The frame, considering the overall context is kind of ridiculous: Apple "requiring software developers to use its in-app payment system" is anticompetitive
Well shucks. Apple also controls who and what can be sold or distributed in the market, how it should be built. They control how much exposure apps get. Some of these controls are used more directly, or blatantly to "rig the market" than others... but these are just the current choices by Apple. It's not a rig. It's the OEM design. Apple rigging the app store market is like Apple penetrating icloud security. That's not a hack, it's a login.
I can see a logic within the frame. If courts force Apple to allow a competing system, it will put downward pressure on what are (imo) indisputably monopoly prices. That's competition, in a neoclassical sense. There can be a big difference between no competition and some.
OTOH, competitiveness within Apples' fully owned market seems like a silly frame to operate within. Competition between ice cream parlours within the walls of DisneyLand are at Mr Disney's discretion. They can decide all ice cream parlours will be subsidiaries, franchises or independants. They can set prices, ban ice cream, etc.
Trying to deal with ice cream competitiveness in DisneyLand this way is a fool's errand. One court rules on a policy forcing Parlours to use Disney's insurance vendor, and price gouging. It's a random detail and maybe it does help out parlour owners lower costs. Disney have an infinite number of such options available though. A free market it'll never be.
Part of the difference is that that nobody thinks you own Disneyland, but people think that they own their iPhone or iPad. This sort of ownership means that it should be possible to change your decisions about what to do with a device after the moment you bought it.
I think most people would find it bad if a BMW branded car could only take gasoline/petrol purchased using a BMW credit card. Even if the terms of the BMW credit card were better than everything else when the vehicle was first purchased, the lock-in it creates would stop competition. And of course, if BMW could change the credit card terms - say, stop allowing purchases at your closest filling station, that would be worse.
Just from a consumer's perspective, given the popularity of Fortnite, it's quite possible that there are some number of people who bought an iPhone just for the purpose of playing Fortnite, and had that use taken away from them. It feels wrong that Apple can take that away from them.
> Part of the difference is that that nobody thinks you own Disneyland, but people think that they own their iPhone or iPad. This sort of ownership means that it should be possible to change your decisions about what to do with a device after the moment you bought it.
I think the main trouble with products like Apple's is that you end up in a monopolist-controlled market just after you have bought the product. See also e.g. Nescafe coffee where, after buying the coffee machine, you are limited to buying coffee from 1 vendor (this is not true anymore but it was true for a long time).
If monopolies are forbidden, then so should a monopoly-after-you've-bought-a-product.
Fortnite took it away because they wanted to create publicity for themselves and set up a situation where they appeared to be David to the Goliath of Apple.
Fortnite took it away and sold their software on the Apple App Store, in the full knowledge that they were planning this move, and they knew what that result would be.
So, Fortnite sold out their own customers willfully, and with maliciousness aforethought.
But if the sole act of forcing app makers to use Apple's generally more private and secure payment system is anticompetitive, then how does the consumer choose Apple as the mediator of their relationships?
Where is the consumer choice for that? I ask because I don't want 3rd parties selling insights from my financial data. Of all choices that a consumer actually wants, it would be the ability to control the apps (i.e., sideloading) running on their device, as opposed to have more control yielded to app makers.
Depends on the resolution. If a developer is able to use another payment processor alongside Apple's payment system, and set different price points to recover the respective fees, the buyer would be able to decide whether adding Apple as an intermediary is worth the price premium. Currently, the buyer does not have such a choice. They must involve Apple and pay the price premium if they want to make the purchase.
Also, adding Apple as an intermediary increases the buyer's privacy exposure in some cases. If the buyer already has an account with the developer's service and makes a purchase that is linked to the account, interjecting Apple into the equation would reveal the purchase to both Apple and the developer, instead of just the developer.
First, the Dutch government position is that forcing apps to have Apple's payment system is anti-competitive... not that developers must include multiple payment systems. The customer isn't getting more choice here, the app maker is getting more choice. Companies like PopEyes, who really want you to enter your credit card, will be getting the choice.
Second, IAP is separate from Apple Pay. If you do payments through another payment ecosystem... Apple still gets a cut. Nobody gets to dodge a price premium. If you want to talk about price premium, we should really be talking about the IAP.
Third, you are getting more risk here. When you use Apple Pay, the vendor knows almost nothing about you. We're talking about the likes of Target and PopEyes (who really wants your credit card info) vs Apple, who retains very little financial information [1]. How many apps have you paid for? How many businesses do you transact with? That's a lot of Targets.
