House Judiciary says Apple enjoys monopoly power with App Store

Posted:
in General Discussion edited October 2020
Apple enjoys monopoly power in the distribution of apps on iOS devices via the App Store, the U.S. House Judiciary subcommittee on antitrust said in a report on Tuesday.

Credit: WikiMedia
Credit: WikiMedia


The House Judiciary report caps off a yearlong investigation into four dominant technology companies: Apple, Amazon Google, and Facebook. The nearly 450-page report concludes that all four companies have engaged in anti-competitive and monopolistic tactics.

Specifically for Apple, the report claims that the company's control over iOS "provides it with gatekeeper power over software distribution on iOS devices."

That's because the App Store is the only method to distribute apps on iOS, and Apple doesn't allow non-native app stores to be installed on its mobile devices. Citing iOS developers, the report adds that Apple "actively undermines the open web's progress on iOS" to push companies to build native apps on iOS, instead of web apps.

"As a result, Apple's position as the sole app store on iOS devices is unassailable. Apple fully controls how software can be installed on iOS devices and CEO Tim Cook has explained that the company has no plan to permit an alternative app store. The former director of the app review team for the App Store observed that Apple is 'not subject to any meaningful competitive constraint from alternative distribution channels,'" the panel finds.

The subcommittee examined Apple's 30% cut of in-app purchases; its treatment of preinstalled apps versus third-party ones; and whether Apple leverages its control of the iOS App Store to "glean business intelligence that enables it to better compete against third-party apps."

"Apple's monopoly power over software distribution on iOS devices appears to allow it to generate supra-normal profits from the App Store and its Services business," the report reads.

Rep. David Cicilline, the head of the antitrust subcommittee, called Apple's 30% cut of app purchases "highway robbery" in a June interview.

The panel also found evidence of exclusionary tactics in the removal or suppression of parental control apps that rivaled Apple's own Screen Time feature. Additional scrutiny was paid on App Store rules, regulations, and the app review process.

In an interview with the subcommittee, former Senior Director of App Store Review Phillip Shoemaker implied rules were applied arbitrarily or in a fashion that was favorable to Apple.

"[Shoemaker] has previously noted that apps that compete against Apple's services have a track record of problems getting through the App Store's review process. For example, Apple's gaming service, Apple Arcade, is a type of app that was 'consistently disallowed from the store," when offered by third-party developers, but Apple allowed its own app in the store 'even though it violates existing [App Store] guidelines.' Mr. Shoemaker explained to Subcommittee staff that Apple's new Guideline 3.1.2a related to streaming game services was likely written to "specifically exclude Google Stadia,' describing the decision as 'completely arbitrary,'" the document reads.

Apple, for its part, maintains App Store Guidelines are "open and transparent," a line parroted by CEO Tim Cook at a hearing in July.

The panel also investigated Apple mergers, App Store search priority, first-party services like Apple Pay and Siri, and the practice of "Sherlocking."

Although the report doesn't explicitly call for Apple or the other tech giants to be broken up, it does endorse an array of legislative changes that could allow the government to better regulate dominant firms.

That includes structural separations and prohibiting dominant platforms from entering similar lines of business and instructing antitrust regulators to assume that mergers by dominant platforms are anticompetitive. The report also suggests preventing dominant platforms from favoring their own services and requiring them to make their services compatible with third parties.

As far as the other companies, the panel found that Amazon enjoys monopoly power over third-party sellers and suppliers; Facebook enjoys monopoly power in online advertising and social networking; and Google enjoys monopoly over online searches.

"To put it simply, companies that once were scrappy, underdog startups that challenged the status quo have become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons," the report reads. "Although these firms have delivered clear benefits to society, the dominance of Amazon, Apple, Facebook, and Google has come at a price."

The findings come amid ongoing antitrust scrutiny of Apple and other tech companies. The Justice Department launched a probe examining Apple in June, and is planning an omnibus lawsuit against Google.

