Apple in Breach of EU Competition Law, European Commission Finds

[pasamio]

Whats the rationale for not requiring say Best Buy, Amazon, your Grocery Store … to implant its in app purchase device in their App?

I feel Apple decided it was better for their ecosystem that for real world goods and services that many of these platforms could make a web app that provided that capability which would make their push for native applications moot. In a sense it's a pragmatic decision to delineate services that would otherwise work just as acceptably in a web browser versus a native application. All of those other examples have web presences that could be modified to work as a web app in a way that doesn't impinge upon their usability significantly. In that sense the native app provides a significant value add over a simple web app by providing a set of experiences that can be accelerated in a different way.

Out of the Epic case we're able to see that behind the scenes Apple dedicate engineering resources to helping Unreal Engine work more efficiently on the device and resolve issues. A lot of the specialised native SDK support predominantly benefits these over apps like Best Buy that doesn't need a better 3D renderer support. In part Apple recoup that cost of investing in making developer tooling better, including third party platforms like Unreal, through their App Store model.

If there is no rationale to regulate this, don’t know what kind of commercial relationships have.

I'm not allergic to regulation but I'm also hesitant to get behind much of the legislation that has been proposed in many places as well. Apple have had much of this model for over a decade now and all of a sudden it's now problematic. I disagree that compelling the only alternative to Android to act like Android is a pro-consumer move, it's anti-consumer and is removing choice. If this was important to me, I wouldn't buy the Apple device, I'd buy the device that provides the capability I want. There exists choice on the market to do so yet some the iPhone is still gaining market share.

As I've noted elsewhere the biggest problem in the smartphone market is that there are only two choices for operating system: Apple's iOS and Google's Android. Google undercut the smartphone operating system market eviscerating the marketshare of Blackberry, Microsoft's Windows Phone platforms (why pay Microsoft $50/device when Google was giving it away?), Nokia's operating systems and some of the smaller Linux based systems (OpenMoko, Maemo). Google now has a monopoly position over that market with almost all smartphone OEMs using Android, even Microsoft now are shipping Android devices.

Yet the majority of the focus is on how we regulate the only alternative to Google.

EDIT: Another note. If you are thinking ... 'Oh just use web apps'. Well compared this is fundamentally a back door to this model, a keyhole ... they control that keyhole too. Its least web app friendly thing on the planet. All protecting you, all to protect your fundamental human rights like Privacy and Security, .. right?. Welcome to the Matrix.

I disagree that it's the least web app friendly platform, they've pushed forward a number of features even after they made the pivot to native they've continued to add features to the web app platform and improve it. An example of this was that Apple worked to bring their Nitro enhancement to the home screen launched web apps. Amazon Luna seems to demonstrate the ability to run a game streaming service through the web browser. To be honest I feel that this is again Apple pragmatism, they've been clear from the outset that they will control and limit what is in the App Store. Now a web app is going to have a disadvantage because the DOM is a really expensive way of rendering an interface, native UI elements are able to be optimised in a way that a DOM/JS interface is unable to be so I am curious to see a deep dive on how Luna operates.

That said I remember years ago the Financial Times had created this really nice web app for the iPhone leveraging local storage and the full screen interface. For me it was a cool demonstration of just what could be achieved.

I think they are two different situations. In the bookstore case, the companies conspired to keep prices higher than what might have been absent the price fixing. That hurt the consumer.

Yes but some how Apple still ended up paying for it. I flag it as a cautionary aspect because Apple seemed to be implementing a similar.

 

[Nuno Lopes]

I feel Apple decided it was better for their ecosystem that for real world goods and services that many of these platforms could make a web app that provided that capability which would make their push for native applications moot.

I know what Apple decided. The fact is that they could have to require in-app-purchases for non digital goods, using the same rationale they decided for digital goods. In the end Apple distributes Spotify Music, Netflix Videos, ou xCloud game streams as much as it distributes, say a TV set.

So. The question I asked was. What could go wrong if they decided for that? How would that be any different from what they do Now?

PS: By the way, Best Buy and Amazon have apps. So they are using iOS as well as others … wait until you start seeing jackets, cars, watches … in 3D ..

 

[pasamio]

Again. Use the Apple way if you want.
But allow the other way for people that don’t think it bothersome to use mult stores.

Why pay the Apple tax? you host the app. Don’t use shady apps. They make it to the App Store on a fairly regular basis anyways

If you want to use multiple app stores, then get an Android phone. There exists a choice in the market today where if you are someone who wants multiple app stores, you can buy the device that has multiple app stores. I don't want to buy that device, I don't like the experience I have on the desktop today and I'm rather much happy with the state of affairs on iOS. This seems to be removing an option from the marketplace to compel Apple to not have it's single unified app store.