And fourth, I am concerned about whether Apple will be able to compel developers to have easy recurring payment cancellation in one place. Whether it's a business or a government doing this, being able to easily monitor and cancel recurring payments is a big consumer win. Where is the consumer choice for this?
Finally, the marketplace is about the negotiation of leverage. You talk about customers choosing vendors... my family members aren't going to win in negotiations with any company. The choice will be Walmart's way or the highway. Where is the consumer choice to have Apple negotiate with Walmart on your behalf?
1. Developers are not able to offer multiple payment systems for certain types of purchases when Apple forces apps to use Apple's payment system. By removing Apple's restriction, developers would be able to offer multiple payment systems and allow customers to have a choice between different payment systems. Apple's restriction prevents customers from having this choice, because it prevents developers from offering it.
2. We'll see when the Dutch situation is finalized. Epic v. Apple was filed in the Northern District of California, which is separate from the Netherlands.
3. You're missing my point. For instance, if you already have an Amazon account and you purchase an e-book to add to your Kindle collection, Amazon would get this purchase information no matter how you pay, since your e-book purchase is linked to your Amazon account. Amazon would already have your payment method (unless you haven't purchased any physical or digital items directly from them beforehand). Paying through Apple would only expose your purchase information to Apple in addition to Amazon, and at a price premium. It would not prevent Amazon from having the purchase information.
4. Payment processors such as PayPal also allow cancelling recurring subscriptions in one click from a centralized page. Apple's payment system is not unique in this regard.
Developers should be able to offer multiple payment systems, so that customers can choose between them. Some customers do not want to use Apple's payment system for some of their purchases, and Apple's requirement deprives these customers of alternative options. Dutch regulators have found Apple's restriction to be anti-competitive.
1 & 4. You haven't answered the question about what consumers are supposed to do when they want Apple Pay, rather than having dozens of financial relationships with dozens of companies. In the free market, you negotiate with what leverage you have. Companies like Walmart, Target, and PopEyes are free to do as they wish.
That PayPal offers you a place to cancel subscriptions does not mean that Target must offer you the option of your preferred payment vendor. In order to achieve this, perhaps you might throw around your weight to negotiate with Target and such? You don't get to compel the use of PayPal unless Target agrees.
2. The reason why companies must pay IAP is for legal reasons, not Apple Pay. Since we're talking about the Netherlands, we can just view Epic as an example of how Apple's legal strategy has played out across the ocean, or not talk about them at all.
3. I think you have a technical misunderstanding if you think paying with Apple Pay means that the vendor has your financial information. They don't. With Apple Pay, Target wouldn't have any credit card information to leak. You are more exposed to financial risk with the numerous financial relationships you have. The reason why some companies already have your credit card information is because you couldn't resist giving it to them, perhaps because Apple wasn't negotiating on your behalf.
1. Sellers get to choose the payment methods they accept. Some sellers don't take cash, some don't take PayPal, and some don't take Apple Pay. If a seller doesn't offer the buyer's preferred payment option, the buyer can either either choose from the payment options the seller does accept, or shop elsewhere. Depending on how the antitrust situation is resolved, Apple may be able to require developers to offer Apple Pay, yet still allow developers to offer other payment options alongside it. Buyers are not entitled to use Apple Pay everywhere, just as they are not entitled to use cash, PayPal, or a particular credit card everywhere.
3. I'm not talking about Target, I'm talking about an e-book purchase on Amazon that gets added to the purchaser's Kindle collection. Amazon must know that the user purchased the e-book, since that is the only way the e-book gets added to their collection. If Amazon already has the buyer's payment information from a previous purchase, directly purchasing the e-book through Amazon would be strictly more private than purchasing it with Apple overseeing the transaction. Every purchase is a different situation, and in some situations, using Apple as an intermediary is worse for privacy than directly purchasing through the vendor. Not everyone prefers having Apple monitor all of their transactions.
> Sellers get to choose the payment methods they accept. Some sellers don't take cash, some don't take PayPal, and some don't take Apple Pay. If a seller doesn't offer the buyer's preferred payment option, the buyer can either either choose from the payment options the seller does accept, or shop elsewhere.
This is precisely my point. Walmart's way or the highway. After all, the free market is a land of the negotiation of weight, and you don't weigh very much.
> Buyers are not entitled to use Apple Pay everywhere, just as they are not entitled to use cash, PayPal, or a particular credit card everywhere.
In the free market, you aren't entitled to anything you can't negotiate. Apple can do this for you. Apple has enough weight with the collection of customers behind them.
