A secret deal let Spotify bypass Android's app store fees
theverge.com
theverge.com
The marginal cost for Fortnite is lower, so Google kept squeezing. It's standard price discrimination. The problem for Google is it also controls the marketplace.
It's the 80% of revenue to rightsholders that makes it a non-viable business.
Right holders made them sign extremely strict contracts which disallow Spotify to diversify themselves. Notoriously, their contracts with majors states that they are forbidden to develop their own in-house label.
Any payment fees would be subtracted before the payout to the rights holders, they pay based on NET revenue not gross revenue [1]
[1]https://support.spotify.com/us/artists/article/royalties/
So true. I was actually once accused on Reddit of using ChatGPT to write a comment that I genuinely wrote myself, by a person who (if I recall correctly) didn’t like the substance of what I was saying. It was a long detailed response with multiple paragraphs and proper usage of words like “However”. Yes, a LLM may write similarly to people who have lots of experience reading and writing formal written English, including academic and legal writing.
At least my example was purely a harmless Reddit accusation. I really feel bad for the people who write essays in school that the teacher incorrectly rejects and reports as AI-written because the teacher misunderstands the limitations of AI detectors and the meaning of their output. (Of course, this is a separate question from students who genuinely try to pass off AI-written work as their own.)
"it was one of the highest-profile early members of the Coalition for App Fairness, a group that included Epic and supported the Fortnite publisher’s antitrust suit"
If they support the suit, why not "psst, btw, we got a great deal from Google. You know, have somebody subpoena contract records ..." Instead they're "We got our 4%, we Support you..."
And? Retailers cut deals and do kickbacks with certain merchants all of the time for different reasons.
Spotify's value, and the actual stuff people pay for, is music streaming from Spotify towards consumers. Apple nor the app store plays any part in this. Apple faces exactly zero costs to enable the actual streaming of value itself, yet just grabs 30% of it.
A flat fee to cover the cost of running an app store? Fine, and fair. Robbing businesses of enormous segments of their revenue: criminal.
There should not be any organization that gets to overrule your own wishes about what software you wish to install on your phone.
That’s turnkey tyranny because all it takes then is a law (or EO) that compels Apple to censor secure encrypted messaging apps.
They already strongarmed them into backdooring iMessage so that it’s not e2ee and Apple and the FBI can easily read all iMessages due to key escrow in (the non-e2ee) iCloud Backup.
Distributors in terms of the above actually DO have super slim margins because they are simply middle-man. They only exist to ship the product to smaller companies.
It they don't play any part, just get out of Apple ecosystem.
Or why don't spotify then develop a smartphone and put it in the hands of billions of people and them distribute its app there. This is the easy part, right?
How does this destroy Spotify?
But I'm not sure they meet the threshold for anti-competative practice. You'd need to show some sort of paid exclusivity (eg a bribe so only Spotify could get a better rate).
30% for market access is a bigger net evil that anything Spotify might be doing IMO.
https://www.macrotrends.net/stocks/charts/SPOT/spotify-techn...
https://www.macrotrends.net/stocks/charts/SPOT/spotify-techn...
How profitable would Spotify be if they were paying full price?
They're not profitable now so very not.
Spotify has Millions of subscriptions. 2% at scale is significant.
Here is their recent Q3 earnings report: https://newsroom.spotify.com/2023-10-24/spotify-reports-thir...
Their revenue was 3.4 Billion Euros at 2% they can take away 68 Million dollars. Which is more than enough for the business to be viable.
It's a very unfair(?) place to be for an app devs to pay the % tax when Google spends one-time fee for reviewing the app + other I/O costs
F-Droid makes it easy to add other repos.
I'm sure companies would prefer a platform where they can pay money to get featured on the front page which comes with their repo preloaded, but if you're a small app business, hosting an F-Droid repo for test releases and perhaps releases for non-Google phones, you can get rid of the auto-updater if you just point people at F-Droid.
The Play store operates in many jurisdictions, including some where this is borderline or could be deemed to be illegal
I hope that some of those jurisdictions start showing some teeth on this sort of anticompetitive behavior
Imagine not being able to figure out how they were so successful while you are struggling to turn profit and make payroll.
These kinds of walled garden ecosystems seem to be very bad for creating healthy competition, and this news is just adds to the *massive* mountain of evidence of shady behavior by every company that controls one.
There really is no “account manager” for the vast majority of play publishers, is there?
Scale has always conferred substantial pricing advantages.
The difference nowadays is that more of a company's business is covered by SaaS, and so more is subject to these taxes.
If 15% of your business had wildly variable scale costs vs your competitor... okay. But if 50% does... as you say, hard to compete even with a better product.
- YouTube Music doesn't pay fees on the Google Play Store
- Apple Music doesn't pay fees on the Apple App Store
If this happens a lot the department bearing the cost is usually compensated with a bigger budget.
My department at AWS “billed” by AWS when any of us set up our own internal AWS accounts.
