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Comment by ocdtrekkie | Hacker News Reader

This is a surprisingly open response to what is likely to be a legal matter, particularly given Apple's usual silence on... most everything.

I definitely take issue with it's avoidance of the core issues though: That the services they provide aren't optional on the iPhone. They make it sound like connecting Spotify to users, and allowing them to use their in-app purchase mechanism is a service they offer that they should be paid for. But the reality is, that Spotify has no choice but to use that service, which is the definition of a monopoly.

In that, I feel they didn't meaningful counter Spotify's primary anticompetition claim, and I look forward to seeing what the EU makes of it.

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I think Apple is going to find itself standing alone by the time the dust settles on this issue. Their 30% tax is a disservice to its own customers, not just app publishers.

Apple tries to counter that the problem is Spotify. It's Spotify that is money-hungry, Apple claims:

Underneath the rhetoric, Spotify’s aim is to make more money off others’ work.

The only problem with this argument is that Spotify is just one example. App publishers of all sizes have expressed grave dissatisfaction over this issue. Ultimately, this has led to a poorer experience for Apple's own customers in the form of higher fees for in-app purchases or weird, convoluted checkout flow that requires you to goto your browser to finish a transaction.

Apple won't find itself standing alone. Other major distributors like Google and Valve are both happy to take 30% off the top of app sales too, and if the chance comes to speak up in support, they will. But the difference is both of them can be circumvented by competitors, for instance Epic Games, who is challenging both. (Epic is launching an Android store soon.) Apple can't be, and that's likely to be the crux of any action against them.

I currently subscribe to Spotify, use the iOS Spotify App, and do not make payments through in-app payments nor do I pay the 30% Apple tax. So it is circumventable, and Spotify is just "optimizing" their revenues here. So at least compared to Steam, Apple's platform is actually more open since you aren't required to pay through Apple's platform. Though I'm not sure on the current requirements for in-app purchases, so correct me if I'm wrong.

Discussion or capture of money must go through apple. The hinting of circumventing has to be really vague And creates a weird ux. IMO you have to follow the rules and pay the toll

https://developer.apple.com/app-store/review/guidelines/#in-...

I buy Steam games from Humble Bundle all the time. The developers can actually generate steam keys and sell their game directly. https://partner.steamgames.com/doc/features/keys

As far as I know you can't do that on iOS. There's also nothing stopping the devs from selling IAP themselves on their own website. So no, Steam is much much more open than Apple's App store. Not to mention the fact that Steam is completely optional and the App store is not.

> As far as I know you can't do that on iOS.

Not at scale, no, but you can generate promo codes (up to a limit - maybe 100?) to distribute your paid app for free.

But the difference is both of them can be circumvented by competitors

If the App Store could be circumvented as easily, Spotify probably wouldn't be raising this issue to begin with.

It can be circumvented quite easily and Spotify already does.

You can upgrade to Spotify Premium through a website which they advertise during their free tier ads.

I think Spotify's complaint here is that they can't tell users of the iOS app to upgrade via the website.

Apple doesn't allow that apparently.

steam gets 30% of sales from within the steam storefront, but O from sales of steam keys from other channels

epic is not the saviour here, they're dumping cash to bring shitty console practices to the pc ecosystem, namely storefront exclusives

Yup. Another prominent example is Amazon’s inability to sell books in the Kindle application on iOS, which has the same anticompetitive undertones given that Apple sells ebooks to users of its platform.

Just like other online book shops don't sell their books on the Kindle device store app.

But, at the very least, Amazon doesn’t prevent you from reading ebooks from outside their store on a kindle. They just don’t favilate their discovery. (Unless things changed since I last owned a kindle which was quite a while ago)

Just like Apple does when you import books via iTunes.

Big fan of iTunes, aren't you?

Big fan of pointing out hate agenda of others, that leave details out to make their points.

Apple allows you to have PDFs and ePub files in their Books app as well.

So not sure what you mean.

I just airdrop/send/email even open ePub/pdf in the browser and I can open them in books (the app) to read them!

It’s the same (technically easier as I don’t need to convert ePub to mobi)

That's not a good comparison. An iOS device is not like a book shop. The iBooks application is. Nobody's asking that you can buy Kindle books in iBooks, but you can't even buy Kindle books in the Kindle app because Apple would demand 30% of the book. If you open the Kindle app on Windows you can buy books in there and Microsoft doesn't take a cut of the sale. People would lose their mind over this. Why is Apple different?

You can import books via iTunes.

You're still missing the point.

