Also Apple's use of private APIs gives them an unfair advantage. So sure, there are competing apps in each category, but they can't ever be as good as the Apple app.
If I sell paper cups to Walmart they will take a 12-17% cut for “entitlements”. I can’t compete with the white label house brand on price that doesn’t have those entitlements. The house brand can also operate on a razor thin margin because that product isn’t critical to their business. This is why when you go into pretty much any grocery, electronics, automotive or whatever store the house brand is always at least a dollar cheaper.
If you don’t want to sell to Apple customers, you can sell direct.
There is really nothing unique about this. Anyone who has a business in retail is familiar with this problem.
Want to sell on Amazon to Amazon customers? 8-20%. Want to sell in Walmart to Walmart customers? 12-17%.
I wish it weren’t so, I really do. I’d be 15% richer overnight (probably more, as I’d be more cost competitive). If we decide that these sort of platform fees are illegal that would actually be HUGE and redistribute massive amounts of wealth from gatekeepers to smaller businesses.
That's a false choice. That's like saying "don't like Walmart? Then leave the US and move to Europe!" The choices aren't equivalent. Each have their pluses and minuses, but the choice of Android or Apple should not dictate which retail outlet you get to use.
In the real world, the consumer can chose the easy retail outlet (Walmart, Amazon) or they can choose a harder to use/access outlet, but at least they get the choice. With Apple, you can't choose your retail outlet, and that is by Apple's design.
If you want to buy it from the App Store you can! But Spotify has decided they don’t want to sell it on the App Store because Apple’s entitlements/platform fee/referral fee/whatever you want to call it is too high.
Only if you independently know that it exists. They can't link out to their web store. Apple can though.
Again, this is can be true in other places in retail as well. Walmart may not be happy if I slap a giant sticker on my box that says, “Buy direct from us for less!” Sometimes the stores don’t care. Sometimes they do. If they don’t like it they reserve the right to kick you off the shelf or ask you to remove it.
But since Apple doesn't allow other stores, it's not the same as regular retail, because the consumer can't choose another store with better policies.
I understand that a lot of people really want to use Apple phones, because they feel that they are superior to Android phones. But this is not a monopoly, it's literally how the market is supposed to work.
You can't walk into a Walmart physical store and ask to see their embedded Target store. Hardware, software, and inventory are bundled into an experience by every retailer in existence.
Apple is using its position in one market (phone hardware sales) to exclude competition in another (app sales). It's a text book example of an antitrust violation.
>Hardware, software, and inventory are bundled into an experience by every retailer in existence.
No, they aren't. You don't have to buy software to run on a Mac exclusively from Apple, for example.
The textbook examples are Standard Oil, IBM, AT&T and Microsoft. It's closest to the Microsoft example, but when you actually READ the textbook you realize the Microsoft example really focuses on specific actions that Microsoft took to prevent companies from promoting Netscape. Much of the Microsoft example was about intent. Moreover, the case was settled and the government dropped the case.
Antitrust law considers the entire market, not just how one company treats their own customers. Apple's policies have no effect on your ability to sell apps on Android.
Here's an example of what would be potentially anti-competitive behavior by Apple: if they made 3rd party developers sign exclusivity contracts that said in order to sell in the Apple App Store, they have to agree to NOT sell a version of the same app in the Google Play store. That would be Apple using its position in the market to exclude competition.
But Apple does not do this. Developers are free to release the same app on Apple and Android, and customers are free to buy into the Apple system or the Android system. Competition exists and is robust. In fact, as measured by unit sales and installed base, Android is arguably ahead of Apple.
> You don't have to buy software to run on a Mac exclusively from Apple, for example.
This is Apple's choice in how they configure those computers; it's not legally mandated.
Android and iOS are separate markets. Let's say I have a hugely popular app on iOS that I make millions a month selling. Some company comes out with an exact replica for Android and begins giving it away for free. The impact on my sales will basically be zero. There are few people out there that own an Android and iOS device and even fewer that will switch based on one app.
>Developers are free to release the same app on Apple and Android, and customers are free to buy into the Apple system or the Android system.
Again, you can't use your position in one market (phone hardware sales) to exclude competition in another (app sales). The existence of a competitor or competitors in phone sales doesn't change that.