I work for a very large enterprise also and we've been instructed to stop internal billing for everyhing less than 10k, and everything above 100k must be compensated in other ways, like shifting of responsibilities or personnel between teams. This was done because various departmental interests were basically trying to 'make money' at the expense of other internal departments and creating a complex mesh of internal contracts that was only wasting a huge amount of overhead :)
The problem with this thing is that it can become a goal of its own and some departments think they are making a ton of money even though they're only shifting internal funds and causing huge expenses in finance.
Tell that to antitrust lawers.
The company I work for owns several hotels, which are managed by another company entirely owned by the parent company.
When I stay at the company's hotel for a business trip, they pay the same fee everybody else pay.
It would be both unfair competition and tax fraud to do otherwise.
Your cellphone maker shouldn't be eating into Hollywood's business.
Your online Walmart is making Lord of the Rings.
And you pay a 30% fee just to deploy your software into their walled gardens, which they monitor, remove the customer relationship, and make you jump through hurdles. If you are successful, someone can pay to place ads in front of legitimate searches for your brand.
Edit: Can't respond to comments anymore after being downvoted, so my response:
> Where and how is the line drawn? Should a cellphone maker be eating into map maker’s business? Laptop maker’s business? Camera maker’s business? A secretary’s business?
Perhaps when there are more than two vendors for one of the most critical pieces of technology for modern civilization.
Perhaps when you can deploy apps without taxation, control over distribution, unfair competition, scare tactics, or adversarial ad placement.
Right now the two vendors wield absolute control over one of the most essential societal functions. It's almost as bad as if they controlled the internet itself.
Where and how is the line drawn? Should a cellphone maker be eating into map maker’s business? Laptop maker’s business? Camera maker’s business? A secretary’s business?
I wouldn’t have the same sentiment against YouTube music or Apple Music, because these are explicitly part of the same companies that host the marketplace.
I mean, ultimately, if you run a marketplace without posted rules and only let your friends and your own self succeed, aren’t you at a minimum sort of cheating? Like a Vegas house who claims fairness but the house gets special odds?
These walled gardens need to be opened up.
Apple/YouTube music not having any platform fee does give them an unfair advantage. Not sure how they rank in their own app stores in music categories though. Android user here so YouTube comes installed by default and even Yt music. Not sure if Apple music comes pre-installed as well. If it does, it does give another advantage to Apple.
A few years ago, I worked on a video game published by Microsoft. We ran game servers in Azure, and on Windows for obvious reasons. The project had to pay for the windows licenses from MS, despite being entirely funded by them, partially developed by an internal studio, on aMS first party IP.
I don't recall how much it cost exactly, but the cost of the per-core windows server license hourly is not far off the cost of a core on AWS these days.
Also, my experience of working in games is that the developers are exclusively windows. The backend services might use other OS's, but all the game development happens on Windows. When this was going on, I don't think a single developer in our room would have know the first thing about Linux.
> Especially for game servers where Linux is in it's element.
I think you'd be surprised at just how many games use Windows servers :)
“Paying” for accounting purposes, and “paying” where the payer loses access to the funds has different consequences.
For example, Apple and Alphabet can account for YouTube and Apple Music paying App Store fees, but leadership can ignore the fees for the purposes of selling a loss leader. Spotify cannot ignore the fees, since it would run out of money to pay other bills (or negatively effect net income).
https://www.protocol.com/amp/amazon-bad-at-games-2646952917
Neither is Disney ignoring transfer cost between Disney Studios and Disney+.
Management accounting takes into account opportunity costs.
>Individuals pay $10 a month for the AI assistant. In the first few months of this year, the company [Microsoft] was losing on average more than $20 a month per user, according to a person familiar with the figures, who said some users were costing the company as much as $80 a month.
Who knows if Apple is earning a profit on its Music + Classical Music apps or whatever else it bundles into its products. Maybe they consider it to be a small enough loss to offset the chance that a customer buys an Apple One bundle, which then makes up for the loss because the margins on cloud storage are much higher.
Streaming music is not like streaming TV.
It is basically anti-competitive behavior.
When you run the marketplace and make sweetheart deals, you change the terms of everyone else in the market. But if you don’t tell everyone in the category about your marketplace changes, they become disadvantaged and yet they would never suspect a thing if you don’t tell them.
So it’s less like a cheaper input widget for a scale operation and more like the terms and conditions change but just for yourself or one customer that nobody else even knows is happening.
Being passive and simply accepting things at face value is not competitive or smart.
The issue is the right to know as a competitor or potential competitor isn’t it? These aren’t deals between two companies, they are terms for public marketplaces, and that is a critical difference.
The parent comment did not suggest doing anything of the kind, and what should a spotify competitor do in this instance anyway?
Imagine you’re an also ran streaming service and found out that AWS gave a special deal to Netflix and they had reduced rates
Or imagine you’re selling “Joe Bobs Cola” and that Coke had a special deal with Walmart.
