27 ms·

Apple’s “monopsony” power, and the woman who named it

311 points by moorage 7y ago

RandallBrown 7y ago
So, since Apple is the only company "buying" apps from developers, they could raise their cut as high as they want and developers can do nothing about it. Could Apple then argue that they aren't the only game in town because of things like subscriptions and web apps? (e.g. I don't pay for Netflix or Spotify through Apple, but the apps work fine)
- unlinked_dll 7y ago
  They could if they didn't strong arm developers into giving them a cut of subscriptions. This is a major point in the Spotify antritrust suit against Apple.
  - mifreewil 7y ago
    To clarify, Apple takes 30% of in-app subscriptions for customers < 1 year. If you retain a customer for a year, then they take 15% of the revenue after 1 year. If a customer signs up and setups payment for the service outside the app, then Apple doesn't take a cut. That's why you can't buy books in the Audible iOS app, or subscribe to Netflix via the iOS app. But you can login and watch/listen to content you've already bought or subscribed to.
    - teruakohatu 7y ago
      What is the justification for the 30% in year one, Apple's costs don't halve after one year? Sounds like they are simply hurting competitors profitability.
      - e_y_ 7y ago
        I think their argument is that they're providing you exposure through the App Store, so they deserve a referral fee for maintaining the App Store, reviewing apps, etc. Normally, user acquisition (getting a user to even think about installing your app the first time) is much more expensive than maintaining a subscription -- also why so many companies are pushing subscription models -- so Apple probably considers it to be worth more. There's also a higher risk of fraudulent purchases or refunds (and associated support costs) for the initial purchase than a subscription. In the past, developers were prohibited from telling users that they could sign up cheaper on your website, allegedly to avoid user confusion; I think it was relaxed somewhat so I don't know if it's still the case. Of course the main reason why they charge 30% for the first year is because they can, and the reason they charge 15% after that is because app/content developers have been starting to gripe about it (probably after realizing they need to make a profit and can't live entirely off VC money). It has little to no relation to how much it actually costs Apple. There's no justification for why it takes a year to get the reduced rate, instead of something like 2 months.
      - lotsofpulp 7y ago
        What is the justification for a doctor making $500k? For a programmer making $500k? For a hotel maid making $30k? Supply and demand. Same with the App Store.
      - monkin 7y ago
        Justification is the same as Google's: https://support.google.com/googleplay/android-developer/answer/112622?hl=en https://support.google.com/googleplay/android-developer/answ... I really don't get why everyone is bashing Apple for this like everyone else is doing the same thing. Yes, we can argue about openness of Google Play Store, but it's also full of malware, crapware, shitware and other BADware. ;)
      - simonh 7y ago
        Apple makes no distinction between companies on it's platform that compete with it and those that do not, they are all treated the same, so it's hard to see an argument that this is mainly targeted at their competitors holding water. Furthermore e.g. Apple does compete with Amazon kindle store on the Apple platform, but Google doesn't compete with AMamzon yet imposes almost identical terms on the Amamzon kindle store on Android. So if it's ok for Google to apply those terms on Android, why is it not ok for Apple to apply those terms on iOS? This whole line of reasoning simply doesn't make a lick of sense. If it is reasonable for Apple to charge companies on their platform at all, then the evidence in the market is that their current charges are competitive and reasonable.
        ajscanlan 7y ago
        > Apple makes no distinction between companies on it's platform that compete with it and those that do not, they are all treated the same, so it's hard to see an argument that this is mainly targeted at their competitors holding water. There was that story last year about them ranking their own apps above competing 3rd party apps when searching. https://www.wsj.com/articles/apple-dominates-app-store-search-results-thwarting-competitors-11563897221 https://www.wsj.com/articles/apple-dominates-app-store-searc...
        simonh 7y ago
        Yep that was pretty skeevey, I’m glad they were held to account and stopped that, but it’s actually nothing to do with the point about not treating individual third parties differently.
- throwGuardian 7y ago
  Also, please omit webapps on iOS Safari as an alternative. Apple gives no explanations on why it cripples Safari's W3C compatibility, especially features around PWA, but everyone knows it's to drive developers, users and hence revenue/profits to the app store. Someone needs to sue Apple for this, and the truth will be revealed when the case enters discovery mode, when Apple internal communications on this are laid bare
  - anoncareer0212 7y ago
    Honestly, they just don't have headcount to pull it off/the manager doesn't care. (hi maciej!) He lionizes it on Twitter as not jumping on the latest fads and gets kudos from Apple fans who conflate "new web API" with "slapdash nonsense Google is rushing to try and make the web beat apps" as if it's 2008 still.
  - BlueTemplar 7y ago
    Remember how the first iPhone released without an app store and the plan was for developers to use web apps?
  - dwaite 7y ago
    Progressive Web Apps aren't a standard but a Google web strategy term. Different browsers just have different priorities. For example, Apple prioritized service workers over web app manifests (which BTW are not yet a W3C recommendation). I can only assume this is partly because there have been so many failed attempts at static web app manifests in the past. Them prioritizing other features for earlier release doesn't mean that Web App Manifest support isn't in active development ( https://bugs.webkit.org/show_bug.cgi?id=158205 https://bugs.webkit.org/show_bug.cgi?id=158205 ).
