Apple’s App Store: monopoly or miracle?

“Launched just a decade ago, Apple’s App Store transformed our interactions with computers, phones, and the internet and remade the world of software,” Bret Swanson writes for the American Enterprise Institute. “There are 1.5 billion iOS devices now in service and 1.8 million apps available, which iPhone and iPad users have downloaded 130 billion times.”

“In a sane world where innovation is celebrated, such an explosion of choice, functionality, and creativity would be considered a miracle. Alas, although the app revolution is pretty amazing, not everyone is happy,” Swanson writes. “And earlier this month, the US Supreme Court ruled that consumers can sue Apple for overcharging in the App Store.”

“The Justices, however, don’t necessarily believe Apple has done anything wrong. That’s because the opinion did not address the merits of App Store antitrust — or whether Apple is in fact a monopolist that overcharges consumers,” Swanson writes. “At some point we’ll get back to the merits of whether the App Store (and other digital platforms) are harmful monopolies. And on this point, I continue to wonder how anyone can assert that the benefits — millions of apps, enterprise quality web services that are often free, one-day (instantaneous) delivery of multitudinous goods (services) — don’t massively outweigh the costs. ”

Read more in the full article here.

MacDailyNews Take: Yup.

The amount by which Apple Inc. has driven down software prices across the board, on every major computing platform, makes legal actions such as this eminently laughable. — MacDailyNews, August 16, 2013

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  1. The driving down software prices and failure to create a full-price AppStore area has resulted in:

    The loss of serious gaming. The Infinity Blade series show what could have been. Instead, the driving of prices down to the lowest has resulted in iOS users -not- being the sort of people to spent proper money on a game, unlike Playstation, Xbox, Nintendo Switch or PC gamers.
    The loss of choice for those who want to purchase games once and then not have to carry on paying for them. Nearly all new games are free to download but cost money to continue playing. It did not have to be like this – it was poor strategy on Apple’s part, by not encouraging an area of the AppStore at proper prices – see (1) above.
    A proliferation of poor-quality apps, each vying for attention. The Apple presentations where they spoke of the hundreds of thousands or millions of apps indicates the very point. Rather than fewer, realistically priced, quality applications, there is now a tyranny of choice of dross.

    1. Freemium games sacrifice gameplay for psychological tricks to siphon streams of money from customers. I long for the day when I could buy a game that was designed by avid gamers for the enjoyment of other gamers.

    2. I think Apple’s lawyers would appreciate a call from you or anyone else who can testify that the company’s business model has resulted in lower prices for consumers than would prevail under the alternative model proposed by the plaintiffs, who are consumers who claim to have been damaged by high prices. Your argument is that a free market would allow much higher prices and profits for the vendors, promoting greater industry and creativity on their part. Maybe so, but that isn’t what this lawsuit is about.

    3. I’m not talking about the lawsuit or the free market – rather than Apple’s visible mismanagement of its AppStore, which we can all see by the dearth of proper games on iOS and AppleTV, which could have been so much better.

  2. I’m far more concerned at the applications I can’t get for $500, or more, because they’re forbidden by the Apple Store.

    And absolutely not, the App Store was not innovative. They added a register to a shareware BBS. Woo hoo!

    1. Overcharging is only one symptom of monopoly power. The best thing Apple could do to prevent its iOS app store from becoming a crap fest of Feeware games would be to endorse direct app sales from legitimate developers. Just like the Mac App Store. Users might again have options for shareware or trial periods, and there would never be a question of price gouging — the app developers would be free of the Apple middleman while still being required to uphold security and quality standards as the Mac does. If Apple isn’t price gouging (which they are, that was the whole point of a locked iOS ecosystem) then Apple wouldn’t lose any revenue. If we believe in a free market society, then let’s stop looking the other way when our favorite company abuses it. Let the user decide.

    2. How is Apple supposed to allow “direct app sales from legitimate developers,” without allowing users to download malware from illegitimate developers? If users can directly download software outside Apple’s control, how can the vendors be “required to uphold security and quality standards?” In a complete free market system, how does Apple (or the government, or anybody else) keep bad actors from taking advantage of unsophisticated consumers?