>This is Apple's choice in how they configure those computers; it's not legally mandated.
Does that mean you no longer think this:
>Hardware, software, and inventory are bundled into an experience by every retailer in existence.
To federal antitrust law, they are not. This is a fundamental misunderstanding that is leading you to all sorts of other misunderstandings.
There are significant security and privacy concerns in allowing third party App Stores and it opens Apple up to significant legal risk. For example if the other stores weren't as vigilant then you could have rampant piracy, apps with illegal content or apps that siphon user data.
That's already the case today in form of the Web, yet obviously Apple is not restricting which websites a user can browse to.
In general, this whole 'third-party stores are a security risk etc.' doesn't hold any water under inspection. Security and privacy come from the sandboxed nature of apps running on iOS, and of course Apple themselves determine what APIs are available and under what circumstances an app can access what data about a device or user.
This is all independent from wherever a user installs an app.
https://arstechnica.com/gadgets/2018/08/fortnites-android-vu...
No, it's like saying "don't like Walmart? Feel free to leave the store and look for a Costco."
Drawing a line between the hardware of the iPhone and the software of the App Store is arbitrary. From Apple's point of view, they are one. And there are other options out there if you do not want an iPhone with the App Store.
Complaining that an alternative App Store should be implemented is like complaining that iOS should also be optional. Why is Apple required to implement additional features and give up market share when the are not a monopoly in the first place?
I fail to see how choosing Android is a false choice when 80%+ of smart phone users do exactly that.
Pointing out that Apple is a duopoly and not a monopoly isn't a compelling argument. Especially so when the other half of the duopoly engages in the same sort of abusive behaviors.
When you're in a Walmart, you can only buy from Walmart. Nothing is stopping you from going to Costco.
The laws of physics are not anti-competitive. What would be an anti-trust issue is if Walmart took steps to prevent their customers from shopping at Costco.
Apple is stopping iPhone owners from going to the equivalent of Costco by banning competing app stores. That's a pretty clear violation of U.S. antitrust laws.
Apple is not preventing you from choosing to buy an Android phone.
Owning an iPhone is like being in a Walmart. You can either buy from the store or go somewhere else. Walmart-made products will be cheaper in the store. You can always go somewhere else. You can make the choice on whether you want to go to Walmart or Costco before, during, or after your stint in either.
They're preventing you from buying iOS apps from anyone but Apple.
>Owning an iPhone is like being in a Walmart. You can either buy from the store or go somewhere else.
It's not and you can't. There's nothing inherent that forces you to only buy software from Apple because you own an Apple device. And you can't go somewhere else to buy your software because Apple blocks that.
The store is obviously going to make a margin to pay for the costs of operating the store. The store brand can't avoid those costs by being in-house because it still needs shelf space and stock clerks etc.
This is different than with Apple because it's actually plausible that it costs "12-17%" to have a physical store with physical goods in it, but a 30% margin for online distribution is just blatant monopoly rent. Which comes from the fact that other stores compete with Walmart in retailing paper cups but Apple prohibits anybody from competing with them in retailing iOS apps.
> This is why when you go into pretty much any grocery, electronics, automotive or whatever store the house brand is always at least a dollar cheaper.
The house brand is cheaper because it has less brand recognition, which in turn is because it has less expense in building a brand through advertising and long-term quality control. This is why, despite the products often being completely identical, many people will pay more for the one they're familiar with and not have to take the chance that the store brand isn't as good (even if it usually is).
The retail store makes its margin based on the spread between wholesale and retail price. They mark it up. Typically, 50%.
Entitlements sit on top of that. They are usually broken out between logistics, damage, marketing support, liability, referral, platform, etc..They average around 15%, but it depends on category.
Amazon.com calls it a “referral fee” for marketplace sellers. No physical store there. This is strictly a fee you pay to access their customers. Same as Apple. It’s the fee you pay to access their customer base, with credit card and billing info, and have them handle the transaction and associated liability.
It’s pretty clear you have zero understanding of retail business logistics.
"Entitlements" are just a component of overall margins. Breaking them out separately doesn't win you anything because the store brand still needs to pay its pro rata share of the cost to cover those things.
