41 Comments
Aug 19, 2020Liked by Matt Stoller

Matt, you’re conflating iPhone app security with the business of the App Store (“Apple will argue that it protects iPhone users from spam, malware, and predatory apps by tightly controlling its app store.”) and this is incorrect. Apple’s own model for macOS shows the path to separating these concerns: in macOS’ default security settings, it will refuse to run apps that haven’t been “notarized”, that is digitally signed by Apple against a known developer identity. Akin to how iOS developers must submit their binaries for App Review, macOS notarization is a simpler process that enables trust in binaries distributed outside the Mac App Store (MAS). The overwhelming majority of publicly distributed macOS binaries are notarized, whether from independent developers selling outside the MAS, open-source app and tooling builds, etc. It’s *vitally* important that this distinction be retained in conversations around App Store. There are giant public interest concerns in platform security and end-to-end trust, yet those concerns have zero technical conflict with the also-giant public interest around these anti-trust arguments.

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Aug 19, 2020Liked by Matt Stoller

Epic might have a bit more merit in their argument against Apple's AND Google's stores if not for (https://daringfireball.net/2020/08/sweeney_hand_waving_game_consoles_app_stores) how they seem to be perfectly OK with how the gaming console makers treat them.

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author

Gruber's argument is nonsensical.

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Granted, Gruber is a bit of an Apple fanboy. But why? Because the console market is smaller?....Also, a more academic question. At what market share does this become a valid argument. Depending on where you look, iOS is 13-25% share of mobile phone market. Android is the rest. But, Epic chose to go after Apple first and Google second? Any thoughts on why?

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Apple is much less flexible than Google, and iPhone customers are more valuable. Both are monopolies in different markets.

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author

Sweeney's point about consoles is that they are physical products that are costly to produce. An app store is a zero marginal cost service. Apples and oranges that Gruber conflates.

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Why isn’t that an irrelevant distinction?

Theoretically, console makers get the money back when they sell the consoles and license the games. The latter is 30% just like access to Apple device owners.

This is as silly as saying that Tesla should be required to offer Nissan’s EV tech in their vehicles, that Tesla using only its own tech is some sort of monopolist abuse.

There are real problems with actual monopolies and similar abuse — Facebook buying all the potential competitors they can for one. Even bigger is what Perlstein said about businesses taking control of the state. Epic v. Apple doesn’t harm anyone in any meaningful way. The money involved per user is bupkis. The only on hurt is Epic’s bottom line and that not on any way that seriously hurts the company.

And then there’s this:

https://9to5mac.com/2020/08/19/epic-likely-to-be-asked-two-hard-questions-by-apples-lawyers/

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author

"Why isn’t that an irrelevant distinction?"

An iPhone app store is just not the same product in any way shape or form as a physical console. it's non-rivalrous, it's much broader and has many more customers, and the market structure for iPhone apps is just very different.

Your link is a link to a request to a temporary restraining order on Apple, not the monopoly case.

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Thanks! Going to be very interesting to watch.

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Gruber is writing nonsense for a very simple reason: Even Epic can't sue most of the market. Even if Console makers' policies are an abuse of the market, it makes sense to focus on the clearest case. If and once a legal doctrine is established, Epic may use it against the Console makers as well.

This is a perfectly reasonable strategy (legal and otherwise), and we shouldn't dismiss Epic's argument because of it - it's not like Apple lacks resources to defend itself in court.

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I disagree with Gruber's take on it. Console makers do a LOT of heavy lifting to subsidize production and market games, particularly AAA-games, in ways that Apple and Google do not. Upon launch, Sony and Microsoft both lose TONS of money on console sales.

I'd frankly prefer this system to change; I'd like to see them charge what consoles actually cost to users, and be much more open platforms. But that's not what people who buy consoles (i.e., not me) care about.

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Aug 20, 2020Liked by Matt Stoller

Just a typo assume you meant capital ;) - Typically large businesses reserve their political political to limit government enforcers or regulators, but something strange started happening a few years ago

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I am Apple customer because they go out of their way to protect me from bad actors.

