Swisher, Galloway and Klobuchar on Apple’s antitrust Achilles heel

From “Apple and Epic go to trial and Friend of Pivot Senator Amy Klobuchar” posted as a Pivot podcast Tuesday: 

The Apple section starts at 24:42 point and continues in the Klobuchar interview.

Their conclusion: If Apple doesn’t get in front of its App Store problem, it will get regulated.

My take: This will not be music to Apple investors ears.

Note: When Prof. Galloway says early on that “Apple will lose,” I think he’s talking about the long game, not this particular lawsuit. But I’ve asked him to clarify.

23 Comments

  1. Fred Stein said:
    Predictable, confirmation bias at work.

    5
    May 4, 2021
  2. David Emery said:
    It’s not clear to me what changes would make Klobuchar happy.

    Frankly, I’d much rather see Klobuchar tackle on-line privacy, that’s a much more serious problem than App Stores.

    7
    May 4, 2021
    • Gregg Thurman said:
      Klobuchar is a mission looking for a cause. The search would be easier if she wasn’t so enamored with herself.

      6
      May 4, 2021
  3. Gregg Thurman said:
    He has also stated that Amazon’s “free” shipping effort was unsustainable. Wrong. I used to hang on his every word, but of late (last 2 – 3 years?) the sheen has dulled a great deal.

    1
    May 4, 2021
    • David Emery said:
      Yeah, but when’s the last time you got something within 2 days of ordering from Amazon Prime?

      1
      May 4, 2021
    • Kirk DeBernardi said:
      @ Gregg Thurman —

      I too enjoy listening to Galloway’s energetic insight, opinions, takes and rants, but — like a lot of us — sometimes he misses his mark. Gusto doesn’t always make great.

      On Amazon’s free shipping being unsustainable — this might have proven true if it wasn’t for AWS (Amazon Web Services) providing a solid cornerstone for Amazon’s profits.

      PS — Galloway should absolutely be commended for his passioned take on capitalism having strayed far from its goal — the promise of commonwealth for all.

      Sadly, he’s the one lone wolf howling about it.

      1
      May 4, 2021
  4. Gary Morton said:
    Just saw a report on CNBC. Epic CEO struggling to explain why 30% and no side loading is fine for XBox, Nintendo, and PlayStation but not for Apple. His response was difficult. In the end he basically said that the game consoles sell at cost and Apple makes a margin on iPhone/iPad so Apple should not make money on games. The idea that because Apple has set-up an application store mirroring industry practices and it has become successful, means that Apple must be regulated is dangerous to all of tech. In the Medical device industry, we used to have a sentiment that you would not point the FDA to your competitors because the FDA only drops bombs, and the collateral damage can harm all. Epic CEO might want to think more long term about the utility of their lawsuit.

    11
    May 4, 2021
    • Gregg Thurman said:
      I have a feeling that (assuming EPIC’s BoD is independent) by January 2023 Epic’s BoD will decide they’ve had enough and him ask to leave.

      3
      May 4, 2021
    • David Emery said:
      Epic is engaged in a long running strategic campaign. Either (a) Sweeney briefed the board, and the board approved this (making the board equally culpable on this ‘bet the company’ strategy) or (b) Sweeney hid this from the board, which -should be a firing offense-. I’m strongly inclined to believe (a), but when have you ever seen a corporate board hold -itself- accountable?

      2
      May 4, 2021
    • Bart Yee said:
      The niche console maker’s margins of Sony, Nintendo, Microsoft are not Apple’s issue, that’s their industry niche and marketplace. Apple decides to make mobile handset hardware that is worth the asking price and margin and it’s a completely different hardware product. The Console makers either don’t, can’t, or won’t ask/get a a better margin, that’s their problem if the hardware is not profitable or their market is so price sensitive.

      Apple’s iPhones and iPads essentially created the mobile gaming platforms and Android followed. Together they made the hardware that Epic’s games play on. SOFTWARE MAKERS CANNOT DICTATE WHAT HARDWARE MAKERS’ MARGINS ARE. And they can’t dictate what App Store access margins are either.

      If Epic wants to dictate margins, then open your own store (oh yeah, they did that), design, build, and sell a hardware platform (like Android Razer) and make all you want.

