Microsoft President calling for antitrust review of Apple App Store

Posted:
in General Discussion edited June 2020
Following a week of controversy about App Store pricing and policies, Microsoft President Brad Smith has chimed in and says that it is past time for antitrust regulators to turn their eyes to Apple.

Microsoft President Brad Smith (left) and CEO Satya Nadella (right)
Microsoft President Brad Smith (left) and CEO Satya Nadella (right)


In a wide-ranging discussion about issues of the day, Smith says that it is time for Apple's App Store -- and app stores in general -- to be regulated.

"I do believe that the time has come, whether we are talking about D.C. or Brussels, for a much more focused conversation about the nature of app stores, the rules that are being put in place, the prices and the tolls that are being extracted and whether there is really justification in antitrust law for everything that has been created," Smith said.

Smith claims that times have changed since Microsoft faced its own antitrust battles, and in many ways, he appears to believe that the present environment is worse. In the event hosted by Politico, Smith called for international agencies to look at Apple, specifically.

"Contrast that with what we're seeing in terms of other app store practices," Smith proposed. "They impose requirements that increasingly say there is only one way to get on to our platform and that is to go through the gate that we ourselves have created. In some cases they create a very high price or toll -- in some cases 30% of your revenue has to go to the toll keeper."

Microsoft has its own app store, as Smith pointed out. If a user installs an app through a campaign ID link, like a link hosted on the developer's site, developers have to pay a 5% fee. However, if the user installs an app through discovery on Microsoft's app store, that fee grows to 15%. But he notes that the situation is different for mobile platforms.

"If you look at the industry today, I think what you find is increasingly you're seeing app stores that have created higher walls and far more formidable gates than anything that existed in the industry 20 years ago," Smith said.

After spending decades as Microsoft counsel, Smith was named President of Microsoft in 2015. He was central to dealing with Microsoft's antitrust battles that began at the turn of the century.

Smith now serves as Microsoft's President, and chief legal officer at the same time. From 2016 to 2017, Smith served on the US Commerce Department's Digital Economy Board of Advisors.

Antitrust, and the Apple App Store

Two major events have developed recently, shining a new light on Apple's App Store practices and fees. On Monday, the European Commission launched a formal investigation into Apple's potential abuses in the App Store and with Apple Pay.

Specifically, the European Commission is looking into fees and practices on the App Store, including restrictions on apps that duplicate Apple's services. Additionally, the Apple Pay investigation will look into Apple's control over the NFC system that is central to the Apple Pay technology.

Nearly immediately thereafter, Basecamp founder and Ruby on Rails creator Heinemeier Hansson complained that Apple rejected an update to the "Hey" email client because of a lack of in-app purchases. App Store reviewers told Hey's developers that the app violated section 3.1.1 of Apple's guidelines, which states that developers are required to use Apple's in-app purchase system for digital goods or services.

"Hey" is a $99 per year email service. There is a web client for the service, and the iOS app was intended to be solely to read "Hey" email.

Hansson also reported that Apple's App Store team will remove the app unless an in-app purchase option is introduced. He added that Apple doesn't regard Hey as a "Reader" app, which are allowed to skirt the in-app subscription requirements.

According to section 3.1.3 of Apple's guidelines, "Reader" apps allow users to "access previously purchased content or content subscriptions" as long as apps don't persuade or point iOS users toward a purchasing method outside of the App Store. That provision of the guidelines is what allows popular apps like Netflix and Spotify to avoid offering in-app purchases. But although those apps don't point users toward a separate sign-up page, neither does Hey.

Apple has since said that the original app approval was in error. Apple Senior Vice President Phil Schiller said that the app doesn't do anything without a subscription, and said that wasn't allowed for email applications. He further defended Apple's moves, and says that there are no rule changes coming.

"Thank you for being an iOS app developer. We understand that Basecamp has developed a number of apps and many subsequent versions for the App Store for many years, and that the App Store has distributed millions of these apps to iOS users. These apps do not offer in-app purchase -- and, consequently, have not contributed any revenue to the App Store over the last eight years," Schiller wrote. "We are happy to continue to support you in your app business and offer you the solutions to provide your services for free -- so long as you follow and respect the same App Store Review Guidelines and terms that all developers must follow."

