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With Apple's announcement yesterday of new App Store subscription offerings and policies requiring all content providers to offer at least the option of in-app subscriptions at the same prices as external options, questions have been raised about how providers will respond to the likelihood that significant numbers of customers will likely choose options that require them to hand over 30% of their revenue to Apple.

The Wall Street Journal explores possible antitrust issues, with experts noting that any such case would hinge on the definition of the market, as that would determine how dominant Apple's position is in it.
"My inclination is to be suspect" about Apple's new service, said Shubha Ghosh, an antitrust professor at the University of Wisconsin Law School. Two key questions in Mr. Ghosh's mind: Whether Apple owns enough of a dominant position in the market to keep competitors out, and whether it is exerting "anticompetitive pressures on price."
Experts note that publishers might be able to argue that tablet devices constitute the market for their offerings, and Apple's dominance in that market could subject it to antitrust investigation. But a broader market encompassing the entire App Store ecosystem and thus smartphones and tablets in their entirety would likely not raise red flags due to Apple's much smaller share of that larger market.
"Millions will be spent litigating how broad the market is," said Herbert Hovenkamp, an antitrust professor at the University of Iowa College of Law.

Mr. Hovenkamp said digital media is the most plausible market. He said he doubted that Apple, currently, has a sufficiently dominant position in that market to warrant antitrust scrutiny.
All eyes are of course also on the content providers themselves, who would have to raise prices by 43% in order to provide Apple with a 30% cut and still maintain their existing income, should all transactions shift to in-app subscriptions.

While many content providers have yet to respond publicly to Apple's announcement as they weigh their options, music streaming service Rhapsody spoke out yesterday, noting that it will be talking with other companies in its same position in "determining an appropriate legal and business response to this latest development."
Our philosophy is simple too - an Apple-imposed arrangement that requires us to pay 30 percent of our revenue to Apple, in addition to content fees that we pay to the music labels, publishers and artists, is economically untenable. The bottom line is we would not be able to offer our service through the iTunes store if subjected to Apple's 30 percent monthly fee vs. a typical 2.5 percent credit card fee.
Publishers of existing App Store applications have until June 30th to comply with Apple's new policies.

Article Link: Apple's App Store Subscription Policies Raise Antitrust Issues as Content Providers Fume
 

Consultant

macrumors G5
Jun 27, 2007
13,313
33
Obviously they did not read the part:

Publisher take 100% revenue if publisher already has the subscriber. Publishers are also free to charge whatever they want, but if they want access to paying customers using iOS, then why shouldn't they go by Apple's rules?

PS. The psystar morons already tried the same argument. Verdict: argument FAILED.
 
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GeekLawyer

macrumors 68020
Obviously they did not read the part:

Publisher take 100% revenue if publisher already has the subscriber.

Publishers are also free to charge whatever they want, but if they want access to paying customers using iOS, then why shouldn't they go by Apple's rules?
That seems to ameliorate my concerns, then.

A lot of people are comparing the iOS App Store to Disney World. Maybe that analogy works.
 
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addicted44

macrumors 6502a
Jun 6, 2005
532
168
It seems that it will take an anti-trust lawsuit to make Apple make a decision that will be beneficial to them.

They are unfortunately focusing on the small 20-30% of SW and content sales as a profit source, instead of making a minimal profit here and expanding the eco-system.

I agreed with the curated nature of the App Store initially, because it was a completely new concept users had never been exposed to before. However, most users are comfortable with the idea of buying apps for their phone, and Apple needs to loosen its restrictions. A great start would be allowing the installation of 3rd party app stores, which may not have the restrictions Apple's does.
 
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CrystalPepsi

macrumors regular
Feb 3, 2011
121
97
June 30 is about when I'll be upgrading to iphone 5. If we lose one or two of the big names from the appstore such as Amazon (Kindle), Netflix, Pandora, etc., I may have to reconsider my upgrade. Yikes.
 
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bittervictorian

macrumors newbie
Oct 9, 2005
16
0
Sydney
From the previous discussion:

The arguments which are made supporting Apple's move all seem to ignore key issues including that by combining (a) the unavailability of other methods of distribution onto i-devices (banning Flash and preventing other browers which could implement Flash) (b) a requirement that apps offer subsriptions in-app and (c) a restriction of linking-out to other methods of purchasing from in-app Apple are giving developers no middle-ground. They can either be on the i-devices and give 30% of revenue to Apple or not have access to that market at all. For many operators both options are likely to be un-economic and likely lead to close-downs (think Spotify, for whom the paid mobile app on the iPhone has been a major source of profit).

