Apples antitrust the mess keeps getting worse, with today’s Apple Pay announcement as a final example. The company is now under fire from so many flanks in so many countries that it spends half its PR life trying to defend its position – and legislation will eventually force it to change anyway.
To me, the most disconcerting thing about the company’s stubbornness on this issue is that the mess could so easily be solved, and I bet it wouldn’t even cost the company a lot of money.
If You Think It’s About Monopolies, Read This First
First, we need to clear up a common misunderstanding about antitrust laws: they only apply to monopolies. It has literally never been the case. Indeed, as we point out in our guidethe very origin of the term supposes several large companies working in the same space:
In most jurisdictions around the world, it is illegal for large companies to join together to form agreements or “trusts” to behave in a particular way – for example, to sell all of their products at the same high price. Laws designed to prohibit this type of behavior are called antitrust laws.
We continue :
However, the term is used more generally to refer to laws aimed at preventing companies from engaging in any a kind of anti-competitive action, i.e. doing anything that would tend to artificially distort competition in a market.
There is a huge market for mobile phone applications. Worldwide, Apple controls about 27% of this market. In some countries it is about 50%. In Apple’s home market, the United States is well over 50%. However you slice and dice the numbers, Apple is a of the largest companies to have a dominant position in this market.
Many antitrust disputes, with a common element
Apple faces antitrust battles on a variety of fronts. The main one is the fact that Apple has full control over the App store. He sets his own commission rates and iOS developers have no choice but to pay him. Many regulators want multiple app stores to be allowed so there is competition in the sale of iPhone apps, and developers and consumers can choose which stores to support.
There are a bunch of other issues, with some overlap with the App Store…
Apple Music vs. Spotify. This is a special case because Apple Music is in direct competition with Spotify, and Apple gives its own app some big advantages when it comes to attracting paid subscribers:
- You can subscribe to Apple Music in the app;
Spotify would have to pay Apple 30% to do it (which is economically impossible)
- Apple offers Apple Music promotions in iOS
- Apple Music is available as part of a discounted plan (Apple One)
Pre-installed Apple apps. Apple creates its own apps and preinstalls most of them on iPhones. This gives them a huge advantage over competing third-party apps, as the default position is that users will use Apple apps. If iPhone owners had to choose which apps to download, it would be a more level playing field.
Apple Arcade vs. Epic Games. Apple allows itself to have an integrated store for games (albeit by renting them rather than buying them), but that doesn’t allow other companies (like Epic Games) to do the same.
Pay Apple. Apple only gives NFC access to its own mobile wallet app while denying it to competitors. Also, because banking apps don’t have access to the NFC chip, banks and card companies are forced to sign up for Apple Pay if they want their customers to use iPhones and Apple Watches for wireless payments. contact.
The common element to all of these is that Apple benefits financially while its competitors are disadvantaged.
If you listen to Apple, it has nothing to do with money. Oh no, sir! This is only to protect customers.
To be fair, the company is right. If you compare the malware rates between iOS and Android, especially when it comes to Android users venturing beyond the Google Play Store to third-party stores and downloaded apps, it’s clear that the App Store is safer.
Apple would make a similar point about Apple Pay. It’s a very, very safe way to make payments. For example, Apple generates single-use card numbers for each transaction, and only shares this unique number with payment terminals.
But third-party companies could offer the same guarantees
Apple says it makes sure all apps allowed in the Apple Store are safe. That’s a bit of a hypocritical claim, since it’s mainly the built-in protections of iOS – like sandboxing – that keep users safe. This would be true regardless of the app store an app originated from.
But, Apple continues, it also protects users from fraudulent apps. Uh…
The broader point here is that any third-party app store would be free to do its own vetting, and there’s no reason it can’t do at least as good a job as Apple.
Same thing with Apple Pay single-use tokens. It’s not Apple technology: rather, it’s an industry-wide protocol known as EMV Payment Tokenization (EMV stands for Europay, MasterCard, Visa – the three bodies that jointly developed the approach). Google Pay and Samsung Pay do the same thing, and individual banks are free to create apps that use the same technology. Still, only Apple Pay can use it on iPhones because you can’t without access to the NFC chip.
Thus, any protection offered by Apple could be offered by third-party companies. However, that’s not even my main point.
Most People Would Still Choose Apple’s Walled Garden
Even if Apple’s scary stories were accurate – that only Apple can properly protect customers from the big, scary world outside its own walled garden – that’s not really the point.
While there is the casual suggestion that Apple should be broken up, the vast majority of antitrust regulators aren’t telling Apple that it can’t offer its own app store or its music streaming service or its mobile wallet product or its weather app or his game subscription or whatever.
All the regulators say Apple should allow third-party companies to compete on a level playing field — in other words, Apple should continue to offer the official App Store while also allowing third parties. iPhone owners can then choose which app store to use. Continue to offer Apple Pay while allowing banking apps to use the NFC chip. Etc.
I bet it wouldn’t even cost Apple a lot of money – for two reasons.
First, the average non-technical Apple customer will choose Apple every time. Offer them an Apple app store and an Epic Games app store, and the overwhelming majority will choose the Apple app store.
Second, even technicians are most will stick to Apple. One of the main reasons I buy the Apple Kit is that I actively love and appreciate the Apple ecosystem. I like how everything is integrated because there is only one company managing everything. So even people who consider the alternatives and examine what they have to offer still stick mostly to Apple’s offerings.
Apple invites legal trouble for no good reason
That’s why I’m baffled by Apple’s stubbornness on antitrust issues: there’s virtually no cost to opening things up and there’s significant risk in not doing so.
If Apple opens things up voluntarily, it can (within reason) choose its own terms. As long as he treats things in a reasonably fair way, politicians will have no reason to insist that he go a step further.
But if he waits for lawmakers to define the terms, he risks ending up with a much worse deal. Right now, for example, a lot of people are arguing that Apple’s 30% commission for big developers is too high. If Apple waits for lawmakers to act, it might be forced to take a lot less. If it just allows third-party app stores — which hardly any iPhone user will bother to use — it can continue to take its cut while shrugging its shoulders and telling lawmakers that developers and consumers are free to use any of the other iPhone app stores out there.
Apple is now the leader and should act like one
macworld Dan Moren suggests that this stubbornness is part of Apple’s DNA.
There’s something in the company’s DNA – likely passed down in part from the late co-founder Steve Jobs – that promulgates the idea that there are two ways of doing things: an Apple way and a bad one. way.
There may be something to it. Steve often did things that people called weird, and he won most of those bets.
But today’s Apple isn’t Steve’s Apple – the upstart battling more established companies. It is no longer the little child in the playground who bravely defies the bullies. Apple is now the school team’s 240-pound quarterback who is increasingly looking like he wants to bully.
It’s time to take a more mature approach. Apple, accept the fact that antitrust pressures aren’t going to magically disappear just because you want them to. Recognize that you will get a better deal with a voluntary change now than with a regulated change later. Recognize that there is a reputational cost to fighting to defeat, and a public relations gain to be had by acting now. Act like a leader, not a reluctant follower.
It’s my point of view; and yours? Please take our survey and share your thoughts in the comments.
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