In a discussion with Hansson, House antitrust chairman David Cicilline said that Apple's fees are "highway robbery."

"Because of the market power that Apple has, it is charging exorbitant rents -- highway robbery, basically -- bullying people to pay 30 percent or denying access to their market," Cicilline said. "It's crushing small developers who simply can't survive with those kinds of payments. If there were real competition in this marketplace, this wouldn't happen."
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Comments

  • Reply 1 of 55
    wood1208wood1208 Posts: 2,506member
    Microsoft, you no angle either.. Look at your past on fairness,anti-trust against you. Worse than most high tech corporation.
    edited June 2020 dt17lordjohnwhorfinqwerty52mdriftmeyerbloggerblogviclauyycjony0baconstangwilliamlondon
  • Reply 2 of 55
    This is just bizarre. And sad. 

    I wonder if we’re seeing peak Microsoft. 
    dt17SpamSandwichqwerty52cornchipmdriftmeyerbloggerblogviclauyycjony0dysamoria
  • Reply 3 of 55
    avon b7avon b7 Posts: 5,689member
    "Smith claims that times have changed since Microsoft faced its own antitrust battles, and in many ways, he appears to believe that the present environment is worse"

    Microsoft behaved in ways that were far, far worse than today's environment, and got off lightly to boot. 

    Microsoft was actively seeking to suffocate and extinguish competition way beyond its own 'garden walls'. 
    edited June 2020 georgie01dt17elijahgforegoneconclusionqwerty52mdriftmeyermuthuk_vanalingambloggerblogviclauyycjony0
  • Reply 4 of 55
    He’s leaving something out. Last I checked games are still at 70:30, and they represent the biggest portion of downloads on all platforms.

    Microsoft is trying to make it appear they are fair, but in reality few developers qualify for the 5% cut.
    dt17foregoneconclusionqwerty52cornchipmdriftmeyerviclauyycjony0
  • Reply 5 of 55
    georgie01georgie01 Posts: 378member
    Not sure how a company can violate antitrust laws over something which only affects the company’s own market and further when that market isn’t the majority in the larger market...

    And Cicilline saying "It's crushing small developers who simply can't survive with those kinds of payments...” is beyond ridiculous and points to a clear agenda that has nothing to do with truth or law.
    dt17foregoneconclusionqwerty52lkruppcornchipmdriftmeyerericthehalfbeeviclauyycjony0tundraboy
  • Reply 6 of 55
    rob53rob53 Posts: 2,494member
    Look at Microsoft's client license fees. These are ridiculously expensive. All the big software companies going to subscriptions should be investigated. Apple's App Store has reduced the price of software for consumers while the big software companies keep driving it back up. Yes, 30% appears to be a large charge for developers but I'm sure we could find other companies charging even more than that to host all kinds of services. 
    viclauyycdysamoria
  • Reply 7 of 55
    This almost sounds reasonable except it’s total BS. First, the fees are a percentage off the sales. If you sell a $3 app, $1 goes to Apple and $2 goes to you. It may sound steep until you realize the size of the market you’re gaining access to, and also how much pre-digital distribution markets were costing to software developers. If you make a software package that’s for sale physically at MicroCenter, Fry’s, Best Buy... and it lists for $100, by the time you’ve paid distribution and mandatory advertising costs (you have to pay to get listed) you’re lucky to get $10. I don’t think a lot of developers are eager to return to that model. Apple created the concept, showed the world how it’s done, and that can’t have been cheap. This is really vindictive coming from MS which failed every single of those endeavors. They used to own the smartphone market with their crappy windowsCE, which ran apps that you couldn’t buy anywhere you had to get a “copy from a friend”. They could have developed the App Store. Jealous idiots.
    cornchipmdriftmeyertenthousandthingsviclauyycsacto joelarryjwteejay2012baconstanglamboaudi4rundhvid
  • Reply 8 of 55
    ITGUYINSDITGUYINSD Posts: 250member
    "Microsoft has its own app store, as Smith pointed out. If a user installs an app through a campaign ID link, like a link hosted on the developer's site, developers have to pay a 5% fee. However, if the user installs an app through discovery on Microsoft's app store, that fee grows to 15%."

