Apple uses platform dominance to 'lock out' competition, says Elizabeth Warren
Massachusetts Senator Elizabeth Warren turned a critical eye to Silicon Valley in a keynote speech delivered at New America's Open Markets Program on Wednesday, saying industry leaders Apple, Amazon and Google use their respective platforms to the detriment of smaller, less powerful competitors.
Falling just shy of accusing the tech giants of running a monopoly, Sen. Warren's (D-Mass.) remarks are in stark contrast to those presumptive Democratic presidential nominee Hillary Clinton made in laying out her technology agenda on Tuesday, a plan viewed as chummy to Silicon Valley. Warren was invited on stage at yesterday's event, prompting speculation that she might join Clinton on the Democratic ticket.
At the Open Markets Program, Warren cautioned against "consolidation and concentration" of power in the tech sector, reports Re/code. The senator wagged a finger at industry heavyweights Apple, Amazon and Google for leveraging their respective platforms to effectively "lock out smaller guys and newer guys."
"Google, Apple and Amazon have created disruptive technologies that changed the world, and [...] they deserve to be highly profitable and successful," Warren said. "But the opportunity to compete must remain open for new entrants and smaller competitors that want their chance to change the world again."
As it applies to Apple, Warren took issue with the company's strict control over its various App Stores, saying sales regulations make it difficult for third-party streaming services to compete against products like Apple Music. The issue has been raised before by firms marketing music streaming services, which in 2015 branded Apple's App Store policies as anti-competitive.
Apple takes a customary 30 percent cut of all purchases made through the iOS and Mac App Stores, including in-app transactions, meaning companies like Spotify must charge users an extra fee to break even. Spotify's premium $10 subscription tier, for example, sells for $13 on iOS and Apple does not allow linking to external stores. In response, Spotify last year encouraged customers to save money by bypassing the App Store and signing up online.
To its credit, Apple is planning to loosen restrictions when a new revenue sharing model rolls out this fall. Instead of charging 30 percent across the board, the company will reduce its take to 15 percent for customers who hold subscriptions for more than one year. The idea is to drive sustainable income instead of one-time app buy-ins. Spotify says the changes are not enough.
The streaming music company also took the opportunity to chime in on Warren's comments.
"Apple has long used its control of iOS to squash competition in music, driving up the prices of its competitors, inappropriately forbidding us from telling our customers about lower prices, and giving itself unfair advantages across its platform through everything from the lock screen to Siri," said Jonathan Prince, Global Head of Communications and Public Policy at Spotify. "You know there's something wrong when Apple makes more off a Spotify subscription than it does off an Apple Music subscription and doesn't share any of that with the music industry. They want to have their cake and eat everyone else's too."
In her speech today, Warren knocked Google for "its dominant search engine to harm rivals of its Google Plus user review feature," while claiming Amazon "uses its position as the dominant bookseller to steer consumers to books published by Amazon to the detriment of other publishers."
The senator from Massachusetts is famously opposed to the consolidation of power by the few, hence her appearance at today's conference (incidentally, the meeting was titled "America's Monopoly Problem What Should the Next President Do About It?"). Warren's zeal for healthy competition extends far beyond the technology sector, though recent media coverage has focused on her interest in Silicon Valley's elite.
Falling just shy of accusing the tech giants of running a monopoly, Sen. Warren's (D-Mass.) remarks are in stark contrast to those presumptive Democratic presidential nominee Hillary Clinton made in laying out her technology agenda on Tuesday, a plan viewed as chummy to Silicon Valley. Warren was invited on stage at yesterday's event, prompting speculation that she might join Clinton on the Democratic ticket.
At the Open Markets Program, Warren cautioned against "consolidation and concentration" of power in the tech sector, reports Re/code. The senator wagged a finger at industry heavyweights Apple, Amazon and Google for leveraging their respective platforms to effectively "lock out smaller guys and newer guys."
