Apple's Browser Rules Stifle Innovation on iOS, Says UK Regulator

[I7guy]

Apple is estimated to command about 50% of the market for spending on mobile app spending.

And a Rolex costs more than a times. People spend more on a Rolex than a times.

In addition to that, the cumulative market share of Apple and Google is close to a duopoly.

Nobody cares about this legal duopoly. The eu should foster competition by creating another platform.

…in terms of unit sales?
Probably higher on revenue.

And yet again, the market share on mobile phone hardware isn’t very relevant.
The regulation is about software. Apps, digital purchases and subscriptions.

The markets for mobile phones are quite competitive and hence remain unregulated (from competition law).
In the UK, the EU, just as in the US.

If you regulate these markets to an extent innovators won’t release products, the eu will cut its nose off to spite its face.

 

[Abazigal]

The biggest traffic generators - or generators of transactions for digital content.

Which actually doesn't quite answer my question though.

Let's say I watch Netflix on my phone using 5g while on my way to work.

Should the Telco tax Netflix (which is responsible for the use of said bandwidth), or Apple (since the viewing is taking place on an iOS device)?

Apple has no problem justifying a distinction between physical and digital products.
Or small and large developers.
Neither have I for this thought experiment.

It actually does matter. Namely that digital products tend to have zero marginal costs (such as an IAP to purchase extra gems for candy crush; it's basically pure profit). I will expand more on this as I address your next main point.

Definitely not!

👉 That’s exactly the point: gatekeepers charging an additional 10% or 30% „tax“ is not in the interests of consumers.


I readily concede that the „walled garden“ and „one stop shop“ is beneficial to consumers and in the best interests of many of them: having all downloadable apps reviewed and buyable through a single, trusted market place.

But a unilaterally set 30% commission that’s under no competitive pressure and has remained unchanged (for large developers, which account by far for the greatest part of App Store revenue) for 16 years and going is not.

Neither is having layers upon layers of companies that charge each other a commission of revenue.

• Should telecommunications equipment manufacturers (among them Nokia and Ericsson) charge telcos a 30% commission on their subscription revenue?
• Should Telcos charge large traffic generators and/or providers of digital content and transactions charge a 30% commission on Apple’s and Google’s „services“ revenue?
• Should Apple and Google charge developers of third-party apps or streaming services a 30% commission on their revenue?

Neither makes for efficient markets or consumers best interests.

As I typed my response yesterday, I suspected you would attempt to draw a parallel between carriers taxing Apple, and Apple taxing developers (and consumers, by extension). But I don't really see these two are comparable examples.

First, there are 3 main ways to monetise an app - ads, subscriptions and IAPs (1-time app payments don't really cut it anymore these days).

Ads aren't subject to any cut, so a developer gets to keep 100% of ad revenue.

As for subscriptions, developers are allowed to do user acquisition via the web if they don't want to pay Apple anything (like what Netflix and Spotify have done). It's obviously nowhere as efficient as simply letting users subscribe directly via the app, but once subscribed, they likely stay subscribed for a long time, making the effort worth it.

Third, we come to IAPs (which is the main generator of App Store revenue), and the dirty little secret here is that a 30% fee is not a proof of monopoly because that fee isn't going to get passed down to the consumer at the end of the day. How do you set a price for a digital product like virtual currency which has no marginal cost of production? You figure out the price sensitivity curve, and then you find the price point that maximises revenue (since profit = revenue in this case). That doesn't change if the fee you pay after the transaction decreases. You take in less money at the end of the day, but that's still the maximum amount you could have collected under those circumstances.

Finally, if there was no interest in App Store fronts, how then is a company like Steam even able to make so much money, and why do developers willingly flock to their platform and happily fork out 30% of game revenue?

https://arstechnica.com/gaming/2024...ocs-reveal-epic-ceos-anger-at-steams-30-fees/

And personally, because so much of App Store traffic stems from IAPs, I feel that this is where it actually makes sense for a central App Store, simply because of the potential for abuse (which is really why Epic is fighting so hard to be able to work around that, and which is why it it annoys me that you are actively cheering on Epic rather than seeing just what it is that they are after here; which is to operate their own App Store where they get to charge other developers a cut).

