AAPL Apple Inc

By Tripp Mickle 

Apple Inc. defended its practice of taking a 30% cut of sales through its App Store following criticism from Spotify Technology SA, escalating a fight between the tech companies as regulators increasingly scrutinize the industry.

The iPhone maker was responding to an antitrust complaint Spotify filed earlier this week in Europe, in which the streaming-music company accused Apple of abusing the App Store to limit competition against its own Apple Music.

The European company also published an animated video illustrating how it says Apple limits competitors, and said in a blog post that Apple had blocked Spotify from its Siri virtual assistant, HomePod voice-activated speaker and Apple Watch.

In its response, dated March 14, Apple said Spotify wants to benefit from its service without supporting it. It said it had reached out to the music company about Siri and that Spotify's smartwatch app went through the same approval process as those submitted by other developers. It said nothing about Spotify and HomePod.

Apple said it wants apps that compete with its services to thrive. It said it has approved and distributed 200 app updates from Spotify, resulting in 300 million downloads. It said Spotify has benefited from the App Store, which reaches some 900 million iPhones, to grow its streaming-music business.

"Spotify is free to build apps for -- and compete on -- our products and platforms, and we hope they do," Apple said in its statement.

Apple said that while it takes a 30% cut of subscription sales through its App Store, the price is for the first year and drops to 15% in subsequent years.

The back-and-forth between the two tech companies comes as legislators and regulators wrestle with whether and how to rein in global tech giants on issues ranging from privacy to taxes to hate speech.

The European Commission, which said it was assessing Spotify's complaint, previously ordered Apple to pay back billions of dollars in tax breaks to Ireland and has fined Alphabet Inc.'s Google for alleged anticompetitive behavior, among other actions.

In addition to defending its business model, Apple criticized Spotify for what the iPhone maker claimed are efforts to reduce royalties it pays the music industry. The streaming-music company joined other tech companies in appealing a recent ruling by the U.S. Copyright Royalty Board that increases royalties to songwriters.

Apple, which launched its own streaming-music service in 2015, said the appeal would damage artists.

Spotify earlier this week said it had appealed because the copyright decision would make it difficult to bundle music along with other media for subscribers.

In addition to the European company's challenge to the App Store business, the U.S. Supreme Court is expected to rule soon on the propriety of a lawsuit brought by consumers who allege Apple illegally monopolized the sale of iPhone apps.

Write to Tripp Mickle at Tripp.Mickle@wsj.com

(END) Dow Jones Newswires

March 15, 2019 12:24 ET (16:24 GMT)

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