This is not new. You really think big vendors are getting the same deals as everyone else?
We can argue that you can distribute your app other ways (at least on Android), but that's not even comparable because of the artificial barriers that are put in place to make that difficult.
When GPM died, I was very anti "switch" to YTM. But now I can't even recall the issues in my head that I suspected/feared with the change. In fact, Youtube Premium and YTM are the only subscription I would recommend to friends and family."
To remind me of my hatred for google, can you describe what you dislike? I realize there's the whole monopoly and walled garden thing.
- playlist decayed and dropped songs, YouTube is even worse about this
- Play Music had a new releases browser highlighting new album releases by genre, you could "walk" into them in AA, then they bled that off
- as it stands "Play" doesnt have music anymore, and so the only discovery is YouTube's recommendations
- YouTube's recommendations are somehow difficult to control, overly gamed, repetitive, coarse, and generic -- some of which are contradictory. Google wasn't even able to protect Gboard from exploits like this with their unsated thirst for big data automation dominance
- they haven't begun to cooperate with other vendors to operate with assistant, instead picking winners, again
- for a span battery was concerning, it's not right now
- for a span Google's failed record of protecting user privacy, even now Google+ echo's when the Photos flow Share workflow walks me into privacy violating features
- i have qualms about providing an ad personalization business real-time granular data about my mood (though it's unlikely since my tastes are too obscure, anyway)
- i have qualms about subjecting myself to the opinions of a business with large enough reach to be an effective political entity and lever of corporate activism against my neighbors in society (particularly for an inferior product)
Hope this helps.
Edit: also the playback history was pretty bad IIRC, I assume it lumps audio playback with shorts, and shorts can't be organized into playlist despite their efforts. I need music to be a commodity, not a gift/promise.
I think the main difference between our experiences is stemming from the "Play" garden.
when I was on android, I didn't care that the Play experience was being "deprecated" because all I would use it (and YTM) for was music. And now with Apple, I just think it as my "music" app. And regardless of platform, I find it absolutely demolishes Spotify top to bottom in UI/UX, audio options, discovery, app health, etc.)
I've never had AA/Carplay, so not surprised this has never bothered me. Makes me realize i'm missing an entire feature suite.
Have you tried it recently? I'm interested if you'd find it to be more "normie polished" than it used to be.
Edit: not sure why I'm defending an evil mega-corp, trying to justify my years of purchases I guess :)
At a glance,
Things that leave a bad taste in my mouth:
- Genres > Metal > "Numb" by Linkin Park
- New Releases isn't organized by genre, which means you breathe through a straw, and hope Google brings a release to your attention.
- The "feed" New Releases which is apparently robo-tailored includes a Slowdive album from 1996, and a bunch of corporate stuff I'll likely never be in the mood for.
- no acknowledgement of labels, collectives, or studios. all very real constructs in current music.
- presumably live music recs are out even though those were never accurate to begin with
- there wasn't any on boarding, i guess im just to assume google knows who i am. went through onboarding, it's just there to slurp up artist relations and obtain feedback on recent trends it's inefficient and irritating out of touch
I like epitaph.
Also, imagine you are an indie Android Developer/small company and want to sell an app. Nowadays for the first $1M in revenue it's a 15% cut, above that (and it used to be since the first $) 30%. But hooray, the big company Spotify pays 0% to 4%.
And then the Google guy says, quote from the article: "These key investment partnerships allow us to bring more users to Android and Play by continuously improving the experience for all users and create new opportunities for all developers."
So yeah indie dev or small company, Google says you should be glad they only take 0-4% from Spotify, that way all Android users have an improved experience!
Not only is this shameful from a morale perspective, but also lawsuits & the EU will have even more arguments against Google now. Bonus: In the last paragraph Spotify is also shown as hypocrite - taking advantage of a 0-4% deal with Google, but at the same time joining a "Coalition for App Fairness" to reduce fees.
but, what's the problem?, yeah they are paying less, but better they're playing less and still helping everyone than paying less and be against app fairness
Someone has to pay for them, it might as well be us.
You're paying for that slush fund.
> You're paying for that slush fund.
Google is probably getting the difference from Spotify in some other way. Google/Apple also have a lot of profit with their app stores because 30% is too damn much.
If Google wouldn't have a deal with Spotify, you'd still be paying 30%.
No, it's unfair market conditions which are illegal in most developed countries.
How can small companies expect to compete with the big established ones if those players enjoy deals way way better than what the new players have?
It's basically hardcoded inequality creating winners and losers from the start and goes against the free market principles.
Bigger companies getting better deals has always been the reality, due to volume discounts.
We have a different idea about what the free market is.
That's exactly why it should change and why Apple(and Google) knows the winds are changing sooner or later.
>Bigger companies getting better deals has always been the reality, due to volume discounts.
That works in retail where I can get a volume discount for buying 2 million tonnes of bannanas, but this logic doesn't apply to digital markets which scale much more effortlessly and cheaply regardless of scale meaning steep discounts for big players are somewhat counter intuitive.