I have nothing against game developers personally, but it's all just dollars and cents at the end of the day. It's pure margin and game developers are always fighting over margins, and they don't really get my sympathy because I personally have little love for IAPs.

You, me, @surferfb and @I7guy, we have gone round the block more times than I can keep track of with regards to this discussion. The point I am trying to make is - it is what it is. Apple and Google won. It would be nice if they weren't so over the top about it, and maybe in some alternate universe, regulators won by managing to appeal to their better Angels.

But in order to actually combat Apple and Google, you are going to need a new platform and (possibly) a new paradigm, and the DMA isn't it. I suspect that somewhere along the way, EU regulators realised that they couldn't really attack the App Store, so they decided to just throw out the baby with the bathwater and attack Apple's integration instead, which is my whole beef with the DMA.

Huawei’s Mate 70 smartphones will run its new Android-free OS

All four models in Huawei’s Mate 70 lineup will be offered with the company’s own HarmonyOS Next, which isn’t compatible with Android apps.

www.msn.com

Contrast this with say, Huawei, who claims to have come up with their own homegrown OS independent of Android. But the reason why you will probably never see something like this in the EU is because the EU's penchant for excessive legislation has all but guaranteed that no company will be able to obtain a foothold in this area. How could they, when the DMA disincentivises any company from growing to the size and scale necessary to challenge Apple and Google?

This is not the first time I have said this. There is good in bad, and there is bad in good. And it won't be the last. When you drill down to the details, is Apple's App Store policies really the issue here, or is it EU policies resulting in their own homegrown industries left being unable to compete, necessitating that the EU itself having to step in to "even the scales"?

 

[Unregistered 4U]

You do know there’s a distinction between goals and side effects?

Yes, and Vestager’s goals have always been to lower the profits of US companies. The side effect is the DMA being so poorly written. And, perfectly explains how regulation focused on ensuring competition would exclude the one area of competition where an EU company would be the gatekeeper.

Operating systems for personal computing are mature today.
And it’s an acknowledgement of reality.
Android and iOS are as likely to be replaced as base to build upon as Windows if for desktop PCs.
There’s no substitute for ecosystem of third-party apps that “competition” could substitute.

“Of course we Europeans are going to base our entire tech future on companies that aren’t based in the region. It’s only an acknowledgment of reality that we literally can do no better. If something replaces Windows OF COURSE it will not be from an EU company and it’s folly to think otherwise.”

There isn’t one and there (likely) won’t be one.
Except, maybe, HarmonyOS - and that’s monopoly power is purely a thing for political reasons.

There isn’t one except for the one that is And, as indicated, it won’t come from any EU nation (though I’d expect that’s not a surprise even to folks in the EU).

 

[Unregistered 4U]

Utter nonsense - because the EU did not mandate the technical design of the API (as you’’re, wrongly, insinuating).

Microsoft had an unsafe design - and they were too lazy to fix it.
Bit quick to blame third parties when somebody’s use of that interface triggered an issue in their unsafe product.

The EU mandated that third party security companies should have the same access to the OS that Microsoft has. For “Competition”. I say again, there is no one remotely knowledgeable about tech that would have even suggested a thing, much less include it in a final document to define actions a company needs to take. Unless anyone believes it’s on Microsoft to tell the EU how it should be regulated. And, if that’s the case, I’m sure Apple would be the next company up to bat to tell the EU how it should be regulated.

Similarly, there’s no one in car manufacturing that would suggest razor blades in seat belts to go off in June 15 years later. No one would suggest a thing and one would HOPE that it wouldn’t find itself in a document to define actions a company needs to take.

