifically mention Spotify or else, the music will play through the Apple Music app by default. All of these unilateral impositions put Spotify and other music streaming services at a disadvantage because of which Spotify was left with no choice but to approach the EU.

ESTABLISHING DOMINANCE

The Bigtech companies often introduce such conditions to their competitors that puts them in a catch-22. For example, in the Spotify case, if Spotify does pay the 30% cut, it has to somehow inflate its prices, more than the price of Apple Music, to survive in the market. In case of non-payment, Spotify then has to face restrictions on communication and technology improvement, making it an inferior experience for its users. Apple also blocks Spotify’s upgrade functions including locking Spotify and other competitors on Siri, HomePod, and Apple Watch, which are frequently used by Apple users. They routinely bar direct communication, via Apple platforms, between Spotify and its customers regarding the upgrade features, promotions or any potential opportunity to enhance their experience of Spotify in the App store. In this way, Apple establishes its dominance and abuses it to make significant encroachment on ancillary products and services. Therefore, there is an undeniable dominance that Big Tech companies enjoy across the tech sector which prospers by regulatory gaps and consumer loyalty.

IMPLICATION ON THE INDIAN MARKETS

Indian Competition Law is considered to be at a nascent stage even after 18 years of its enactment, due to the lack of robust competition policies and constructive deliberations. It relies heavily on the other jurisdictional constitutional bodies, viz. European Commission, UK and US antitrust laws, to develop itself which is why Indian Courts and Tribunals have set a high precedent value to the cases from these jurisdictions.

The current Indian framework of competition law has not evolved enough to scrutinise the cases against Big Tech companies that have a global presence and are dynamic in their functioning. In 2018, the Competition Commission of India (hereinafter ‘CCI’), in the case of Umar Javeed vs. Google LLC, had prima facie found Google to violate Section 4 of the Competition Act (hereinafter ‘Act’) and ordered Director General (hereinafter ‘DG’) to conduct the investigation. However, even though two years have passed since the order, the report is still not submitted. Thereafter, in November 2020, CCI again found Google, in  XYZ v. Alphabet, violating Section 4 of the Act by providing preferential treatment to its products over its competitors’ products and thereby abusing its dominant position. Additionally, there have been similar cases against the e-commerce platforms such as Amazon and Flipkart for giving preference to certain sellers. Similarly, the food chain giants, like Zomato and Swiggy, were under the radar of Competition Law for giving preference to their own cloud kitchen services over other restaurant’s services.

It is crystal clear that the decision of the European Commission, in the present case of Spotify v. Apple, will have a significant role in paving the way for decisions in the above cases, especially in the case of Google. The informant in the case of XYZ v. Alphabet mentioned the Apple’s case before CCI and drew certain parallels between the facts of both of these cases. The conduct of Apple in the EU is similar to that of Google in India. More similarities were drawn from both these cases, which includes exclusive use of their own payment system for the in-app purchase or the purchases from the store. Further, both of them charge a 30% commission on these purchases. CCI, too, while ordering the DG for investigation reiterated the EU case of Apple v. Spotify. Therefore, it will be very interesting to know what will be the decision of EC in Spotify v. Apple as it will definitely have a significant impact on and will act as a precedential value for the Indian competition law while dealing with Big Techs’ dominance abuse cases.

CONCLUSION

There is no denial in the fact that CCI has until now taken a very liberal approach in matters pertaining to Big Techs. However, there has been a recent surge in getting these matters reported and bringing them to the notice of the regulators. The cognisance of CCI in one of such matters by fining Google $21 million for abusing its dominance in the web browsing market shows a silver lining for the independent developers in the technology market. Amazon has also faced antitrust probes wherein CCI provided certain evidence to the Karnataka High Court relating to the preferential treatment given by Amazon to its selected sellers. This led to Big Techs taking precautionary steps to distance themselves from any legal hurdles. Recently, Google took a safe approach to avoid any scrutiny by decreasing the commission from 30% to 15% that it charges from companies who use the play store. Although, no significant move has been made against these Big Techs and the fines are a mere reprimand, the current suit between Apple and Spotify could act as a stimulus for CCI in modifying its approach. With the European and English regulatory sights set on the Big Techs, the suit against Apple can bring about a watershed moment in the Indian Competition Law and can gauge the true effectiveness of these laws.


(Archit and Vidhi are currently law undergraduate at National Law Institute University, Bhopal. They may be contacted via mail at saxenavidhi76@gmail.com and/or architjain.ug@nliu.ac.in)

Cite as: Archit Jain and Vidhi Saxena, ‘Time To Play Fair Vis-a-Vis Spotify vs Apple’ (The RMLNLU Law Review Blog, 30 May 2021) <https://rmlnlulawreview.com/2021/05/30/time-to-play-fair-vis-a-vis-spotify-vs-apple/> date of access

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