The Showdown Between Apple and Spotify

Summary

WSJ Tech News Briefing: The Showdown Between Apple and Spotify

Date: September 19, 2025
Host: Bell Lin
Guests: Annemarie Alcantara (WSJ Tech Reporter), Tim Higgins (Bold Names Co-host, WSJ Columnist)

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Overview

This episode zeroes in on two critical tech stories: YouTube’s rollout of new AI video-creation tools and a deep dive into the escalating feud between Spotify and Apple over control of the app economy. The conversation outlines the technological shifts reshaping digital platforms and explores the regulatory and competitive challenges facing tech titans, focusing especially on Apple’s embattled position as App Store gatekeeper.

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Key Discussion Points and Insights

1. YouTube’s Expansion into AI-Powered Content Creation

[00:19–04:17]

• YouTube Shorts and Google’s VO3 AI Video Generator

  • YouTube is integrating Google’s VO3, an AI video generator capable of creating short videos with sound, into Shorts, available free for creators.
  • Additional features include AI-powered editing, adding objects or motion, and applying stylized visual effects (e.g., “comic bookie” look).
  • Quote:
    "The biggest one is that VO3, which was just released in May, it's like Google's AI video generator with sound, and that's coming to YouTube Shorts for free."
    — Annemarie Alcantara [01:46]

• Quality, Realism, and Prompts

  • Output realism depends on prompting skill and specificity.
  • VO3’s Shorts model is optimized for speed and ease of uploading/viewing, at some sacrifice of quality.
  • Quote:
    "If you are iterating on the prompt or give it a really strong prompt, you'll definitely most likely get better results..."
    — Annemarie Alcantara [02:21]

• Disclosure and Labeling

  • All AI-generated videos on Shorts must be labeled as such; there’s no way for users to screen AI content out of their feeds.

• Podcasting Enhancements

  • Audio-only podcasters will get AI suggestions for turning audio content into video, aiding the shift toward video podcast consumption.
  • Video podcasters will receive AI-generated suggestions on segmenting content into clips or Shorts to boost reach.

• User Reaction

  • Despite criticisms, analysts expect users will continue engaging with the influx of AI-made content.
  • Quote:
    "People will say that they don't like it and they don't engage with it, but they're still on there watching it, commenting, seeing it, whether they like it or not."
    — Annemarie Alcantara [04:05]

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2. Apple vs. Spotify: A Decade-Long Struggle Over the App Store

[05:16–11:30]

Spotify’s Long Game Against Apple

• Background
  • Spotify has challenged Apple’s dominance as App Store gatekeeper for over a decade, largely behind the scenes.
  • Quote:
    "For more than a decade, the company has plotted and worked oftentimes behind the scenes to challenge the power of Apple's role as the gateway to the digital world..."
    — Tim Higgins [05:54]

The Contentious “Apple Tax”

• What Is It?
  • “Apple Tax”—Apple’s 30% fee taken from in-app digital purchases.
  • Spotify faced both high operating costs and this “tax,” which squeezed margins and made it less competitive after Apple Music launched at a lower price.
  • Perceived Unfairness
    • Spotify contends that Apple’s practices are anti-competitive, especially when Apple undercut Spotify with its own music service.
    • Quote:
      "Spotify felt like they were being undercut… put into kind of an anti competitive environment."
      — Tim Higgins [06:24]

Regulatory Battles: The US vs. the EU

• U.S. Regulatory Efforts

  • Initial appeals to American regulators and lawmakers got little response or relief.

• EU Intervention

  • Spotify made a strategic pivot to the EU, where antitrust regulators were already targeting Apple.
  • The European Commission fined Apple roughly $2 billion over its app economy practices and treatment of streaming services.
  • Quote:
    "The European Commission ultimately fined Apple something like $2 billion for the way it was treating streaming music services and its app economy."
    — Tim Higgins [08:03]

Apple’s Response

• Apple’s Position
  • Apple sees Spotify as exploiting the system after pulling in-app upgrade options to avoid fees.
  • Apple argues this is unfair to both itself and other firms that comply with App Store policies.
  • Quote:
    "Apple is incredibly frustrated... they feel like Spotify is essentially a freeloader... and they're not paying for it."
    — Tim Higgins [08:52]

