Hacker News Reader

Comment by xg15 | Hacker News Reader

I'm not against app store operators demanding a service fee - but I've always been baffled that everyone seems to be ok with the amount of power Apple and Google have over the app economy.

If you're a tech startups engaging with end-users, right now there seems almost no way around offering an iPhone and Android app to accompany your product or service. There are whole sub economies where the app is the product.

Yet app stores are basically private property where the companies running the stores can set (and change) arbitrary rules and regulations. If a rule change means your app is no longer viable and that app was your product, sucks to be you.

Shouldn't at least the free market crowd object against a whole economy being at the mercy of two companies?

View on HN

I'm not against app store operators demanding a service fee... as long as they do a good job of blocking malware/spyware apps (Google doesn't, many GooglePlay-approved apps spy on you and send your data home), don't block innocent apps for sake of their own interest, let a consciously willing user bypass the store and, at last but not at least, don't demand a ridiculously high fee. A fee of 5% is ok, 10% is tolerable, 30% is absurd.

The fee would be alright if the ecosystem of app store apps was fair. When Google bans those kinds of apps from their store and Apple doesn't even support 3rd party app stores on their devices, it makes the argument of a monopoly a lot more forseeable.

> Shouldn't at least the free market crowd object against a whole economy

It's not the whole economy, unless google+apple conspire to regulate the market to prevent others from entering. Frankly, developers are free to leave the platform and we should be telling them to get out. We 've had enough of google+apple fanboys telling everyone that they must make an app for that. We don't have to, and it's like shooting yourself in the foot. Very few developers are successful and we 're better off working on open platforms. And also, most mobile ads traffic is fraudulent. Stop advertising your stuff on mobile.

> unless google+apple conspire to regulate the market to prevent others from entering

Not to pick on you specifically, but this view is way too wrong to be so common.

The information economy is fundamentally different from the industrial economy for (at least) two reasons:

- Extremely high capital intensity

- Positive reinforcement through network effects (same and cross-side)

As a result, market concentration in information and technology markets is extremely high compared with other industries. It's not a conspiracy, and it's not something anyone can change. It's just the nature of the product itself.

There are a few strategies to combat it (open source, adversarial interop, etc...) but "just build your own" isn't one of them. Because it's almost always impossible in practice.

Is it really high capital intensive? I make websites and i m not rich. Network levels are strong and global, but they do come and go every few years, its unlikely that facebook will be as long lived as disney or mcdonalds.

A mediocre engineer is worth on the order of a million bucks a year to one of these big companies... one engineer can create a reasonably large amount of 'capital' - that doesn't make it cheap.

Yeah, you could build that capital for yourself rather than for a big company, if you wanted to; that doesn't mean it wasn't expensive.

That, and I think that big successful projects take a lot more than just someone who can build a decent website. Take friendster... one of my favorite examples 'cause it was one of the real-world cases of a company dying due to insufficient resources being put into systems administration and scaling. They were in the right place, at the right time, with the right product to become what facebook is now; they got traction, but due to performance and reliability issues, they ended up leaving an opening for Facebook to come in and eat their lunch.

And even getting to the point where facebook was is really hard.

I mean, it happens; Craigslist is a famous example, but usually you need more than one engineer worth of capital to build one of these things, and you need more than just engineers.

> if you wanted to; that doesn't mean it wasn't expensive.

it wasn't, at all, if you re comparing it to almost any other industry sector

I dunno. every time I step out into other industries, I'm shocked at how little even skilled people are paid. I dunno much about animation, but I'm pretty sure you could setup, say, a small publishing house and support it for a few years on a million bucks. I'm certain you could start up a restaurant on that kind of scratch, and if you were the business type, you could turn that into a chain. I mean, sure, you'd need more for promotion/advertising, but that's just as true of the tech industry.

I mean, sure, a business starting with a million bucks is unlikely to become a multi-billion dollar business, but... I think it's a reasonable amount to start a reasonable business... and I think that's how McDonalds, at least, got it's start.

> Is it really high capital intensive? I make websites and i m not rich.

If you work in the industry and aren't familiar with concept yet, it's something that you would greatly benefit by reading up on. Capital intensity is about the RATIO of capital costs to operating costs. Compare the cost of developing a website with the cost of operating it. In general, the former are much higher than the latter--though there are some exceptions.

Actually, the total (absolute, not the ratio) cost is related to a third factor I didn't even list--constant or increasing returns to scale. This means that products can be VERY expensive to develop before an extra dollar of investment won't result in more than one additional dollar of profit. No surprise that there's a synergistic relationship here with capital intensity (very low per-unit costs). This isn't going to be super-applicable if you're building websites for small companies, but if you consider how much it would cost to develop a commercial operating system that was on par with what's currently out there (Android/iOS/Linux/MacOS/Windows/etc...) it would many millions on the low end to billions if you couldn't rely on open source.

i m not in the industry but i couldn;t find a definition such as the one you re mentioning

> Capital-intensive industries use a large portion of capital to buy expensive machines, compared to their labor costs. The term came about in the mid- to late-nineteenth century as factories such as steel or iron sprung up around the newly industrialized world.

i dont know, computers are dirt cheap, and IT is famous for being particularly easy to enter into as a sector. I don't think i m the exception

There's more to "capital" than a physical machine.

Compare the cost of creating software (often many millions) to the per unit cost of copies of that software (zero).

Compare the cost of developing a new processor architecture and setting up the manufacturing plant (billions and billions) compared with the per-unit cost.

Compare the cost of building out a physical network infrastructure to cover a city (many millions) compared with the cost of connecting a single user to the box down the street.

Compare the cost to create all of Facebook's hardware and software infrastructure to the marginal cost of adding one more user to the platform.

There are several Android stores and sideloading apps is trivial. Lots of apps choose to go around the store. Fortnite doesn't use the Play Store, for example. It's possible.

Reply on news.ycombinator.com