Apple’s Secret Monopoly
By: Will Oremus
Tags: App Store, Privacy, Antitrust, Apple, Tech

For many developers whose livelihoods depend on the App Store, speaking out can feel like a risky strategy. As Ida Tin, CEO of the period-tracking app Clue, told the Washington Post in September 2019: “You don’t want to annoy the milkman when you only have one milkman.” At the time, Apple had just announced similar period-tracking features in iOS, casting Clue’s future in doubt. At launch, however, Apple made its new cycle tracking data available to Clue and other third-party apps via its HealthKit programming interface, or API, which has given them at least a chance to compete with its own offerings.

As Apple frames it, the App Store is all about competition and consumer choice. In the draft response to the House antitrust committee obtained by OneZero, Andeer wrote, “Ever since we created the App Store, we’ve embraced competition as the best way to help our users access the best apps — even when those apps compete directly with our own. Our apps compete with third-party developers’ apps across every category, and in many cases, the developers’ apps are more successful.” (Update: Apple’s full response to the subcommittee has now been published. You can read it here.)

When Apple rejects rivals’ app updates or runs with their ideas, the company says, it’s always with the user’s interests in mind. But developers benefit handsomely, as well: Apple says it has paid out more than $155 billion in App Store revenues to third-party developers over the years. The company also points out that the majority of apps on the App Store — 84%— are free, and thus pay nothing to Apple. These apps — which include such big names as Instagram, Twitter, and Pinterest — make money by selling ads, and the main benefit to Apple is simply to make its devices more useful and attractive to buyers.

An Apple chart depicting rival apps that it feels offer services similar to its own. Credit: Apple

Apple — and its cardinal simplicity — are beloved for a reason. There is something to be said for Apple’s ability to integrate new features into its operating system, even if that puts some apps out of business. It’s hard to see how consumers were better off, for instance, when turning their iPhone into a flashlight required opening the App Store, navigating a slew of competing flashlight apps from developers they’ve never heard of, and trying to figure out which ones were legit and which were trying to spam them with ads or mine their data.

And while it can feel unfair for Apple to give its own apps access that third-party rivals lack, figuring out which third-party apps deserve what levels of access is undoubtedly tricky. It might sound simple to leave all such decisions to the user, but that presupposes a level of sophistication that it’s unreasonable to expect of the average iPhone owner. It also presupposes good faith on the part of every developer, when in reality there are plenty of scammers out there.

It’s tough to make the case for curbing a company whose public image is sparkling.

The problem is when Apple uses those excuses to justify actions that privilege its own business over those of legitimate rivals — a trend that Cicilline remarked on at the January hearing. “I’m increasingly concerned about the use of privacy as a shield for anti-competitive conduct,” he said.

Sherlocking is only one of the ways that Apple wields its power over other firms. And in some cases, it’s hard to see the benefit to anyone other than Apple itself.

Sweden-based Spotify, whose streaming app competes directly with Apple’s own Apple Music, last year filed a formal complaint against Apple with the European Union’s antitrust regulators. It also launched a site called Time to Play Fair, calling attention to Apple’s alleged abuses. The company claimed that Apple repeatedly rejected or delayed approval of updates to the Spotify app, degrading the quality of its product, while working on Apple Music.

“They continue to give themselves an unfair advantage at every turn,” CEO Daniel Ek wrote. In the App Store, he said, Apple was acting as both “player and referee,” a metaphor that echoed Warren’s framing in her call to break up big tech platforms. (Though she didn’t mention Apple at first, Warren has since clarified that she thinks Apple should be broken up too.)

Apple has responded with its own marketing website touting the App Store as a boon to consumers and developers alike: “Since the launch of the App Store, an entire industry has been built around app design and development, generating over 1,500,000 U.S. jobs and over 1,570,000 jobs across Europe.”

Still, the signs of discontent are growing. On February 13, Google’s YouTube TV became the first major streaming app to announce it would not only prohibit new signups through iOS, but disable the accounts of existing users unless they switch to paying Google directly. In that case, there’s no moral high ground: Google takes the same 30% cut from mobile apps that use its Google Play Store on Android.

That same week, at a game conference in Las Vegas, Tim Sweeney, CEO of Fortnite-maker Epic Games, railed against both Apple and Google for their high fees, and for discouraging users from using other app stores, such as Epic’s own Epic Games Store, which takes only a 12% cut from developers. He contrasted Apple and Google’s rates with the 2% to 3% fees charged by credit card companies. In the world of gaming and apps, Sweeney said, “Undue power has accrued to participants in the supply chain who are not at the core of the industry.”

Most developers, of course, have nowhere near the scale or resources of those Goliaths. At the same House antitrust subcommittee hearing in which Tile testified, Basecamp’s Hansson decried the effects of Apple’s terms and payment policies on developers of more modest means. Basecamp is among the companies that has tried to encourage users to sign up outside of its iOS app. Its attempts to do so have landed it in app-review purgatory more than once. “It’s a horrible experience for users,” Hansson said.

Tech companies sometimes dismiss criticism on the grounds that their critics don’t understand the industry. But at the Colorado hearing, all four of the major witnesses — from Tile, Basecamp, Sonos, and PopSockets — represented tech-savvy startups. Hansson, in particular, is a legend among computer programmers, having invented the popular coding language Ruby on Rails.

Lawmakers from both sides of the aisle sounded moved, persuaded, and, in some cases, shocked by the testimony. While the Democrats called the hearing, Colorado Republican Rep. Ken Buck appeared equally chagrined by Apple’s behavior and interested in possible remedies. “I think it’s clear there’s abuse in the marketplace and a need for action,” Buck said.

Hansson said he was gratified by the response. “There wasn’t a clear consensus about what needs to be done. But just the fact that we can agree on the problem, in this day and age, is amazing.”