      Saying that the defrauded have recourse through the civil courts is a joke (and I speak as a retired attorney). Even if the victim had thousands of dollars to sink into litigation expenses, what reasonable person is going to do that to win a judgment for a few hundred dollars in actual damages against a shell corporation with no assets?

      My mother turned 93 today. She loves her iPad and I love that she has it. I would be a lot less happy if iOS was an open system that did not provide protection for those who lack the background to manage do-it-yourself computer security. My late father’s Windows PC was a nightmare of malware installed on top of malware on top of anti-malware; that’s what happens in an unregulated market.

      The iOS ecosystem has been marketed as safe and secure for people like my mother and your minor children. Even more than the Mac, its intended market is not people with computer science training. Nobody–least of all Apple–expects that the target audience for a $199 iPod touch is the same as the target for a $1000+ MacBook or iMac, much less a fully-loaded $2700+ professional Mac. You can expect educated adults to avoid downloads from questionable sources, but many iOS users have no relevant education.

      It is all very well to say that if they cannot protect themselves, screw them. I hear that regularly from the same people who insist that most rape victims were asking for it and that folks with preexisting health conditions who cannot afford insurance in an unregulated market deserve to die. The sad fact is that there are a lot of people in our society who have fewer resources than we do. America was founded on the notion that the strong (e.g. King George) should not be allowed to enrich themselves at the expense of the weak. Apple was originally founded on the notion that everyone should have access to useful and secure computing resources.

      If Apple’s critics don’t like that, they don’t have to buy the company’s products. The market is dominated by alternatives from manufacturers with other agendas. Eliminating Apple’s business model to make it just like its competitors reduces choice. It does not enhance it.

      1. Each store will be directly accountable to the consumer. Apple only has to worry about what they sell. The consumer should be careful from where they shop. If they don’t want to be careful, they can shop Apple Store only.

          1. Instead of screwing them, how about informing them? Or put in another way, the sovereignty over our devices should not be impaired due to other’s ignorance, other than that allowed by law.

          2. PS-
            “If Apple’s critics don’t like that, they don’t have to buy the company’s products. ” -TxUser

            That is uncharacteristically nationalistic of you, except in the context of tech. Rings exactly like “If you don’t like it here, leave!”

            1. Dissenters can dissent all they like. You can dissent from Apple and I can dissent from Trump. The bottom line, though, is that neither of us is entitled to have our way. If you can’t live with Apple, you have alternatives. If I couldn’t live in America, I have alternatives, too. The difference is that Apple is not subject to a written Constitution that it has chosen to trample. You have a gripe with Apple, but I don’t have a gripe with America. It is my country right or wrong, but when I believe its leadership is mistaken I have a moral and political duty—not just the right—to express my dissent. Your right—not a duty—to criticize Apple is a materially different issue.

      2. Txuser, explain the Mac store for us. Does it have all the issues you claim would occur on a more open platform? Why is a monopoly required for security on iOS but not for the Mac?

        1. Two differences. It seems clear that the average Mac owner is more sophisticated about computer security than the average iOS user. Many iPhone users do not even regard their iPhone to BE a computer, and many more of them are minors or seniors.

          Secondly, the installed base for iOS is ten times larger than MacOS. Both factors mean that iOS App Store customers are much, much more vulnerable in much larger numbers than Mac App Store customers. Besides which, the Mac has historically been an open platform, so its users are used to protecting themselves, while iOS users are not. Malware authors are going to be preferentially attracted to a platform with more vulnerable victims.

    3. A trillion dollar consumer company with only ~40 products …. definitely plenty of overcharging going on. Cook doesn’t even know what to do with all the easy money Apple skims as proprietor of the only iOS app store in town. You can only burn Apple gasoline in an Apple car, you know. It’s too scary if you look outside the gate. Any other industry would be smashed to pieces for attempting such an abuse. The biggest losers are app developers who are railroaded into a crowded anti-competitive store.

      Only technical ineptitude on the part of the legal eagles has allowed Apple to get away with their store monopoly this long. Claiming that Apple provides users the option of throwing away everything invested in the iOS platform to exercise the choice of buying another platform like Android is not an acceptable solution. That is not choice. App distribution should be competitive like any other product marketplace. Ironically, Apple provides excellent choice on the Mac, even creating tools for Mac owners to run Windows apps. Why should iOS be different????

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