      0
      May 5, 2021
  5. The most successful computer/mobile games have profit margins of 90%. Fortnite is considered one of the most successful games ever. That profit margin sounds rather steep, maybe Epic should share some?
    A clever judge might toss Epic a bone on payment methods but then require Epic to allow Apple to have a store in the Fortnite metaverse, one that accepts Apple Pay.

    6
    May 4, 2021
  6. Thomas Larkin said:
    So far Epic’s case looks heavy on stretched bluster and spin, without a lot of substance, and a blindly self serving view of the world. But as a shareholder I’m also trying to see the bigger picture. Will there be some adjustments in the app store going forward? Sure. Could that not in fact be largely due to the fact Apple will stay ahead of the curve? Sure. How large a role does this particular case play? We’ll see. Is Apple doomed? Is David taking down Goliath? Nice rhetoric but that seems a bit over the top. But this stuff sure is generating a tsunami of click bait.

    7
    May 4, 2021
    • Alan Birnbaum said:
      And, to quote agent Maxwell Smart about the media, “ …and loving it! “

      2
      May 4, 2021
  7. bas flik said:
    to me app store is icing on the M1. not relevant to the enormous profits M1 family will produce in the future. anyway the growth of ecosystem will offset loss of government intervention. if the black hole is formed you can not do anything anymore but sucked into it.

    3
    May 4, 2021
  8. John Konopka said:
    Maybe a lawyer can chime in an explain why Apple is different from Walmart, Costco, Safeway and any other retailer with a store? Everyone has their in-house brands. Everyone tracks what sells and at what price. CVS aggressively develops products that compete with name brands, prices them lower and puts them on the same shelf next to the name brand. No in-house brand pays a commission to the store owner.

    Having said that, I can see Apple improving the App Store. They should be more aggressive about rooting out copycat apps. They should pay their curators better and give them more time with each app. There should be a sort of independent ombudsman to listen to appeals from developers. I don’t want to see these legislated. I’d like to see Apple do things like this as it would make the App Store better for all of us, Apple included. Given the level of attention they give to so many other things I’m surprised Apple hasn’t tried to make the App Store more excellent. It seems like that drive for excellence is in Apple’s DNA.

    4
    May 4, 2021
  9. Mark Visnic said:
    @Philip

    “Note: When Prof. Galloway says early on that “Apple will lose,” I think he’s talking about the long game, not this particular lawsuit. But I’ve asked him to clarify.”

    He is a significant outlier unless he is talking about the long game.

    I don’t disagree, unfortunately, in the greater scheme of things. Based on Microsoft jumping the shark on pricing to 12%, the adjustments “might” include lowering fees and probably should include allowing reference to side loading alternative. As Ben Thompson mentioned, even product labels in brick and mortar stores contain web site information on the product providers.

    1
    May 4, 2021
  10. Michael Goldfeder said:
    Sweeney’s legal position is that he doesn’t have one. Never did. This was a PR ploy from the start and now that it’s time to show his cards, he’s holding a Hallmark Sympathy Card.

    He thought everyone in the App Developer community would be right there beside him at the tip of the spear. Nobody showed up. Much like those old comedy films where they show a line of soldiers and say everyone who wants to volunteer take one step forward. Then everyone takes a step back other than Abbot and Costello. Tim Sweeney is out front all by himself.

    1
    May 4, 2021
  11. Steven Noyes said:
    “ Their conclusion: If Apple doesn’t get in front of its App Store problem, it will get regulated.”

    The App Store isn’t already heavily regulated???? Don’t get me wrong. As both a part-time developer for the platform and a long time user, I like Apple’s regulation. But saying it will get regulated is indicating someone doesn’t understand the situation.

    1
    May 5, 2021
    • “The App Store isn’t already heavily regulated???? Don’t get me wrong. As both a part-time developer for the platform and a long time user, I like Apple’s regulation”

      They’re talking about regulation by government agencies. .

      1
      May 5, 2021
  12. Joe Murphy said:
    “They’re talking about regulation by government agencies”

    Regulators: Bureaucrats.
    Aka empowered armchair quarterbacks.
    With power and vision hellbent on a mission.
    Too often at the dismay and expense of others.

    0
    May 5, 2021

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