Apple owns a mall (iOS). In that mall, Apple owns a book store (iTunes). Amazon also has a book store in the mall (Kindle).

Apple does not want to sell Amazon's books (Kindle format ebooks) in it's store (iTunes). Ok.

Apple decrees that no store in the mall shall sell any books but iTunes books, which only they may sell. Not Ok.

Amazon is free to sell books in their app, they just need to pay a portion of their revenue for the privilege of doing so much like in the mall.

And Apple is forcing everyone to sell in their mall and no other. That's pretty much the point.

There are other malls available, across the world Apple's mall is quite small.

We're not talking about the world. We're talking about the universe of the iPhone.

In the brick-and-mortar world, malls are fungible, and stores that sell the same goods are fungible. The iPhone is not fungible.

We are talking about the universe of mobile devices.

You are; I don't think we are. Spotify certainly isn't, and it may be entirely reasonable to view the world through that lens.

In relative numbers yes, but I wouldn't call short of a billion active devices "quite small".

Still, there is a choice for anyone that wants to sell products.

Anyone that wants to constrain themselves to a single market, needs to accept the rules of focusing on a single market.

Are you really free to do something if it comes with highly unfavorable conditions then?

Do malls take a portion of the revenue generated from the stores? I assumed they just paid rent and kept the money generated.

How malls and stores negotiate rental agreement is very ad-hoc and strategic but yeah it is often directly or indirectly tied to revenue.

Oh that's a shame, most books I buy today are through the Kindle app on Android (or my Kindle device).

Let's not forget that you can't buy Kindle books on iOS because of this policy. Apple wants 30% of the cost of every book, which would kill Amazon's margin. (Of course, this is just businesses fighting over the lion's share of the money; the publisher is only going to give the author ten cents on the dollar in royalties anyway.) But Apple will happily sell you books in their store, which smells like anticompetitive behavior.

Steam Link faces a similar issue. Apple, apparently, considers buying desktop games through an app that can remotely play them on your phone to be the same situation, and demand that payments go through them.

Apple does not have a monopoly on Smart Phones or App Stores. They're able to as much as anyone to control how their platform is used - there's no law against maintaining a closed and curated platform and your product or platform is not considered a Market in by itself.

There's also no law against having a monopoly, only for abusing your monopoly in one market to gain an unfair advantage in a different one.

Which is what spotify is arguing is happening with Apple Music

iOS isn't considered to be a market so they don't have one to abuse. Unless the courts declare that iOS is a market then the App Store would be considered to have a monopoly on App Stores in iOS, but you can't have a monopoly on your own product/platform (then everyone would be a monopolist). A monopoly is measured against the overall market. If Android didn't have an App Store or it was the size of Windows App Store then iOS App Store could be considered a monopoly, but not at the fraction of the user base that iOS has now.

The fraction doesn't matter at all in this case. Spotify is saying they're abusing the 30% to be able to push their own music application for cheaper.

It doesn't matter in this case because iOS isn't a Market and the iOS App Store doesn't have a monopoly on App Stores. They can appeal to the public about the unfairness of it all (which is likely what their open letter was designed for) but they don't have a legal case against Apple nor an inalienable right to be able to participate in their platform on their own terms.

If so, McDonalds is abusing its power even more. They don’t even let me sell my burgers in their stores.

Similarly, it wouldn’t surprise me if music festivals or cinemas charge suppliers selling on their grounds more than 30% of revenues.

I know app stores feel different, but as far as I know, that legally still is a reasonably apt comparison. That may eventually change, but if so, someone will have to specify what exactly the difference is. I’m not sure that is as simple as “physical vs digital”.

McDonald's doesn't host other food companies though.

In this case apple has a marketplace AppStore.

App stores feel different because they are different. You seem to have an incorrect definition of what a market is

McDonalds is not a market, McDonalds is a vendor in a Market.

Apples has a created a market on is the platform by virtue of the App Store, a case can be made for Anti-Trust due to to this, but it would be a hard one.

Defining what is and is not a market is always one of the largest challenges for Anti-Trust, take for example the Merger of Sirus and XM, there was a debate over if Sat Radio was a market separate and independent of Traditional Radio, in the end Sirus / XM won and was able to establish that Sat Radio was not an independent market because consumer could easily switch between Sat Radio and Traditional Radio

Given the Lockin, and increasing Costs associated with Changing Mobile Platforms it becomes more of a question on if iOS and Andriod should be separate markets or be considered a single market. I can see cases for both

I am not familiar with the legal history you cite but it is intriguing. Are there other antitrust cases that hinged on whether or not two things were their own markets or part of a larger one?

