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Supreme Court Allows App Store Monopoly Lawsuit Against Apple to Proceed [Updated]
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Except Apple is not forcing Spotify to charge more, that was Spotify's choice. They decided to be butt heads about Apple's fees.
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Thus they cahrge a single price and get different cuts depending onm the sales channel; just like evryu other company theat sells through a variety of channels.
Exvery company puts all their costs on the consumer unless they want to go out of business when the money runs out.
Well, the surest way to find out is to allow competing app store(s) on the platform. Let's see another companies approach to presentation, service, promotion, specialisation, transaction, delivery and after sales.
They are having their app hosted and promoted on the Apple App Store for free. How is that not clear? If I want to download Netflix, fast, easy and without being a techie, I can do it on the App Store. If I’m a grandmother and want Netflix, I can get it on the App Store. No cost to Netflix. I don’t have to pay a dime, Netflix doesn’t have to pay a dime (the developer fee is not for the app itself).
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“There is no harm in consumer choice”.
So, your grandmother downloads an app that her friend told her about, and app from a non-Apple Store. That app has a virus in it which completely locks her iPhone and demands a ransom to unlock it.
Might that be a downside to “consumer choice”?
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Apple has a 10% market share of Macs in the USA vs. over 50% iOS market share in USA. iOS is a much bigger target. Mac has also been around for 35 years, before there was such thing as a consumer virus. iOS was fortunate to start its life having learned from Mac, thus Apple made different choices. And there is plenty of malware on Macs (we remove malware from a Mac client machine weekly). The walled garden is not what keeps you safe on iOS. The App Store keeps you safe.
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Apple has not limited anyone from selling anything outside of their store. You can side load whatever you want, just like you can remove a stock car radio and install your own (though it’s not easy to do for a normal consumer). You also can offer your app in the App Store, for FREE, and then sell your service for that app outside of that App Store, and not pay Apple a dime for that sale.
The “annoying steps” you mention are you basically saying you want to keep using Apple’s software updates (also for free, btw), but not be bound by the rules of those updates.
The point is, if you launch an app on just one store you lose ~50% of your potential customer base. If you sell a certain service that isn't your own software generating the revenue then a 30% cut is quite a lot. Just imagine you offer an IAP for a music track for which you usually charge 99 cents on the web. Let's assume you purchased the license for 70 cents. If you sell that through an App-Store IAP 100% of your margin (in terms of markup, not profit) goes to Apple.
It does force them to a 30% commission. So, that actually forces you to raise prices in certain conditions as explained above.
I wouldn't say the App-Store has driven prices down. Generating of the revenue has changed. Microtransactions and mini apps are the norm now. Beyond that many apps are either subscription based now, have IAP costs (games are mostly financed by some rich customers spending a lot on already expensive IAPs) or are heavily relying on ads... Datamining may be another source of income...
The market of apps, yes. But the market of stores is a different topic. I recommend reading this article: https://arstechnica.com/gaming/2018...am-with-new-store-that-gives-devs-more-money/
Then you either forgo the Apple market or find a different way to make money. Apple is not obligated to make changes to fix a developer's broken business model.
However, it is not Apple that is dictating your price, but the developer deciding what to charge. Someone else can offer the same functionality at a lower price and Apple isn't going to force them to charge more. I simply do not buy the argument that Apple is forcing companies to charge for on the App store; especially since many don't.
Interesting article. Two key questions remain:
1. EPIC is clearly trying to play catchup and thus offering developers a better deal to come on their platform.If they become big enough will they keep the same terms or demand a bigger cut once they have enough clout to so do?
2. Will games be cheaper of EPICs platform for the consumer? If not, then their is no benefit to the consumer. If so, the developers may make less per game even with a larger cut of the sales price.
Your analogies are really not great,
For starters that retailer CAN move kiosk, And mall and the customers CAN choose to use that mall instead (Android) if they so wish.
As a customer though I will continue to choose to visit the High end mall (Apple) with slightly higher prices, better facilities and more safety, than visiting the one in the Ghetto and risk getting robbed or shot.
With regards to your Gas station and car ... Well you bought the car in the first place knowing full well that it only accepts one kind of gasoline from one type of nozzle - whats the problem. You want compatibility with everyone else's nozzle with a warranty then buy a different car.