I though Apple was the seller? You see, in a Stores the seller is the store. Only marketplaces the seller isn’t the markeplace, and those each seller pay for hosting, a rent the varies by square meters, not by volume of sales. Even those, you are free to share more info about pricing outside the marketplace as they pay for hosting. Than you have stores such as Amazon with “independent“ sellers, but it provides infrastructure to deliver the goods sold … unlike the App Store … oh by the way, the later does not gave the monopoly over it … Sellers are able to provide and deliver to your house the exact same product elsewhere.

For an extra fee you can have your goods fulfilled by Amazon or you can handle fulfilment directly. Amazon's charge model is also volume based, for each product you sell via Amazon you pay a referral fee to Amazon. The exact details of the fee is dependent upon the type of product with the default being 15% and an Amazon device accessory could result in a 45% referral fee. On top of that there is either a per sale fee or a per month fee, any fulfilment fees if you're using FBA plus any on going inventory storage fees relating to that too.

Of course sellers are free not to list on Amazon, they could list on eBay via it's "buy it now" system, or through any other vendor that makes sense for them. However at that point you've not leveraged any of the aforementioned companies IP to make that product.

I know what Apple decided. The fact is that they could have to require in-app-purchases for non digital goods, using the same rationale they decided for digital goods. In the end Apple distributes Spotify Music, Netflix Videos, ou xCloud game streams as much as it distributes, say a TV set.

So. The question I asked was. What could go wrong if they decided for that? How would that be any different from what they do Now?

PS: By the way, Best Buy and Amazon have apps. So they are using iOS as well as others … wait until you start seeing jackets, cars, watches … in 3D ..

Apple could have required it but they didn't and I addressed that disparity in the reply that they made a business decision to not enforce that. As I stated, what could be different is that those companies would rely upon web applications rather than native applications and this could provide a less than optimal experience, something not as well integrated to iOS. That was clearly a driving force for the native app store in general based on what we've seen come out of the Epic trial. I suspect Apple wanted the buy in for the real world apps in a way that they felt the digital goods would be less problematic. Even then they've not outright prevented digital goods being acquired off device, just required on device sales to go through their infrastructure.

 

[Nuno Lopes]

If you want to use multiple app stores, then get an Android phone.

Who said I want to use multiple App Stores? But what’s the problem of having multiple stores? Why I need even to make that choice when choosing a smartphone? Don’t think that is part of the brochure is it?

You are correct. They don’t make say Amazon pay because they don’t want to. Movies tickets … state taxes … bit coin transaction whatever. Is all enabled by their intelectual property right? They just need to move from in-app purchase to in-app payment …

Technology sets the boundaries and regulate what its just not State Regulators. Vote by wallet. Those are a bunch of beurocracts that owe their salary to the mega corps … just check the latest Apple investiments want to make in the US, check the billions they pay in taxes. It’s a Miracle.

I wonder in that brilliant and inspiring commercial that Apple did playing with IBM, whose side they would be on. The ones breaking barriers or the ones setting them.

 

[pasamio]

Who said I want to use multiple App Stores? But what’s the problem of having multiple stores? Why I need even to make that choice when choosing a smartphone? Don’t think that is part of the brochure is it?

I don't know, who said you don't want to use multiple App Stores? Since you quoted me, I'm assuming you think I'm attributing that to you however if you look at the quoted text you'll find I wasn't replying to you, I was replying to Td1970 who said they wanted multiple app stores.

I don't think there is any problem having multiple app stores if someone wants to support them, in fact the folk over at Google are pretty keen on it and they've got this thing called "Android" that enables that. Android's the world most popular smartphone operating system with something like 75% of the world's marketshare with a wide select of great devices available at any price point you're interested in.

I don't think there is anything wrong with having a singular app store either, in fact I quite enjoy it as a feature of the device. It's nice to have choice in the market between an operating system with a unified app store and operating systems that support multiple app stores.

App Store used to be a part of the advertising back in the early days of it's launch, though these days I think everyone is more or less aware of what the App Store is and it's design.

 

[Nuno Lopes]

@pasamio,

The problem of replying to multiple people on the same post is not ideal.

Don’t think there is nothin inherently wrong with single store places either. Just abusive or regular practices

Will see how this pans out.

PS: Comparing this device we call an App Store with anything else falls short in describing its dynamics.