>We have a different idea about what the free market is.
The free market means that if I want x tonnes of bannanas to buy or sell, I can choose which supplier or to whom, and at what price to buy/sell them.
In the mobile digital markets you have no such freedom of choice. It's either Apple on the iOS market or Google (minus sideloading) on the Playstore, that's it. They're two monopolies with no competition, not a free market.
The marginal unit cost of serving a large customer is always lower than serving a smaller one. Why shouldn't I pass the savings to that large customer?
The risk premium for serving a large established firm is lower than serving a smaller one (including payment failure risk). Why shouldn't I pass the savings to that large customers?
Large customers also give you predictive revenue and gives sufficient room in purchasing decisions. Why shouldn't I pass the savings to the large customers?
Large customers may also bring in other customers and open up new revenue channels for me. Why shouldn't I pass the benefit to them?
Economies of scale is a thing and that's how consumers get to enjoy low prices and high quality.
It's incredibly sub-optimal to punish economies of scale
And you're not paying 30% either place, you're paying 15%.
There's no reason to lock it behind an app store on mobile other than "if we don't do it, Tidal/Deezer/Apple will".
Spotify didn't have a web player available in the first few years of its existence.
> There's no reason to lock it behind an app store on mobile other than "if we don't do it, Tidal/Deezer/Apple will".
A webapp-only music streaming service sounds like a nightmare on a smartphone, considering offline playback, integration with the OSes native playback controls, wearable support etc.
Either way, once sideloading is allowed on iOS I expect companies to aggressively renegotiate app store fees.
> I'd be curious to know how much of Spotify listening happens offline; my guess is that it's very little.
Then you haven't lived in a country with bad cell coverage, primarily metered/limited data plans, or both.
Side note: After watching The Stig's laps while listening to dull audio on Top Gear, I tried replacing TrackMania's music with very soothing music. My times got better.
GTA: San Andreas on the XBOX did allow you to use such a feature, provided that you had used the XBOX's disc drive to rip the audio CDs yourself. I recall letting the XBOX rip all of my System of a Down CDs circa 2005 for expressly this purpose.
PC ports, IDK. Probably.
After loading, the entire game (from opening screen to ending scene) fit completely into the PSX's tiny RAM.
And the in-game background music was just regular CD audio tracks on the game disk, which was easy since the drive wasn't used for anything else anyway.
Open the drive, swap disks for your choice of audio CD, and it was happy to play those tracks instead.
(Or, alternatively: Put the Ridge Racer game disk into a regular CD player and enjoy the synthwave soundtrack all on its own.)
They later extended it on the Xbox 360 to allow you to link in your Windows Vista machine to stream your MP3's straight to it
Playing Halo 3's campaign to Queen was a great experience back in 2007
The Xbox 360 expanded on the feature in some neat ways -- if you had an iPod or other portable player, you could plug that in via USB, it supported generic DLNA shares (so you could play music from Kodi/XBMC running on a PC), and some (most?) games would flag cutscene audio vs. in-game audio, which would allow the system to pause the user-provided audio and fall back to the game's soundtrack for cutscenes.
It also had global settings for controller vibration, inverted camera.. perhaps some others? I really miss those in future generations and on PC.
Yes. Source:
Able to? Or allowed to?
As many others, Sony found later that it's not worth it to operate a own streaming service, and probably made a deal with Spotify where Sony provided the initial application, Spotify provided the service and potentially pays some additional revenue share to Sony.
It's a story from a moment in time where every distributor/company thought they could do a better/more profitable music streaming service than Spotify...
Spotify is deeply in bed with the traditional labels/music industry and that industry seems to be able to "move" stuff easily from what I've seen. I always have a hard time visualizing all the components at play here though.
Is that true? My Alexa and Sonos devices work great with Apple Music.
Apple might not even do that, but given Google's documented behaviors about making their sites work better with Chrome they might expect that Apple would if they could.
FWIW, Apple doesn't control the music industry. Spotify has more than twice the marketshare of Apple Music, so I'd imagine that (for now) Spotify has commensurate influence over the music industry.
> …they might be tempted to make their hardware handle that music better.
Maybe Google would, but (to my original point) Apple doesn't tie their media services to their devices.¹ I think it's worth keeping in mind that you really can't equate Google's evil tendencies to Apple's (and vice-versa) because their business models are completely different.
ok but your previous comment was in response to
>>And both Google and Sony really doesn't want Apple to control the music streaming industry as it could affect their device sales.
>Is that true? My Alexa and Sonos devices work great with Apple Music.
so when I replied
> when a company that produces hardware that plays music has control over the industry that delivers music to that hardware…
it is meant to imply that I am answering
>is that true?
with - Yes, that is true BECAUSE...
and my statement
> …they might be tempted to make their hardware handle that music better.
followed by
>Apple might not even do that, but given Google's documented behaviors
should be interpreted as me saying
Apple doesn't tie their media services to their devices (although that might change if they found it very beneficial). But Google is evil and would tie their media services to their devices therefore they might expect that other companies would do the same.