If you are tech savvy, sure, you can alter the car that you like the look of, but void your warranty at your own risk (the current situation).
For Apple's sake I sure hope they win this case, as all blame is going to fall on them rather than developers or third party stores if the **** hits the fan. The likelihood is that devices will start getting bricked left right and center by third party non-curated apps by shady developers with badly coded apps. Then the bitching and moaning will start about iOS devices being unreliable, Apple stock drops, development of devices and software slows down etc etc ....
I said iOS Apps. You can't distribute iOS Apps on the iOS platform outside Apple's App Store from what I read.
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What about paying $100 just to be an Apple developer? That's not free. The reason Apple has so many free Apps is because developers get tired of updating Xcode, Mac OS, and other dev tools etc. so the Apps will run on recent devices. From experience Apple removed all my paid Apps first then eventually whittled down all the free Apps. I know Apple says they're for Indie developers but where is the help? Remember Kagi? I made a lot more with them than I ever did on the Apple App Stores and I didn't pay $100 a year. They sell the dream but almost no one reaches that dream of being able to make a living. That's how scammers earn a living. Selling an unattainable dream...
While you are right that Apple is under no obligation to change their business model, Apple has to be aware what the developers of apps think about their business models and make choices accordingly.
As it's a business model, and Apple is just another business, if Apple's App suppliers start getting fed up enough to take their business elsewhere. Apple loses out. 30% of 0 is still 0. So, Apple, as a business, might desire 30% as it fits their financial budgeting. But if the people supplying Apps to the iOS platform no longer feel like they can make money with 30% they can either stop using in app purchases entirely (Apple stops getting 30%, and only gets the developer fees they charge developers), or a worst case for Apple, Those developers just walk away from the Apple platform.
So, taking the approach that "Apple has the right, therefore Apple is always right" is nonsense. This is business. it's cut throat. You can only dictate terms if you have a completely captive audience. Apple no longer has such a position in the overall market as there's ample competition. If Apples fees no longer make it profitable to put apps on the App Store, things will change.
Heck, we're already seeing small changes. Netflix, Spotify, and other large subscription based services not using IAP anymore because of the fees.
The issue in Android Land is different because Android doesn't force you to use the Play Store. There are a few other launchers/installers that are from somewhat trustworthy distributors (Amazon, EPIC) that bypass the fees Google wants to charge. Something Apple doesn't allow for (the whole premise of the lawsuit)
I think Apple hasa every right to charge for being a payment processor. that stuff isn't free. But at the same time, when all they're doing is payment processing (Past initial download / purchase), 30%/15% is extremely high. Typical payment processors, such as Mastercard/Visa only charge 2-3%. So a 30%/15% split for essentially just processing payments is quite an onerous burden on many of these companies (it's 30% straight off their bottom line)
I certainly agree. In the end Apple has to decide what maximizes their profit and set terms accordingly.
Apple does a bit mor etan process payments, such as host apps, provide access to a large customer base, advertise the most popular apps, etc. The question for developers is how much is that worth to me? Is a 15% cut worth it or can I make more money if I used the resources spent on developing iOS apps on another platform?
In the end, how much it costs Apple to provide the app store services has little bearing on how much they can charge for using the app store; their fees will reflect the value developers think they get from being on the app store.
Absolutely, and like above said, if Developers no longer feel like 15% providing enough value, They can attempt to address it with Apple and renegotiate, or move elsewhere.
I honestly don't think this lawsuit has a lot of validity. The plaintiffs are going to have to do a lot of work to prove that Apple is a monopoly. While the terms of the contract can be argued as unreasonable, that doesn't IMHO change whether or not Apple is actually a monopoly or not.
And if developers want to really send a message, they'd stop supporting Apple's payment processing completely.
So when Trump adds some tariffs on Apple products and Apple adds the increased cost to the retail price, who is the one increasing the price?
Apple. As the product seller, they can chose to raise the price, lower their margin, exit the business or find an alternate non-tariffed supply chain.
Do you think Spotify would lower their prices is Apple lowered their cut? Spotify could charge less for subscriptions bought through their web interface but last time I checked they didn't.
