2) I didn't trash Apple. I simply stated that, in my opinion, they need to drop the argument that they don't have a type of monopoly and shift instead to the more accurate and more defensible position that " the Apple Store is an integral part of what makes the iPhone private, secure and stable."
Actually, the judge disagreed with you:
Based on a review of the current limited record before the Court, the Court cannot conclude that Epic has met the high burden of demonstrating a likelihood of success on the merits, especially in the antitrust context
What the judge understands is that you cannot penalise companies for being successful.
You cannot decide that a component in a product is a monopoly simply because the product becomes too successful.
You cannot tell McDonalds that it must allow Burger King to set up kiosks in every McDs restaurants.
What the judge is telling them that if they want to force their app store into the App Store then the antitrust approach is not going to work; they're going to have to try something else.
No, those are two different topics where she ruled on two different sides:
On one, where she ruled in Epic's favor, she was talking of Apple banning Epic's Unreal Engine.
On the other, the one you are siting where she ruled against Epic, she was talking of Apple banning of Epic's Fortnite where she said: “the current predicament (with “Fortnite”) appears of its own making” and refused to order its reinstatement. And Reuter's reports: "Epic had sought to reverse its punishments by Apple until the broader case could be decided."
But, despite her stay of Epic's request to reinstate Fortnite, she clearly demonstrated her skepticism of Apple's argument that the App Store cannot be a monopoly simply because the iPhone is not a monopoly -- and passed the ultimate decision down the road. Again, Reuters reported the exchange as:
"During a terse exchange with Apple counsel Richard Doren at a hearing
on Monday, the judge said she saw “no competition” to Apple’s App Store
on the iPhone.
“The question is, without competition, where does
the 30% (App Store commission) come from? Why isn’t it 10? 20? How is
the consumer benefiting?” she asked.
Doren replied that consumers had choices when deciding to buy an Android device or an iPhone.
“The
competition is in the foremarket,” he said, reiterating an argument
that has been central to Apple Chief Executive Tim Cook’s defense during
Congressional antitrust hearings.
Gonzalez Rogers replied that there was “plenty of economic theory” to show that switching brands imposed costs on consumers.
She
at one point muted Doren in the virtual proceedings. Doren later said
that Apple would prove at trial that “people switch all the time”.
So, I'll stick with my opinion (shared by this judge) that Apple's defense of its App Store policies, that it is not a monopoly because the iPhone does not have a monopoly is a weak defense and won't stand up under scrutiny. As I said, I think a better defense would be that while the iPhone is not a monopoly (obviously true!), that the App Store is a necessary part of making the iPhone private, secure, and stable and users derive considerable benefit from that. Because, viewed from within Apple's ecosystem, the App Store IS a monopoly.
My point is not so much where Apple is right or that Epic is right -- that's too complicated for me, but that Apple's ongoing defense that the App Store is not a monopoly simply because the iPhone is not a monopoly is a weak case and Apple's lawyers need to up their game. My gripe (and the judge's) is not so much with Apple but with its lawyers and their defense of Apple.
According to Reuters, Apple got blasted for its App Store policies in "terse" exchanges between the judge and Apple's lawyer:
"During a terse exchange with Apple counsel Richard Doren at a hearing
on Monday, the judge said she saw “no competition” to Apple’s App Store
on the iPhone.
“The question is, without competition, where does
the 30% (App Store commission) come from? Why isn’t it 10? 20? How is
the consumer benefiting?” she asked.
Doren replied that consumers had choices when deciding to buy an Android device or an iPhone.
“The
competition is in the foremarket,” he said, reiterating an argument
that has been central to Apple Chief Executive Tim Cook’s defense during
Congressional antitrust hearings.
Gonzalez Rogers replied that there was “plenty of economic theory” to show that switching brands imposed costs on consumers.
She at one point muted Doren in the virtual proceedings."
Essentially the judge called Bull on what she sees as Apple's bullshit contention that the iPhone has not created a monopolistic market that it exploits with the App Store.
My personal thoughts on it are that Apple needs to go beyond (or drop) its claim that it has not created any sort of monopoly and iPhone users are free to go over to Android and claim (correctly) that the Apple Store is an integral part of what makes the iPhone private, secure and stable.
I agree with you on this.
