Business News Digital Legal Media

Spotify accused of ripping off self-serve ad platform from Canadian company

By | Published on Friday 1 May 2020


Spotify has been accused of ripping off a Canadian company when it developed its Ad Studio platform that first launched in 2017. “This is a case about a big business stealing from a small business”, Toronto-based VoxTonePro says in a new lawsuit that claims Spotify has breached American laws related to trade secret misappropriation and unfair competition.

VoxTonePro says in its legal filing that it was an innovator in the audio advertising production business by being the first to build a platform that simplified and automated the process of making radio-style ads. That platform made it much easier and much cheaper to produce audio ads, thus making advertising on audio platforms like Spotify accessible to a much wider range of advertisers.

The company says: “Using conventional recording studios, or even other online voice actor services, a fifteen word ad could cost hundreds or thousands of dollars. VoxTonePro, however, offers a 200 character (approximately 50 word) audio ad for $13.99. Additionally, a two-studio company could not scale up for purposes of servicing a global platform like Spotify – the studios would quickly hit capacity. The VoxTonePro platform, however, can accommodate near limitless growth”.

First developed by founder Nadeem Mughal in the early 2000s, VoxTonePro launched its platform in 2006. Nearly ten years later, in early 2015, Mughal reached out to Spotify to suggest a partnership, proposing that – by utilising his technology – the streaming firm could offer a simpler ‘self-serve’ advertising booking system, removing the hassle of making audio ads and therefore selling more advertising overall.

Despite some conversations, Spotify didn’t initially pursue a partnership with VoxTonePro. However, the following year Spotify reached out to Mughal to say that it was now looking into launching a self-serve ads system and that it was interested in discussing possibly working with VoxTonePro on making that happen.

This, the lawsuit claims, is when “Spotify began plotting to steal VoxTonePro’s trade secrets”. And it had plenty of trade secrets to steal. “Over its many years of effort and expense, VoxTonePro has developed, accumulated, maintained, and refined confidential and proprietary know-how, including business practices, innovative order-processing technologies, and methods for implementing such practices”.

Mughal and his company basically allege that Spotify pretended to be interested in a partnership so that he would reveal confidential information about how his platform works and give Spotify people access to the backend of his ad-serve system. No partnership materialised and instead Spotify launched its Ad Studio product, which offers its own tools to make it much easier for advertisers to make their ads.

“This is a case about a big business stealing from a small business”, the lawsuit says. “Before it had meetings with VoxTonePro, Spotify had no system for self-service voiceover ad creation. But after several meetings with VoxTonePro – during which it learned details of VoxTonePro’s platform and led VoxTonePro to believe that a partnership was coming – Spotify scrambled to launch a platform just like VoxTonePro’s”.

“Having gotten what it wanted from VoxTonePro, Spotify brushed VoxTonePro aside”, the legal filing goes on. “These facts give rise to claims for trade secret misappropriation arising under the [US] Defend Trade Secrets Act, and trade secret misappropriation and related claims under New York state trade secret, misappropriation, and unfair competition laws”.

Spotify is yet to comment on these allegations.