It’s a Meta Store.

 

[Nuno Lopes]

Apple could have required it but they didn't and I addressed that disparity in the reply that they made a business decision to not enforce that. As I stated, what could be different is that those companies would rely upon web applications rather than native applications and this could provide a less than optimal experience, something not as well integrated to iOS.

But if they did would not be based on anything different technically and conceptually than what they are doing with third party digital services

What would be your opinion if they did? It can’t be any different than the one you have regarding the in app purchase policy for digital services as it would be contradictory. In terms of value they would still keep on distributing and just hosting nothing but apps to 50% of Americans pockets holding devices they don’t own and an OS they have fully licensed for their use, much as they do now. That is what the 30% revenue share is for!

The only effective way to compete at the same level is to make these pockets hold something else. That is where the competition is, not in App Store services in the current business configuration. There is no competition there, very much so even on Android. There is a device competition, the buck stops there in terms of App Stores. People don’t buy an iPhone, Galaxy or FireTV because “oh I want to go Google Play store, Apple App Store, Amazon or Windows Store”. There is little value in that. They buy these devices because they like their capabilities and need to access digital services and apps to do stuff. Also the innovation in digital services brings more buyers of these devices and licenses, not so much the other way around. Pure digital services that survive and prosper support all devices and platforms … like analogs. This in app purchase policy forces them to bring their clients and leads to the App Store not the other way around.

There is a theory that digital services businesses are evil, they just want to have success at expense of Apple innovation. Well if you actually look at Apple sales records volume that is not true at all. In fact, if you can imagine an App Store with no third parties Apps … the iPhone would be dead, like Windows Phone is. So such conclusion makes no sense, they are indeed collectively giving contribution to make Apple ventures successful, just by investing in building apps and bringing their services to their devices.

Giving a technological foundation to this decision is funny, because this is not a technical discussion. It’s fundamentally a business decision.

What is under discussion by regulators is if the business in and around in app purchase policies are abusive or not, taking into consideration the entire vertical stack. Including digital services they own that directly compete with third parties. Just that. Not so if there should be more App Stores in iOS. That would not make much sense to me at all as it would solve nothing relevant to digital services and smartphone users.

PS: Yea Safari limited web app support is a keyhole also controlled by them.

 

[Ethosik]

Doesn’t Apple do this now. Force you to be locked? So your upset that some one else is following apples lead.

I am a bit confused here.....People want to break up the locked down environment that iOS has. I do NOT want this. What you are saying is why I prefer iOS. I WANT it to stay locked. If it becomes Android, iPhones would become more useless as there are far better Android phones that are cheaper.

 

[jlc1978]

I though Apple was the seller? You see, in a Stores the seller is the store.

Apple's model is very much like a consignment store - they host the product, make the sale and take a cut, even if they do not own the product in question. In any case, the App Store is still a store making sales.

Only marketplaces the seller isn’t the markeplace, and those each seller pay for hosting, a rent the varies by square meters, not by volume of sales.

How a store gets charged for space can and does vary, including a flat price per sq meter plus a percentage of revenue.

Even those, you are free to share more info about pricing outside the marketplace as they pay for hosting. Than you have stores such as Amazon with “independent“ sellers, but it provides infrastructure to deliver the goods sold … unlike the App Store … oh by the way, the later does not gave the monopoly over it … Sellers are able to provide and deliver to your house the exact same product elsewhere.

Spotify also sells outside of the app store, so Apple does not have a monopoly on sales of Spotify subscriptions.

Are you a customer, a supplier or from Apple? As a customer what would you loose? As a supplier, what is the problem if may opt for direct billing or as it is? If you are from Apple or an Apple shareholder, I understand.

As a customer, if Apple is forced to allow Spotify to bypass IAP and allowed to advertise in app on how to do it, Apple will need to find a way to makeup for the lost revenue; especially since Apple will no doubt be forced to allow others to do this as well. Apple could significantly raise the costs to a developer for services already included in a developer account, such charging for hosting and per download, etc. This will lead to less developers and higher costs, hurting the consumer.

The Platform is the State, then you have "at best" multiple State to choose from, not multiple grocery stores. Having all the user using the same grocery store inside the state does not equal to what customer want without giving them a choice. Your choice is telling the customer to move to another state if you want another grocery store.

Exactly. They get to chose which OS they want to use; or not to use if they want.

And that state currently holds ~70% of US citizens and 75% of U.S. total App Store revenues with zero grocery stores competition.

Considring the US sahre of iOS is ~60%, and Europe ~ 32%, I'd say Apple has some competition still.