Pure speculation: by necessity, Spotify has probably gotten pretty good at those things too. I would bet they've got some pretty heavy hitters in the dealmaking department.
https://www.theverge.com/2023/2/28/23618264/eu-antitrust-cas...
Also of course, Spotify is somewhat of a monopoly of its own, or a chosen 'winner' by the music industry at large colluding.
Spotify has ~30% of the market, Apple Music, Tencent, and Amazon have each ~13%, YouTube Music another ~9%.
That's far from a monopoly...
And as far as I can tell, the music labels (Warner/Sony/Universal) need Spotify to be able to negotiate with Apple/Google/Amazon.
[1] https://www.musicbusinessworldwide.com/sonys-stake-in-spotif...
Which is a really fair point. Because why waste time on this, when a user who cares about playing their own music can just open a browser tab or spotify/apple music/local/etc. app, and it will work literally in any game anywhere. And Playstation supports Spotify/Apple Music/local music playback during games natively, without any hacks or workarounds (like using the built-in web browser) as well. I assume Xbox has similar functionality, but I don’t have much experience with it.
The only games i’ve seen that allow (limited) in-game audio provider choice are those that have an in-game radio feature (older GTA games, Forza, etc.), so that the custom user music kinda works “in-universe” in those games.
As for why, it seems like those were just the only two that bothered to integrate their apps with Playstation. Which kind of makes sense, as Spotify and Apple Music are the two largest streaming services currently (by user numbers[2]). Youtube could arguably claim to be more popular, but their YT music app feels half-baked even on the primary platforms (iOS and Android). And the other ones right behind are Tencent Music and Amazon Music, which are rather unpopular, at least in the US.
0. https://www.playstation.com/en-us/support/subscriptions/how-...
1. https://www.playstation.com/en-us/support/hardware/play-vide...
Indeed, and that skillset has given them an advantage in the market. Things working as expected. Does it suck for their competitors? Absolutely. Is it illegal? I don't think so.
Anyone is free to fork android and make their own app store. A luxury thanks to open source. The network effect is real but the market isn't intended to be "fair", it's brutal.
Facebook has/had that too in many markets.
This to me is still quite shocking, especially since those are completely separate departments and such behavior would so clearly scream anti-trust
It would scream anti-trust though, and would surely attract the attention of regulators (which are already circling in the skies)
Because Amazon is likely already giving big companies discounts. There is a huge amount of competition between the big 3 cloud providers who work whatever deals they can to get big customers.
B2B deals are not like consumer ones. Often times companies will "trade" their own business' service in place of cash.
This is true, but it misses a big motivation behind it. It costs more to have enough capacity to support on-demand use since it has to sit idle, waiting for a customer. Part of the discount you get is you give AGA certainty in demand. They don't need to hold as many machines in the on-demand pool, and it makes long-term planning easier. You'll also find that those on-demand prices don't actually scale. At some point, you'll have to talk to a rep and commit to more hardware and a discount because you're just too big.
The word you're looking for is business. This is literally how big business to business is done. It also doesn't automatically mean anti-trust.
The Apple lawsuit failed primarily because, well, it's not illegal to use a legal monopoly (copyright) in the intended manner. Nor is it illegal to merely be big[0]. Epic's lawsuit against Google may succeed purely on the basis of "well, Google opted in to competing app stores and payment methods, Apple didn't", which is not at all the outcome I wanted or expected.
[0] Or at least, it stopped being illegal after the neoliberals rewrote history with the "consumer welfare" argument.
What are you referring to? I'm not familiar with what you mean, nor have specific enough keywords to self-discover.
If you wrote down all the rules of Google app store, including all their sweetheart deals (I'm sure there are many), and accounted for all departments within Google that influence AppStore, it would be massively smaller and way simpler conceptually. The scale of bureaucracy, inconsistency, bad incentives and accumulated cruft is just not comparable.
At least with the government you are backed by the rule of law. With companies it's always "tough luck, you agreed to the EULA".
PS: and never forget that government agencies gave us the Internet, so all those layers and layers of bureaucracy did give us something great and it isn't all bad even if you want to see it that way.
At least on Android, normal users can sideload your app, so you can bypass all of these store policies if you are big enough. For example, see Termux, PornHub, or Fortnite. On Apple, you're just out of luck if you don't want to pay 30% or comply with every technical policy. Want to try out media over QUIC? Too bad, you need to use HLS and only HLS for streaming, or your app will be removed.
That being said, rumor has it Apple is going to soon allow sideloading of apps in some places due to regulatory pressure. (I assume they’re hoping to find a balance where it’s too hard for the average person, but possible enough to avoid legal woes)
https://www.androidauthority.com/iphone-sideloading-misunder...
By the way, altstore exists on iOS. Although it is very limited.