> Amazon.com calls it a “referral fee” for marketplace sellers. No physical store there. These is strictly a fee you pay to access their customers.
Yet notice that their fees are typically something like 13% rather than 30%, and they're still dealing in physical goods and then have to contend with the sellers who send an empty box rather than a product etc.
Most wholesalers don't get charged entitlements by the stores. Damaged items are not entitlements, they're straight contractual issues and especially with foodstuffs, wholesale contracts may specify that up to a % of goods may arrive damaged and in unsaleable condition.
Marketing support is negotiated by brands seeking premium shelf space, or end-of-aisle placements or in-store marketing.
Liability is not an entitlement. Ever. It's something you work out between legal departments if you get sued under product liability laws.
My sources? My clients include about a dozen clothing retailers, 20ish restaurant chains, 3 big box stores, and a number of smaller grocery chains.
It's pretty clear you have zero understanding of retail business logistics and you should consider revising your comments to reflect that.
EDIT: After reading your other comments, it's pretty clear that you think that a manufacturer, i.e., Alpha Cola, sells to a Walmart shopper and pays Walmart for this opportunity. That's not how retail works. Walmart pays Alpha for a bunch of soda, and as part of this Alpha may negotiate an offset (what you've been calling an entitlement) for marketing support like in-store displays and premium shelf space alongside Code.
BUT BUT BUT in many situations, this is actually reversed: for example, for beer and convenience stores, the store agrees to give the beer premium space and in-store displays and may even agree to cover the costs. And in my example above, Coke usually wouldn't pay a store anything for marketing support--instead, the store would agree to provide unpaid marketing support to Coke for the privilege of carrying Coke's products. The store then uses Coke as a loss-leader to get people into the store.
It depends. With Walmart specifically It depends if it’s owned, dsv, or platform. Sometimes a manufacturer (that’s what we call them, not “product makers”) does sell to a Walmart shopper and pay Walmart for the opportunity. That’s what the Walmart Marketplace is. Same as the Amazon Marketplace. Even DSV contracts are now changing, as e-commerce retailers will have you ship items from your warehouse in their box with their tape.
Walmart literally calls these either entitlements or allowances, it depends where (and when) you signed a contract with them.
They exist because they have great brand recognition far better than most third party products. And the reason they are cheaper is because they sign bigger, low margin deals with suppliers who would be scared of undercutting their existing products.
Your claim is that Athletic Works (a Walmart brand for athletic apparel) has better brand recognition than Nike and Great Value cola has better brand recognition than Coca-Cola?
> And the reason they are cheaper is because they sign bigger, low margin deals with suppliers who would be scared of undercutting their existing products.
Again, your claim is that Great Value brand sells more cola than Coca-Cola?
What's your explanation for why many people nonetheless buy the more expensive non-store brand?
A house brand is just a white-label product sold with minimal marketing other than shelf space in a store. The difference between a house brand and a branded products is marketing spend.
General Mills, for example, supplies most of the store-branded cereal products alongside its own, more-expensive/heavily marketed brands. Most US liquor is supplied by the same handful of distilleries, and most "craft" liquor is actually just the same stuff with a different label.
Amazon, for example, has more than 100 house brands. But you wouldn't know what they are...since Amazon doesn't advertise them anywhere except on their own website. And they definitely don't have better recognition or outsell their branded counterparts. (Raise your hand if you've purchased a Nike product in the last few years. Now raise your hand if you've ever purchased a Peak Velocity product?)
> The store is obviously going to make a margin to pay for the costs of operating the store. The store brand can't avoid those costs by being in-house because it still needs shelf space and stock clerks etc.
Your implication here is that Walmart's 12-17% charge is fine because that covers the costs of operating the store. Ignoring the fact that 12-17% are in massive excess of the operational costs, your implication is then that storefronts should not make a profit.
Which is frankly a ridiculous notion. Storefronts should make a profit, or there is little point to their existence. The App Store is not a public service. It is a privately-owned storefront. As long as we live in a capitalist society, demanding that the App Store cede its profits is absurd.
No it isn't. It's that they should operate in a competitive environment so that the profits are the ones produced by a free market without unreasonable barriers to entry rather than being monopoly rents.