Just because there's "plenty of economic theory" to show that switching brands imposed costs on customers isn't an argument to open up the iPhone to more App Stores. There is a cost to the consumer to switch from Android to iPhone or PC to Mac and thousands of examples across a plethora of industries and consumer goods.
My personal view is that 30% at the outset of the App Store may have been reasonable, but as with everything the market moves on and this level of "commission" is perhaps too high now that the store has been established and it's start up costs likely covered. 15% seems more realistic, especially as 15% is the "commission" rate for ALL subscription apps from year 2 onwards. This level should more than cover payment fees, bandwidth costs, hosting, development tools, etc.
The biggest issue is what is the "cost" of providing App Store access to the mountain of free apps that pay nothing except the $99 annual developer fee?
One of Apple's filings in the current court case lays out the argument that the 30% fee is not purely for payment processing but includes, for example, licensing fees for the IP present in a wide swathe of APIs. One possible reason for subscriptions to digital content being eligible for the lower rate is that the container for delivering that subscription content (an app) is utilising a smaller range of IP and gets updated less frequently thus requiring fewer administrative resources.
Regardless, the rate itself is not the issue for this court case - that's a PR and marketing concern. The core issue is whether or not Apple can maintain a legal right to set its own rules for the store and levy fees for access based on its own decisions about how it runs its business. And Epic will discover just how different its perceptions are from reality.
I think there is a push for a lower "commission fee", though Epic (and others) clearly want it to be as close to 0% as possible. And whilst I agree that the core part of the case may not be about the fee per-se, it is clearly a point of contention that is guaranteed to be brought into the mix at some point. Whilst I didn't specifically mention licensing fees for IP and APIs my list was by no means complete - hence the "etc". However, I do question why you would consider that the lower rate for the subscription model would have lower IP/API support costs associated with it? Surely any app on the App Store can use any of the IP / APIs regardless of whether it is subscription or non-subscription as they all need to be maintained regularly. On the assumption that the 15% fee for subscription apps is perfectly acceptable (and likely profitable) for Apple, by corollary this fee would be sufficient for non-subscription apps too.
As for the core issue, I feel I made my point clear on that as I do think that Apple, as the platform owner - that's hardware and software - can manage it how they deem fit. This is very much in line with you and many others. Consequently, I suspect that the main issue will be the fee level, not so much whether Apple has to open up their walled garden - which is the exact reason the majority buy into it in the first place!
According to Reuters, Apple got blasted for its App Store policies in "terse" exchanges between the judge and Apple's lawyer:
"During a terse exchange with Apple counsel Richard Doren at a hearing
on Monday, the judge said she saw “no competition” to Apple’s App Store
on the iPhone.
“The question is, without competition, where does
the 30% (App Store commission) come from? Why isn’t it 10? 20? How is
the consumer benefiting?” she asked.
Doren replied that consumers had choices when deciding to buy an Android device or an iPhone.
“The
competition is in the foremarket,” he said, reiterating an argument
that has been central to Apple Chief Executive Tim Cook’s defense during
Congressional antitrust hearings.
Gonzalez Rogers replied that there was “plenty of economic theory” to show that switching brands imposed costs on consumers.
She at one point muted Doren in the virtual proceedings."
Essentially the judge called Bull on what she sees as Apple's bullshit contention that the iPhone has not created a monopolistic market that it exploits with the App Store.
My personal thoughts on it are that Apple needs to go beyond (or drop) its claim that it has not created any sort of monopoly and iPhone users are free to go over to Android and claim (correctly) that the Apple Store is an integral part of what makes the iPhone private, secure and stable.
I agree with you on this.
Just because there's "plenty of economic theory" to show that switching brands imposed costs on customers isn't an argument to open up the iPhone to more App Stores. There is a cost to the consumer to switch from Android to iPhone or PC to Mac and thousands of examples across a plethora of industries and consumer goods.
My personal view is that 30% at the outset of the App Store may have been reasonable, but as with everything the market moves on and this level of "commission" is perhaps too high now that the store has been established and it's start up costs likely covered. 15% seems more realistic, especially as 15% is the "commission" rate for ALL subscription apps from year 2 onwards. This level should more than cover payment fees, bandwidth costs, hosting, development tools, etc.
The biggest issue is what is the "cost" of providing App Store access to the mountain of free apps that pay nothing except the $99 annual developer fee?