Is that a similar question to when the gas tax rises and then prices at the pump rise, who is the one increasing the price?
Actually, they were pretty clear they were not ruling on the merits of the case but wether the plaintiffs had standing; which SCOTUS said they did.
Fair enough. So what was your disagreement with the. OP's:
So basically the Supreme Court isn’t saying Apple is a monopoly but that their argument about consumers not being direct purchases from Apple is bogus.
PC_tech might have been pointing out that Apple didn't argue that consumers aren't direct purchasers of apps from Apple.
Some have, apparently, been lead to believe that that was Apple's argument. But it wasn't.
How so? Apple argued, from my understanding, that since they marked up apps from developers they were simply a pass through and thus people buying apps were not direct purchasers and thus had no right to sue under antitrust laws. SCOTUS made no comment on the merits of the case:
We disagree. The plaintiffs purchased apps directly from Apple and therefore are direct purchasers under Illinois Brick. At this early pleadings stage of the litigation, we do not assess the merits of the plaintiffs' antitrust claims against Apple, nor do we consider any other defenses Apple might have. We merely hold that the Illinois Brick direct-purchaser rule does not bar these plaintiffs from suing Apple under the antitrust laws. We affirm the judgment of the U. S. Court of Appeals for the Ninth Circuit.
Apple, Inc. v. Pepper, No. 17-204, at *5 (U.S. May. 13, 2019)
Does your understanding come from reading Apple's briefs and/or from listening to the oral argument? Or does it come from someone else's explanation of the case?
As is often the case when it comes to court cases, much of the reporting relating to this case has been inaccurate. I've explained Apple's basic argument in greater detail elsewhere, and I'd recommend to anyone who really wants to understand it that they read Apple's briefs for themselves. But giving it cursory treatment:
Apple and the United States (through the Solicitor General) argued meaningfully the same thing. Their position (or one of their positions) was that Apple sold iOS apps to consumers. When it comes to sales to consumers, Apple is the agent and app developers are the primaries. Apple doesn't deny that, when it comes to iOS apps, consumers are - under Illinois Brick - direct purchasers.
However, it is Apple's (and the United States') position that the plaintiffs in this case don't really allege that Apple monopolized iOS apps. Rather, the plaintiffs allege that Apple monopolized iOS app distribution services. Those services are sold to app developers. Under Illinois Brick, app developers are the (allegedly overcharged) direct purchasers of iOS app distribution services and thus have standing to bring an anti-trust action against Apple.
So...
Consumers are direct purchasers of iOS apps.
App developers are direct purchasers of iOS app distribution services.
Consumers have standing to sue over alleged iOS app monopolization.
App developers have standing to sue over alleged iOS app distribution services monopolization.
I, btw, think that Apple and the United States were right in this case. The plaintiffs were essentially arguing out of both sides of their mouths. They wanted to conflate the two markets. But those are separate markets because Apple isn't a reseller of iOS apps; it's an agent seller of iOS apps. I don't think there's much of a credible argument that it's actually a reseller. If it were, then the iOS app market and the iOS app distribution market would effectively be the same thing.
The problem for the plaintiffs in arguing that the market in question is for iOS apps is that it can't possibly prove that Apple has monopoly power when it comes to iOS apps. There are thousands of developers who have developed millions of apps which are sold or downloaded billions of times a year. Apple likely accounts for only a small portion of iOS apps which are sold.
The problem for plaintiffs in arguing that the market in question is for iOS app distribution services is that, while it might be able to establish that Apple has monopoly power in that market, they aren't the overcharged direct purchaser and thus shouldn't have standing under Illinois Brick.
So plaintiffs need to be both talking about iOS app distribution, in order to survive Illinois Brick and have standing, and be talking about iOS apps, in order to have a chance to demonstrate that Apple has monopoly power (and then that it's used it improperly).
Hopefully the lower courts will interpret the Supreme Court's decision in this case in the way that makes most sense, as being a finding that the plaintiffs have standing (in accordance with Illinois Brick) to sue based on an alleged monopolization of iOS apps - not based on an alleged monopolization of iOS app distribution.
But regardless of whether one agrees with Apple's argument in this case, that argument isn't what some have said it is. Apple did not deny that it sells apps directly to consumers. Quite to the contrary, Apple acknowledged that it sells apps to consumers.