If Apple is forced to become Microsoft then what? We all get to live with constant threat to our privacy our finances?

No thank you Matt.

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author

Epic isn't saying that you can't be an Apple customer. It is saying people who do not wish to be Apple customers can choose not to be.

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I agree that Apple should be scrutinized for their practices towards developers, especially as services becomes a bigger part of their business, but I have very little sympathy for Epic in this battle. To use a brick-and-mortar analogy, aren't Epic acting like a retail vendor who is trying to sell their goods at a shopping center while refusing to pay rent? Apple's 'mall' in this case, also happens to charge the same rent as pretty much every other shopping center in town, even though it attracts the most lucrative customers. Isn't Apple effectively agreeing that people who don't wish to be Apple customers are free to purchase Epic's goods on other platforms? What am I missing?

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I like using the mall analogy as well, but this led me to the opposite conclusion. Lets say Apple is running a mall renting stores to vendors, while at the same time also running stores in the same mall competing against the same vendors.

Apple stores (apps) have preferential paths and attention by Mall cleaners/security etc. (access to private APIs, easier if any app review), and don't pay rent. On the other hand, competing stores do not get the attention (the storefront is perpetually dirty), internal modifications have to be approved by Apple Mall (slowly if at all), and are not allowed to reflect the rent in their prices (they must match prices in other malls, even if the other mall charges less rent, and even if the Apple stores don't pay any rent, and can therefore offer the same product for less).

IMHO, renting shops creates an obligation on the mall owner to allow the shops to compete fairly. Where Apple runs a competing service (e.g. Apple Arcade for games), it should not be allowed to influence its rivals' prices, or to impose unreasonable rent.

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Totally agree. Those anti-competitive practices you mention concern me much more than this clash with Epic. Apple already has a great ecosystem. Unfortunately that hasn’t really translated into a thriving business for many developers, and its a shame because I feel like they would have a lot to gain if they focused on building something that benefits consumers and developers rather than Just flexing their market muscle.

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Aug 19, 2020Liked by Matt Stoller

As I mention in a top-level comment, there is *zero* technical concern that security and business-side antitrust are at odds. They are not, and Apple already shows the way with macOS. In short, Apple can scan and notarize (digitally sign and validate) binaries for distribution by means outside of the App Store. This is how macOS works with software distributed either via the Mac App Store (subject to full app review, Apple’s payment infrastructure, and App Store rules) or via notarized software bundles scanned and tied to a known developer ID. The latter are distributed independently, by whatever means the developer sees fit – for sale outside of the MAS, free downloads (e.g. open-source tools), etc.

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Considering your blog's theme, is there really no other way to buy your book than thru Amazon?

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author

Yup, buy it on Amazon. Amazon's a monopoly, your consumer purchase doesn't change anything.

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"Epic took on Valve, which owned a monopoly game store, Steam, by launching its rival Epic Games Store. "

It's very difficult to call Valve a monopoly by the time Epic launched its store. Already at that time there was competitors like GOG, itch, Origin and the various publisher stores (battle.net, UPlay, Paradox store, etc.), and of course, the Windows Store which is installed by default on modern Windows installations. If anything, the trend was for publishers to start their own stores/launchers. The linked article itself mentions that EA quit Steam for years, and judging by their revenue reports[1], they did not suffer for it all that much (if at all).

[1] https://www.macrotrends.net/stocks/charts/EA/electronic-arts/revenue

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Matt, I think the main issue is honestly in the way Apple does not treat individuals fairly in regards to the tax/fee they require. If everyone was charged 30% on all transactions in the app store, Apple has every right to do so because they "created" the App Store.

However, where it becomes concerning is when "special" rates are provided to companies such as Nike, Amazon, etc. This provides a direct disincentive to small business and further props up big business by subsidizing their growth.

Can you imagine if Apple charged 30% to Amazon or any other big players? This argument wouldn't exist because Apple could fall back on its "fair fee to everyone".

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Why doesn't Apple charge Facebook, Instagram, Snapchat, Mcdonalds, Amazon, Twitter, Tiktok? Why do the most downloaded and installed apps in the world pay Apple nothing?

