From The Verge’s “Congress is diving into the App Store fight” posted Wednesday:
The [Senate antitrust] hearing brought in representatives from companies like Spotify, Tile, and Match Group, a dating app company, to explain how Apple’s App Store fees and walled-garden business strategy harms their companies. All three companies gave harsh testimony, accusing the iPhone-maker of anti-competitive behavior over the burdensome fees it charges some app developers on its App Store.
The timing couldn’t be worse for Apple, coming just a day after the company announced an iPhone-linked item tracker called the AirTag in direct competition with Tile. Speaking to Congress, Tile’s General Counsel Kirsten Daru said that once Apple decided to develop its own item-tracking devices and services in 2019, the two companies’ friendly relationship dissolved.
“If Apple turned on us, it can turn on anyone,” Daru told lawmakers. “And Apple has demonstrated that it won’t change unless someone makes them, making legislation so critical.”
Apple’s shifting platform relationships were a theme in the hearing, with each company testifying to how quickly Cupertino’s collaborative outreach could turn competitive. Match’s Chief Legal Officer Jared Sine told lawmakers that app store fees amount to the company’s single largest expense, totaling around a fifth of the company’s total sales. Spotify’s Head of Global Affairs and Chief Legal Officer Horacio Gutierrez said that Apple’s business model equated to “a classic bait and switch,” luring developers into its app store and suddenly changing the terms to benefit the iPhone-maker.
“We all appreciate app stores and the roles that Apple and Google have played in helping to create many of the technologies that have defined our age,” Sen. Amy Klobuchar, chair of the subcommittee, said on Wednesday. “We’re not angry about success… It’s about new products coming on. It’s about new competitors emerging. This situation, to me, doesn’t seem like that’s happening.”
My take: It will come as no surprise to regular readers that I believe the App Store is an antitrust problem for Apple — not for charging rent, but for playing hardball with competitors in a park where it sets the rules and calls the balls and strikes. The full 3:15-hour hearing is available here. It starts at the 30-minute mark.
Personally, I say eff them, let them go straight over to Android entirely since Android is BY FAR the dominant ecosystem worldwide in unit numbers, active devices, reach to users, and “techy” people. Android is also, by far, the least secure, slowest updating, highly fragmented OS, and least demographic to be monetized, but hey, you won’t get to complain so hard against them.
Want to gain access to APPLE users, not your users, pay some rent to have a place in APPLE’S marketplace, simple as that. A marketplace that Apple keeps expanding with products and services that keeps growing the hugely successful and willing-to-spend demographic year after year after year. Ingrates!!
Senator Klobuchar fails to understand GM has a monopoly on what shows up on the dashboard of GM Cars & Trucks. So does Ford & Toyota… Together they sell most cars and trucks. It that failure to fully open up the dashboard a monopoly too? Why are only Sirius XM and Bose allowed in?
Does Tesla allow anybody’s software to be installed anytime? Where’s the discussion of Nintendo, Sony and other gaming sites that also take ~30%?
If you search ‘Senate Antitrust’ at c-span.org the first link takes you to Recent Programs. Pick the April 21, 2021 program and at least listen to Apple’s Chief Compliance Officer, Kyle Andeer. He’s outlining their solid defense, based on security. Around this time Quanta announced Apple’s schematics had been stolen by BEvil. Odd timing, huh?
The Power of the Microphone, PED. We’ve seen it abused before, and we’re seeing it abused here. That you, steeped in Apple as you are, think these folks actually have anything resembling a case to make tells it all. You are a sharp, educated observer, and yet even you nod in agreement.
Here’s a suggestion:
You’ve got the microphone, so take your best shot. Lay out your case against Apple here, in front of your friends, in a special article or even series of articles.
For our part, we promise to be calm, level-headed, and fact-based in our responses.
Let us debate this proposition of yours, in front of the whole world, but this time with someone who isn’t afraid to share the microphone.
I’m not a lawyer, I’m a journalist. I’m not trying to make a case. I’m trying to report the case that’s being made against Apple in Congress from the perspective of someone who reported two of the biggest tech antitrust cases: U.S. vs Microsoft and U.S. vs. Apple. Maybe I am trying to make a case. What I’m trying to convey — to a readership curiously resistant to the message — is that I think I see which way the wind is blowing.
