Apple cites web, third-party markets as evidence against App Store dominance
In a submission to the Australian Competition and Consumer Commission, Apple rejected the notion that the App Store is the world's dominant app marketplace, noting users can acquire digital content from the web and other sources.
Apple and Google are targets of an ACCC probe into app store policies, with the antitrust watchdog examining potential issues arising from purported marketplace dominance.
The investigation is part of a larger inquiry into digital platform services and seeks to determine whether third parties can compete in a market alongside the App Store and Google Play. Also under review are app store regulations, fees imposed on developers, rankings systems, marketplace access, and the collection of consumer data.
Responding to the ACCC's original issues paper release in September, Apple said it "perceives and treats other distributors of apps, for platforms other than iOS, as significant competitors whose pricing and policies constrain Apple's ability to exercise power over developers." Further, the company disagrees with the body's characterization that the App Store is "the most dominant app marketplace by a large margin." Apple does not believe it has a "substantial degree of power" in any market relevant to the ACCC inquiry, nor does the company see market failures that need to be addressed through legal action.
Apple's submission (PDF link) was filed in February and made public on Wednesday. ZDNet reported on the document earlier today.
There are a number of channels through which iOS users can access digital content, Apple says, citing main competitors like the web, web-based app stores including Steam, and alternative hardware and software platforms like Google Play. Additionally, developers have alternative methods at their disposal, both for distribution (reader apps) and collection of fees (outside subscriptions).
Apple argues there is "vigorous" cross-platform competition to retain developers, adding that numerous App Store innovations have been driven by the need to keep up with other ecosystems. In-app purchases, pricing terms, App Store editorial content, subscriptions, Apple Arcade, promotional codes, App Clips and more are cited as examples of responses to, or catalysts of, change in the marketplace.
The tech giant maintains that it faces significant competitive constraints as developers have the option to walk away from the App Store to other platforms.
"Most notably, App Store prices (i.e., the App Store commission) continue to decrease," Apple says. "Apple has never had the market power to increase or even maintain its commission. Over the years, Apple commission has decreased, or Apple has increased options for developers to avoid its commission (like the Reader Rule and Multiplatform Rule) in order to remain competitive and differentiate itself against other app marketplaces."
Apple typically takes a 30% cut of in-app purchase revenue, but that slice was recently reduced to 15% for developers earning less than $1 million a year. Google in March followed suit with an identical program.
The document notes that app marketplace commissions are not unique to the App Store, as Amazon, Google, Microsoft and Samsung each levy fees on their respective stores.
Today's publication comes days after Apple told the ACCC that it was "surprised" to hear developers had concerns with the App Store review process.
Apple and Google are targets of an ACCC probe into app store policies, with the antitrust watchdog examining potential issues arising from purported marketplace dominance.
The investigation is part of a larger inquiry into digital platform services and seeks to determine whether third parties can compete in a market alongside the App Store and Google Play. Also under review are app store regulations, fees imposed on developers, rankings systems, marketplace access, and the collection of consumer data.
Responding to the ACCC's original issues paper release in September, Apple said it "perceives and treats other distributors of apps, for platforms other than iOS, as significant competitors whose pricing and policies constrain Apple's ability to exercise power over developers." Further, the company disagrees with the body's characterization that the App Store is "the most dominant app marketplace by a large margin." Apple does not believe it has a "substantial degree of power" in any market relevant to the ACCC inquiry, nor does the company see market failures that need to be addressed through legal action.
Apple's submission (PDF link) was filed in February and made public on Wednesday. ZDNet reported on the document earlier today.
There are a number of channels through which iOS users can access digital content, Apple says, citing main competitors like the web, web-based app stores including Steam, and alternative hardware and software platforms like Google Play. Additionally, developers have alternative methods at their disposal, both for distribution (reader apps) and collection of fees (outside subscriptions).
Apple argues there is "vigorous" cross-platform competition to retain developers, adding that numerous App Store innovations have been driven by the need to keep up with other ecosystems. In-app purchases, pricing terms, App Store editorial content, subscriptions, Apple Arcade, promotional codes, App Clips and more are cited as examples of responses to, or catalysts of, change in the marketplace.
The tech giant maintains that it faces significant competitive constraints as developers have the option to walk away from the App Store to other platforms.
"Most notably, App Store prices (i.e., the App Store commission) continue to decrease," Apple says. "Apple has never had the market power to increase or even maintain its commission. Over the years, Apple commission has decreased, or Apple has increased options for developers to avoid its commission (like the Reader Rule and Multiplatform Rule) in order to remain competitive and differentiate itself against other app marketplaces."
Apple typically takes a 30% cut of in-app purchase revenue, but that slice was recently reduced to 15% for developers earning less than $1 million a year. Google in March followed suit with an identical program.
The document notes that app marketplace commissions are not unique to the App Store, as Amazon, Google, Microsoft and Samsung each levy fees on their respective stores.