Apple is a bully. I believe the Supreme Court is going to cut Apple's royalty/patent/appstore fee down to 3% from 30%.

The argument about the appstore providing security to Iphone users is bullshit. The mafia says that too. There can be multiple appstores competing on price. We have many companies manufacturing medicine and they are all regulated for safety. Example: Steam and Epic's Game stores do not have viruses. Both could compete to provide Apps on Iphone.

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Is the case against Google not damaged by the fact that you can install on android not going through the store, and indeed for a good while that was the only way to play Fortnite on Android?

Now that they are banned from the play store, you can still download it the original way.

After stating Google's cut wasn't worth it, they moved to the play store, because they decided it was worth more money to be on the Play store, but they have other options, including launching Epic Store for Android. They could even partner with an OEM to include Epic store on their Android phones by default.

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Matt, I read your blog a lot. Hugely enjoyable and makes me think about these issues in the UK. In the meantime, I came across this research into the cost of mobile data globally. Was astonished to see the most expensive region in the world by far is...North America, supposedly technologically advanced and developed. Probably another sorry example of this problem: https://www.cable.co.uk/mobiles/worldwide-data-pricing/

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Hey Matt,

I believe Apple should not be allowed to put their apps directly on the Iphone. They should be forced to compete fairly by putting their apps in the Appstore and having to compete to get customers to download them and install them. Why should Apple be allowed to have Apple Music on every Iphone when Spotify is not.

Good writing. Thank you.

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I think the biggest deal here is Apple's retaliation -- revoking the developer account will have one of two effects:

1) chilling effect across the game industry -- very few game dev teams have the resources to build a cross-platform game engine that can power modern 3D games. They are so incredibly complex; a large percentage of the industry relies on UnrealEngine. It isn't the only game in town, but it's a substatial part

2) many game developers will not target Apple platforms any more. That could actually hurt iOS quite a bit. MacOS is an irrelevant gaming platfrorm -- Linux is frankly more relevant. But if companies that want to bring ports of their console and PC games that use UnrealEngine suddenly can't target iOS, that could hurt Apple more than Epic.

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Hi Matt, I had an argument recently with someone who said facebook etc. were private companies and and could do whatever they wanted regarding censoring things. I tried to say that they are private in name but public in fucntion, and that they have a monopoly on that function. But I didn't know how to form my argument exactly. Where do you stand on this, regarding "free speech" on such platforms?

Thanks for your work and thoughts

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Hi Matt,

Came across this article by Cory Doctorow and thought it was a relevant read. https://onezero.medium.com/how-to-destroy-surveillance-capitalism-8135e6744d59

"Apple’s use of copyright locks also allows it to establish a monopoly over how its customers acquire software for their mobile devices. The App Store’s commercial terms guarantee Apple a share of all revenues generated by the apps sold there, meaning that Apple gets paid when you buy an app from its store and then continues to get paid every time you buy something using that app. This comes out of the bottom line of software developers, who must either charge more or accept lower profits for their products.

Crucially, Apple’s use of copyright locks gives it the power to make editorial decisions about which apps you may and may not install on your own device. Apple has used this power to reject dictionaries for containing obscene words; to limit political speech, especially from apps that make sensitive political commentary such as an app that notifies you every time a U.S. drone kills someone somewhere in the world; and to object to a game that commented on the Israel-Palestine conflict."

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"Apple’s payment system charges a 30% tax for any revenue generated by any iPhone app during its first year"

This is wrong. Apple takes 30% of of all revenue (in-app purchases, etc) forever, not just in the first year. It only goes down to 15% in subsequent years for subscription revenue (which is a rare thing - almost all revenue isn't subscription based).

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2 Analysis group studies recently released :

How Large Is the Apple App Store Ecosystem? released by Apple https://www.apple.com/newsroom/pdfs/app-store-study-2019.pdf

Apple’s App Store and Other Digital Marketplaces A Comparison of Commission Rates https://www.analysisgroup.com/globalassets/insights/publishing/apples_app_store_and_other_digital_marketplaces_a_comparison_of_commission_rates.pdf

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