When I get a free day, Joe, I’ll try to do the deeper dive you suggest. Things are busy for me right now.
Amy Klobuchar’s take appears to at least acknowledge that this is not a clear-cut issue. So perhaps those winds you see are beginning to shift.
In a way, the AirTag vs Tile conflict is good timing, not bad, because it gets it out in the open. Note that Tile is not saying Apple stole their idea. Rather, they’re saying that Apple is Goliath and they’re David. But does it really fit? A parallel is that McDonalds ice cream maker story that ran recently in Wired titled “They Hacked McDonald’s Ice Cream Machines—and Started a Cold War”.
In that case, though, it’s pretty clear that the Big Guys were also the Bad Guys. Not nearly so clear in the Tile case.
Also, the main reason competitiveness should be an issue is when it stifles growth and change. Apple saw that A LOT with Microsoft, and the change Apple brought was in overcoming the true monopoly that was the ossified Microsoft.
Show me where Apple is stifling growth and change and you may win me over, especially if it’s on the scale of a Microsoft. But I’m not seeing any of that right now. I’m actually seeing the opposite. Tile, last I looked, was still in business. It just suddenly has some real competition….
I disagree respectfully with your take. If Apple’s setting of the rules and calls the balls and strikes are targeted to give Apple enhanced competitive advantage then you have a valid point. If Apple’s setting of the rules and calls the balls and strikes are targeted to maintain a continuity of integrity, security and efficiency in the running of the App Store for Apple users (which is my perspective) then I see no anti-competitiveness by Apple in its running of the App Store.
Great respect from me for your comment. It prompted me to make my response to PED just above your comment.
Spotify’s Gutierrez spoke of ‘Digital sovereigns and how Apple rose to dominance by providing a platform to 3rd party developers instead of restricting the iPhone to Apple apps alone. Somehow Apple letting in 3rd party app developers so they can sell products and Apple making rules is abusive. I’m amazed to hear politicians arguing against Apple’s rules that protect consumers from fraud. US Consumer Protection Bureau being grossly underfunded.
Ms. Kirsten Daru of Tile clearly described Apple’s use of nonproprietary, unhackable UWB technology for Find My. She insists the more easily hackable Tile method makes it easier for everyone to find objects or people. Everyone. Including Putin? Not a word about the landfill space taken up by old Tiles.
On and on, none of the witness’ convinced me as juror and App Store consumer. Don Quixote had a better chance tilting at those windmills.
It’ll be interesting to see how Epic manages/curates their store.
Of all the valid arguments made on Apple’s behalf, this one is my favorite.
Before the App Store there little, if anything, in the way of a central distribution point. Symbian was the dominant mobile OS, but even it had variations that were incompatible with other variations. You had to find the app through publications that you wanted, then find where it could be purchased, then hope it was compatible with your model Nokia handset.
When the Appl Store was introduced at WWDC the audience stood up and cheered, despite Apple’s 30% cut. 100% of nothing is nothing. 70% got them more, much more, and they knew it. Not only would sales skyrocket, but the expense of maintaining multiple variants disappeared.
Both Senators insinuating the largest corporate tax payer, the largest dividend payer is some kind of organized crime syndicate. Unknown witnesses are too afraid to speak out for fear of retaliation from Apple in-house Yakuza. I’m surprised the committee has not gotten to RICO laws yet.
The cost of designing the hardware & OS wasn’t mentioned. Apple must also eat the cost of maintaining their stores, virtual or brick & mortar. Senator Blumenthal is for rolling out the Sherman Act and wants interoperability between Google and Apple apps. ‘AirTags are a carbon copy of Tile.’ Tile controls 80-90% of the market now. But that’s not a monopoly today. Clueless, for such an otherwise intelligent gent.
Finally, Senator Hawley, the fist-pumping Insurrectionist, went directly after share buybacks and Apple’s money, while insinuating Apple spends nothing on Security. Huh?
Which BTW ought to issue a final ruling later this year after the EU’s highest court took up her appeal to overturn her loss in the lower court that vitiated her $13 billion tax claim.