And the same goes to EU market. That is how EU view Anti-Competitves. When you hold the majority market power, in revenue and profits, there are things you cant do. It is not the monopoly status that matters, it is the monopoly power.

No, it's abuse of the monopoly power. In the US, and I suspect in the EU, being successful and having significant marketshare so as to be a monopoly does not warrant action unless yo abuse that power. Airbus, for example, isn't under fire for being one of the 2 biggest a/c suppliers.

And if that is a business landscape Apple doesn't like, the same argument would suggest Apple should pull out of EU.

Not going to happen. It will be interesting to see how Apple responds to the final ruling, which no doubt will take years to finally wind its way through the courts.

On the flip side, if I were Spotify I'd be a bit worried about winning; as they are the biggest streaming service in the EU with a market share about the same as Apple's iOS share. Content holders may decide to attack their monopoly status and seek to be able to offer their own off app ad free subscriptions to music while demanding Spotify stream it as a condition of access to the content. They could wind up being hoisted by their own petard.

 

[Nuno Lopes]

Apple's model is very much like a consignment store - they host the product, make the sale and take a cut, even if they do not own the product in question. In any case, the App Store is still a store making sales.

In what way App Store hosts say for instance, video streams and music streams? Hey, in what way the App Store hosts say the LinkedIn Network? Those consignment stores host the entire thing being sold.

How a store gets charged for space can and does vary, including a flat price per sq meter plus a percentage of revenue.

Where is the store space needed to host the goods being sold? Videos streams, audio streams, game streams, hey the LinkedIn network in the App Store?

As a customer, if Apple is forced to allow Spotify to bypass IAP and allowed to advertise in app on how to do it, Apple will need to find a way to makeup for the lost revenue; especially since Apple will no doubt be forced to allow others to do this as well. Apple could significantly raise the costs to a developer for services already included in a developer account, such charging for hosting and per download, etc. This will lead to less developers and higher costs, hurting the consumer.

How much more? Go to 50% shared revenue for API Kit licensing? That would in be interesting.

PS: The $resources$ required to host a regular app are far than lighter video streams, and lighter than say this website.

 

[coredev]

And that state currently holds ~70% of US citizens and 75% of U.S. total App Store revenues with zero grocery stores competition.

Well, the revenue should be irrelevant for the monopoly considerations.
Just because people who spend more money are drawn towards one specific store does not make it a monopoly.

 

[ksec]

Well, the revenue should be irrelevant for the monopoly considerations.
Just because people who spend more money are drawn towards one specific store does not make it a monopoly.

This is the argument whether Apple is or is not a monopoly. Which is actually irrelevant in discussion. It is whether they have the monopoly "power" within their respective market. And the figure suggest they are. Or monopsony where they are the single purchaser or goods.

 

[PlayUltimate]

It is funny how people on here defend Apple no matter what. The EU charge is right. Apple is competing in the appstore and due to the fees, other similar services cost more. Why should Spotify or anybody else have to lower their standard price just so they can make the price look the same due to the Apple fee but get less money than Apple?

lol, its fine to love the brand but sometimes it is also ok to criticize them when they are doing wrong.

If I buy an apartment building, am allowed to give rent discounts to my family members? friends? Or do I have to charge everyone the same regardless?
Am I allowed to live in one of the apartments and not charge myself rent?

 

[PlayUltimate]

Digital businesses are run towards customers not OSs. If one in two your customers are using an iOS device, their choice, you don’t have the option. People don’t buy a smartphone based on who they will pay for apps and their digital services, they don’t really care. Yet they are falling into a trap!

A trap?

The in app purchase policy and process created by Apple is built in a way that totally and absolutely confuses customers. He or she have no idea that is moving out of the App (a place) to the App Store (another place) in order to pay. Users may think that is Spotify that is billing, it is not. Than if they go to the Apple Music … exactly same thing, yet they simply see a lower price, ”Oh Spotify is more expensive they think”. There is no customer awareness of what is going on, and any attempts to inform the customer in the App (a thing that is not Apple property) are forbidden by policy, with the risk of being expelled from installing their App on their customers devices.

This is called entrapment, not to commit a crime of course as none is being committed by the user. But to choose Apple Music.

This system is ethically wrong in so many ways man.

So the primary basis of your argument is that Spotify's cost of goods is too high to compete against Apple Music in the iOS Store. Not sure how else to look at it.
Also, are you suggesting that there should be no charge for being made available in the iOS Store? And if not, how much should be charged? And what would be your rationalization for that number vs some other number? At least the 30% markup is fairly common industry amount and is not arbitrary.