Apple in a statement on Tuesday rebutted the report's claims.
"We have always said that scrutiny is reasonable and appropriate but we vehemently disagree with the conclusions reached in this staff report with respect to Apple. Our company does not have a dominant market share in any category where we do business. From its beginnings 12 years. ago with just 500 apps, we've built the App Store to be a safe and trusted place for users to discover and download apps and a supportive way fro developers to create and sell apps globally. Hosting close to two millions apps today, the App Store has delivered on that promise and met the highest standards for privacy, security and quality. The App Store has enabled new markets, new services and new products that were unimaginable a dozen years ago, and developers have been primary beneficiaries of this ecosystem. Last year in the uNited States alone, the App Store facilitated $138 billion in commerce with over 85% of that amount accruing solely to third-party developers. Apple's commission rates are firmly in the mainstream of those charged by other app stores and gaming marketplaces. Competition drives innovation, and innovation has always defined us at Apple. We work tirelessly to deliver the best products to our customers, with safety and privacy at their core, and we will continue to do so."
The House report in full, section regarding investigation into Apple starting at page 329:

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Comments

  • Reply 1 of 87
    Google, Microsoft and all the others ALSO charge 30% fees. How is it highway robbery for Apple and not the rest?!
    magman1979StrangeDayswilliamlondonlongpathgregoriusmredhotfuzzlkruppcurtis hannahpulseimageslolliver
  • Reply 2 of 87
    EsquireCatsEsquireCats Posts: 1,211member
    The iPhone originally came with only the ability to serve web apps. Functionality that has only been enhanced since then and is well documented for devs to use, however it was both developers and consumers who demanded direct development on the hardware, aka native apps. 
    magman1979williamlondongeorgie01lolliveredredcornchipchristophbtechnokillroyFileMakerFeller
  • Reply 3 of 87
    rob53rob53 Posts: 2,723member
    Just a diversion from all the monopolistic activities by pharmaceuticals and all the other major corporations who pay off our legislators. Apple isn't paying enough so they're getting targeted. We all know almost all take legal brides and the only way to bring Congress back to the people is to make it illegal for corporations to pay them off. 
    JWSCmagman1979williamlondonStrangeDaysplanetary paullkrupplollivercornchipmcdaveDogperson
  • Reply 4 of 87
    How do so many stupid people manages to get themselves elected to government office?
    peterhartmagman1979williamlondongeorgie01planetary paulviclauyycpulseimageslollivercornchipentropys
  • Reply 5 of 87
    Anilu_777 said:
    Google, Microsoft and all the others ALSO charge 30% fees. How is it highway robbery for Apple and not the rest?!
    Thats just shows that the House knows nothing about tech yet they keep pretending.....go clean up your House first
    peterhartmagman1979williamlondonJWSCplanetary paulcurtis hannahlolliverDogpersonkillroydanh
  • Reply 6 of 87
    Excellent news! Any other industry and the execs would have already been in jail. Imagine a car company telling you that you have to buy all accessories from their store, and ones bought from anywhere else will just not work. And the makers have to get their products approved before they can be sold, by a somewhat arbitrary set of rules, and they have to pay 30% to the car manufacturer commission.
    edited October 2020 williamlondonelijahgcornchipgc_uk
  • Reply 7 of 87
    SpamSandwichSpamSandwich Posts: 33,408member
    rob53 said:
    Just a diversion from all the monopolistic activities by pharmaceuticals and all the other major corporations who pay off our legislators. Apple isn't paying enough so they're getting targeted. We all know almost all take legal brides and the only way to bring Congress back to the people is to make it illegal for corporations to pay them off. 
    One thing that has baffled me for a long time is the utter ignorance of their lobbying efforts. Failure to lobby is a failure to defend Apple’s interests.
    magman1979planetary paulcurtis hannahwatto_cobra
  • Reply 8 of 87
    StrangeDaysStrangeDays Posts: 11,764member
    Rep. David Cicilline, the head of the antitrust subcommittee, called Apple's 30% cut of app purchases "highway robbery"