    It's simple.  
    I think the main issue is there is only one way to get an app, and that is controlled by Apple.  Give consumers an alternative method for putting apps on their iPhones and iPads.  If not then, like the MS method above, if you arrive at the App Store via the developers web site, the fee is much less.  And MS 15% vs Apple 30%?  I can see how that could be "highway robbery".
    edited June 2020 elijahgdarkvaderwilliamlondon
  • Reply 9 of 55
    uraharaurahara Posts: 525member

    "Because of the market power that Apple has, it is charging exorbitant rents — highway robbery, basically — bullying people to pay 30 percent or denying access to their market," Cicilline said. "It's crushing small developers who simply can't survive with those kinds of payments. If there were real competition in this marketplace, this wouldn't happen."

    Lol. Market power of less than 15% in smartphones and less than 10% in computers.
    Hahaha. Market power...
    I can’t understand how such a company with such a small market share can be investigated for antitrust. They are the minority of the market. They should be getting the support for competing with the ‘big’ players on the market, who has much more users and owns the market. 
    viclauyycjony0
  • Reply 10 of 55
    elijahgelijahg Posts: 2,076member
    urahara said:

    "Because of the market power that Apple has, it is charging exorbitant rents — highway robbery, basically — bullying people to pay 30 percent or denying access to their market," Cicilline said. "It's crushing small developers who simply can't survive with those kinds of payments. If there were real competition in this marketplace, this wouldn't happen."

    Lol. Market power of less than 15% in smartphones and less than 10% in computers.
    Hahaha. Market power...
    I can’t understand how such a company with such a small market share can be investigated for antitrust. They are the minority of the market. They should be getting the support for competing with the ‘big’ players on the market, who has much more users and owns the market. 
    The monopoly is within the Apple ecosystem itself moreso than the market as a whole. If you've written an app in Swift, and Apple changes how it interprets (or even changes the wording) of their rules you're SOL. The only option is to rewrite your app from the ground up for Android.
    williamlondon
  • Reply 11 of 55
    The problem with these kinds of arguments is that it's far too easy to find an exact parallel in other markets. Want to sell something at a big box retailer? You've got to negotiate how much of a cut they'll take and (big surprise) smaller companies don't have as much leverage. Want to sell something at a giant grocery chain? Same deal. Plus, the same company that runs the big box or grocery chain can sell their own house brand in competition to yours. Banks can change credit card terms and interest rates at will and aren't required to provide a rational reason for it beyond "we wanted to make more money". Same with your landlord. They can increase your rent by 8% every year without making any improvements to your unit or to the building it's in. 
    mdriftmeyerlarryjwjony0dysamoriaMisterKitjeffharris
  • Reply 12 of 55
    TMC44TMC44 Posts: 2member
    He’s calling for a review because Microsuck as I call them, does in fact do that, suck. All these tech companies are tired of being beaten by Apple. So, they’ll come up with any reason to investigate, sue or call for a review because they know as well as everyone else that Apple will not only win but outperform and outclass all the rest. 
    cornchipuraharasacto joejony0baconstangwilliamlondonjeffharris
  • Reply 13 of 55
    georgie01 said:
    Not sure how a company can violate antitrust laws over something which only affects the company’s own market and further when that market isn’t the majority in the larger market...
    You have to figure that a large part of the complaining is really due to Apple's users being more likely to actually spend $$ on mobile. Like you say, that doesn't have much to do with traditional antitrust law.
    baconstangjeffharris
  • Reply 14 of 55
    SpamSandwichSpamSandwich Posts: 33,408member
    Good thing the courts are ready and willing to be influenced by sore losers.
    cornchipuraharajeffharris
  • Reply 15 of 55
    lkrupplkrupp Posts: 9,009member
    Everybody wants free ride on Apple's amazingly successful platform. On both the Mac and iOS a developer is more likely to succeed financially if their products are in the App Store where it's easy to buy, install and pay for. But that's not good enough, they want free access or just a nominal fee. Most people don't know that grocery stores actually charge brands for shelf space in their stores. Don't pay, your product does not make it to the shelves. Grocery stores also sell their own branded products in competition with the name brands. Lots of retailers do the same thing but in Apple's case it's deemed anti-trust and anti-competitive.Go figure.
    SpamSandwichuraharaviclauyycmacplusplusjony0lamboaudi4williamlondonjeffharris
  • Reply 16 of 55
    Rayz2016Rayz2016 Posts: 6,699member
    So Microsoft thinks the situation is worse than what they were doing. 