It doesn't always work (NYT lets you cancel online in California but not other places) but it did here. We already know ISPs stayed net neutral.
Disagree. I seen literal children figure out how to torrent stuff.
But yes, if you have a look at Fortnite, the 2 methods they provide are (1) downloading the APK, or (2) Samsung's Galaxy Store:
https://www.fortnite.com/mobile/android
Even though they probably lose installs this way, I'm pretty sure that many kids manage to install Fortnite just fine.
Children can be tech nerds too.
Maybe because it fully covers the needs for >99.9% of Android users. Sometimes the answer is the obvious one.
> While there were early signs that the browser ballot screen was influencing browser usage in the EU, with Mozilla attributing some European Firefox growth to the selection page, long-term trends strongly suggest that it was next to useless
It won’t hurt either.
The privacy/security arguments are marketing bullshit that Apple came up with because they suck on the security side (previously their stuff was "secure" because nobody really cared about it) so they went with a brute force "we control everything" way of "solving" the problem. And all the privacy nonsense are just attacks on the business models of their competitors, they are not any better when it comes to ethics.
Their "sideloading" restriction is like a dumb parent who make extremely strict interdiction about consuming alcohol. The first opportunity the kid gets you will find him drunk out of his mind. Education works, blanket interdiction like prohibition are historical oddities that are unsustainable. There are risks in life, people need to accept them and move on...
You can also obviously just buy a PC and run whatever you want, but the entire point is the barrier to entry. If it's easy, more people do it, and that's good. If they have to contend with a convoluted mess, people give up, and you lose whatever they might have created.
What would be the economic and geopolitical consequences of the US breaking up the only US companies that are globally competitive? Chinese giants will outcompete the smaller less competitive remnants after these kind of corporate breakups.
This may or may not be true, but size is not necessarily a predictor of victory, especially in warfare.
History is rife with smaller belligerents defeating larger ones through innovation/force multiplication/asymmetrical warfare.
I think it's fair to say that an oligopoly stifles innovation; you can see it in how expensive and slow companies like Lockheed, Boeing, or BAE are when it comes to providing matériel needed by actual warfighters.
I don't think this is an either-or scenario – you need both – but saying that we can only be globally competitive on the backs of megacorporations is incorrect.
American big tech companies aren't competitive in anything. They're entrenched monopolies. Google, Apple, Microsoft, Meta, and Amazon products are all shit, but users don't really have any other choice. If we break them up, it will create market opportunity for actual innovation in the US.
The question is whether we actually have the talent and expertise to innovate once you remove all of the current artificial barriers (big tech monopolies, walled gardens, etc).
I think we do. At least more than China, where most of their big tech companies seem to be built on stolen and cloned tech.
If their products are all shit, how are they able to maintain their monopolies? Why hasn't a competitor started up that offered a better product?
It's a little of both to be honest. I disagree that their products are shit (in fact some of their products I think are really damn good), and I don't see how short of coercion with government or a private army or something that you could maintain a monopoly with products that suck.
But I genuinely think I might be missing something here. Maybe a better question is, how are they able to maintain their monopolies with shit products? Huge barriers to entry combined with quick acquisition of competitors? That's mostly how Rockefeller did it in the 19th century, but that's not a good parallel either because he didn't have a shit product.
Tried to find a references for this and found a blog post and comments
https://www.johndcook.com/blog/2010/11/16/why-att-licensed-u...
We temporarily had like 20 phone services, and we ended up back with (barely) 3.
I think there are 2 "solutions" to try: - breaking up a company once it becomes too big; separating the various business it operates, so that they cannot have unfair advantage of consolidation and competitors have a better chance (it's easy to "win" when you can subsidize one branch losses with another high margins...) - preventing them from becoming so big in the first place by forbidding them to buy any other business. If they have to grow organically it would take lots more time, require more ressource from the main business and take years to be competitive. I never understood why we let some companies swallow another just because it has the money. Companies with too much cash on hand are pointing at an economic inefficiency and it just means they should be taxe more because they are stealing too much ressources from the world.
Anyway, we end up in those situations because we assume a lot of things that are just plain wrong, in the first place the notion that the pie just gets bigger. It's fundamentally false because ressource are limited (natural ressources, numbers of humans, total available time, etc). When you make runners compete, you give all of them a single, similar lane; you don't just let a single runner push everyone out of a single lane... But the second case is exactly how our economy works...
The tree of the free market must be refreshed from time to time with the blood of corporate tyrants.
“The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants.” (emphasis added)
https://www.monticello.org/research-education/thomas-jeffers...
[0] https://en.wikipedia.org/wiki/C_(programming_language)
[1] https://en.wikipedia.org/wiki/Breakup_of_the_Bell_System
More seriously, each of those companies could be split without too much trouble and no loss of shareholder value. Microsoft in particular seems to be made up of components that work against each other.
4% isn't an amazing deal on payments from Spotifys point of view, and 10% for Netflix seems like in insult for processing payments. Normal payment processors are closer to 1.5 - 2%.