    ...lol these guys have no idea how much larger the markup is from manufacturer to nearly all retail endpoints. think at least 100%. but even within console markets (Steam, Google, Xbox, Sony, Nintendo), it's all the same 30%. 
    gatorguyJWSClollivercornchipaderutterwatto_cobra
  • Reply 9 of 87
    magman1979magman1979 Posts: 1,241member
    lam92103 said:
    Excellent news! Any other industry and the execs would have already been in jail. Imagine a car company telling you that you have to buy all accessories from their store, and ones bought from anywhere else will just not work. And the makers have to get their products approved before they can be sold, by a somewhat arbitrary set of rules, and they have to pay 30% to the car manufacturer commission.
    Most stupid, ignorant comment of the thread, congratulations *hands user a DUNCE hat*

    This is the STUPIDEST IT-related thing the asshats of the US government have spit out their blathering pie holes, my god...
    planetary paulJFC_PAgregoriusmredhotfuzzcurtis hannahlollivercornchipequality72521aderutterrazorpit
  • Reply 10 of 87
    StrangeDaysStrangeDays Posts: 11,764member

    lam92103 said:
    Excellent news! Any other industry and the execs would have already been in jail. Imagine a car company telling you that you have to buy all accessories from their store, and ones bought from anywhere else will just not work. 
    ReplaceYou mean like how you can only get Tesla software features from Tesla and not third-parties?
    JWSCJFC_PAgregoriusmredhotfuzzmagman1979curtis hannahlolliverchristophbequality72521razorpit
  • Reply 11 of 87
    SpamSandwichSpamSandwich Posts: 33,408member
    Rep. David Cicilline, the head of the antitrust subcommittee, called Apple's 30% cut of app purchases "highway robbery"

    ...lol these guys have no idea how much larger the markup is from manufacturer to nearly all retail endpoints. think at least 100%. but even within console markets (Steam, Google, Xbox, Sony, Nintendo), it's all the same 30%. 
    Rep. Cicilline is quite a piece of work.
    https://en.wikipedia.org/wiki/David_Cicilline#Controversies
    JWSCmagman1979watto_cobra
  • Reply 12 of 87
    benji888benji888 Posts: 133member
    This is just the kind of b.s. to lead to get Apple to open a back door. We like apple’s way of sandboxing, it is better for the consumer’s security and privacy....we know what we’re getting.

    I just don’t get how Apple can be considered monopolistic when they DO NOT have a monopoly with their products.

