EU Says Apple's App Store Breaks Competition Rules After Spotify Complaint (cnbc.com) 58
Apple has "abused its dominant position" in the distribution of music streaming apps through its App Store, the European Commission said Friday. From a report: "Our preliminary finding is that Apple exercises considerable market power in the distribution of music streaming apps to owners of Apple devices. On that market, Apple has a monopoly," Margrethe Vestager, the head of competition policy in the EU, said in a press conference. The European Commission, the EU's executive arm, opened an antitrust investigation into the App Store last year, after the music streaming platform Spotify complained in 2019 about Apple's license agreements. The agreements mean that app developers have to pay a 30% commission on all subscription fees that come through the App Store. On Friday, the EU said it took issue with the "mandatory use of Apple's own in-app purchase mechanism imposed on music streaming app developers to distribute their apps via Apple's App Store." App developers are also unable to inform users of alternative ways to purchase the same apps elsewhere --another issue the commission said it was concerned with.
Surprising (Score:4, Insightful)
App developers are also unable to inform users of alternative ways to purchase the same apps elsewhere --another issue the commission said it was concerned with.
You would really think this should be the core issue. Charging what they want to use their store, including ancillary transactions, is far less problematic than forcing all the app distribution through their store in the first place.
Re:Surprising (Score:5, Insightful)
That's part of it, but in broader terms I think the problem is restricting everyone to a storefront they control while also demanding a toll. Contrary to what Apple likes to think, they do not own the phones once they sell them. Forcing everyone to use a store they control is monopolistic. Going a step further and punishing third parties who have alternate payment methods by preventing them from mentioning them to users is just icing on the cake that Apple so desperately wants to have and eat at the same time.
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There are plenty of ways to not have apple take any money from you.
You make your app free, apple takes $0.
You sell ads for you app, apple takes $0.
You sell coins and such for your app outside of apple. Apple takes $0. Fortnite lets you buy v-bucks outside of iOS to be used inside iOS just fine. Netflix/etc use this by having people subscribe. I'm sure Apple has made $0 for all of Netflix, except the few people that used Apple's sub
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You sell coins and such for your app outside of apple. Apple takes $0.
Except that you can't mention that ANYWHERE in the application.
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Re: Surprising (Score:2)
I could explain it with: If the "store" (it's not a store) sets no rules, it's no problem to demand people use it. It's the rules that make it a problem.
Of course that feels a bit like spinning.
Re: Surprising (Score:1)
Payback's a bitch (Score:4, Insightful)
This is just payback for the EU losing in court.
https://www.washingtonpost.com... [washingtonpost.com]
U.S. vs E.U. "monopoly" definition (Score:5, Interesting)
The way EU defines monopoly is better, in that it can be illustrated as follows:
U.S.: "Do you have any competition, no matter how small or insignificant it might be?"
Company: "Yes."
U.S.: "You do not have a monopoly"
versus...
EU: "Do you have enough market penetration, such that, any competition you have is essentially insignificant, or can be made insignificant by your actions that favour your business?"
Company: "Yes."
EU: "You have a monopoly."
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By that definition, Apple would not be anywhere near close to having any monopoly in the EU in any markets where Apple participates. Apple's computers are below 10% and smartphones are below 25%. You could only make a coherent argument for tablets.
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By that definition, Apple would not be anywhere near close to having any monopoly in the EU in any markets where Apple participates. Apple's computers are below 10% and smartphones are below 25%. You could only make a coherent argument for tablets.
The relevant part is overall sales of apps/services in the market. Betcha it's way higher percentage there.
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In the EU it's more about if a company uses its position to distort the market.
An example would be controlling a popular mobile OS and preventing any other company from releasing software for it except on your app store, or taking payments except via your payment provider.
Re: U.S. vs E.U. "monopoly" definition (Score:1)
Re: U.S. vs E.U. "monopoly" definition (Score:2)
Good to see... (Score:4, Insightful)
Apparently, she gets the concept of a localized monopoly.
And doesn't parrot the "users have a [fake] choice" nonsense that some people here repeat as if they thought about it.
Good to see.
And also interesting, since her previous job was a high place on the opposing team. Seems she learned from it.
Good for her. (And us.)
Now let's see how the world's gonna disappoint me again in 3... 2... 1...
Market definition (Score:1, Insightful)
"... distribution of music streaming apps to owners of Apple devices. On that market, Apple has a monopoly."
Isn't that a bit like saying Toyota has a monopoly on Toyotas? Trivially true, but not a useful way to define a market.
Re:Market definition (Score:5, Informative)
"... distribution of music streaming apps to owners of Apple devices. On that market, Apple has a monopoly."
Isn't that a bit like saying Toyota has a monopoly on Toyotas? Trivially true, but not a useful way to define a market.
No - Apple has a streaming service, which is preinstalled on all the devices it sells (reminds anyone of the 90's MS antitrust case?). Users have to go looking for Spotify on the AppStore.