"Google, Apple and Amazon have created disruptive technologies that changed the world, and [...] they deserve to be highly profitable and successful," Warren said. "But the opportunity to compete must remain open for new entrants and smaller competitors that want their chance to change the world again."
As it applies to Apple, Warren took issue with the company's strict control over its various App Stores, saying sales regulations make it difficult for third-party streaming services to compete against products like Apple Music. The issue has been raised before by firms marketing music streaming services, which in 2015 branded Apple's App Store policies as anti-competitive.
Apple takes a customary 30 percent cut of all purchases made through the iOS and Mac App Stores, including in-app transactions, meaning companies like Spotify must charge users an extra fee to break even. Spotify's premium $10 subscription tier, for example, sells for $13 on iOS and Apple does not allow linking to external stores. In response, Spotify last year encouraged customers to save money by bypassing the App Store and signing up online.
To its credit, Apple is planning to loosen restrictions when a new revenue sharing model rolls out this fall. Instead of charging 30 percent across the board, the company will reduce its take to 15 percent for customers who hold subscriptions for more than one year. The idea is to drive sustainable income instead of one-time app buy-ins. Spotify says the changes are not enough.
The streaming music company also took the opportunity to chime in on Warren's comments.
"Apple has long used its control of iOS to squash competition in music, driving up the prices of its competitors, inappropriately forbidding us from telling our customers about lower prices, and giving itself unfair advantages across its platform through everything from the lock screen to Siri," said Jonathan Prince, Global Head of Communications and Public Policy at Spotify. "You know there's something wrong when Apple makes more off a Spotify subscription than it does off an Apple Music subscription and doesn't share any of that with the music industry. They want to have their cake and eat everyone else's too."
In her speech today, Warren knocked Google for "its dominant search engine to harm rivals of its Google Plus user review feature," while claiming Amazon "uses its position as the dominant bookseller to steer consumers to books published by Amazon to the detriment of other publishers."
The senator from Massachusetts is famously opposed to the consolidation of power by the few, hence her appearance at today's conference (incidentally, the meeting was titled "America's Monopoly Problem What Should the Next President Do About It?"). Warren's zeal for healthy competition extends far beyond the technology sector, though recent media coverage has focused on her interest in Silicon Valley's elite.
Comments
To compete, you need to overcome that barrier.
It's difficult to build successful platforms, so nobody is going to lay down the red carpet for you to just walk-in and compete.
Says the people who haven't ever had cake. If you can't make money off of 10 million users paying $10 a month, maybe, just maybe the problem isn't the stores, it's that nobody without a piece in hardware makes anything streaming music, even with the meager artist royalties. Wonder why that is.
Then again, Apple created the App Store and should have full control over it and it's pricing if they want to, but when you become a platform allowing 3rd parties to participate and sell, that should have limitations in terms of competition. As it stands today, they're not breaking any laws and deserve to reap whatever income they can, but morally they can't be opposed to Prince's statement in my opinion.
sheesh. Does she ever speak with actual facts? Or is she only capable of making stuff up to fuel. Mob mentality, taking advantage of easily confused issues.
So in her opinion, a company that WAS "the little guy" played by the rules and created an ecosystem from nothing that people would buy into and provided satisfaction and security to consumers... Is now somehow "wrong."
good going lady. Now please GET going. And don't come back.
The problem with antitrust arguments against Apple is that Apple doesn't have all that large of a share of most markets. The iPhone makes up less than 20% of global smartphone sales, and about 50% in the US. That's better than Blastdoor Inc, but t's not anywhere near a monopoly -- certainly not near the share of the market that Microsoft had with Windows when the DOJ went after them.
Also, it's hardly a 'monopoly' when iDevice only counts 20% of marketshare. On the other hand, Android which counts close to 80% of marketshare...
It's just unbelievable that a competitor has the gall to make any vile attempt to force Apple to give preferential access to Apple's own customers.
I'm not sure that I think Apple shouldn't be allowed to do such things on their own platforms and stores, but that doesn't mean I have to like it.