Today's publication comes days after Apple told the ACCC that it was "surprised" to hear developers had concerns with the App Store review process.
Comments
"Apple argues that it does not have a dominant position in this market, as it considers the relevant market to be either “smartphones” or “apps.” Since the company holds a minority share of the smartphone market in most of the countries in which it operates, it believes it cannot be considered to have a dominant position.
Competition regulators tend to take the view that the relevant market is “iOS apps,” and here Apple has a 100% monopoly on their sale and distribution. Edge cases aside, there is no way for a developer to bring an iOS app to market without selling it through the App Store."
EDIT: oh, it's from 9to5Mac's "antitrust guide"...no wonder it doesn't make much sense. That site has no clue what it's talking about per antitrust. For example, they treat Apple lowering the cut to 15% for developers making less than one million per year as if it's proof that the 30% cut represents something anticompetitive...which doesn't really make any sense considering 1) 30% still applies to companies making more than one million AND 2) Google made the same cut despite Android already allowing alternate stores.
Yeah, in a world with people who act reasonably, cooperatively, and recognize that they are sharing a planet with other people, Apple's moves would be celebrated by developers trying to create a business for themselves with fewer hurdles to jump over. But we're living in a world where it's every person for themself, everyone else is here to serve them, and everything comes down to either winning or losing, at any cost. The Epic losers of the developer community whose existence would not be possible without the groundwork laid by Apple's massive investments want it all and they want it their way. Biting the hand that feeds them isn't good enough, they want the whole damn arm.
https://www.lexology.com/library/detail.aspx?g=1f7e6823-29bc-4e21-95e4-eb61bebb176b
As" dominance in a market" is determined by the European Union for competition law issues:
https://www.oecd.org/daf/competition/abuse-of-dominance-in-digital-markets-2020.pdf
And as seen through the eyes of the party currently in full control of the US House, Senate and White House.
https://www.americanprogress.org/issues/economy/reports/2020/07/28/488201/using-antitrust-law-address-market-power-platform-monopolies/
The CCA (Australian Competition and Consumer Act) :
- prohibits cartels and anti-competitive conduct such as concerted practices and abuses of market power
- provides for private damages actions for anti-competitive conduct on a ‘single damages’ basis
- imposes personal liability for individuals, such as executives and management personnel knowingly involved in cartel conduct
- imposes access obligations on monopoly infrastructure owners, which allows others to access and use that infrastructure in certain circumstances
- prohibits misleading or deceptive conduct, as well as unconscionable conduct, in commercial and consumer transactions
- prohibits unfair terms in contracts involving small businesses and consumers
- sets out statutory guarantees related to the safety and quality of goods and services in consumer contracts
- establishes a strict liability regime for manufacturers that produce defective goods.
So now it would depend on how the Australian competition authorities look at Apple's iOS infrastructure and whether it operates in a monopoly position, and if so whether it allows for sufficient competition. I'm certainly not qualified to make that decision, nor are you in all probability. Just guessing, but I personally believe the relevant market will be determined as 'iOS ecosystem". Apple obviously recognizes that a distinctly possible outcome too, as will Google WRT Android and Search.In its claims, Apple is simply skirting the core issue. You are not going to have any app store competition once you purchase an iPhone.
This restriction is not communicated to the buyer at any time prior to purchase and that is where I believe they will fall foul to anti competition investigations.
You second link has this disclaimer at the beginning of the report: 'The opinions expressed and arguments employed herein do not necessarily reflect the official views of the OECD or of the governments of its member countries or those of the European Union.'
Your third link is to editorial content, not court opinions. The writer gives his opinion as to what Apple "might" be in violation of, but does not cite any relevant court cases. He uses public complaints, filed lawsuits, and various investigations only, not actual legal judgements.
“Y2K was 21 years ago. Looking back, I think the only thing we learned is that if a bunch people work really hard to stop a problem from happening, lots of other people will assume it was never really a problem.”
EDIT: Here's one legal opinion (Apple v.Pepper) where Apple and Ticketmaster are equated, and why they believe a SCOTUS ruling re:Amex should have been applied.
https://truthonthemarket.com/2019/05/13/dementia-sets-in-at-scotus-as-the-justices-collectively-mislay-amex/
Question: why would Google be motivated to match Apple's 15% rate cut if the iOS ecosystem was not in competition with the Android ecosystem? That appears to be a very obvious sign of competition outside of iOS.
I'm no legal scholar and there's probably few if any members here who are well-versed in the intricacies of competition law and government policy. Some things that may not make sense to one person will make sense to another, and the only members of those two groups who matter are the ones with input in the process.
I believe the Aussies will define the relevant market as "iOS". Others will choose to believe otherwise. IANAL. That is not my legal-based opinion, simply a personal one based only on the limited reading I've done and how the issues were explained. At some point the ones who matter will offer their far more legal opinion.
I don't think Apple would do so without concerns over competition regulators and what legal avenues they might use to compel Apple to change business practices. Otherwise why would they do so?