Apple operates in a competitive environment. There are hundreds of other options to choose from.
Unless you mean the App Store should be competitive within the iPhone. Why? How many layers deep do we need to ensure a perfectly competitive and open environment? If I put an app (say, a VM) on the App Store that has its own operating system and contained app store, am I now obligated to allow people to put their own app store in my app?
> without unreasonable barriers to entry
In what world is 30% "unreasonable?"
Companies have the option of going to the App Store. There is no obligation for a company to use the App Store. They are not being cut out of the smartphone industry if they don't use the App Store. Apple is not a monopoly here - there are other options than the iPhone for you to sell your service on.
For phones, not for App Stores. Which other viable store distributes iOS apps?
> Unless you mean the App Store should be competitive within the iPhone. Why?
Because iPhone users are a different app market with different customers than Android users. A customer who wants to buy a PC can easily buy it from Amazon, Walmart, Target, Newegg, etc. based solely on e.g. best price for the same product. A customer who has an iPhone is not going to buy a new phone just so they can buy the same app through Google instead of Apple.
> How many layers deep do we need to ensure a perfectly competitive and open environment?
What does it have to do with layers? The user should be able to control the product they bought, all the way down. You don't have to enable anything, just don't actively interfere with it.
> If I put an app (say, a VM) on the App Store that has its own operating system and contained app store, am I now obligated to allow people to put their own app store in my app?
Apple prohibits you from doing that to begin with, which is half the problem.
> In what world is 30% "unreasonable?"
The one where it bears no relation to underlying costs and is that high only due to the lack of effective competition.
> Companies have the option of going to the App Store. There is no obligation for a company to use the App Store. They are not being cut out of the smartphone industry if they don't use the App Store. Apple is not a monopoly here - there are other options than the iPhone for you to sell your service on.
Platform monopolies are like regional monopolies. Android customers are not a substitute for iOS customers in the same way that customers in Florida are not a substitute for customers in California -- because you sell to both of them, not one instead of the other. If Walmart had a retail monopoly in California, you can't argue that they don't by pointing to a competitor in Florida.
In which world is "iOS apps" an industry? The industry here is apps in general. In which case you have hundreds of other devices and tens of other stores, of which Apple is a minority player in both.
> The user should be able to control the product they bought, all the way down.
To what degree? Should the user be able to swap out the kernel code? Should they be able to switch out the phone CPU? Clearly the notion is ridiculous. To enable the user to customize this deeply requires implementing additional functionality to do so. It is not as simple as "not interfering."
> You don't have to enable anything, just don't actively interfere with it.
And in doing so, you compromise the security of your product. If I allowed my consumer to edit (compromise) my product arbitrarily, I can never make a secure product, and making a polished product becomes that much harder. Integrating against a generic interface always requires more work and thought than integrating against a known one.
> Apple prohibits you from doing that to begin with, which is half the problem.
This is why I phrased it as a thought experiment and not a reality. You are sidestepping the question.
> The one where it bears no relation to underlying costs and is that high only due to the lack of effective competition.
Just about zero storefronts have commissions that even remotely align with business costs. Walmart's 12-17% commission is far in excess of the operating costs. So is the Play Store's 30%, or Amazon's own commission.
> Platform monopolies are like regional monopolies. Android customers are not a substitute for iOS customers
How? Moving from Android to iOS or the other way is trivial. It is not nearly like moving from state to state. You either buy an iPhone with an App Store, or an Android phone with something else. There is no artificial lock-in besides your own wallet.
There is plenty of customer choice here.
The one where the set of customers is almost completely disjoint.
> To what degree? Should the user be able to swap out the kernel code? Should they be able to switch out the phone CPU?
The vendor should take no measures to prevent the device owner from doing these things.
> And in doing so, you compromise the security of your product.
Products should not be "secure" against their owners. You need not concern yourself with the experience of people who willingly choose to take matters into their own hands.
> This is why I phrased it as a thought experiment and not a reality. You are sidestepping the question.
I answered the question. You should not take any measures to impair the owner from doing as they please. You don't have to make it easier, just don't actively make it difficult or take steps to purposely impair competition.