> There's also no law against having a monopoly,

Yes there is. It's called anti-trust law and a large part is about pure market share.

It's also illegal to use your monopoly in a market to get advantages in that market. Most notably, you can't use your monopoly to keep your monopoly. (I.e. intel making a deal with dell where dell cannot use AMD processors)

> Yes there is. It's called anti-trust law and a large part is about pure market share.

That's not a law against having one, only abusing one.

Mergers get blocked simply because the resulting company would have too much market share. That is a straight up ban on monopoly.

> That is a straight up ban on monopoly.

No, it's still not illegal to have a Monopoly. The FTC can block mergers that can create them if they believe it will harm consumers, e.g. through higher prices caused by less competition, but they typically won't block them if they think consumers will benefit through operational efficiencies gained by consolidation.

It's legal to have a monopoly.

It's legal to have a monopoly and get advantages in the market.

It's illegal to have a monopoly and then try and extinguish your competition in the current or any adjacent markets.

Mergers get blocked simply because the resulting company would have too much market share. That is a straight up ban on monopoly.

My given example of dell and Intel actually happened and was prosecuted. How does that fit your claims?

Monopoly regulations are enforced inconsistently across time according to political whims. There’re going to be plenty of counter examples to go around.

Monopolies and oligopolies are inefficient. Whether legal or not they result in in detrimental outcomes.

Apple’s market share is 15%. Not quite monopoly territory.

Their market share on iOS devices is a bit higher than that

Ford's market share of F-150s, the best-selling car in America for 30+ years, is 100%. What is your point.

Do they get 30% for every part you put on it they don't make?

How is that relevant.

Can I sue walmart for not letting me put my products on their shelves?

I mean that’s basically them abusing their monopoly on Walmart stores right?

Let’s get things straight. Apple does not have a monopoly on smartphones. Apple does not have a monopoly on smartphone app stores.

Bad analogy. This is more like...

Walmart tells a manufacturer they have to pay a special Walmart surcharge every time a sale is made, and that they can't raise their prices only at Walmart (or give discounts at other stores) to make up for the difference.

And, in addition, after the sale is made, if the product allows the customer to buy add-ons after they bring the product home, the customer is required to go back to Walmart to purchase that add-on, and another Walmart surcharge is assessed; the manufacturer isn't allowed to sell add-ons directly to the customer without Walmart acting as middleman.

Does Apple even have a majority market share though?

My bet is they decided to respond due to PR issues. The response from the EU will likely depend to some degree on the public reception of Apple. The Spotify post looked very strong, so even if they don't fully dismantle it (as you noticed they dodge some issues) they provide enough arguments that it isn't immediately clear to bystander who is right.

> My bet is they decided to respond due to PR issues

This is the strange bit, since Apple does this very rarely. Or at least, they used to…

You know, it's a funny thing, how to define anticompetitive and monopoly practices, depending on how you frame the scope of the market. See Peter Thiel's book for a chapter on this.

You could say that Apple has a monopoly over developers building apps and providing their services to people using iPhones. But is that the scope that is under regulation, or what constitutes the "marketplace"?

Someone else looking at it could say that Spotify has a multitude of ways to provide its content to customers -- web, it's own Windows + Mac desktop apps, Android, etc. Would you claim that that is lacking competition?

Which way is a regulator supposed to look at it?

> which is the definition of a monopoly.

Like Walmart has a monopoly on shelf space at walmart.

Apple does not have a monopoly on neither Phones nor on application markets for phones. They have a very attractive market, which they control, but not a monopoly.

From my understanding, Spotify is arguing that it should be void of platform/processing fees for in-app payments, potentially zeroing fees for everyone... That's a hard argument to make, because if they win that, then Stripe wouldn't be able to charge processing fees either. You'd get into an argument of what fees would be fair, and in-app payments are not a requirement for the app store so it's hard to argue it.

I think the most likely scenario is that Apple will capitulate and remove any restrictions from apps soliciting payments in a web browser from within the app (are there any restrictions on this?).

Yes, currently Apple prohibits developers from linking to their websites subscription signup. I agree if Apple provides payment processing, they should get some cut (though not 30%). The issue is that Apple prohibits signing people up from anything but their IAP feature.

I think the % for processing/platform is justifiable and hard to argue against setting that % for them. The most likely outcome is that they will either remove the restriction from advertising alternative payment methods on signup, and in exchange Apple can do what it wants with in-app payments.