Impact on Consumers

• Why It Matters
  • While it may seem like a “billionaires fighting trillionaires” squabble, the fallout can affect pricing, innovation, and user experience.
  • Analyst perspective: such battles can distract dominant companies (like Microsoft in the past, now potentially Apple) from innovating—e.g., Apple’s perceived AI struggles.
  • Quote:
    "It is also a really an American story... These colonists... had their own Boston Tea Party moment, feeling like Apple was overreaching or being ultra aggressive."
    — Tim Higgins [09:49]
  • Quote:
    "You have to wonder as you watch Apple now as it struggles to develop artificial intelligence, at least in the mind of investors, maybe Apple did get distracted in the last few years."
    — Tim Higgins [11:10]

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Notable Quotes & Memorable Moments

• “The biggest one is that VO3, which was just released in May, it's like Google's AI video generator with sound, and that's coming to YouTube Shorts for free.” — Annemarie Alcantara [01:46]
• “If you are iterating on the prompt... you'll definitely most likely get better results just because you're being more specific.” — Annemarie Alcantara [02:21]
• “Spotify felt like they were being undercut… put into kind of an anti competitive environment.” — Tim Higgins [06:24]
• “Apple is incredibly frustrated... they feel like Spotify is essentially a freeloader...” — Tim Higgins [08:52]
• “It is also a really an American story... These colonists... had their own Boston Tea Party moment, feeling like Apple was overreaching or being ultra aggressive.” — Tim Higgins [09:49]
• “You have to wonder as you watch Apple now as it struggles to develop artificial intelligence, at least in the mind of investors, maybe Apple did get distracted in the last few years.” — Tim Higgins [11:10]

---

Timestamps for Key Segments

• 00:19–04:17: YouTube’s new AI generator & podcasting tools (Guest: Annemarie Alcantara)
• 05:16–11:30: Apple vs. Spotify: Origins, regulatory fights, and consumer impact (Guest: Tim Higgins)

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Tone and Takeaways

The tone is insightful, fast-paced, and slightly skeptical—especially regarding how much these corporate battles and technological leaps directly impact average users. The podcast positions the Apple-Spotify clash as emblematic of broader cycles in American tech: innovative upstarts rebel against the entrenched power of platforms, turning increasingly to regulators when innovation alone can’t shift the balance.

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For listeners: If you want to understand why your streaming app prices—or their features—are changing, or why Apple’s stronghold over your iPhone might wane, this episode provides sharp context from the journalists tracking these industry-defining conflicts.

Transcript

[Joanne Wright]

IBM is on a mission to become the most productive company in the world. Join SVP of Transformation and Operations Joanne Wright at the break to learn how its mission can benefit your enterprise and why AI is the catalyst for success.

[Bell Lin]

Welcome to Tech News briefing. It's Friday, September 19th. I'm Bell Lin for the Wall Street Journal. Google is making it easier for creators to access artificial intelligence. Introd introducing a new AI generator tool into YouTube for anyone to use. WSJ reporter Ann Marie Alcantara tells us what that means for app users, including why we could see a lot more AI and AI slop in our YouTube feeds. Then music streaming service Spotify's rebellion against Apple is working following years of efforts by Spotify. Apple's future as a toll taker at the center of the app economy is unclear. But first, YouTube is entering its AI era. The video streaming company is now letting creators use Google's AI video generator inside the platform, giving users the ability to make short videos with just a text prompt like this one that was prompted by the Wall Street Journal.

[Annemarie Alcantara]

Come with me to my 9 to.

[Bell Lin]

5 job before I head to a concert later. Those are the types of short videos that could soon be flooding YouTube feeds. WSJ reporter Annemarie Alcantara joins us now to discuss. Anne Marie, give us a rundown of the top AI features that YouTube is adding to its platform.

[Annemarie Alcantara]

So the biggest One is that VO3, which was just released in May, it's like Google's AI video generator with sound and that's coming to YouTube shorts for free. And then there's other few more features that are coming to YouTube shorts, like editing with AI or adding an object or motion to a video or even giving it a little stylized look, depending on what you're looking for. You know, a comic bookie and that sort of stuff to your shorts.