The results would either be (1) the competitor to Apple goes out of business or (2) the competitor raises prices available via ALL sources to cover the 30% it must give to Apple via i-device sales.

In either case - if Apple drives the likes of Spotify out of business OR the competitor has to raise all prices - if Apple then enters the subscription music market, then there actually could be anti-trust issues (as Apple certainly does have market power in that market - a key difference from the Psystar case, for example).
 
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macsrcool1234

Suspended
Oct 7, 2010
1,551
2,130
Obviously they did not read the part:

Publisher take 100% revenue if publisher already has the subscriber. Publishers are also free to charge whatever they want, but if they want access to paying customers using iOS, then why shouldn't they go by Apple's rules?

PS. The psystar morons already tried the same argument. Verdict: argument FAILED.


Fail. 30% of ones revenue is significant for anybody.

Don't bend over so deep for Apple.
 
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talkingfuture

macrumors 65816
Dec 4, 2008
1,216
0
The back of beyond.
I'd be interested to know what take the printer and retailer get when you buy a paper magazine. Surely more than 30%. A couple of magazines I read are always blaming the cost of paper when they put their price up.
 
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kerryb

macrumors regular
Sep 14, 2003
139
0
what about the Xoom?

It seems that content providers have already ruled out all the the iPad killers coming from Samsung, Dell, etc... I'm sure those companies will offer a better price as soon as they get their "iTunes killers" in place. Content providers can pass on Apple's demands if they feel they are too high. The iOS is not the only way to distribute content available, web browsers and print still remain options. Yes the future will eventually make the tablet or should I say Pad the best outlet but we are not there yet.
 
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GooMan

macrumors regular
May 8, 2006
205
24
USA
Still not sure how I feel about this. I can understand both sides, to an extent. The eBooks purchases & magazine subscriptions makes sense but how/why would Netflix have to pay Apple 30% every month. That doesn't make sense to me.
 
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Zero!sOne

macrumors member
Apr 20, 2010
40
0
Pennsylvania
Obviously they did not read the part:

Publisher take 100% revenue if publisher already has the subscriber. Publishers are also free to charge whatever they want, but if they want access to paying customers using iOS, then why shouldn't they go by Apple's rules?

PS. The psystar morons already tried the same argument. Verdict: argument FAILED.

The point is that subscribing through Apple to have one bill for multiple different services is infinitely easier to the consumer than handling that many different subscriptions separately. A large number of subscribers will probably switch to the easier-to-them model, which means services like Rhapsody and Netflix have to adjust their pre-existing pricing model to accommodate this loss in revenue.

If service providers were allowed to offer better deals on their own websites, the "100% revenue" comment would be useful. As it is with Apple's current rules, however, they can't.
 
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Centient

macrumors 6502
Oct 20, 2009
467
7
June 30 is about when I'll be upgrading to iphone 5. If we lose one or two of the big names from the appstore such as Amazon (Kindle), Netflix, Pandora, etc., I may have to reconsider my upgrade. Yikes.

I'm actually in a similar predicament right now. After a grueling and ultimately insulting several hours wasted yesterday with AT&T, we're leaving them and were planning on going to VZ for the iPhones. However many of the services I use through iOS are tied into companies that may or may not wish to continue to operate in the iOS ecosystem come June 30.

I'd love some clarity from Apple on exactly how and who will be effected by this. It could very well determine whether we move onto another OS in the coming days.
 
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NebulaClash

macrumors 68000
Feb 4, 2010
1,810
0
Whether Apple owns enough of a dominant position in the market to keep competitors out

As we are constantly lectured about, Android is kicking Apple's butt in the marketplace, so clearly Apple is no longer dominant. Or else Android supporters are exaggerating. Can't have it both ways. Either Apple is so strong you have to resort to the courts to stop them, or Apple is being beaten in the marketplace already. Pick one and stick to it, trolls.

As to the issue, I'm not sure what to think. Apple certainly deserves to get paid for its work. Every time you order a book or magazine from Amazon, the postal service gets paid to deliver it to you. So what Apple is doing makes sense, but I'm not sure 30% is the right number. More like 10% seems fairer.
 
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Joker Eh

macrumors newbie
Nov 18, 2010
13
0
And Apple has said
if a publisher chooses to sell a digital subscription seperatlely outside the app, that same subscription offer must be made available at the same price or les, to customers who wish to subscribe from within the app.

That to me is choice and consumers should be given choice and Apple is providing that.