> Just about zero storefronts have commissions that even remotely align with business costs. Walmart's 12-17% commission is far in excess of the operating costs.
Competitive businesses have margins that align with business risk and the cost of required capital, because that's what competitive means -- it means that somebody else exists who is reasonably able to take your customers by undercutting your price as long as doing so is still profitable enough to exceed their own capital costs.
> So is the Play Store's 30%, or Amazon's own commission.
Google Play has a weaker app monopoly than Apple because their mechanism is different -- OS APIs that require Google apps, which in turn require Google Play and cause it to be the default app store on nearly all Android devices. But it's not as if that's the canonical example of a competitive market either. And then you look at some of the competitors they do have, like F-Droid, which operates with zero margin at all.
> How? Moving from Android to iOS or the other way is trivial. It is not nearly like moving from state to state. You either buy an iPhone with an App Store, or an Android phone with something else. There is no artificial lock-in besides your own wallet.
You can't be serious. Once you have one device or the other, your data ends up on that vendor's services in those data formats, the builtin apps are different and you become accustomed to them and incur retraining and data transfer expenses, both platforms don't have exactly the same apps so if you use an app which is only on one platform then you have to use that platform and are locked into that app store for all other apps, once you've paid hundreds of dollars for a phone the resale value drops immediately and switching would require eating the loss which can be more than $100 compared to an app cost of only $1. You may prefer one platform over the other for any number of reasons having nothing to do with the app store but those reasons discourage you from switching and thereby tie you to the app store of that platform.
Its exactly like moving from state to state. The numbers aren't as big because a phone doesn't cost as much as a house, but they're the same relative to the cost of apps when an app costs around $1 compared to the typical trip to a grocery store of several hundred dollars, and have the same kind of switching costs where you have to move all your stuff and make labor-intensive changes to many other things that are independent of the app but not the location/platform.
This does not constitute an industry. Industries are defined by product space.
The Pixel and iPhone compete in the same industry. The Play Store and the App Store compete in the same industry. There’s no question around this.
> You don't have to make it easier, just don't actively make it difficult or take steps to purposely impair competition.
This completely ignores the concept of a physical security model. The owner cannot be trusted. Enabling the owner to modify their device arbitrarily introduces physical security bugs.
Your model prevents anyone from making secure devices. At least - not without a lot of extra thought and engineering time, which they should not be obligated to in the first place.
> it means that somebody else exists who is reasonably able to take your customers by undercutting your price as long as doing so is still profitable enough to exceed their own capital costs.
Case in point: Android and the Play Store which directly compete with iOS and the App Store. You cannot claim that Android and iOS compete while simultaneously claiming that the App Store and the Play Store constitute different industries. And there are few more obvious examples of competition than Android and iOS, or the Play Store and App Store.
> Once you have one device or the other, your data ends up on that vendor's services in those data formats
This is no different from me not being able to transfer my purchases from the Play Store to the Amazon App Store. No platform is obligated to give you the tools necessary to switch off said platform. If you buy a game on the PS4, you have no reasonable expectation of getting it on PC for free, regardless of how nice a feature that may be.
Transfer of purchase has never been an expectation of any storefront.
And you're back to arguing that brick and mortar retailers in Florida compete with ones in California because they sell largely the same products.
> The Pixel and iPhone compete in the same industry. The Play Store and the App Store compete in the same industry. There’s no question around this.
By this logic, if Samsung announced a competing phone platform that nobody uses and a competing app store that only works on that platform and has no apps but charges 5% fees, everyone could switch to that app store and sell/get all their apps there even though it has no users and no developers.
> This completely ignores the concept of a physical security model. The owner cannot be trusted. Enabling the owner to modify their device arbitrarily introduces physical security bugs.
The vendor cannot be trusted. The owner is you. If you can't trust yourself then you've already lost.
> Case in point: Android and the Play Store which directly compete with iOS and the App Store.
So you expect that if Google Play reduced their fee from 30% to 15%, developers would switch from distributing their apps on iOS to distributing them on Google Play? How is that even possible when they already distribute them on both?
> You cannot claim that Android and iOS compete while simultaneously claiming that the App Store and the Play Store constitute different industries.