One of Apple's filings in the current court case lays out the argument that the 30% fee is not purely for payment processing but includes, for example, licensing fees for the IP present in a wide swathe of APIs. One possible reason for subscriptions to digital content being eligible for the lower rate is that the container for delivering that subscription content (an app) is utilising a smaller range of IP and gets updated less frequently thus requiring fewer administrative resources.
Regardless, the rate itself is not the issue for this court case - that's a PR and marketing concern. The core issue is whether or not Apple can maintain a legal right to set its own rules for the store and levy fees for access based on its own decisions about how it runs its business. And Epic will discover just how different its perceptions are from reality.
I think there is a push for a lower "commission fee", though Epic (and others) clearly want it to be as close to 0% as possible. And whilst I agree that the core part of the case may not be about the fee per-se, it is clearly a point of contention that is guaranteed to be brought into the mix at some point. Whilst I didn't specifically mention licensing fees for IP and APIs my list was by no means complete - hence the "etc". However, I do question why you would consider that the lower rate for the subscription model would have lower IP/API support costs associated with it? Surely any app on the App Store can use any of the IP / APIs regardless of whether it is subscription or non-subscription as they all need to be maintained regularly. On the assumption that the 15% fee for subscription apps is perfectly acceptable (and likely profitable) for Apple, by corollary this fee would be sufficient for non-subscription apps too.
As for the core issue, I feel I made my point clear on that as I do think that Apple, as the platform owner - that's hardware and software - can manage it how they deem fit. This is very much in line with you and many others. Consequently, I suspect that the main issue will be the fee level, not so much whether Apple has to open up their walled garden - which is the exact reason the majority buy into it in the first place!
Yes, Epic and others are whining about paying too much and they do want it to be as close to zero as they can get it. But even if Apple lowered it to near zero, they would STILL be whining. Why: because, as you point out, Apple sets their own rules on requirements each app must meet to gain entrance to and remain in that beautiful walled garden. Actually, historically, that's been the biggest block of complaints. Leading the pack a while back were parental control apps that broke Apple's rules.
For myself as an Apple user, I want those rules because they help to insure privacy, security and stability, It's one of the things that sets Apple apart and enables me to feel comfortable putting things on my phone that I would not otherwise be able to put there (like financial stuff). But, the rules and the fees go together: It costs money to create, maintain and enforce those rules -- as well as running the App Store itself.
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But, despite her stay of Epic's request to reinstate Fortnite, she clearly demonstrated her skepticism of Apple's argument that the App Store cannot be a monopoly simply because the iPhone is not a monopoly -- and passed the ultimate decision down the road. Again, Reuters reported the exchange as:
“The question is, without competition, where does the 30% (App Store commission) come from? Why isn’t it 10? 20? How is the consumer benefiting?” she asked.
Doren replied that consumers had choices when deciding to buy an Android device or an iPhone.
“The competition is in the foremarket,” he said, reiterating an argument that has been central to Apple Chief Executive Tim Cook’s defense during Congressional antitrust hearings.
Gonzalez Rogers replied that there was “plenty of economic theory” to show that switching brands imposed costs on consumers.
She at one point muted Doren in the virtual proceedings. Doren later said that Apple would prove at trial that “people switch all the time”.
So, I'll stick with my opinion (shared by this judge) that Apple's defense of its App Store policies, that it is not a monopoly because the iPhone does not have a monopoly is a weak defense and won't stand up under scrutiny. As I said, I think a better defense would be that while the iPhone is not a monopoly (obviously true!), that the App Store is a necessary part of making the iPhone private, secure, and stable and users derive considerable benefit from that. Because, viewed from within Apple's ecosystem, the App Store IS a monopoly.
My point is not so much where Apple is right or that Epic is right -- that's too complicated for me, but that Apple's ongoing defense that the App Store is not a monopoly simply because the iPhone is not a monopoly is a weak case and Apple's lawyers need to up their game. My gripe (and the judge's) is not so much with Apple but with its lawyers and their defense of Apple.
As for the core issue, I feel I made my point clear on that as I do think that Apple, as the platform owner - that's hardware and software - can manage it how they deem fit. This is very much in line with you and many others. Consequently, I suspect that the main issue will be the fee level, not so much whether Apple has to open up their walled garden - which is the exact reason the majority buy into it in the first place!