 

[jlc1978]

In what way App Store hosts say for instance, video streams and music streams? Hey, in what way the App Store hosts say the LinkedIn Network? Those consignment stores host the entire thing being sold.

Spotify is paying for access to Apple’s customers. For that Apple gets a cut of the revenue. A consignment store doesn’t necessarily have to have the item, they can take an order, the seller delivers and the item is never in t he store but the store gets a cut

Where is the store space needed to host the goods being sold? Videos streams, audio streams, game streams, hey the LinkedIn network in the App Store?

Irrelevant. The space for access to the customer is the product.

How much more? Go to 50% shared revenue for API Kit licensing? That would in be interesting.

Maybe, which is why I think the small developer would be hurt if Apple is forced to allow advertising off app purchases.

PS: The $resources$ required to host a regular app are far than lighter video streams, and lighter than say this website.

That is irrelevant to the value provided, and why you price on value whenever possible. Just because it costs me 10k to provide a service doesn’t me I can’t charge 30k for it.

 

[Nuno Lopes]

Spotify is paying for access to Apple’s customers

No. Its paying for access to their (Spotify) customers, in equal terms, some just (one in two Americans) happen to have an Apple device on their pockets. That is the only way to justify 30% markup in these cases.

iPhone users use the Internet like any others and get Spotify marketing as well as others. Its mostly Spotify brining customers to the App Store.

“Irrelevant. The space for access to the customer is the product.”

So you are redefining what a product is lovely. Interesting, never got the impression that the Apple TV was Netflix or that the Internet was the App Store. You see, the only way the App Store has to work is through a space called Internet. Super.

To define a product, an experience, through its access point is totally absurd as proven by counter examples above. Much more than that is being sold.

Now, you are correct in one thing. The App Store only hosts access points yet its revenue share model charges for the product as a whole. In other words, the App Store charges for things that materially does not deliver to their customers.

Just think for a moment 30% on say a monthly subscription of $10. That is $36 a year for using the App Store to pay and update an app. Now take two … that would $72 … a miracle happens. A family of iPhone users are paying hundreds of dollars a year to be able to download/update apps and access to a nicely curated library, on a devices that already cost them close to a thousand if not more. They don’t know this, because this cost is hidden when they click ”Buy”, tangled up in a soup of business jargon and policies.

I know this, so I usually buy subscription directly to the suppliers. Users like me, I’m in the game, know this. But busy customers not in the game, mostly don’t really.

“That is irrelevant to the value provided, and why you price on value whenever possible. Just because it costs me 10k to provide a service doesn’t me I can’t charge 30k for it.”

Your are starting to repeat qualifiers. I understand what does not fit your prose is irrelevant.

The reason why this is relevant its because it exposes the fact that the 30% markup is not based on what the App Store does for their suppliers in comparison to others, but the fact that its the gateway to 50% of Americans pockets (people carrying iPhones). Its policies put them in a position of no competition hence the ability to charge for things that does not deliver materially, that is the reason why it is so “valuable”. That is the core value of the App Store.

Combining this that the company has products that compete directly with their App Store “suppliers” and may come up with more plus its 50% market share in the US, some might consider that its policies are anti-competitive.

PS: Of course your can always argue that you know of Spotify through the App Store and they did such a convicing job to click the buy button. That is the thing, it can be the case of many apps, but it can also not be the case of many others. The gatekeeper effect.

 

[pasamio]

@pasamio,

The problem of replying to multiple people on the same post is not ideal.

I try to balance out too many posts versus single replies. I use the multiquote feature and that makes it easy to read a thread, add posts to reply to as I go and then reply once I've caught up with the conversation. I try to reply to folk who reply to me, that's part of the conversation and how we learn and grow.

Don’t think there is nothin inherently wrong with single store places either. Just abusive or regular practices

Will see how this pans out.

PS: Comparing this device we call an App Store with anything else falls short in describing its dynamics.

It’s a Meta Store.

Time will definitely tell on this one, we've got the Epic case up now so that should be interesting to see over the coming weeks. The meta store concept is an interesting one, I'm not sure I entirely agree but I also see part of where you're coming from. Your phrasing feels similar to what a mall would do, it's a meta-store that often has invasive rules on it's tenants (e.g. don't meet sales quotas then you're out) though I'm not sure the analogy completely holds.