And then, Apple doesn't have to pay an extra 30% to itself when users subscribe to their service, compared to Spotify that would. Additionally, Apple's rules prohibit Spotify from telling users how to pay for their service from their app (they can't even link to anything from their app that might even potentially lead the user to somewhere where they could see pricing for Spotify's subscription, let alone buy it - yup, Apple is that anal about controlling purchases via the use of their devices).
Re:Market definition (Score:5, Insightful)
In the 90's MS case, the market was defined as something like "personal computers". MS had significant monopoly power in that market, and leveraged that monopoly to extend to other markets (e.g., browsers). Granting Internet Explorer pride-of-place was only a problem because it was an attempt to leverage Microsoft's monopoly power. If Microsoft had not had a monopoly in the PC market, there would have been no anti-trust violation.
The point I'm making is this: how ought we define the relevant market in this current EU/Spotify case? If the market is "smart phones", Apple only controls roughly 20% of that market -- nowhere near a monopoly. But if we define the market as "Apple smart phones", then basically it's tautological that Apple controls 100% of the Apple smart phone market. That's kind of a silly way to define a market.
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They aren't saying the market is 'Apple smart phones'. The market is distributing apps for Apple smart phones.
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Yes. More specifically, they described the market as "distribution of music streaming apps to owners of Apple devices". I quoted them directly in my comment.
I'm challenging whether this is the proper definition of the relevant market. Of course Apple will be considered a monopolist on any market definition that includes "... to owners of Apple devices" as part of the definition. I think that's tautological and question-begging and circular and a bit silly. A better market definition would be "portable wifi/
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Of course Apple will be considered a monopolist on any market definition that includes "... to owners of Apple devices"
Why? Is Toyota considered a monopolist on a market that includes '...to owners of Toyotas'? Certainly not. Pirelli can certainly sell tires 'to owners of Toyotas'. Auto Zone can sell parts '... to owners of Toyotas'. Exxon can sell gas '...to owners of Toyotas'. What, exactly, is so special about Apple that they are the only ones allowed to sell apps '... to owners of Apple devices'?
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iOS devices are a closed ecosystem, like a WebOS Smart TV or a Playstation or an Xbox or an Amazon Kindle or a Keurig or lots of other things. That's not really "special", it's just a tech choice. If Toyota wanted to, they could introduce technological linkages to various parts and make warranties dependent on using OEM parts and what-not. Generally, Toyota doesn't operate like that. Although the car market has made moves towards diagnostic systems that have technical boundaries. Or try installing a 3rd-par
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Uh, no, they couldn't. The law prevents them from doing that. It also prevents Apple from doing it, they just don't care.
Re: Market definition (Score:1)
Try swapping out your Toyota EV battery and then take it in to the dealer expecting service under warranty. Or try installing a third party app on your Toyota infotainment system.
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Your argument is basically that if a company takes specific action to eliminate competition, they can't be called anti-competitive. Talk about silly.
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That's not my argument at all.
My argument is really much more mundane than that: in order to exert monopoly power unfairly, it requires two things: 1. a monopoly (or near-enough monopoly); 2. unfair exertion of power. Each in isolation can be legal. Combining them gets you in trouble with anti-trust regulators. Proving both is necessary. (E.g., I can't install a third-party store on my Kobo e-reader, but they're not going to get in trouble for it because they're not a monopoly in e-readers.)
In this specific
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What you don't seem to understand is that these actions are from the viewpoint of DEVELOPERS, not USERS. While from a USER point of view there may be one 'smartphone market', from the DEVELOPER point of view they are two distinct markets. Not one app sold through the Play Store can be used on an IOS device, and not one app sold through the App Store can be used on an Android device. You yourself said a market is defined by things like interoperability and close substitutes. Well, how much interoperabilit
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Spotify-on-Samsung is a close substitute for Spotify-on-iPhone. The vast majority of Spotify's engineering effort is devoted to their huge back-end systems. The client-side app is pretty small, and you can use a portability layer like Qt (or others) to target both Android and iOS from a single codebase.
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Is that a fact? So if you, an IOS user, wants Spotify you can just use get the 'alternative' of Spotify-on-Samsung? Cool. Didn't know that. Oh wait, that is bullshit. If you, an IOS user, wants an app, the only 'market' you are concerned with is the market for IOS apps, not some generic 'smartphone app' market And if I, Spotify, want to sell you an app, the only market I am concerned with is the IOS market, not some generic smartphone app market.
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Right, yes. If I was dissatisfied with my iPhone, I could go buy a Samsung Galaxy.
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Yeah I think this is going to backfire or result in some other unexpected side effects. Nintendo is going to have a fit if they can't enforce "Licensed for use on the Nintendo console-du-jour". Or some kind of crazy impact in the automotive or other embedded markets. Or maybe app authors will suddenly get stuck with more liability for their apps and payments.
I would not be surprised at all if this just makes things worse where developers can use whatever store they want, but they still have to get their
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I hate predicting things, but as a bit of idle speculation, here goes. I think the EU might have sufficient juice to wring some concessions out of Apple. I think it's more likely that Apple will prevail outright, but if it doesn't, the outcome will be something like: Apple has to relax its rules to allow apps to link out to websites that sell the associated subscription (but only if the user is in the EU). I don't think this particular case will lead to some earth-shattering shakeup of the market.