    A reminder: Microsoft was charging computer makers a Windows license fee for every computer they sold … whether Windows was installed on the machine or not. 
    cornchipmdriftmeyerjdb8167viclauyycsacto joeteejay2012jony0baconstanglamboaudi4rundhvid
  • Reply 17 of 55
    lkrupplkrupp Posts: 9,009member
    elijahg said:
    urahara said:

    "Because of the market power that Apple has, it is charging exorbitant rents — highway robbery, basically — bullying people to pay 30 percent or denying access to their market," Cicilline said. "It's crushing small developers who simply can't survive with those kinds of payments. If there were real competition in this marketplace, this wouldn't happen."

    Lol. Market power of less than 15% in smartphones and less than 10% in computers.
    Hahaha. Market power...
    I can’t understand how such a company with such a small market share can be investigated for antitrust. They are the minority of the market. They should be getting the support for competing with the ‘big’ players on the market, who has much more users and owns the market. 
    The monopoly is within the Apple ecosystem itself moreso than the market as a whole. If you've written an app in Swift, and Apple changes how it interprets (or even changes the wording) of their rules you're SOL. The only option is to rewrite your app from the ground up for Android.
    There is no such thing as a 'monopoly within' an ecosystem. That's complete bullshit. It's the same bullshit argument that deems Apple has a monopoly on the Macintosh and  therefore Mac clones should be allowed. You are apparently one of the ones who want iOS tp become Android. Therein lies the bullshit as you are perfectly free to leave the 'monopoly' you so despise. You are in no way locked in to that ecosystem. You are there by choice. Ma Bell was a monopoly because if you wanted a telephone you had one and one place only to go. There are hundreds of smartphone manufacturers to choose from in a myriad of colors, styles, features, many of which are deemed to be vastly superior to Apple's shitty, overpriced offerings. Yet you chose Apple. Why?

    Developers choose to develop for iOS because they can make much more money on iOS than Android. Android users, as numerous studies point out, are cheap ass bastards who won't spend a dime on software.
    edited June 2020 sacto joemacplusplusjony0SpamSandwichlamboaudi4williamlondonjeffharris
  • Reply 18 of 55
    Rayz2016Rayz2016 Posts: 6,699member
    elijahg said:
    urahara said:

    "Because of the market power that Apple has, it is charging exorbitant rents — highway robbery, basically — bullying people to pay 30 percent or denying access to their market," Cicilline said. "It's crushing small developers who simply can't survive with those kinds of payments. If there were real competition in this marketplace, this wouldn't happen."

    Lol. Market power of less than 15% in smartphones and less than 10% in computers.
    Hahaha. Market power...
    I can’t understand how such a company with such a small market share can be investigated for antitrust. They are the minority of the market. They should be getting the support for competing with the ‘big’ players on the market, who has much more users and owns the market. 
    The monopoly is within the Apple ecosystem itself moreso than the market as a whole. If you've written an app in Swift, and Apple changes how it interprets (or even changes the wording) of their rules you're SOL. The only option is to rewrite your app from the ground up for Android.
    Unfortunately, you cant just change the definition of a monopoly to suit your argument. 

    Secondly, Apple doesn’t dictate that you write your app in Swift or any other language for that matter. Quite a few apps are written in JavaScript. And Google has at least two frameworks that will allow you to develop an app that will compile on IOS and Android. 

    If the Apple ecosystem is a monopoly (even though Apple only has the largest installed base in the smartwatch market) then you may as well say that Office is a monopoly, and so is Google Search. 