But if they did would not be based on anything different technically and conceptually than what they are doing with third party digital services

What would be your opinion if they did? It can’t be any different than the one you have regarding the in app purchase policy for digital services as it would be contradictory. In terms of value they would still keep on distributing and just hosting nothing but apps to 50% of Americans pockets holding devices they don’t own and an OS they have fully licensed for their use, much as they do now. That is what the 30% revenue share is for!

To be honest I already frequently pay more for convenience via platforms like Amazon and I'd likely end up doing much the same with iOS. I already go out of my way on MacOS to look to see if there is an App Store version because it provides a more convenient experience. I'm fortunate enough to be able to afford the Apple Tax and enjoy it's convenience.

The only effective way to compete at the same level is to make these pockets hold something else. That is where the competition is, not in App Store services in the current business configuration. There is no competition there, very much so even on Android. There is a device competition, the buck stops there in terms of App Stores. People don’t buy an iPhone, Galaxy or FireTV because “oh I want to go Google Play store, Apple App Store, Amazon or Windows Store”. There is little value in that. They buy these devices because they like their capabilities and need to access digital services and apps to do stuff. Also the innovation in digital services brings more buyers of these devices and licenses, not so much the other way around. Pure digital services that survive and prosper support all devices and platforms … like analogs. This in app purchase policy forces them to bring their clients and leads to the App Store not the other way around.

We've fallen into a duopoly with iOS being the only alternative to the monopoly that Android holds over the OEM phone manufacturer market. Apple have slowly worked up to that 50% marketshare and it's an interesting market dynamic considering the competition is cheaper, has functionality like side loading, multiple app stores and competitive if not better hardware options. And even on that platform the majority of the world, outside of China, leverage Google's Play Store anyway...the OEMs even pay Google for the opportunity to do it. However even though Apple has been the minority player, in the EU and globally I believe still at 30% though the US is hovering around 50%, there hasn't been a problem of lack of third party developed apps on their app store that would cause the App Store to be a truly differentiating factor for a device purchase.

There is a theory that digital services businesses are evil, they just want to have success at expense of Apple innovation. Well if you actually look at Apple sales records volume that is not true at all. In fact, if you can imagine an App Store with no third parties Apps … the iPhone would be dead, like Windows Phone is. So such conclusion makes no sense, they are indeed collectively giving contribution to make Apple ventures successful, just by investing in building apps and bringing their services to their devices.

Personally I don't think digital services are inherently evil, I empathise with a number of them being caught off guard by what is often a capricious review process by Apple that like most modern services these days has an appeal option that seemingly goes to a box that just says "We've reviewed your case and decided we were still right" as an delayed autoreply.

I don't think it was purely a lack of apps that killed Windows Phone, though certainly it didn't help. Android took away all of the OEM's who had made Windows Mobile devices because it was the new shiny and at the time Google was giving away Android compared to the I think $50/unit cost Microsoft charged. Google had the head start with Android and was able to replicate the iPhone experience quickly with their own take on "openness". That meant they had the leg up on Microsoft and their vendors started shipping Android phones. By the time Windows Phone 7 came along with an updated look and feel they were already three years late, they broke backwards compatibility with their earlier Windows Mobile 6 apps, pushed Silverlight as the preferred development tooling for the device in addition to their XNA gaming focused SDK. Microsoft paid companies to build apps for the platform and the Nokia Windows Phone devices weren't that bad but those were the only devices. By being late to the market the PC enthusiasts who weren't going to buy the Apple phone had already purchased an Android phone which meant you didn't have as strong an evangelising position in the broader community. On top of that the launch of Windows Phone 7 was a step backwards for many users compared to the previous version with functionality drops in areas that should have been core competencies for Microsoft (ActiveSync comes to mind). Microsoft had an interesting operating system years too late to the market without realising their real competition wasn't the iPhone but Android. Without Nokia, who had at one stage been looking to be yet another Android OEM, Windows Phone would have died sooner.

That said if anyone is going to come up with a viable competitor, Microsoft is the one to do it. I think there is a value proposition in there to be the alternative to Apple's walled garden, the alternative to Google's privacy impinging approach and to highlight their own services. If they found an approach where they could run Android apps in addition to what ever they built their own native apps in then that could pose an interesting challenge in the marketplace that is missing.

PS: Yea Safari limited web app support is a keyhole also controlled by them.

Don't disagree and as we see devices get increasingly powerful I think ensuring that the web app support is maintained with relative parity to other SDK's is important in the long run. The web is truly the cross platform, device agnostic development environment and realistically without it we'd be in a completely different world.