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That would be a big improvement for anyone that has developed software they can sell a subscription for, wouldn't you say? Heck, it's a 30% increase in revenue from all IOS spotify users in fact.
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To clarify, it's 30% for the first year and 15% in following years. It's my understanding that less than 1% of Spotify users are subscribed via the App Store, and they're all in the 15% bucket at this point. I'm sure the precent of Spotify subscribers with an iOS device is much higher than 1%, and they mostly subscribed via other channels, i.e., going to spotify.com directly. And to further reduce the scope, such a settlement might be limited to the EU. So we're getting sliced pretty thin here.
But yes, it w
Re: (Score:1)
That's true for a general purpose computer like a Dell or a MacBook Pro. It's not true for your Xbox or your Game Boy Advance or your Playstation or your Kindle Paperwhite or your Smart TV or your Keurig, etc etc. It's not obligatory. A manufacturer can include such a feature if they so choose.
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But you ignore that Apple had to put time money and effort into acquiring its iPhone customers in the first place. Spotify wants to free-ride off Apple's efforts to acquire customers.
The argument could be made that there wouldn't be [m]any "iPhone customers" if there weren't a bunch of apps (like Spotify) developed for it in the first place.
So really, who's riding whose wave?
Re:Market definition (Score:5, Informative)
If they said Apple has a monopoly on selling iPhones, then you would have a point. But they aren't saying that. They are talking about selling additional items/services AFTER the purchase of the phone. So the only way your analogy would work is if Toyota made it so that the only way you could purchase tires for your Toyota was through the 'Toyota Store', and any tire manufacturer who wanted to sell tires to Toyota owners was forced to sell through the Toyota store and agree to their terms.
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I hate to play the game of analogies, because analogies are always imprecise, but the situation you're describing reminds me of Keurig making single-serve coffee machines that can use only K-Cups, due to some intentional technological hurdle. (Or printers that only work with approved cartridges, etc. I suppose there's lots of examples.) Companies get away with it in some cases, and get in trouble for it in some cases. In the case of Keurig, the relevant market was the "single-serve brewer market". Keurig ha
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The market, as the EU sees it, is 'distribution of apps to owners of Apple devices'. In determining what is a market, they use things like the size of the market. The App Store had about $64B in revenue last year. That is a huge market. And Apple controls 100% of it.
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I'm not going to check, but I doubt the EU uses "size of the market" in determining what is a market. A market is going to be defined according to what products are interchangeable or close substitutes or serve a similar purpose. There's a certain art to defining a market, certainly.
But yeah. It's tautological to say that the operator of an app store controls 100% of that app store. Like, yes, of course. That's true of every app store, or physical store for that matter. The more relevant point is that Apple
Re: (Score:1)
I'm not going to check, but I doubt the EU uses "size of the market" in determining what is a market.
"I'm not going to check, instead I'll double-down on my arguments."
The person who made the claim can provide a citation, if they so choose. I doubt the claim is true, but I'm not going to put any effort into it.
Re: (Score:1)
You said above:
That is not the same say what you're now saying is a tautology:
What do you feel is irrational or unfair about the actual defined market : distribution of streaming apps to owners of Apple devices?
The part where the market is limited to "owners of Apple devices" (well, "iOS devices" would be more accurate). Apple only controls 20% or so of the smartphone market, and something similar for the tablet market. It's like saying Costco has a monopoly on the Costco market. Or, perhaps more specifically, "Costco has a monopoly on selling the X category in Costco stores", where "X" is pretty much anything. Costco charges customers to be members, and Costco charges suppliers to sell in their stores. This would
Wow, good job! (Score:3)
This is bullshit (Score:3, Insightful)
There is no "market of Apple devices". There's a computer market, there's a tablet market and a smartphone market. In none of which is Apple anywhere close to having dominant marketshare worldwide. If anything, Google's Android fits the description vastly better. A manufacturer having a monopoly on the gadgets it makes itself is not news and has never been. And it's irrelevant.
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There is no "market of Apple devices".
Yes there is - for example there's a whole AppStore around their phones. And Apple is selling a bunch of services tied to pretty much all their devices.
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By this logic, you're saying there's really only 1 tire manufacturer.
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Nobody is claiming there is a 'market of Apple devices'. Why did you make that strawman? What they said was the 'market of DISTRIBUTING APPS to the owners of Apple devices'. There are something like 1.5B IOS devices. That is a huge market. And Google has 0% share of that market, so it is hardly 'dominant marketshare'.
Re: This is bullshit (Score:1)
Re: (Score:2)
But in return, you are saying that the app developers should not pay back into this benefit?
In return, Apple gets more sales of their devices because more apps are being developed for those devices by outside developers.
There's a reason BlackBerry and Windows phones aren't around anymore.
Does this happen for AppleTV+ subscriptions? (Score:2)
Reading the comments here reminded me that AppleTV+ is available on non-Apple devices.
I'm wonder if the "same deal" happens to Apple as well - like if they can sell subscriptions directly to users, or say on the Sony store they have to pay Sony a 30% cut?