[Bell Lin]

And how realistic are the shorts or the videos that are created with VO3 on YouTube? In other words, will we be able to tell that they're AI generated?

[Annemarie Alcantara]

Like with any AI product that we're using these days, it kind of depends on your prompting. You know, if you are iterating on the prompt or give it a really strong prompt, you'll definitely most likely get better results just because you're being more specific or thinking about the style that you want the video to be in. That being said, the model that YouTube Shorts is using for VO3 is a different one that you can usually find on Google's regular products. And the whole point of this custom model is to make sure people can Create these videos faster, upload them faster. When you're scrolling on shorts, you can watch them more easily and there's no lag time, so there is some decrease in quality there. But the actual video itself and what's in it will depend on your prompting.

[Bell Lin]

And will YouTube label that these AI generated videos are in fact created with AI?

[Annemarie Alcantara]

Yes, the videos have to be labeled that they're AI generated in their text, but there's no filter for you to not see these AI videos in your feed.

[Bell Lin]

And what about podcasting? YouTube is the most popular platform for podcast listeners. What's changing for podcasters who are on YouTube as well?

[Annemarie Alcantara]

So for podcasters who are mostly focused on audio only, you know, no video, et cetera, they will get suggestions from AI on how to turn that audio into a video, which is very helpful since people are really rapidly consuming video podcasts more and more. And then for those who are using video for their podcast, they'll also get suggestions from AI on which parts of the podcast to turn into clips or shorts and basically increase eyeballs on your content.

[Bell Lin]

And how do you expect users will respond to the introduction of all this AI content on their feeds?

[Annemarie Alcantara]

I spoke to one analyst who mentioned people will say that they don't like it and they don't engage with it, but they're still on there watching it, commenting, seeing it, whether they like it or not.

[Bell Lin]

That was WSJ reporter Annmarie Alcantara. Coming up, Apple is facing pressure over its iPhone sales and investors are worried that it is falling behind in AI innovation. But there's another threat to its App store that's been brewing for years. That's after the break.

[Joanne Wright]

In 2023, IBM set a goal to become the most productive company in the world. It started by asking questions, lots of questions, says Joanne Wright, SVP of Transformation and Operations at IBM.

How can we radically simplify end to end workflow and processes? What can we eliminate? How do we automate everything that we can? And then how do we embed AI into everything we do? So far, over a two year period, we've delivered over $3.5 billion of productivity savings for the company.

[Bell Lin]

Despite the recent announcement of shiny new iPhones, a part of Apple's core business, its lucrative App Store is imperiled because of efforts by Spotify over many years. Bold Names Co host and WSJ columnist Tim Higgins joins us now to discuss the bad blood between Spotify, Apple. The showdown between the two companies is covered in his book. Iwar Fortnite, elon Musk, Spotify WeChat and laying siege to Apple's Empire, which was published earlier this week. Tim, tell us how Spotify has been slowly chipping away at Apple's dominance and its brand.

[Tim Higgins]

Well, very carefully and over a long period of time. For more than a decade, the company has plotted and worked oftentimes behind the scenes to challenge the power of Apple's role as the gateway to the digital world for so many users with their iPhone and the App Store.

[Bell Lin]

And tell us about this so called Apple Tax. It seems like it's at the heart of a lot of the dispute here. Why do opponents of it really just despise it so much?

[Tim Higgins]

Yeah, the opponents of it call an Apple Tax. Apple would not call it a tax. They think it is a fair fee, a slice of the revenue generated in their App Store for digital goods that are consumed in their digital world. They make the argument that they're providing a huge customer base with security and protection. But for a company like Spotify, especially early on, when you think about what this company as a startup was trying to do, it had some huge costs that were hanging over it. And one of that was the money they pay to get those songs. That was a big expense. Another expense early was that 30% fee that they had to pay to Apple. But worse probably in their mind, was when Apple made the pivot to streaming music with its own service, Apple Music. You remember this. In 2015, Apple priced their service, their monthly service, below what Spotify was offering through the Apple App Store. The Apple App Store cost of Spotify was 30% more because of that Apple fee. And so Spotify felt like they were being undercut. They felt like they were put into kind of an anti competitive environment. And they really were not happy about that and were taking their case to Washington, hoping to get some relief from, if not regulators, lawmakers, and just were not really receiving a lot of warm welcomes there.