 

[Nuno Lopes]

Time will definitely tell on this one, we've got the Epic case up now so that should be interesting to see over the coming weeks

It is indeed unfortunate that Epic is champion this. Its not really the perfect candidate to get the message across. It basically a store arguing with another store and that might cloud the core problem at hand. Spotify is different in that regard, I guess.

“We've fallen into a duopoly with iOS being the only alternative to the monopoly that Android holds over the OEM phone manufacturer market.”

Here is the thing. I‘m not against Apple in anyway. I’m against Meta Stores, the App Store being probably the first in the planet. The digital material is so malleable compared with analog that breaks business common sense. The general population does not know who is delivering them what, where ones values start and the other ones ends any more and Meta Stores makes it even easier to manipulate.

In my view, these kinds of store should be regulated. Say, requiring them to allow “residents” direct billing within their Apps. I think that would make it clearer where one services starts and the other ends. Of course, “residents” could opt form the in-app-purchase Store service and all should pay for hosting and app distribution based on resources consumed. Not based on the end value digital services deliver to the customer, that is a Meta Store dipping on value that do not deliver … some might even think of “double-dipping”.

In the near future, smart glasses, smart-houses, smart-buildings built by tech companies … all with in-place-purchases charged with Meta Stores and their tax. Horrible, just horrible both for customers that will end paying more, and suppliers that will have their business conditioned by these companies. We can see its effects already. Apps in the App Store cutely offering less features for more money. 79B in revenue for an app hosting and billing service that technically close to a WebSite hosting and Paypal, together. The second has a fraction of the other revenue and serves far far more businesses.

If people think that whatever App Store costs is not reflected in the price affecting customer think otherwise. Its not the supplier that is paying, its the customers. Suppliers will not reduce their revenue of course, they need the money to compete, having customer paying more for the same. To save the day come just a tad cheaper Meta Store services, taking advantage of their influence on higher prices by third parties, so costing more than today, they are the host, so they only need to absorb a fraction of the cost in the end price if any. But it will happen is such subtle ways that no end user/customer notices it … oh its inflation … yeah.

Meta Stores create a problem that otherwise would not exist to than offer a solution at a higher price. This is how bad the thing is.

 

[jlc1978]

Now, you are correct in one thing. The App Store only hosts access points yet its revenue share model charges for the product as a whole. In other words, the App Store charges for things that materially does not deliver to their customers.

the App Store's customers, for subscription based apps such as Spotify, are the streaming service; and tehy deliver great value to that customer.

“That is irrelevant to the value provided, and why you price on value whenever possible. Just because it costs me 10k to provide a service doesn’t me I can’t charge 30k for it.”

Your are starting to repeat qualifiers. I understand what does not fit your prose is irrelevant.

The reason why this is relevant its because it exposes the fact that the 30% markup is not based on what the App Store does for their suppliers in comparison to others, but the fact that its the gateway to 50% of Americans pockets (people carrying iPhones). Its policies put them in a position of no competition hence the ability to charge for things that does not deliver materially, that is the reason why it is so “valuable”. That is the core value of the App Store.

Exactly. Yo keep insisting Apple's fee is unfair because the cost of the hosting is small; yet as you admit the value to Spotify is accessing Apple's customer base. That is what Apple charges for, and the value of that to Spotify is far beyond the hosting costs to Apple.

Should Apple be forced to cut it's 30% for subscription apps, Apple should just charge them per download no matter what the streaming service charges for the app. I doubt Spotify would like that, considering estimates say it may do 5 million d/l's a month. Apple could charge Spotify say $2/download and probably generate more income than 30% of app store subscriptions.

 

[Nuno Lopes]

Exactly. Yo keep insisting Apple's fee is unfair because the cost of the hosting is small; yet as you admit the value to Spotify is accessing Apple's customer base. That is what Apple charges for, and the value of that to Spotify is far beyond the hosting costs to Apple.

If you want to understand what I said don’t misread me. Digital services, any business, need to access their customer base whatever they are.

By your definition of customer base than Apple itself accesses everyone customer base without paying a fee. Spotify does not want to access Apple customers, but their customers, like Apple can access theirs anywhere on the planet, including iOS. Don’t think Spotify minds paying for a third party (Apple) hosting their app if its better for their customers in context. Don’t think that Spotify minds at all Apple success in selling devices and OS licenses to their customers or any other of their products/services.

Why does Apple want to access Spotify … everyones customers by having them share their revenue with them while offering competing digital services now or any that might come in the future? Ask them.

Don't tell me that Apple wouldn't love to have everyone using their devices, profit margins permitting of course. Just like any business.