    But of course, none of this really matters because monopolies aren’t actually illegal. 
    uraharaviclauyycsacto joemacplusplusjony0lamboaudi4williamlondonMisterKit
  • Reply 19 of 55
    elijahgelijahg Posts: 2,076member
    lkrupp said:
    elijahg said:
    urahara said:

    "Because of the market power that Apple has, it is charging exorbitant rents — highway robbery, basically — bullying people to pay 30 percent or denying access to their market," Cicilline said. "It's crushing small developers who simply can't survive with those kinds of payments. If there were real competition in this marketplace, this wouldn't happen."

    Lol. Market power of less than 15% in smartphones and less than 10% in computers.
    Hahaha. Market power...
    I can’t understand how such a company with such a small market share can be investigated for antitrust. They are the minority of the market. They should be getting the support for competing with the ‘big’ players on the market, who has much more users and owns the market. 
    The monopoly is within the Apple ecosystem itself moreso than the market as a whole. If you've written an app in Swift, and Apple changes how it interprets (or even changes the wording) of their rules you're SOL. The only option is to rewrite your app from the ground up for Android.
    There is nonsuch thing as a 'monopoly within' an ecosystem. That's complete bullshit and you are apparently one of the ones who want iOS tp become Android. Therein lies the bullshit as you are perfectly free to leave the 'monopoly' you so despise. You are in no way locked in to that ecosystem. You are there by choice. Ma Bell was a monopoly because if you wanted a telephone you had one and one place only to go. There are hundreds of smartphone manufacturers to choose from in a myriad of colors, styles, features, and dozens of cell service providers to subscribe to. But YOU decided to do business with Apple. Why?
    Blah blah "bullshit" blah blah attack person rather than argument blah blah "bullshit" blah. 

    That's all I read when you post, as you're one of the ones who would defend Apple to the ends of the Earth, even if they dropped a bomb on every user who didn't update you'd defend them. As usual you didn't have an answer as to why it's fine to force devs to rewrite their app from the ground up because Apple says they don't like their app. And in any case, we'll see soon whether the law in the US and in the EU thinks there is a monopoly, and of course if Apple is found to be monopolistic you'll disagree with that too, shouting at the lawmakers and calling them idiots.

    Just like Bell, if you want an app on iOS you have just one place to go. If a developer has written an app in Swift, they have just one place to go. Apple disallows apps that are similar to built-in ones. That's anticompetitive. You're forced to use Safari, because Apple won't allow you to change the default app used to open http links. Why can't you see that lock in is the the same thing as Bell's? Well - you can, just you defend Apple's every last action like any reasonable discussion that's not 100% pro-Apple somehow personally damages you. And in any case you are locked in to a certain extent, when you have invested money in apps and devices that are useless with Android (HomePod for example). The stickiness of Apple's ecosystem is well known. But when that's not convenient you just say it's not a thing when that's patently false.
    darkvaderITGUYINSDwilliamlondondysamoria
  • Reply 20 of 55
    ITGUYINSDITGUYINSD Posts: 250member
    lkrupp said:
    Everybody wants free ride on Apple's amazingly successful platform. On both the Mac and iOS a developer is more likely to succeed financially if their products are in the App Store where it's easy to buy, install and pay for. But that's not good enough, they want free access or just a nominal fee. Most people don't know that grocery stores actually charge brands for shelf space in their stores. Don't pay, your product does not make it to the shelves. Grocery stores also sell their own branded products in competition with the name brands. Lots of retailers do the same thing but in Apple's case it's deemed anti-trust and anti-competitive.Go figure.
    That's what you got out of reading the article, is that everybody wants a free ride?  I've not read anywhere that anyone thinks the App Store should be a free service to developers.  What is an issue is the mandatory 30% cut that Apple takes, and the inability of app companies to sell their own product without going through the App Store.

    Your grocery store analogy doesn't really work here because there are more than one grocery store chains.  There is only one App Store.  If Grocery store A sets a 30% fee to sell a food item, and grocery store B sets a 10% fee, the manufacturer has a choice and can sell at store B.  There is no choice in the Apple ecosystem.  That is the problem, not that everybody wants a free ride.
    edited June 2020 elijahgdarkvaderCheeseFreezewilliamlondondysamoria
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