Personally I like going through the App Store this way I can say no to providing my contact information to the publisher.

I would never buy the apps I buy on my Mac, iPhone, iPad if not for the App Stores, so why shouldn't Apple benefit from this to further develop the stores and services.

I side with Apple on this one.
 
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Nothlit

macrumors regular
Sep 14, 2009
242
18
Obviously they did not read the part:

Publisher take 100% revenue if publisher already has the subscriber. Publishers are also free to charge whatever they want, but if they want access to paying customers using iOS, then why shouldn't they go by Apple's rules?

PS. The psystar morons already tried the same argument. Verdict: argument FAILED.

This is absurd. It makes sense for Apple to take 30% of the one-time sale of an app, since they provide hosting and bandwidth for the application binary. But to take 30% of in-app purchases, which are entirely hosted and served by the developer, not Apple, is ridiculous. This will squeeze Amazon Kindle off the iOS platform. 30% is all Amazon gets after the publishers take their 70% cut. If Apple takes that 30% instead, Amazon gets nothing, and has no reason to stay on iOS. Services like Netflix, Rhapsody, and Pandora will likely have to raise prices across the board (even for non-iOS customers) in order to offset the burden of this 30% tax. This is not good for consumers at all.
 
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Popeye206

macrumors 68040
Sep 6, 2007
3,148
836
NE PA USA
I wish people would get off the 30% is soooo much kick. It's not. Get a clue, retailers and any distribution channel makes money when distributing and selling products and 30% is very common and fair.

But... the part that Apple will or should change is the part about having to offer the in-App price at the same or lower price. This is the part that publishers don't like and the anti-trust part as it's controlling prices.

If Apple changed that part, all would be good and let the buyer make up their mind as to where to buy.
 
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ghostface147

macrumors 68040
May 28, 2008
3,597
3,742
I don't suscribe to anything that is available on an iThingie, so it doesn't affect me personally. However the publishers need to tell Apple to piss off and pull their content. Both sides will lose a little, but Apple needs to understand that this is wrong. The suscribers lose on this one.
 
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JonHimself

macrumors 68000
Nov 3, 2004
1,553
4
Toronto, Ontario
Maybe I'm naive, maybe I fit in the 'fanboy' category.. but I refuse to believe that Apple doesn't know what they're doing with this. I have to assume that their team of lawyers was able to analyze and determine they could fight (and win) any charges. I have to assume that from a business standpoint they're confident that the develops/providers will go along with it.
They're not some small company without the ability to judge the market... of course they could be wrong and this could backfire, but if I were to bet on this, I have little reason to not bet that Apple knows what they're doing.
 
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nyctravis

macrumors 6502
Jun 12, 2007
263
110
San Francisco, CA
I think the 30% cut is quite heavy. But in terms of anti-trust, I'm confused. Apple still allows them to obtain subscriptions on their own and keep 100% of revenues, they are just saying they also have to offer the option via the AppStore. But with allowing developers their own pathway it seems to that Apple isn't forcing anyone to use the AppStore so I'm not sure how this is anti-trust. I'm sure I'm missing something, though, and someone can enlighten me.
 
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skellener

macrumors 68000
Jun 23, 2003
1,768
507
So. Cal.
This is absurd. It makes sense for Apple to take 30% of the one-time sale of an app, since they provide hosting and bandwidth for the application binary. But to take 30% of in-app purchases, which are entirely hosted and served by the developer, not Apple, is ridiculous. This will squeeze Amazon Kindle off the iOS platform. 30% is all Amazon gets after the publishers take their 70% cut. If Apple takes that 30% instead, Amazon gets nothing, and has no reason to stay on iOS. Services like Netflix, Rhapsody, and Pandora will likely have to raise prices across the board (even for non-iOS customers) in order to offset the burden of this 30% tax. This is not good for consumers at all.
Agreed Nothlit. I think the big issue here isn't the percentage. It's the fact that Apple is banning links to purchase through a browser. That is extremely anti-competitive. That is where I feel they will be liable for anti-competitive practices.
 
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karsten

macrumors 6502a
Sep 3, 2010
890
122
dear apple:

please kindly make hardware and stay out of the content industry. you suck at it, and aren't welcome.

thanks,
someone who likes to read more than just stuff blessed by a computer maker
 
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Wickedgardengtp

macrumors member
Mar 2, 2009
93
3
Apple has things to pay for. All of that 30% isn't going in Steve's pocket. I hope Apple ups it to 40%.
 
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