Simply put, the EU regulators failed to understand the impact of what they proposed and are NOW saying, “Well, someone should have told us it was stupid!” No, they should have educated themselves BEFORE including anything even remotely like that in a set of remedies. And their response is tone deaf. Something more like “We didn’t recognize the potential impact of that rule at the time, but we have taken steps to ensure no ruling like that, that doesn’t take into account common norms of the industry being affected, ever emerges from this body again,” that’s acknowledging that the final domino never falls until the first one is pushed. Their response was, “Yes, we pushed the domino, but Microsoft didn’t tell us how dominos worked!”

 

[Abazigal]

Utter nonsense - because the EU did not mandate the technical design of the API (as you’’re, wrongly, insinuating).

Microsoft had an unsafe design - and they were too lazy to fix it.
Bit quick to blame third parties when somebody’s use of that interface triggered an issue in their unsafe product.

I think it will become painfully clear in hindsight that anti-monopoly actions against Microsoft have caused more harm than they have helped, by making Microsoft drag their feet in areas like security (because the fear is that any attempt to further lock down their system could be painted by third parties as being anti-competitive).

Maybe someone here will argue that ransomware or the risk of a third party vendor bricking millions of PCs is the lesser of two evils compared to a Microsoft monopoly. But maybe in an alternate reality, Microsoft was allowed to lock down their OS and make it more secure, even if it came at the expense of businesses being unable to exist. And for all we know, we could be better off for it.

 

[AppliedMicro]

There’s also the point that there’s a big difference in using a network to function and using iOS to function. To use a metaphor, a network is a dumb pipe that, while requiring periodic maintenance, doesn’t ultimately care what device it connects to. iOS an actively developed operating system with APIs that are created and maintained for the express purpose of allowing the developers’ apps to function in the OS

In-app purchases aren't even a pipe to be maintained.

Allowing developer to handle in-app purchases on their own requires zero effort and expense from Apple.
Prohibiting them from doing it is the same as an internet provide selectively blocking traffic to/from Apple.

It's only gatekeeping to extract rent.

The reason your argument will ALWAYS fail is that there is an alternative, and that alternative is the market leader by a wide, wide margin.

An approximate 50-50 split on mobile application stores is not a "wide margin".
And neither does it invalidate the duopoly argument, when you look at how similar their terms and conditions are.

If developers don’t want to pay Apple, no one is forcing them to write apps for Apple’s customers.

...as is no one forcing users to subscribe to internet access through an ISP.

You have choices for an open ecosystem.

There are more than one criteria for choice of ecosystem for "the vast, vast majority" of users.

iOS user in the EU no longer have a choice for a closed one.

Of course you can. You can choose to only use Safari as your browser, download all your apps from, and make all your digital purchases through Apple.

Third-party developers may withdraw their Apps from Apple's Store at any time for whatever reason - so it doesn't extend to their apps - just as it doesn't today.

 

[AppliedMicro]

It actually does matter. Namely that digital products tend to have zero marginal costs (such as an IAP to purchase extra gems for candy crush; it's basically pure profit). I will expand more on this as I address your next main point.

Exactly.

Same is true for in-app purchases or subscription services that are not provided by Apple: Zero marginal cost to Apple - yet 30% commission. Pure profit.

Should the Telco tax Netflix (which is responsible for the use of said bandwidth), or Apple (since the viewing is taking place on an iOS device)?

Doesn't really matter, does it?
You are advocating for economy in which every actor should have to right to charge a "downstream" company for mere access to customers - for not locking them out from access to customers.

by making Microsoft drag their feet in areas like security (because the fear is that any attempt to further lock down their system could be painted by third parties as being anti-competitive).

You're forgetting that Microsoft offered their own security products to compete with third parties for good money. Even acquiring third-party developers and rebranding their offerings to Microsoft products. They decided to monetise "security" - and leveraging their underlying platform to gain unfair advantages.

the ISPs are welcome to try, and I am not convinced that things will ultimately play out the way you envision. What is it that you want at the end of the day? Do you want the customer to benefit

Of course I want customers to benefit.