 

[I7guy]

If you want to understand what I said don’t misread me. Digital services, any business, need to access their customer base whatever they are.

By your definition of customer base than Apple itself accesses everyone customer base without paying a fee. Spotify does not want to access Apple customers, but their customers, like Apple can access theirs anywhere on the planet, including iOS. Don’t think Spotify minds paying for a third party (Apple) hosting their app if its better for their customers in context. Don’t think that Spotify minds at all Apple success in selling devices and OS licenses to their customers or any other of their products/services.

Why does Apple want to access Spotify customers? Ask them.

So you're lumping all digital services users into the relevant market for proving your point about anti-trust regulations being applied to digit businesses? Ok then.

 

[Nuno Lopes]

So you're lumping all digital services users into the relevant market for proving your point about anti-trust regulations being applied to digit businesses? Ok then.

Can you elaborate?

 

[I7guy]

Can you elaborate?

I was attempting to summarize what I believe was being conveyed.

 

[jlc1978]

If you want to understand what I said don’t misread me.

I'm not sure what you think I misread. You were pretty clear, IMHO, that Apple's customer base is what Spotify wants to access and that is the value Apple delivers:

"...but the fact that its the gateway to 50% of Americans pockets ... That is the core value of the App Store."

The question on the table is how much should Spotify pay for that access.

Digital services, any business, need to access their customer base whatever they are.

True, which makes Apple's customer base valuable and thus they can charge for access.

By your definition of customer base than Apple itself accesses everyone customer base without paying a fee.

Np. It depends on what a company is selling on the app store. In the case of streaming services the customer is the service and is paying for access to Apple's customer base.

Spotify does not want to access Apple customers, but their customers, like Apple can access theirs anywhere on the planet, including iOS.

Spotify's iOS customers are by definition also Apple's customers. A company can have multiple customer bases.

Don’t think Spotify minds paying for a third party (Apple) hosting their app if its better for their customers in context.

And the question is how much should Spotify pay for access to that customer base.

Don’t think that Spotify minds at all Apple success in selling devices and OS licenses to their customers or any other of their products/services.

Spotify obviously like that Appel is successful since they have an app that makes them money on iOS.

Why does Apple want to access Spotify … everyones customers by having them share their revenue with them while offering competing digital services now or any that might come in the future? Ask them.

Simple - to make money.

Don't tell me that Apple wouldn't love to have everyone using their devices, profit margins permitting of course. Just like any business.

Sure, and they also love making money off of the large customer base they have built, just like any other company.

 

[Nuno Lopes]

I'm not sure what you think I misread. You were pretty clear, IMHO, that Apple's customer base is what Spotify wants to access and that is the value Apple delivers:

"...but the fact that its the gateway to 50% of Americans pockets ... That is the core value of the App Store."

Again, don’t miss read me.

If you have a device that it 50% of Americans is quite natural that some of them will or are using digital services like Spotify and others. Heck all of them are using digital services, without digital services you would have a in your pocket.

For instance Apple devices to work it needs a communication infrastructure, it does not mean that it wants access to Telco customers. People naturally use multiple distinct services.

You can’t find one single evidence that Spotify or Epic want access to Apple Customers but theirs.

Now if a business uses their power over the another, say by potentially being in the pocket of 50% of the customers of some other business, to than force them to share the payment of their services through some kind of mechanism, all while offering a competing product, for sure its more indicative what you are imputing to Spotify. Not only access but also going after them.

Here is the full quote:

“The reason why this is relevant its because it exposes the fact that the 30% markup is not based on what the App Store does for their suppliers in comparison to others, but the fact that its the gateway to 50% of Americans pockets (people carrying iPhones).”

Both Spotify and Epic did not set compete themselves with any of Apple’s businesses. Apple set it self to compete with them, one through Apple Music and another through Apple Arcade. It’s Apple who wants their customers and it does look like it is using its device business and market share along with its Meta Store to have leverage over them.

Some judges might find it an abuse of market position.

I’m pretty stunned that other digital services such as Netflix, Zoom, Safari Books and many other haven’t joined in. Maybe they are all waiting for it to start eating their lunch to come out of the closet with their own law suit … too late. Jurisprudence.

The case is quite simple if we look at with reasoning foundations. Now, Apple is fighting this by playing not a reasoning gaming but an emotional game: “Epic wants to turn iOS into Android, we don’t want to be like Android”. That is clever and might just be enough to convince a more emotional judge.

I’m not into winning arguments. That is a waste of time so I stopped here without reading the rest, roger out.