Suppose that two companies make power plants. They all burn carbon to make heat to make steam to make electricity. One company's burns coal, the other natural gas.
When you're buying a power plant, there is competition between them. You can buy either one and they both burn carbon to make electricity.
But suppose, Standard Oil style, that the company making coal fired power plants has a monopoly on coal and the one making natural gas fired power plants has a monopoly on natural gas. Then those are two separate markets -- once you've bought your power plant you're locked into one or the other. Trying to combine them into the "fuel market" only works if you can switch from one to the other without replacing your very expensive power plant, but you can't. Which is why they're two different markets.
> This is no different from me not being able to transfer my purchases from the Play Store to the Amazon App Store. No platform is obligated to give you the tools necessary to switch off said platform.
It's not a matter of being obligated to help you switch. It's a matter of the switching cost being a barrier that segments the app market.
Exactly. This is how the free market works. If Samsung’s App Store is more palatable to developers and users, they will move there. This is what we see with Epic Games moving Fortnite off of the Play Store.
> The vendor cannot be trusted. The owner is you. If you can't trust yourself then you've already lost.
How do you define ownership? Physically owning the device? If a thief steals your phone, should they have the same permissions as you do over the device? Absolutely not.
Physical security matters. Ownership should be linked to a secret in your brain, not the fact that your hands are on it. And this model of ownership restricts quite a bit of modification without extra engineering or thought.
> Then those are two separate markets -- once you've bought your power plant you're locked into one or the other.
You are not buying a power plant. You are buying energy. There is a front-loaded one-time cost to switching to another power plant.
But let’s avoid silly analogies. The costs associated are obvious and visible to the users before they decide on Android or iPhone. Buying an iPhone does not segment them into a different industry. They can easily get the same apps from an Android phone. The barrier to entry via device cost does not create an industry. Industries have always been and will always be defined by product space - what is being sold. In this case, apps.
That it is expensive to switch from an iOS App Store to an Android App Store is a factor that is left to the user to make when they decide to choose one of the app stores. This is little different from switching from Steam to the PlayStation store with respect to the games industry.
Except that they can't do that when they have to create an entire ecosystem in order to compete in app stores, because of the network effects. Microsoft tried and failed with Windows phone, despite having its own desktop monopoly to leverage, pouring a fortune into it and by most accounts creating something that was actually quite good, because you can't get developers without users or users without developers. The barrier to entry is a mile high.
> This is what we see with Epic Games moving Fortnite off of the Play Store.
Which is only possible because Google doesn't prohibit that. Apple does.
> How do you define ownership? Physically owning the device? If a thief steals your phone, should they have the same permissions as you do over the device? Absolutely not.
> Physical security matters. Ownership should be linked to a secret in your brain, not the fact that your hands are on it. And this model of ownership restricts quite a bit of modification without extra engineering or thought.
That's all software. As soon as you lock the device, the decryption key should no longer exist and require the thing in your brain to recreate it.
If the software is designed correctly -- and nothing about that needs to be a secret -- there is nothing the thief can do to decrypt the locked device even with unlimited control over the hardware.
The thing hardware lets you do is allow you to use weak authentication, by having the hardware remain in possession of the real decryption key but rate limit the number of authentication attempts.
But that has absolutely nothing to do with app stores or anything like that. All you need for that is a tiny piece of special purpose tamper-resistant hardware that can store a strong key and then release it in response to successful authentication, while rate limiting the number of authentication attempts. Then when you lock the device the main processor discards the key and the only way to get it back is the rate limiting authentication hardware, which can be completely independent of the rest of the device.
> You are not buying a power plant. You are buying energy. There is a front-loaded one-time cost to switching to another power plant.
But that's the point. If you have to spend hundreds to have a choice of where to buy a $1 app, that isn't a real choice. If the alternative app store has the same app for $.01 instead of $1 -- a 99% discount -- all you can do is shrug because it's not worth spending hundreds of dollars to save $0.99. There is no amount of discount the other app store can offer to get you to switch. They could pay you $1 instead of charging you $1 and the switching cost would still put you deep in the red. That's what a lack of competition looks like.
> The costs associated are obvious and visible to the users before they decide on Android or iPhone.