And both developers and consumers benefit from having open access and being free from to high transaction costs and gatekeeping fees for mere access to consumers.

 

[salamanderjuice]

How much innovation is there in the windows browser market?
There is really just Chromium/blink right now. Even MS’s Edge is based on chromium.
The only browser competition in the world comes from iOS/macOS safari.

So is the windows world the utopia? less actual competition not more?
I don’t get it? Without iOS there would be near zero browser competition.

And also, no one makes money making browser engines. So what innovation is going to happen (or has happened?) outside of chromium?

The PWA thing is a security implementation problem. Something that some mobile device companies take more seriously than others. Surely that’s a consumer choice? I want the most secure phone possible right? Unless the eu thinks consumers don’t have the right to buy a secure product?

Firefox is a thing...

On Android, you can get Firefox mobile which has it's own non-Blink/webkit browser engine and features like extensions. No such luck on iOS.

There's also an entirely new browser engine in development for Ladybird.

 

[I7guy]

In-app purchases aren't even a pipe to be maintained.

In your opinion.

Allowing developer to handle in-app purchases on their own requires zero effort and expense from Apple.

If you want to sell on an iPhone, like Costco, you okay by the rules. Else distribute your wares other ways, like a website.

Prohibiting them from doing it is the same as an internet provide selectively blocking traffic to/from Apple.

It's only gatekeeping to extract rent.

Just like Costco charges its vendors. See the parallel?

An approximate 50-50 split on mobile application stores is not a "wide margin".

It is not An approximate 50/50 split. Your math is way off.

And neither does it invalidate the duopoly argument, when you look at how similar their terms and conditions are.

It does.

...as is no one forcing users to subscribe to internet access through an ISP.


There are more than one criteria for choice of ecosystem for "the vast, vast majority" of users.


Of course you can. You can choose to only use Safari as your browser, download all your apps from, and make all your digital purchases through Apple.

Third-party developers may withdraw their Apps from Apple's Store at any time for whatever reason - so it doesn't extend to their apps - just as it doesn't today.

The original point still stands. The iOS ecosystem in the eu is now open the ship has sailed for those who want a closed ecosystem.

 

[Abazigal]

You're forgetting that Microsoft offered their own security products to compete with third parties for good money. Even acquiring third-party developers and rebranding their offerings to Microsoft products. They decided to monetise "security" - and leveraging their underlying platform to gain unfair advantages.

I did address this in a subsequent post.

https://forums.macrumors.com/threads/apples-browser-rules-stifle-innovation-on-ios-says-uk-regulator.2443707/post-33595233

That with the benefit of hindsight, maybe what would have ended up being in the best interests of end users in the long run was to allow Microsoft to gain an unfair advantage by leveraging their underlying platform, rather than allow everybody open and equal access to their OS. Sure, Microsoft ends up further entrenched (like they aren't already today), and is it really such a huge loss to society if there were less companies hawking antivirus, anti-cheat software or pushing software updates that ran the risk of bricking millions of devices around the world?

Maybe in an alternate reality, Microsoft went ahead and closed off kernel access to security firms, Symantec's audience with EU regulators in 2006 (I am starting to see a recurring theme here) went nowhere, and both Symantec and McAfee closed down shortly after. It may mean fewer jobs for everyone, and maybe those jobs didn't even need to exist in the first place were it not for Microsoft being forced to open up Kernel access to third party developers.

I am still of the opinion that sometimes, what is good for businesses is not necessarily good for consumers, and vice versa (and I don't just mean gatekeepers such as Apple, Microsoft and Google). In this particular case, Crowdstrike happened because Microsoft was never allowed to implement a shift in security that it knew was necessary two decades ago, because from the EU's perspective, their insistence that operating systems be kept open in order to foster open competition ultimately blinded them to the shifting realities of technological progress and the inherent risks of kernel-level access in PCs continuing to be made accessible to everyone.

I wonder if we will see a similar situation with the EU's usb-c mandate as well - that technological progress gets frozen in time (industries not allowed to move beyond usb-c, or not moving quickly enough because nobody has any incentive or influence to push for something better).