[Bell Lin]

And as you write in your story and in your book, Going to US regulators didn't quite make a dent in Apple's dominance. But going to the EU made a big difference. What happened?

[Tim Higgins]

The US Side would come back into the story years later, but for Spotify, they made the strategic play of going to Europe. Remember, Spotify is a company that comes out of Europe and the EU has a powerful antitrust regulator and a history being aggressive, especially against big US companies, in particular US tech companies. And it comes at a time when Apple was already in the crosshairs of the EU's antitrust office. The EU European Commission ultimately fined Apple something like $2 billion for the way it was treating streaming music services and its app economy.

[Bell Lin]

What did Apple have to say about your reporting? What's its stance on all this?

[Tim Higgins]

Apple is incredibly frustrated with some of these players feeling, and they've said this quite a bit, that they feel like Spotify is essentially a freeloader, that they haven't been paying for a long time because they pulled out of allowing users to upgrade to premium subscriptions. Within the Apple app economy, you used to have to go to your computer to do it, and that was to avoid that Apple fee. And so essentially Apple is pointing out that Spotify is a huge business. It's got access to all these people, has really built an ecosystem on top of their business, and they're not paying for it. And they think that's unfair for themselves. They also think and argue it's unfair for the other companies that are playing by the rules.

[Bell Lin]

It might be tempting for us consumers, us users to dismiss this as bickering between our big tech companies. But is there and will there be an impact on us, on users, as a result of how this all plays out?

[Tim Higgins]

You get to the point that sometimes it's hard for the user to dial into this issue because it's so much like billionaires fighting trillionaires over pennies of commission, right? But it is also a really an American story if you think about it. Apple created a new world in a lot of ways with the app economy and these colonists, if you will, created their own businesses and grew up in it and benefited from it. But they kind of had their own Boston Tea Party moment, feeling like Apple was overreaching or being ultra aggressive or too aggressive, and they kind of rebelled. It definitely gets at a classic tech cycle that we see in the US in particular. A technology company rises with success, becomes super powerful, and then its rivals turn to regulatory efforts to try to even the playing field, if you will, and it becomes a distraction. We saw that with Microsoft, it's peak of its previous power concerns that it was a monopoly, the Department of Justice going after it, regulators in Europe going after it, and Microsoft co founder Bill Gates and others at that company who were running things at that time, were involved in things at the time, have said those fights a generation ago were a distraction. They missed out on the next big thing like mobile computing, the rise of the iPhone, because they were distracted. And you have to wonder as you watch Apple now as it struggles to develop artificial intelligence, at least in the mind of investors, maybe Apple did get distracted in the last few years.

[Bell Lin]

That was Bold Names co host and WSJ columnist Tim Higgins and that's it for Tech News Briefing. Today's show was produced by Julie Chang. Logging off for the weekend. I'm your host Bell Lin. Additional support this week from Zoe Culkin, Jessica Fenton and Michael Lavelle wrote our theme music. Our supervising producer is Melanie Roy. Our development producer is Aisha El Musleam. Chris Sinsley is the deputy editor and Falana Patterson is the Wall Street Journal's head of News Audio. We'll be back later this morning with TNB Tech Minute. Thanks for listening.

[Joanne Wright]

It's not just IBM that benefits from its mission to be the most productive company in the world. So do its clients. Joanne Wright, SVP Transformation and Operations at IBM, explains We've created a playbook that's.

Client Zero for how to do really fast effective AI. The key has been to drive for progress over perfection. We built a solid foundation with data and taken the opportunity to really learn from the people who have a role to play in running IBM each and every day. Our own experience has taken us from far beyond just doing pilots and theory to real ROI and real productivity. A lot of our clients are very hungry to know what they can learn from us as Client Zero and then obviously how can they avoid perhaps some of the mistakes we've made or some of the failures we've had. The fact that we've been able to derive and deliver our own use cases across everything that we do really transcends our clients experience.

Visit IBM.com to learn how AI can drive enterprise wide productivity.

[Annemarie Alcantara]

Custom content from WSJ is a unit of the Wall Street Journal Advertising Department. The Wall Street Journal News Organization was not involved in the creation of this content.