In the Apple antitrust case, the future of digital commerce on your iPhone and iPad could be influenced by how courts resolved market control issues after technological innovations that disrupted previous generations: railroads and credit cards.
Tim Higgins and Sarah E. Needleman for The Wall Street Jounal:
With the courtroom battle between Epic Games Inc. and Apple Inc. concluded Monday, U.S. District Judge Yvonne Gonzalez Rogers must now decide if the iPhone maker has improperly prohibited third-party app stores and forced developers to use its in-app payment system that collects a commission as high as 30%.
As she decides if Apple has operated an illegal monopoly, she’s already made it clear during the trial in Oakland, Calif., that she’s thinking about how previous precedent-setting cases involving American Express Co. and a St. Louis railroad apply to the new digital economy in the 21st century…
The question of how to define a market in the case is a central issue. Is the market confined to distributing apps on the iPhone as “Fortnite” videogame creator Epic argues? Or, as Apple contends, is the market just devices on which videogames can be played? …On Monday, however, she raised the notion that the market might be the mobile videogame market — an option that neither party raised…
Part of Apple’s terms to developers include a so-called anti-steering provision that prohibits them from sending users in the app outside of Apple’s payment system to save money using a cheaper method. Epic’s lawsuit was preceded by a plot to sneak its own in-app payment system into “Fortnite” aimed at circumventing Apple’s, a violation of the rules that got it kicked out of the store. In response, Epic filed its lawsuit in August claiming Apple was a monopoly.
Apple contends that its anti-steering provision is allowed by judicial precedent in a case involving American Express. In that case, the Supreme Court upheld AmEx’s policy that prohibited merchants that accept its cards from steering consumers to use rival cards, such as Visa, so they could avoid fees…
Apple is against the idea of allowing notice or a link to another payment system. Apple equates it to requiring Nordstrom Inc. to hang a sign in its store that Macy’s Inc. has cheaper prices.
MacDailyNews Take: Yup.
So, we can sell our t-shirts and mousepads in Target’s, Walmart’s, Amazon’s, etc. online stores, taking advantage of the audience and clientele that Target, Walmart, Amazon, etc. have built through the years at considerable cost to them and use their store infrastructures, also funded by them, alongside a link to our own store that offers the same products for 15% – 30% less?
Sign us up!
Oh, wait. Target, Walmart, Amazon, etc. don’t allow free advertising for other stores in their stores. Duh.
You know, one slight change could transform this judge’s hint [allowing app developers to inform users that Apple’s App Store isn’t their only shopping option] from epically stupid to genius: Epic Games or any other developer gets to “inform users that Apple’s App Store isn’t their only shopping option” simply by paying Apple a 15% – 30% advertising fee for each sale they make outside the App Store. — MacDailyNews, May 13, 2021
The bottom line: Epic Games wants to enjoy all of the benefits of Apple’s App Store, use of Apple’s server farms, staff, electricity, etc. along with access to well over one billion of the world’s most affluent users for free.
[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]
Your business, your stores, your rules. Consumers can go elsewhere if they don’t like it. That’s not the definition of a monopoly. It’s called free enterprise.
I’m 100% with MDN on this one. Fair Walmart analogy and the visual on those memed shoppers kinda stings. I think Apple could probably take a smaller slice of the app revenue pie, but that doesn’t really seem to be the issue.
The most insightful point in this whole case is the judge’s suggestion of what the sphere of the market is, neither of which where defined by the parties. This gives insight into how the judge may view the case.
If it is mobile gaming market, then Epic has a real problem as Apple does not have a monopoly there. Even if the judge looked solely at the App Store as a market of one, it’s fees are not out of line with other app stores and the majority of purchases for iOS users comes from transactions outside of the application which can be used within the application. Apparently, users aren’t losing sleep over it.
In my mind, this was a gambit to get a favorable ruling that Epic could then wield as a hammer over other app stores. Cutting in-app purchase fees in half could net a 8 or 9 digit revenue increase. Not bad for a few weeks of attorney fees and a marketing campaign.
And if it’s the iOS App market… game over.
Apple’s app store is a monopoly. The third party apps sold there are not allowed to sell anyplace else? Come on, total monopoly.
They are allowed to sell elsewhere. The Plaintiff in this case makes most of its money selling add-ons through its web site that can be used when playing on the app. The app itself isn’t sold at all. It is free, and it is available on several Non-Apple platforms.
This particular dispute isn’t about third-party app stores. It is about whether Apple can be required to stock a free app in its store that bypasses the mechanism that Apple uses to finance the App Store.
They are not allowed to sell their iOS App elsewhere. Or even give it away elsewhere.
But you knew that!