An easy fix for Apple’s App Store monopoly, just in time for Wednesday’s antitrust hearings

Competitors complain that Apple gives its own apps special treatment over third parties in its App Store, and they’ve got a point.

Apple is “acting as both a player and referee to deliberately disadvantage other app developers,”  Spotify’s Daniel Ek wrote in the complaint that launched a European Council antitrust investigation of Apple’s App Store.

Elizabeth Warren put it even more starkly:

Either they run the platform or they play in the store. They don’t get to do both at the same time.

But Congress, which will have a chance tomorrow to press the issue with CEO Tim Cook, doesn’t have to carve up Apple to create a level playing field.

If the problem is Apple’s “tax” (15% to 30%) on third-party apps, why not make an exception for apps that compete directly with Apple’s—like Spotify—and drop the tax for them. Problem solved.

That’s the idea, and the antitrust committee can have it free of charge. (Truth be told, I stole the idea from NYU’s Scott Galloway suggested it last week on Pivot.)

One more thing: Let’s not quibble about Walmart, etc, or whether Apple deserves monopoly control over its own App Store. To paraphrase someone smarter than me: The relevant market is whatever the regulatory authority says it is.

13 Comments

  1. Fred Stein said:
    Hmm,

    @Elizabeth: Every grocery chain store and drug store chain carry house brands and name brands. Often they’re made at the same factory. Do you propose legislation to apply the same rules? Note: This house brand thing has been around for decades.

    Apple has the same ‘monopoly’ status as Disney has for its theme parks. Both give their customer similar value propositions in terms of security and family friendly content.

    5
    July 28, 2020
  2. LALIT JAGTAP said:
    Let govt entities take ownership and management of the App Store from all companies like Google, Apple, Amazon, and Microsoft (Xbox) store.

    It will be great for all, participants companies, and governments like the EU, China, India, and the USA. That way the EU doesn’t have to worry about Spotify not getting enough access to compete with Apple. Next China can not blame India from banning apps owned by Chineses companies. And the USA can hope to bring democracy to China thru Apps, as Internet has not been that successful. Such a waste of time and resources by companies and elected govt. representatives.

    0
    July 28, 2020
    • Steven Noyes said:
      Was there a missing /s tag at the end?

      0
      July 28, 2020
  3. Rodney Avilla said:
    “One more thing: Let’s not quibble about Walmart, etc”

    That sounds like something a politician would say ;-).
    Translation: I don’t have a good answer to that question, so I’m not going to allow you to raise it.

    “The relevant market is whatever the regulatory authority says it is.”

    They may want us to believe that is true, and they may act like it is true, but that doesn’t mean that we, in our public discussions, are bound by that (arrogant?) mindset.

    2
    July 28, 2020
  4. Gary Morton said:
    What is the problem with Spotify? Spotify users do not have to pay any additional fees if they sign-up for the service through the App store. Really, there is no issue for the consumer. If consumers sign up for Spotify outside of the App store, there is also no issue for them, simply enter their userid and password. The complaint from the company Spotify is that they have to share 30% of the initial subscription fee and 15% thereafter for subscribers who sign-up on the App Store and manage their subscription on the App store. I find that subscriptions on the App store are my much preferred subscription methodology for most subscription services. Then I do not have to hassle with separate userid/password issues, spam from the provider, uncertainty about renewals, endless emails when renewal times come, credit card security, etc. The argument from Spotify is that the fee makes them less competitive vs Apple Music because it reduces their profits and thus their ability to reinvest into their product? On the other hand, they do not have an App store to manage, do not have to constantly innovate in the highly competitive smartphone space, do not have to develop their own relationships with every carrier around the world, etc. Is that all worth nothing?? Should Spotify just be able to freeload off the carriers, smartphone manufacturers, and chip suppliers, store operators, and security providers?

    6
    July 28, 2020
    • Peter Kropf said:
      “they [Spotify] do not have an App store to manage, do not have to constantly innovate in the highly competitive smartphone space, do not have to develop their own relationships with every carrier around the world, etc. Is that all worth nothing??”

      You forgot this one: Spotify don’t have to finance, conceive, and build the app store that landed in Spotify’s lap like a Christmas gift.

      No Pain, No Gain

      2
      July 28, 2020
    • Jerry Doyle said:
      @Gary Morton: “… they (Spotify) do not have an App store to manage, do not have to constantly innovate in the highly competitive smartphone space, do not have to develop their own relationships with every carrier around the world, etc. Is that all worth nothing?? Should Spotify just be able to freeload off the carriers, smartphone manufacturers, and chip suppliers, store operators, and security providers?”

      Amen! Hallelujah!

      0
      July 28, 2020
  5. Thomas Larkin said:
    If Spotify doesn’t want to sell its service through a reseller, so be it. Apple’s not requiring it to. Stick to the free app with its customers subscribing through its own website. Problem solved. How did we get to this absurd notion that a reseller should be compelled to offer anyone’s product without charge?

    1
    July 28, 2020
  6. Jerry Doyle said:
    Spotify… yeah Apple; you build that platform. Make that sucker humongous, I mean like 1.4Bplus! Make sure that Apple train runs on time! You heah! Then every time a Spotify family member arrives at the Apple train station platforms, stop that friggin’ train so my folk all can get aboard for that fancy carriage ride to Blessedville! You heah? Now I don’t expect a charge for your overhead costs such as administrative fees you incur, operational expenses, maintenance & upkeep of that platform & my luxurious ride. I want it all to be FREE man! A free ticket to ride 🙂

    0
    July 28, 2020

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