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Comment by vturner | Hacker News Reader

The key point I presume is the definition of "market" here; and I'm not convinced the market "software that runs on iOS" is so large that monopwhatever can be declared there and used to justify price control.

Though as a thought experiment Apple is like a wealthy landed gentleman who sets up a well maintained outdoor market for the tradesmen to bring goods and the lower classes to buy them. If Apple owns so much land they are the only ones capable of setting up a large enough market, maybe we should regulate that gentleman's fees to the tradesmen? By virtue of people's need to be fashionable and the enormous cost to develop a smartphone and OS, Apple effectively controls enough "land" to warrant regulation. I don't know...

Finally, this rationale also it seems causes a dilemma with B2B relationships. What if your market is quite specialized? Are you a "monopsony"?

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I don't think we need to divide the market into specialized segments (iOS devices, luxury smartphone, etc) to make the case against Apple. They have somewhere around 50% of the global market in terms of smartphone revenue (not devices shipped).

For the App Store, which is what matters to developers, revenue was around $25 billion in the first half of 2019, vs $14 billion for Google Play Store.

It's not literally mono- but as the article notes, just having a significant share of the market (I would say 30% would be enough) allows companies to dictate prices, and iOS has more like 2/3rds of the revenue.

That's not even getting into all the restrictions that Apple puts on third-party developers, including categories of apps that you can't even make if you wanted to -- unless you're willing to sit out half the market, and assuming that Google doesn't do the same thing. As a software guy, I consider that a bigger deal than the % cut (which is not entirely unreasonable given how much of that goes to credit card fees for low-dollar-amount transactions)

> They have somewhere around 50% of the global market in terms of smartphone revenue (not devices shipped).

On a monopoly/monopsony theory, devices shipped is the relevant metric, and revenue isn't.

Are you sure? I was looking for this and everything mentioned market share but it didn't specify unit vs revenue market share.

This has been well documented for years, the average iOS app earns nearly a multiple of close to 10 what other mobile platforms earn. Their share of revenue from apps is massive compared to their market share of devices.

for me the relevant metric is they have the 100% of ios devices market, at least on Android you have several app stores. That is a problem for me, but one that I can't foresee a solution in the future.

Whether the market is 60:35 is favor of Apple or 60:35 in favor of Google, either way there's no real competition in the market. It's two local monopolies milking their captive audiences for everything they're worth.

The relevant metric is the ability to move the market. The % don't directly matter.

"Reasonable" would be to charge a fixed transaction fee plus a percentage that doesn't scream "dysfunctional market!".

Microsoft takes 5% for selling apps in the Windows store. That may be a bit desperate given that these stores aren't just payment services but act as merchants of record, taking care of international taxes, billing and running an actual store.

I wouldn't complain for a second if store fees were in the neighbourhood of 10% plus transaction fee.

But charging 30% irrespective of price is not reasonable by any reasonable definition of reasonable.

It made sense in the early days when apps were $0.99 and credit cards charged approx $0.19 + 3% per transaction (Apple likely gets better rates, but just as an approximation).

There's still a lot of apps that fall in that range, but I'd agree with you that it's completely unfair for subscriptions and more expensive apps.

Steam is probably also overcharging with their 30% cut (once upon a time that was an amazing deal compared to boxed retail) and most games are $30+ so it's a pretty hefty chunk of change. I don't necessarily agree with the exclusivity tactics taken by Epic or EA/Ubisoft but having more diverse options for buying PC games is a good thing.

The non-standard features like Steam multiplayer and mods Workshop that lock out non-Steam users pretty much forever are IMHO even worse than the 1-year exclusivity (as long as it's not retroactive).

Steam multiplayer? You mean the friends list? Steam doesn't provide hosted mp servers for games. Mods are made by community members that can be released anywhere. Workshop is just a distribution channel.

Battle.net and origin are lock in services. Nothing about them is open to the public or accessible. Steam is pretty open and reasonably successful at it.