I agree that the best case is that Apple sets the price it does business at, but that there are reasonable ways for the app to use a different payment provider, even if just by linking to the web. This keeps Apple's price in check naturally... As they'll need to keep the price competitive enough that the convenience of using their service is worth it.

I can also see the argument that for users that discover an app through the App store, they must pay the platform/acquisition costs. But I agree a lifetime 15% is unfair.

Best case scenario is

1) Apple switches their platform monetization to a more direct model where you pay to advertise your app in the App store. This will get tricky because their "Top apps" list still serve as advertising but you can't just remove an app from there because it refuses to pay.

2) Apple removes the restrictions against advertising alternative payment/subscription methods

In this case users should also be able to install from outside sources and not be forced to use the app store.

Perhaps one reason people buy iphones, is because you can't install from outside sources. It's part of the feeling of trust in iPhone. If you get a subscription in-app, you can easily cancel it on your phone, without having to worry about going through some kind of retention hell (call to cancel, dark ux patterns to prevent cancellation, etc...) As well as level of security in that it's one less company with my credit card to worry about being leaked/hacked/whatever.

They already have a way to pay for ads when searching.

If Visa or MasterCard tried to charge 30% transaction fees, they'd be laughed out of the market.

The problem is that you can't laugh Apple out of the market for payments on iOS devices, because they don't allow other entrants into that market.

Visa and Mastercard do actually charge 30% if you don't pay within 30 days or so. Why is that not equally laughable?

Is it because they provide a service in exchange for that 30%, a service that many people are willing to pay 30% for?

I'm talking about the merchant fees, not the interest rate for cardholders. The cardholder interest rate is not at all analogous to Apple's revenue share.

Apple is charging for the reach accessible by participating in their platform, it's effectively a distribution and marketing cost not a payment processing cost. The no linking requirement is so you don't use the accessibility enabled by their platform to bypass their fees. So if Spotify wants to bypass the App Store's subscription fees they'll need to find another way to notify and acquire new Customers, i.e. outside the App Store via their website or general advertising/marketing.

This is the clearest way to say it. Spotify has utterly no argument in this case. Their claims make no sense, it’s just a lot of noise for Spotify to drum up an angry mob of people who vaguely misunderstand “monopoly” and hate Apple for whatever unrelated reasons.

If you want to put your product into the distribution channel that Apple spent shitloads of money to create and operate, then you have to pay their fees and that means you can’t engage in a practice like linking to an outside signup page that is solely for the purpose of circumventing the fees you rightly owe for use of the distribution channel.

Nobody has to distribute your app for free. You don’t like the prices Apple charges for it? Go to Android, or make your own distribution channel, whatever.

Spotify is free to not participate if they don’t like the pricing.

Nobody is talking about the price of app distribution though. It's about the cost of a Spotify subscription. This subscription has nothing to do in the slightest with Apple. Apple doesn't have to promote it, distribute it, host it, pay for its bandwidth, nothing.

Spotify already has their own distribution channel (sign up on their website), and Apple is prohibiting them from mentioning it on iPhones and instead forces them to use Apple's distribution channel, which comes with a hefty price tag.

So if they want to distribute their free app on the iPhone, they are welcome to do so, as long as they don't mention that people have to go to their website to sign up for the premium service.

We can still argue about whether Apple is allowed to behave this way, but at least we'll be arguing about the right thing.

The only thing anyone is talking about is the price of app distribution. That price includes obeying the terms of Apple’s distribution channel.

> “Spotify already has their own distribution channel (sign up on their website)”

Yes, and if they don’t like the prices for oveying the rules of Apple’s distribution channel, they are free to remove the app from Apple’s app store, and notify customers that they cannot use the service on iOS devices.

The cost of distribution is the cost of selling their commercial digital services on Apple's platform.

If Spotify deems 30%/15% split is too much to be able to sell their services on iOS, they don't need to participate in that market, they can continue selling their online streaming services on the Web and Android and and spend the money they would've paid Apple in distribution costs in more advertising/marketing to acquire new Customers.

If the App Store revenue share is so lucrative they can also consider that as an opportunity and are free to build and sell on their own platform, invest their resources in building hardware + mobile devices, OS, Apps + software, dev tools, distribution channels, retail stores, marketing/advertising to entice everyone to use it and enjoy the 30%/15% revenue share from everyone else choosing to participate and thrive on it. Or maybe it will end up being cheaper for them and they'll get more revenue because of iOS's larger and quality user base to just pay the App Store fees for being able to offer their commercial services to the iOS ecosystem created with Apple's investments.

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