Stratechery’s Ben Thompson opens his latest essay about Apple, Epic Games, and the App Store by quoting a bit of the opinion by Circuit Judge Consuelo M. Callahan in last week’s decision by the Court of Appeals for the Ninth Circuit, reversing the District Court’s ruling that Qualcomm was guilty of antitrust violations:
This case asks us to draw the line between anticompetitive behavior, which is illegal under federal antitrust law, and hypercompetitive behavior, which is not.
What makes this distinction particularly challenging is that the question as to what is anticompetitive and what is simply good business changes as a business scales. A small business can generally be as anticompetitive as it wants to be, while a much larger business is much more constrained in how anticompetitively it can act (as a quick aside, for the first part of this essay I am painting in broad strokes as far as questions of specific legality go). The specific case of Apple and the iPhone raises an additional angle: should the importance of the market in the question make a difference as well?
While the most likely outcome is an Apple victory — the Supreme Court has been pretty consistent in holding that companies do not have a “duty to deal” — every decision the company makes that favors only itself, and not society generally, is an invitation to examine just how important the iPhone is to, well, everything.
Indeed, this is the most frustrating aspect of this debate: Apple consistently acts like a company peeved it is not getting its fair share, somehow ignoring the fact it is worth nearly $2 trillion precisely because the iPhone matters more than anything. This is not a console you play on to entertain yourself, or even a PC for work: it is the foundation of modern life, which makes it all the more disappointing that Apple seems to care more about its short term bottom line than it does about the users and developers that used to share in its integration upside; if Apple doesn’t change course, hyperessential will at some point trump hypercompetitive.
MacDailyNews Take: There is much, much more in Thompson’s full article – highly recommended – here.
Obviously, running the App Store costs Apple some amount.
We think the ultimate ending to this legal challenge will be that developers will be able to take payments in their apps without being forced to give Apple a cut or as much of a cut as today.
Companies that currently are large enough to work around Apple and send users to their own sites for payment include Amazon and Netflix. Apple will likely need to end this practice and allow all developers to allow users to subscribe to services, buy ebooks, etc. within their apps without a 15%-30% fee. A smaller fee may be tenable, as Apple does have costs to run the App Store, of course. We’ll see after the legal gears grind glacially and eventually spit out their end results.
By the way: On every iPhone, iPod touch, iPad, and iPad mini box, the potential buyer is informed of requirements, including “iTunes X.x or later required for some features” and also that an “iTunes Store account” is required. The plaintiffs were informed of the requirements prior to purchase. If the plaintiffs didn’t like the terms that came along with Apple devices, they should have opted for a pretend iPhone from any one of a dime-a-dozen handset assemblers. Then they could blissfully infest their fake iPhones with malware from a variety of sources.
Note also that Apple doesn’t set the prices for paid apps.
Lastly, 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, May 14, 2019
[Thanks to MacDailyNews Readers “Fred Mertz” and “Ladd” for the heads up.]