If Walmart has a monopoly in California and Target has a monopoly in Florida, you can know that before you decide where to live, and pick whichever state you like, but either way you're living somewhere with a monopoly.
> Industries have always been and will always be defined by product space - what is being sold. In this case, apps.
So you can't have a monopoly in California if there is a brick and mortar competitor in Florida, because you both sell similar products?
> This is little different from switching from Steam to the PlayStation store with respect to the games industry.
Yes, that is exactly the same, and the consoles should not be doing it either.
Purchased iTunes has been DRM free for over a decade and you can even transfer movies bought on iTunes to other services at least from four of the major studios.
This functionality already exists on macOS.
What do you think would happen if the Facebook or Instagram app weren’t available for iOS? What if you could only use Netflix or YouTube on Android devices?
In fact, the App Store is a minority storefront on minority hardware.
This argument is so much FUD.
A paper cup company sells their cups to Walmart at wholesale prices. Walmart buys all the cups they sell in their stores, including the "Walmart brand" generic cups, and so "resells" them to the end customer. Because Walmart is "reselling" the cups, it can charge whatever it wants on whatever products it wants.
Not even remotely the same thing to what Apple does: Apple just claims to be a transaction processor facilitating a direct sale between an app-maker and a customer. Except that Apple charges its competition 30% and itself nothing.
They use to use this sort of scenario as the textbook example of antitrust violations. Antitrust enforcement fell out of favor in the West following the actions against Microsoft, but it looks like the EU is girding up to start enforcing it again.
If Apple’s policies are an antitrust violation then it will likely extend to Amazon, Walmart, and any other retailer that also sells their own product. It would also impact Microsoft, Sony and Nintendo.
I’m not actually again inst that. I just find the Spotify case to be particularly weak.
Amazon, Walmart.Com Marketplace...no. Because if you want to sell Physical Product X, you can sell on Amazon and Walmart.com. Or Ebay. Or your own website. You can't sell an iPhone app through the Google Store. Amazon has raised antitrust concerns, but they are very different from the ones facing Apple. Walmart.com hasn't raised any...because they aren't attempting to use their existing market position in physical retail to reduce competition in online retail.
Microsoft, Sony, and Nintendo. No, because you can buy games for each console in physical stores, you don't have the same issue--none of these company's stores is the sole way to sell your game to a owner of that console.
The Spotify case is may not be the strongest case, but it's just one of hundreds or thousands. And worse for Apple, Spotify is an EU company, and the EU is still very much in favor of enforcing antitrust laws.
(I assume your reference to Shopify was a typo. Not sure what their beef with Apple is, if any.)
The physical games require the approval of the respective platform owners who also take a cut.
I know this sounds stupid, but how do we know that Apple isn't taking a 30% cut and attributing it to app store revenue like the other 30% cuts everyone else gets?
Apple can operate Apple Music at a razor thin, zero, or negative margin. It’s not critical to their business. Spotify can’t.
This is true for any retail operation with its own house brand products. It’s why they are always cheaper, even if internally they treat the accounting the same as they would with an external vendor.
The broader issue here is that if you tie bundle things together as features of a single product, a for-profit company has little incentive to improve them. We don't get the best product/feature possible but the worst one whose lack of quality can still be compensated by other features/products.
Saying "they're a feature trying to be a product" instead of properly regulating the market does not result in a functioning market but in WeChat.
And I disagree with the idea that music streaming is really a product. The streaming services don't own any content; they're basically just the packaging around other people's content. And, unlike cable TV providers, who also package other people's content, music streaming services do not own the last mile to the customer. The other natural comparison would be to Netflix, but Netflix has exclusive content (mainly because they were intelligent enough to realize early on that they would end up where Spotify is now if they didn't develop their own content). The only thing music streaming services really bring to the table is playlist curation and discovery. That doesn't seem very substantial to me and, in that light, it's not a surprise to me that an independent music streaming service would struggle to make money.
I don't think meat and bakery departments are features under a definition useful for this discussion. For me, a product is something you can pay for separately, a feature is part of a product.
That means meat and baked goods[1] are separate products. Supermarkets having meat and bakery departments is not much of an issue because it's perfectly reasonable to buy meat from a butcher and other groceries in a supermarket.[2] You cannot really mix Android and iOS apps.