Now that Netflix knows that Spotify pay 4%, why would they ever agree to anything more?
But that makes the deal even weirder, Spotify doesn't have a choice, yet they have a completely insane deal.
https://developer.apple.com/support/reader-apps
Many companies (like Google) move Apple's subscription fee to end users, so don't feel too pity about them. Just compare YouTube premium cost as an in-app purchase and on the website. €15.99 vs €11.99 here in Ireland.
Google had a choice not to offer the YouTube subscription as IAP and just link people to the website. But the conversion rate for IAP is way higher compared to the website link, so they just punish their users, who pay €4 extra every month.
I should also note, that up until recently, Apple specifically had clauses that you couldn't have the link to the website bit AND they had a 'you can't pass the price onto customers' rule.
I would suspect, they have a special deal as well.
Unarguably, they don't need to do that. They want to, because a monopoly on payment processing makes a lot of money.
If 4%/15%/30%/whatever is what Google needs to charge to run their payment processing business, that shows that they're extremely inefficient/incompetent, and the market would be more efficient if other companies were able to offer that service instead. Last I checked, Stripe charges 2.9%, which is even less than what Google charges Spotify in this unicorn deal.
EDIT: the same goes for "store infrastructure" or whatever. If Google offered publishers the option to run their own infrastructure for distributing apps/updates/whatever, everyone would take that deal rather than pay Google's nonsense fees.
Crypto offers no protections so no fees need to be taken.
The reality is these fees are for access to an audience. Google spends a lot of money developing Android and creating a storefront that huge numbers of people see every day.
Casting that as "payment processing fees" is like complaining it's outrageous for a farmer's market to charge $200/day for a 10x10 booth because 100sf of parking lot can be had for $10/day somewhere else: you have to willfully misunderstand the business for the argument to make any sense.
I suppose the question is, did the farmers market threaten all the other land owners if they allowed a competing farmers market to open up? Or throw metaphorical wrenches in the way to a competitor?
Google's exclusivity agreement makes it much harder for alternatives to emerge. Even with this though, I get that they are funding open source development and need to protect it somehow lest it be stolen (cough by Amazon cough) and made a competing platform. I'm quite unsure where the balance should be.
App store monopolies aren't built on threats. A mall giving an anchor retailer a sweetheart deal isn't threatening nearby malls.
They are, however, built on economies of scale.
App stores, like payment processors, have economies of scale in the sense that you need a critical mass of users to sign up for them and trust them with their payment info, so you're not going to have a thousand of them, but you could certainly have a dozen. At which point they would have to compete on things like fees and keep each other in check.
But not if each platform has only a single dominant payment processor.
Unless I'm mistaken, Google has made threats, such as "if you include a competing app store, then you don't get any of the google apps, google play services, etc, and you can't use the Android trademark.
We saw in the early 00s a proliferation of "Android" devices that didn't have the Play store, and they were mostly DOA
> and they were mostly DOA
Maybe those stores should have invested a few dozen billion dollars in building up a comprehensive first-party app ecosystem that made them attractive to users.
Economies of scale, and all. Nobody's going to your farmer's market, because everyone's going to the mall that has a Walmart.
Anyways, to your point about audience: That's BS. The reason Google Play is the dominant store definitely has a lot to do with that, because nobody is going to publish on "My Awesome Android Store" if it doesn't have users. However, the reason they have that audience is because of their anticompetitive tactics. It's all a cycle that feeds into itself, and it's how they're able to become the only game in town and charge literally whatever they want.
Epic has the ability and resources to potentially build a store with enough of an audience to attract more developers and compete with Google Play, but it won't happen as long as Google is allowed to continue acting anti-competitively.
This is called a monopoly rent and is the sort of thing antitrust law is intended to prevent, when it's working properly.
> Google spends a lot of money developing Android and creating a storefront that huge numbers of people see every day.
Google gives Android away for free. They choose to do that, and if they didn't then it would lose to a competitor that did, because operating systems are a classic example of somewhere that free software works in the absence of anti-competitive behavior. If Google didn't develop Android then Samsung and Amazon and Canonical and Mozilla would do it, and parts of it would be more like Debian, which would be better.
> Casting that as "payment processing fees" is like complaining it's outrageous for a farmer's market to charge $200/day for a 10x10 booth because 100sf of parking lot can be had for $10/day somewhere else: you have to willfully misunderstand the business for the argument to make any sense.
Does the farmer's market also take actions to interfere with you being able to build your own storefront?
You are of course right that there is more work involved beyond a traditional payment processor. However, 30% of everything?? Even the standard 3% that payment processors take is ridiclously high. It's rent-seeking all around.
Spotify pays no feed to Google when they handle the payment processing themself, via some credit card processor and honestly why the hell should they. So Google decide that in an attempt to get even the tiniest amount of payments to go through them, they'd drop the price to 4%... Why is that so important to them?