> I'm not talking about Target, I'm talking about an e-book purchase on Amazon that gets added to the purchaser's Kindle collection. Amazon must know that the user purchased the e-book, since that is the only way the e-book gets added to their collection.
A company doesn't have to know your financial data to know that you paid for a digital good. I am talking about Target, except Target is just an example of a company that already had a financial leak scandal. I also talked about Amazon, since there's enough room to talk about more than one company. My response was that you forked over your credit card information because Amazon had that power.
As you say, you're not entitled to choose the terms of your relationship with Amazon. Your choices were only Amazon or... not Amazon. I mean, not unless you can negotiate with Amazon. And then you have to do this for PopEyes and Target too, all while contemplating your entitlements as a customer.
So I ask again, where is the consumer choice to have Apple intermediate relationships on your behalf?
Some banks and other services such as Privacy.com offer disposable credit card numbers to conceal your payment identity. These services work very well. You can ask Apple to offer this service, if you want Apple to intermediate for you. But as long as Apple does not offer a such a service, it is not the seller's obligation to cater to a buyer's preference to use Apple to pay for everything. An Apple user has no right to compel a developer to transact with Apple on unfavorable terms, and is therefore not entitled to the "choice" that you are describing.
The Dutch antitrust regulator has determined that Apple is not allowed to force developers to exclusively use Apple's payment system. There is no antitrust principle that compels developers to offer Apple Pay or any specific payment option. But as I said before:
> Depending on how the antitrust situation is resolved, Apple may be able to require developers to offer Apple Pay, yet still allow developers to offer other payment options alongside it.
If that's not an option for Apple, then the burden is on Apple to offer a competitive payment processing solution to be accepted by both developers and users.
> An Apple user has no right to compel a developer to transact with Apple on unfavorable terms, and is therefore not entitled to the "choice" that you are describing.
I am not talking about a customer's right to compel a developer to choose private and safe methods for payment. I am talking about leverage in a free marketplace. It's not that you don't have the right... you don't even have the weight as an individual customer to step into a negotiating room for a conversation. Apple does.
I am also far more sympathetic to consumer protection than whether companies should be able to choose Stripe or manage your financial information for their business benefit. This is the "unfavorable terms" you're talking about.
> Depending on how the antitrust situation is resolved, Apple may be able to require developers to offer Apple Pay, yet still allow developers to offer other payment options alongside it.
If this is the case then the conversation will be moot. But this is speculative, so I am arguing for the other side of your forward-looking statement.
Apple's payment system offers no more leverage than a free disposable credit card that you can limit and cancel at any time. When Apple's payment system is the only option, its high fees (unfavorable terms) generate a huge amount of deadweight loss in the app economy. What Apple needs to do is find a way to allow its users to retain as much of the convenience of its own payment system as possible without violating antitrust regulations. This is achievable by, for example, requiring apps to let users quickly and easily unsubscribe from recurring subscriptions in the app itself.
Currently, iOS users have little to no leverage against Apple. To make certain kinds of purchases in iOS, buyers must pay a large price premium to subsidize Apple's fee regardless of whether they prefer to do so. The Dutch antitrust regulator recognizes this as a problem, and is instructing Apple to correct the situation. How Apple proceeds from here will determine the user experience on its platform, but continuing to violate antitrust laws harms both users and developers through market inefficiency.
> Apple's payment system offers no more leverage than a free disposable credit card that you can limit and cancel at any time. When Apple's payment system is the only option, its high fees (unfavorable terms) generate a huge amount of deadweight loss in the app economy.
> Currently, iOS users have little to no leverage against Apple. To make certain kinds of purchases in iOS, buyers must pay a large price premium to subsidize Apple's fee regardless of whether they prefer to do so.
Instead of chatting abstractly about high fees, why don't we put some numbers on the table? Apple Pay's "high fees" go to banks at 0.15% per transaction, or 15 cents per $100.¹
The IAP fee is not the same thing as Apple Pay. Apple Pay is a protocol for payment where neither Apple nor the store keep your credit card information. IAP is a revenue sharing agreement with Apple. Many people agree that the IAP is onerous, and as a business contract it is subject to various legal jurisdictions.
If you disagree with high fees, we should really be talking about the IAP and not Apple Pay.
> Apple's payment system offers no more leverage than a free disposable credit card that you can limit and cancel at any time.
I see this ordering of effects as backwards: first Apple uses its leverage, which derives from its hundreds of millions of more spendy users, and now we have Apple Pay, a private system of paying where even Apple does not store your credit card number on their servers, or other identifying information.² This differs from Privacy.com, where you may directly linking your debit account. Also note that you may wish to be careful when cancelling a "disposable" credit card when you have recurring charges.