Also: "and quality has probably stagnated or gone down as a result" does sound like an issue. However in this case, I guess it's either because supermarkets are cheaper or because buying everything in one place is more convenient. The latter is a natural advantage of supermarkets. Putting all stores in one place would be good for the customer by lowering the cost of shopping at multiple stores but it's physically impossible.[3]
Apple's advantage on its own platform, in contrast, is the result of anticompetitive behavior and could be avoided.
> The only thing music streaming services really bring to the table is playlist curation and discovery.
Size of the catalog? Different clients? Even if music streaming was purely a commodity, why can't a commodity be a product? Even electricity is.
[1] I guess you could technically consider meat and bakery departments services. But in that case, does such a thing as a good even exist?
[2] Geography aside. If the stores are too far apart, shopping at both is unreasonable. But I would be surprised if you didn't see any issues in such a case.
[3] A supermarket that somehow actively stops competitors from opening near it would be acting competitively. Concentrating all stores in one place does have pose the issue of increasing customers' distance to the nearest store. But that's easy to solve when we're violating the laws of physics anyway.
And you've just succinctly stated in a nutshell why this is an antitrust violation.
Apple is leveraging its market position in other markets to force out competition in the music market. With Apple, there's no option to provide Spotify to iPhone users except through Apple's own store.
With retail it's different--the retailer still has to pay for the product up-front. They charge more for the branded products because they can. People have seen the branded product on TV, or online, or in a restaurant, etc. Often but not always the branded products will be higher quality (but this depends on the product and the store), and so this is another differentiator between the store brand.
More importantly, and the reason that store brands aren't an antitrust issue like Apple Music is--if a retailer tries to leverage its store brand over the branded competition, the brands can simply stop selling to the retailer, because their products can be purchased in the exact same form at another retailer. This has actually happened before, many times.
Mail, Maps, Stocks, Notes, Reminders fit that same definition. In those cases I imagine they're "value adds." Music (as a store or subscription, not as a player) I don't see being a "value add."
> because their products can be purchased in the exact same form at another retailer.
The Internet is different. I've always been annoyed that if I buy a movie or most ebooks I'm tethered to that platform for playback. I'm very glad thats generally no longer true for music purchases.
It’s like buying a house that can contain products from a special store that sells cheaper and better versions of name brand products that conform to your house’s design. If you move into a house built by another company, suddenly you must shop at a store where the options are more expensive and you lose access to some of the things you bought for your old house.
They're talking about the lock-in of the App Store and competing with Apple Music. Your argument sounds more applicable to music purchases than a subscription service. Especially with a subscription, it seems more similar to the independent butcher/bread maker competing with a grocery store analogy brought up elsewhere in this thread.
I'm a bit lost on the house analogy and how that applies to Spotify and Apple Music.
Apple may or may not be running AM at a profit or not...that's not the problem. The problem is that they're not subjecting AM to the same competitive pressures as AM's competition, i.e., internally they're not holding AM to the same limitations on billing, marketing, etc. as they're forcing on Spotify, Pandora, etc.
If Apple wanted to run AM in a way that didn't violate Western anti-trust rules, they'd have to make it adhere to the same app store restrictions spotify and the rest face, and they would have to charge it 30% for subscription fees. (AM is a separate legal entity. For tax purposes it may just ultimately be money changing pockets, but for legal and especially for antitrust purposes the fact that there is actual money moving around is what matters.)
How would you classify iMovie, Pages, etc? They were sold on the store and now offered for free and compete with others.
> With Apple, there's no option to provide Spotify to iPhone users except through Apple's own store.
Kindle, Audible, Netflix, HBO and a bunch of others have been on there for years. Netflix tested the waters with subscribing through Apple and went back to offering it outside of the store. I don't think Kindle ever has.
I don’t see how this is Apple’s fault, though: Spotify should be able to write an app for watchOS.
https://9to5mac.com/2018/09/17/overcast-apple-watch-redesign...
They can make an app so you can listen direct from your Apple Watch. Overcast manages to:
https://9to5mac.com/2018/09/17/overcast-apple-watch-redesign...