It sounded to me that, in exchange for that favorable per-subscription rate, Spotify paid $50,000,000 into a “success fund,” whatever that means. $50mm / .11 = $454mm... sounds like they’re basically paying the equivalent of Play Store commission on half a billion’s worth of revenue, without any guarantee that they’ll actually be able to sell that much new growth through Play Store. That feels like sharing the risk in a way that isn’t too out of the domain of reason.
From [0], they added about $2bn in revenue year-on-year in 2022. Although we don’t know the term of this Play Store agreement (or what a “success fund” is), paying an amount equivalent to the normal commission on 1/5 of that total annual growth figure seems like a pretty nontrivial amount to commit.
The other stuff they provide exists to sweeten the deal.
When you start applying that 30% to $15 spotify subs, $50 uber rides, $60 video game, then a bunch of in-app purchases ranging in value; the math falls apart and if you have scale to do it, the negotiated rate makes more sense for those businesses given the average transaction amount.
Google gives no shits if random app developer isn't on Play. And so holds firm on their cut.
Play without Spotify makes a lot of users ask "Why isn't Spotify on Play?" And probably follow-up with "How do I get Spotify? Download another app store? Okay, I'll do that."
So essentially, the money that Google ceded to Spotify was approximately what they thought discouraging users from installing alternate app stores was worth.
It's a pretty impressive list of publishers, actually (scroll to bottom): https://cloud.google.com/solutions/games
The real issue though is that there isn't a good way to handle every app. In a normal world, every app would cost money to buy, and they would only be charged on the purchase prize. But in a world where most apps are free and then there are in-app purchases, there isn't really any other way for those to be monetized but to take a cut of transactions. But obviously these things don't scale the same.
To prevent Spotify from filing more EU antitrust complaints as they did for the Apple Appstore? [0].
Plus, 4% sounds low, but nominally 4% from all Spotify subscriptions on Android with their imense user base is a very large sum compared to any minor 2-3 person App studio that is charged 20-30%.
[0]: https://www.fastcompany.com/90836299/spotify-vs-apple-eu-app...
This seems like an obvious defect in antitrust regulators.
For me, I think the open question is can they deny 3rd party app stores or side-loading apps. Then, we get into the "Microsoft installing IE by default" fight. How can a 3rd party app store compete? (I don't have an answer)
The European Union's Digital Markets Act finds that pretty easy.
The DMA will let them charge 100% fees if they want, it just won't allow them to be the only store on the platform to force people to pay that fee.
This is somewhat the basis of the lawsuit that actually brought this out.
The accusation is (iirc): Google has backroom deals with OEMs to prevent them from having any market installed by default except for Google Play. This is what stopped Epic from continuing with their own mobile market idea, as no OEMs would agree due to this.
If they are a monopoly or duopoly or cartel it is very easy to argue against that.
I’m still scratching my head trying to understand why this is okay but Microsoft bundling internet explorer wasn’t.
Behaving as though predicting a response is a counter to it is bad faith.
However, since these markets are so dominant, I'd like any discounts to be transparent and offered to everyone at the same terms. Apple's public discount program works like this, although who knows what secret deals they have.
Related: are utility companies in various jurisdictions allowed to strike deals like this?
Apple is the Nintendo of gaming. Through advanced psychology tricks, they aren't held to the same standards.
I do think there's a strong argument to be made about forcing Apple and Google to facilitate the ability to install a different OS if the user wishes.
They don't have any, we know because of Epic testimony.
If Play Store decided to ban or restrict, say, Uber or Netflix, that's just billions of dollars of economic damage on a flick of a finger.
They hold more power than banks. It's surprising they aren't tightly regulated like banks would be.
No. Stop doing this.
When someone has a monopoly, the solution is not to keep the monopoly and try to regulate it. It's to break the monopoly.
Also not all monopolies are dangerous or evil, e.g. Steam.
Banks aren't dangerous because they're a monopoly, they're dangerous because you're entrusting them with your money.
Platform app stores are dangerous because they're a monopoly.
> Also not all monopolies are dangerous or evil, e.g. Steam.
Steam is still taking a 30% cut. Only monopolists can get away with that, and they should all be smashed.
You need aggressive internal competition to prepare your industries for aggressive external competition.
Korea used an alternate approach where the country was run by a dictator who put the CEOs in prison if they didn't export enough.
Now that's industrial policy!
When you have a large vertically integrated bureaucracy, the integration ossifies. Your cars are heavy so they need big engines and use a lot of fuel. Your big engines wouldn't fit in a smaller car. A smaller engine wouldn't be powerful enough to accelerate your heavy cars. So if gas prices suddenly go up, you have to throw everything out and start over from scratch.
Which you can't do overnight, even if someone is threatening to put you in jail. So now Toyota is bigger than Ford, GM and Chrysler put together.
I once tried installing the Amazon app store to see if I could get a version of Kindle that allowed in-app purchases. It didn't exist.