    I agree with the above, this is a distraction from things they need to be doing, and it does have to do with lobbying and money.
    castcoremagman1979lolliverStrangeDaysrazorpitwatto_cobra
  • Reply 13 of 87
    Absolutely ridiculous.  Apple have made a resounding success of app development and distribution and given developers a massive pool of buyers that they wouldn’t have dreamed were possible. Apple have always been transparent and strict on their process, quality and profit margin. If they have a monopoly it has been gained with the full support of their developers and customers who have all benefitted. However, a monopoly suggests their is no alternative out there which is of course wrong. There is the google and other alternatives each with an equal chance of success if they go about business the right way. The anti-Apple brigade are now concerned that Apple are growing too big and successful so are looking for ways to undermine their success. It’s outrageous and smells pretty bad. I and the millions of other Apple customers are happy that we are provided with a vast pool of stable, tested and secure apps and understand there is a premium to pay for that. Leave them alone and go and search for vendors who don’t deliver such a good portfolio and aren’t as transparent as Apple. 
    castcoremagman1979lollivergilly33razorpitwatto_cobra
  • Reply 14 of 87
    rob53rob53 Posts: 2,723member
    lam92103 said:
    Excellent news! Any other industry and the execs would have already been in jail. Imagine a car company telling you that you have to buy all accessories from their store, and ones bought from anywhere else will just not work. And the makers have to get their products approved before they can be sold, by a somewhat arbitrary set of rules, and they have to pay 30% to the car manufacturer commission.
    Don't want to criticize Tesla but they fit your comments. Actually, many others do as well with proprietary hardware, especially audio systems. Yes, you can buy aftermarket head units but these won't have access to all the sensors the OEM device has. Most cars and trucks can use aftermarket wheels and tires but even those require specialized hardware to work. Most nuts and bolts will work but not all. I can buy parts and accessories for Apple products from a variety of stores so your comment doesn't work. Apps are written by all kinds of programmers, it's just that Apple demands almost all apps (some enterprise apps are handled differently) go through the App Store, which I, along with 99% of users, really like. The problem is not consumers having issues but developers complaining. These people can always find another platform to work on. Consumers aren't complaining about the cost of apps because they have gone way down from the exorbitant prices charged previously (like Adobe and Microsoft). We have no problem with Apple getting a 30% cut because we know Apple has to pay for the servers and personnel to provide these services. Now, if only these people in the House actually had to pay for products instead of someone else buying them for them they might actually understand things. Time to put real people in Congress instead of millionaires. 
    georgie01JFC_PAmagman1979lollivergilly33aderutterStrangeDaysrazorpitwatto_cobra
  • Reply 15 of 87
    22july201322july2013 Posts: 2,657member
    Excellent News! This would justify Apple shutting down the Third Party App Store permanently and replacing it by an Apple-Only App store. Companies could still get their products placed on this Apple-Only App store if they made a contract with Apple and branded their products as Apple products: eg, Apple Fortnite, Apple Premiere, Apple Chrome, etc. Nobody would be prevented from being on this Apple-Only App store, all they have to do is agree to be a subcontractor for Apple. And they could still make lots of money, even more money, because Apple could ensure a lack of competition in their respective fields.

    For those who don't get me, I'm 50% serious and 50% sarcastic. That is, this should not be what anyone wants yet it's what everyone may get if they pursue this path.
    retrogustowatto_cobra
  • Reply 16 of 87
    camber said:
    How do so many stupid people manages to get themselves elected to government office?
    People keep voting them in. 
    magman1979lkruppdewmelolliverrazorpitwatto_cobra
  • Reply 17 of 87
    Really lame... A clear example of people with a preconceived idea seeing what they want to see.

    If iOS was opened up to 3rd party stores and if web apps were more encouraged we would see a decline in quality and security, and we would see no reduction in overall app prices. With the exception of app subscriptions (which suck), app prices are already so ridiculously low. Do people not have a memory of what software prices were like before Apple’s App Store? Apple’s efforts even brought down pricing on some desktop apps because consumer expectations have changed.
    edited October 2020 aderutterwatto_cobra
  • Reply 18 of 87
    What kind of moron believes a company's control OVER ITS OWN PRODUCTS/PLATFORM constitutes a monopoly???
    magman1979castcorelolliverpscooter63BeatsSpamSandwichretrogustorandominternetpersonStrangeDaysrazorpit
  • Reply 19 of 87
    lam92103 said:
    Excellent news! Any other industry and the execs would have already been in jail. Imagine a car company telling you that you have to buy all accessories from their store, and ones bought from anywhere else will just not work. And the makers have to get their products approved before they can be sold, by a somewhat arbitrary set of rules, and they have to pay 30% to the car manufacturer commission.
    What are you talking about! Your example is totally wrong.
    1. You know at all the difference between HARDWARE and SOFTWARE. 
    2. You can buy accessories for your Apple devices everywhere, not only in the AppStore 
    3. And if you want to replace an original part in your Ford car with a part made by third party supplier,
        be sure  the last one have already paid maybe much  more than 30% to Ford for the rights to may produce this part.

    magman1979curtis hannahBeatsaderutterwatto_cobra
  • Reply 20 of 87
    |Apple's gaming service, Apple Arcade, is a type of app that was 'consistently disallowed from the store," when offered by third-party developers

    yeah and Netflix is a type of movie, Spotify a type of song...



    magman1979aderutterkillroywatto_cobra
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