Question

Would you consider Apple’s app store a monopoly or not and why?

Answer 1

The iOS App Store has been in the news lately, with the US Supreme Court recently allowing anti-trust lawsuits to proceed against Apple. At issue is the 30% cut Apple takes from all transactions that occur in the App Store, which has been controversial since the initial release of the App Store back in 2008.Last week, the European Commission announced, in response to a complaint filed by Spotify, that it would be opening an investigation into Apple’s App Store practices, which potentially constitutes an illegal breach of EU competition laws. At Proton, we applaud this decision, and also Spotify’s bravery in bringing this complaint in the first place. American tech giants have long engaged in abusive behavior which is designed to stifle dissent and competition, and perpetuate their market dominance. We know this because we have quietly tolerated this exploitation for years. And like many others, we have long hesitated to speak out for fear that these tech giants may abuse their market dominance to destroy all who dare to stand up against them.

Apple’s iOS controls 25% of the global smartphone market (the other 75%, is largely controlled by Google’s Android). This means that for over a billion people (particularly in the US where their market share approaches 50%), the only way to install apps is through the App Store. This gives Apple enormous influence over the way software is created and consumed around the world.Perhaps the most harmful expression of this power is Apple’s exorbitant 30% tax on developers, which is now the subject of antitrust investigations in both the United States and the European Union. To be clear, this is an enormous fee and would be intolerable in normal market conditions, but it’s particularly damaging if you offer a product that competes with Apple. It is hard to stay competitive if you are forced to pay your competitor 30% of all of your earnings. Apple attempts to justify these fees by arguing that the App Store is no different from a mall, where companies seeking to offer their products must pay rent to the owner of the mall (in this case, Apple). This argument conveniently ignores the fact that there is just a single mall when it comes to iOS and no possibility of a competing mall to rent space from. It is not illegal for Apple to own a mall and rent space, nor is it illegal for Apple to own the only mall. What is illegal, is exploiting the fact that it owns the only mall to charge excessively high pricing which harms competitors.

This is virtually indistinguishable from a protection racket: It is a fee that developers must pay if they want to stay in business. And it is a fee which ultimately harms consumers because these fees are indirectly passed on to users, either through higher prices, or through fewer competing products in the marketplace. After the European Commission launched its investigation on June 16, Apple released a statement saying “the European Commission is advancing baseless complaints from a handful of companies who simply want a free ride.”Apple has now even gone so far as to ban apps from the App Store if they refuse to offer in-app purchases for paid features that are available for purchase elsewhere. In other words, Apple wants a nearly one-third cut of your sales, regardless of whether you want to sell on their platform or not. This was precisely what happened with Proton. As we know from any mafia trial, the absence of witnesses willing to take the stand does not imply there was no crime, it only serves to highlight the power of the accused. By taking the stand today, we want to clearly refute Apple’s claim that only a “handful of companies” are objecting to these practices.