I admit mine came from reading Kavanaugh’s opinion and as a non-lawyer the subtle details escape me. My reading seemed to be that SCOTUS focused on whether or not consumers had standing to sue despite Apple’s claims. I appreciate your analysis; one thing I find interesting is how a simple page or two SCOTUS decision has details and ramifications beyond a simple reading.
The issue certainly was whether, under Illinois Brick, the plaintiffs had standing to sue. You're correct on that point. But Apple's argument for why the plaintiffs didn't have standing wasn't that those plaintiffs weren't direct purchasers of apps from Apple.
Ideally a court decision fairly lays out the arguments of the respective parties and at least tries to address those actual arguments. But, sometimes (and too often, in my assessment), court decisions misrepresent or essentially ignore some of the arguments which the parties involved make. Why do they do that? There are surely different reasons, but one reason can be that - given the way the court thinks it should or would like to rule - it doesn't have a satisfactory response to some of the losing party's arguments. In other words, a court might be ruling against a party which has a pretty strong argument for which the court can't come up with a strong counter-argument.
Apple v Pepper is one of those cases where the decision doesn't fairly lay out or try to address an important argument made by one of the parties. Rather than addressing Apple's argument - and that of the United States - head on, Justice Kavanaugh sidestepped it. For all intents and purposes he ignored a crucial aspect of it, perhaps the most crucial aspect of it.
Because of that, and because of what the majority opinion actually says, this decision leaves a bit of a mess for the lower courts considering this case. The Court didn't really definitively decide what it needed to decide. Yes, the plaintiffs are direct purchasers from Apple. That wasn't in dispute. But... of what are they direct purchasers? That's quite important when it comes to anti-trust allegations. The identification of a relevant market is crucial in monopolization cases.
The Court sounds like it's saying that plaintiffs are direct purchasers of apps. On more than one occasion the majority opinion says that pretty directly. But at other times the court muddies the water a bit such that someone might argue that the Court found that plaintiffs are direct purchasers of something else - e.g., distribution services. So this is something a lower court is going to have to decide: Yes, plaintiffs are direct purchasers under Illinois Brick, but of what? Of iOS apps? Of iOS app distribution services? Or are those things to be considered as the same? I think the most natural reading of the Court's Apple v Pepper decision is that consumers are direct purchasers, under Illinois Brick, of iOS apps.
So here's what I expect to happen, among other things, when this case returns to the district court. Plaintiffs will try to make the case that Apple has monopolized iOS app distribution. Apple will say... wait a minute, they don't have standing to sue us for monopolization of iOS app distribution. The Supreme Court said they're direct purchasers of iOS apps, not iOS app distribution services. Plaintiffs will respond that the two are the same. Apple will respond that they are not, because Apple is an agent seller (of iOS apps) rather than a reseller. Apple will argue that the Supreme Court didn't say that Apple was a reseller of iOS apps, that the Court sidestepped that question.
The district court will be left to decide whether the plaintiffs have to base their monopolization claim on the iOS apps market or will be allowed to conflate that market with an iOS app distribution market. I think the right answer, based on the Supreme Court's majority opinion, would be the former. But who knows how the district court will rule if that indeed does become an important question in the case. But if it finds as I think it should, the plaintiffs will have to appeal that finding because they don't have much of a case for monopolization (by Apple) of iOS apps. They need to be able to argue monopolization of iOS app distribution.
The Supreme Court did a poor job of being clear on this point because it chose - for whatever reason(s) - to sidestep Apple's and the United States' real argument. I wish it had taken that argument head on and been clear on the import of its decision.
All that said, and although Justice Kavanaugh's opinion doesn't really address a major part of the argument made by Apple, his opinion doesn't attribute to Apple the argument which some have claimed it made - i.e., that consumers don't purchase apps directly from Apple. To the contrary, Justice Kavanaugh acknowledged that Apple does not argue that (citations omitted):
Put simply: There wasn't a dispute that consumers are direct purchasers from Apple. The dispute was over what they are direct purchasers of, and thus what they can - under Illinois Brick - bring an anti-trust action against Apple based on. Unfortunately, the Supreme Court chose not to provide a clear answer to that question.