And finally, that everything is ultimately a trade-off (which includes the desire for more competition). At the time, the iOS App Store did address legitimate concerns surrounding the purchasing and downloading of third party software that hurt users and chilled the market for app developers (because the internet back then was, and arguably still is, a virus and malware-riddled mess). Apple rebuilt consumers' confidence and willingness to download third party apps step by step (which is why I feel their 30% cut is not unreasonable for the role Apple has played in growing the overall pie for mobile apps), and the EU's proposal is to violate Apple's property rights and handwave that all way and pretend that the value and progress which Apple has created never existed.

That's what I have observed about these seemingly one-off mandates. I am not certain the EU is capable of monitoring the outcomes of their own legislation and adjusting them in keeping with the times. A ruling is passed and the EU assumes that things will always just stay that way for now and forever more.

Is this really worth more competition? Not everyone may agree, but I think we can at least agree that there will definitely be tradeoffs and possibly unforeseen consequences. That's all I am saying.

 

[surferfb]

In-app purchases aren't even a pipe to be maintained.

Allowing developer to handle in-app purchases on their own requires zero effort and expense from Apple.
Prohibiting them from doing it is the same as an internet provide selectively blocking traffic to/from Apple.

iOS absolutely has to be maintained. It requires use of Apple’s property. And prohibiting Apple from doing so is compromising the safety and security of iOS customers.

It's only gatekeeping to extract rent.

Disagree. They’re protecting their customers and providing a much better, integrated experience that attract the kind of customers developers want to sell to (because they actually pay).

An approximate 50-50 split on mobile application stores is not a "wide margin".
And neither does it invalidate the duopoly argument, when you look at how similar their terms and conditions are.

Apple should be REWARDED for creating an environment where it gets roughly 50% of the revenue despite having 25% of the market, not punished. Because it shows their approach has value that is worth developers paying for access to.

The duopoly argument doesn’t hold any water. The answer to a duopoly is not “make the company with less market share act just like the one with the greater market share”.

...as is no one forcing users to subscribe to internet access through an ISP.

Should developers also get access to their ISP for free because they need internet access to sell to customers? No? So why do they get access to Apple’s property without paying?

There are more than one criteria for choice of ecosystem for "the vast, vast majority" of users.

Yep. There are. But you need to factor everything in when making a decision. And if an open ecosystem is so important to you that you’d force a company with 25% market share to change their rules to be like the company with 75% of the market, against the preferences of that company and the majority of its customers, maybe you should have picked the one with 75% of the market to begin with.

Of course you can. You can choose to only use Safari as your browser, download all your apps from, and make all your digital purchases through Apple.

Third-party developers may withdraw their Apps from Apple's Store at any time for whatever reason - so it doesn't extend to their apps - just as it doesn't today.

iOS is no longer a closed ecosystem in the EU (or anywhere really, because the same code is in other area’s iOS, just turned off). Just because you choose to not use any of the options doesn’t change the fact it’s been forced open.

 

[Unregistered 4U]

The EU’s feelings about the duopoly shouldn’t even factor into it anymore as the EU are taking steps to maintain and strengthen that duopoly. They are complicit in ensuring the continuance of the thing they claim to decry. If only they weren’t focused so much on how to shift profits from US companies and were, instead, innovating at the hardware level, there would be a date attached to the end of the duopoly. It would end the moment the EU’s solution hit the market.

 

[I7guy]

The EU’s feelings about the duopoly shouldn’t even factor into it anymore as the EU are taking steps to maintain and strengthen that duopoly. They are complicit in ensuring the continuance of the thing they claim to decry. If only they weren’t focused so much on how to shift profits from US companies and were, instead, innovating at the hardware level, there would be a date attached to the end of the duopoly. It would end the moment the EU’s solution hit the market.

That’s a good point. The EU, by virtue of the DMA is revenue shifting. Taking profits from the US and funneling them into the EU. Audacious.