Steam doesn't host multiplayer servers, but it does offer services for match making, lobbies, voice chat and P2P networking (including the use of Valve's network as a relay).

https://partner.steamgames.com/doc/features/multiplayer

Mods can be released anywhere, but in practice, usually aren't ! Steam might not provide hosted MP servers for non-Valve games (are you sure it doesn't ?), but we've even seen older games having Internet multiplayer removed to the exclusivity of Steam's own "VPN" : Dawn of War 1, Civilization 4 (for which they also managed to break most mods for no seemingly valid reason)...

In practice mods are definitely released outside of Steam Workshop. I don't think I've ever used Steam Workshop for a Skyrim mod for example.

Skyrim had mods before Workshop even existed. Things are very different for games released with Workshop support.

In my experience they aren't different at all. Steam Workshop is just a distribution platform for mods. It's a mod installer and manager. It doesn't stop you doing it manually.

Also, Battle.net is in a somewhat different category, as, as far as I know, is only used for Activision-BLizzard games ? (No possible monopsony issues when it's the same company !)

Steam's store page promotions provides up to 80% of the revenue for indie games. 30% is a steal for what they offer. Discord nitro offered a selection of games along with its premium subscription. People would take the subscription for the chat features and very few if any played the games offered with it, to the point where discord just cut the games out. Nobody cared.

I've spoken to a few silicon valley guys who believe steam will be disrupted, but I just don't see it at all. Epic has a chance because of fortnite users. Steam was built on hl2, epic on fortnite. Features and cut %s aren't the deciding factor.

"Reasonable" is defined by the market. But since they are a monopsony...

The use of monopoly as the primary measure of whether market abuse is happening or not is a flawed presupposition to begin with. There are only two mobile phone platforms, which are easily more dominant general computing platforms than desktop operating systems, and the proprietors of both routinely use their influential positions in various ways to manipulate secondary markets that depend on them. This is no different than Standard Oil and the railroads.

Quite simply, if the legal tools don't exist to deal with this abuse, they need to be created...just like the Sherman Antitrust Act.

Under traditional antitrust regulation, a monopoly is one that has "undue market control." The key terms here are "undue", "market", and "control", which will all be subject to tons of lawyers making a bunch of arguments.

Your point is about the "market": if the market is iOS devices, then there is no question Apple has "control". If "market" is smartphone apps, the argument gets shakier.

Antitrust violations are notoriously difficult to prove in court. Even if Apple were to lose in some iOS app antitrust case, the prospect that it leads to general B2B applications is quite negligible.

The market is too small? Let's try comparing it to a more "conventional" market, like cable TV.

Total iOS app store revenue is somewhere within the neighborhood of $50-100 billion per year. That puts it roughly on par with the US's cable television industry.

There are about 100 million people using iPhones in the US alone. That's about twice the number of cable TV households in the US.

So, it seems like the market for iOS apps is similar to the market for cable TV, and there's also less competition, as I may have other options for getting TV shows, but I don't have any other options for getting apps onto my iPhone.

But you had other smartphone options, and you chose to buy Apple's solution. In making that choice, you were not just buying a piece of general-purpose hand-held computing hardware, you were buying into to a specific, explicitly-curated ecosystem of software and services. Apple's gatekeeping role here was a significant part of the iPhone's value proposition. If that's not what you want, or if you think it is overpriced, why would you choose to buy it? Other devices are available.

(As someone who doesn't use either an iPhone or an Android phone, I don't really have a dog in this fight. Just an observer trying to see various points of view.)

Yeah, I don't care about Apple. You know very well what you are getting into if you buy their products or make these mobile apps. I do care about Google's bait-and-switch where running a "Google-free" Android is starting to be very problematic, a lot of apps just not being provided outside of Google Play, and/or not working without Google Services anymore...

> and I'm not convinced the market "software that runs on iOS" is so large that monopwhatever can be declared there and used to justify price control.

The size of the market is not relevant here. The real question is whether customers have viable alternatives or not. If not, then you're in a "monopwhatever" situation. We don't yet know if DoJ thinks iOS users have alternatives or not though.

Large by what measure? Size of the market in dollar amount? % of market?

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