An individual customer of insurance does not have leverage over the insurance company. As a collective, you have all the leverage, which in turn means more bargaining power for the insurance company. As an individual member of Costco, you have no leverage over Costco. As a collective, you have the only reason why Costco can demand better prices.
By "Apple payment's system" I'm referring to any payment system that Apple mandates the use of on iOS, all of which Apple takes a 15-30% cut from revenue. I'm not referring Apple Pay except when I specifically mention it by name. I don't use "IAP" to refer to Apple's payment system, because I'm including purchases through the App Store itself, and those aren't IAPs.
95% of purchases through Apple's payment system (App Store + IAP) by volume are subject to Apple's 30% fee.[1] Sellers need to raise the price by ~42.9% to recover the 30% cut, and the cost of that fee is subsidized by the buyers. Those are hard numbers that have a negative impact on both users and developers.
Yes, I agree that Apple helps provide users with leverage against iOS developers when they overstep boundaries on privacy in some cases. But, Apple never provides users with leverage against Apple itself. Many users and iOS developers are too small to directly challenge Apple when it engages in anti-competitive practices, so that is where government comes in to provide leverage to users and developers against Apple.
And if the app maker doesn’t offer any other alternative to their captive payment system? How do I force them to accept the Apple payment system as a valid alternative? One where I’d be happy to pay a premium, just to make sure that when it comes time to cancel the account, I can do so easily and quickly?
Apple still controls the App Store, so Apple can require developers to offer an easy cancellation method for subscriptions that can be purchased from apps in the App Store. Depending the result of the Dutch antitrust decision, Apple might still be able to require developers to offer Apple's payment system alongside any other payment systems, and there would be no problem with that as long as developers are able to offer different price points to offset the fees for each payment system.
First principles arguments are crushed by emergent properties at scale. Disneyland has less than a hundred restaurants. The harm to society if Dinseyland has extra control over those restaurants is miniscule. The harm caused by Apple having monopolist control on the majority of mobile phone owner's entire software stack is exponentially larger.
In some circles, maybe, but not here in the Netherlands (+/- 60%). Worldwide, the majority of phone owners still run Android.
This is one of the key arguments people use in Apple's defence, because the bigger their majority share, the quicker anti-monopoly laws would apply.
I agree with your point, though. The Apple/Google duopoly hurts the general public to ensure the profit margins for these companies' shareholders. Those with neoliberal convictions might not agree with me, but I believe that the free market needs regulation to prevent problems like these.
I don't find that convincing. There's billions of ios users. That certainly passes the bar of emergent effects of scale to properly view it as its own unique market. It doesn't matter if there's billions of other users on android.
I don't disagree with that. I'm not suggesting that harm is comparable, only structure. You can deal with DisneyLand ice cream by ignoring it. Apple, not necessarily.
That said, if you were to deal with DisneyLand ice cream...
It is ridiculous if framed like that. A better interpretation is that this adresses an easy to address aspect of the anti-competitive phenomenon that is Apple app store – allow other payment processors. It is a lot like coming to a house fire with a pack of bandages. Can't hide the fact that noone seems willing to address the bigger problem.
Exactly, everything else you listed about Apple's behavior is also anticompetitive and will hopefully be addressed in the future. But lets start with payments.
Well shucks. Apple also controls who and what can be sold or distributed in the market, how it should be built. They control how much exposure apps get. Some of these controls are used more directly, or blatantly to "rig the market" than others... but these are just the current choices by Apple. It's not a rig. It's the OEM design. Apple rigging the app store market is like Apple penetrating icloud security. That's not a hack, it's a login.
I can see a logic within the frame. If courts force Apple to allow a competing system, it will put downward pressure on what are (imo) indisputably monopoly prices. That's competition, in a neoclassical sense. There can be a big difference between no competition and some.
OTOH, competitiveness within Apples' fully owned market seems like a silly frame to operate within. Competition between ice cream parlours within the walls of DisneyLand are at Mr Disney's discretion. They can decide all ice cream parlours will be subsidiaries, franchises or independants. They can set prices, ban ice cream, etc.
Trying to deal with ice cream competitiveness in DisneyLand this way is a fool's errand. One court rules on a policy forcing Parlours to use Disney's insurance vendor, and price gouging. It's a random detail and maybe it does help out parlour owners lower costs. Disney have an infinite number of such options available though. A free market it'll never be.