    - throwGuardian 7y ago
      Missing in iOS Safari: 1. Binary WebRtc data channel messages 2. Browser notifications that a PWA can use 3. Web App storage beyond 50MB, and guarantee that the OS won't whimsically delete storage, despite being below 50 MB 4. You've already cited Web App Manifest There's probably a ton of other W3C standards not in compliance, but the above list is pretty damning.
- eru 7y ago
  > So, since Apple is the only company "buying" apps from developers, they could raise their cut as high as they want and developers can do nothing about it. No. Monopsony and monopoly don't work like that. See eg https://en.wikipedia.org/wiki/Monopoly_price https://en.wikipedia.org/wiki/Monopoly_price Basically, when a monopolists or monopsonists tries to abuse their position, they will shift less volume. There's a finite optimal cut that maximizes profits. So: when Apple increases their cut, they'll get fewer apps developed. Marginal app developers will go work on Wall Street or flip burgers etc.
m463 7y ago
so: - monopoly: the only seller - monopsony: the only buyer So app store customers can only buy from apple. And the app developers can only sell to apple.
- olliej 7y ago
  PlayStation, Xbox, Nintendo, sega, ... are the same: You can only sell for those devices with manufacturer licensing (that includes profit sharing and mandatory annoyances like “achievements”), and consumers can only buy games licensed by those manufacturers. The only difference is that PC developers haven’t experienced that before. It seems like this would have been established in the 80s/90s, so I’m surprised we’re getting to court - is there a change in judicial philosophy? That said, as far as I can tell every platform charged the same ~30% so I’m sure any company can simply point to the entire market as having established that under fair conditions (after all, if there was a cheaper platform surely they’d prioritize that?)
  - simion314 7y ago
    Or maybe we could get side loading on console.
    - wheelie_boy 7y ago
      The fixed hardware that is long-lived and affordable is possible because the hardware manufacturer subsidizes it, especially at the beginning. If they were not able to rely on money from game sales, the hardware would be much more expensive. An alternative way for companies to make money manufacturing gaming hardware is to keep the prices low until there are a lot of great games for the system, and then jack up the hardware prices later on. So you might want a hardware standard that multiple companies could produce, which games could interface with and be portable between.. Eventually it just turns back into PC gaming.
      - mrep 7y ago
        And it is anti-competitive business model. By selling the consoles at such a low price that you cannot make a profit on them and then relying on a volume of game sales to effectively extract your rent from, it by design limits the number of companies that can compete that way because there is a limited number of game sales.
oleganza 7y ago
"Merchants at Macy's can only sell at Macy's". There are many options for you as an app developer. You can enjoy the scale and tooling provided by Apple, at one cost. Or you can write apps for any other computer at some other cost. Or you may choose not to be an app developer at all and do something else useful.
- JamesBarney 7y ago
  Monopsony doesn't mean option-less. Just because you can take a horse doesn't make standard oil not a monopoly.
  - 52-6F-62 7y ago
    And that's where the argument is: Standard Oil had a monopoly on oil itself. Apple doesn't have a monopoly on phones. They've just dictated how their phone is going to work. The options aren't Apple iOS ecosystem, or no phone dev at all. There are numerous other smartphone companies out there. Apple isn't even close to the largest share of operating systems used in the market—by far (https://www.statista.com/statistics/266136/global-market-share-held-by-smartphone-operating-systems/ https://www.statista.com/statistics/266136/global-market-sha...)
vturner 7y ago
The key point I presume is the definition of "market" here; and I'm not convinced the market "software that runs on iOS" is so large that monopwhatever can be declared there and used to justify price control. Though as a thought experiment Apple is like a wealthy landed gentleman who sets up a well maintained outdoor market for the tradesmen to bring goods and the lower classes to buy them. If Apple owns so much land they are the only ones capable of setting up a large enough market, maybe we should regulate that gentleman's fees to the tradesmen? By virtue of people's need to be fashionable and the enormous cost to develop a smartphone and OS, Apple effectively controls enough "land" to warrant regulation. I don't know... Finally, this rationale also it seems causes a dilemma with B2B relationships. What if your market is quite specialized? Are you a "monopsony"?
- e_y_ 7y ago
  I don't think we need to divide the market into specialized segments (iOS devices, luxury smartphone, etc) to make the case against Apple. They have somewhere around 50% of the global market in terms of smartphone revenue (not devices shipped). For the App Store, which is what matters to developers, revenue was around $25 billion in the first half of 2019, vs $14 billion for Google Play Store. It's not literally mono- but as the article notes, just having a significant share of the market (I would say 30% would be enough) allows companies to dictate prices, and iOS has more like 2/3rds of the revenue. That's not even getting into all the restrictions that Apple puts on third-party developers, including categories of apps that you can't even make if you wanted to -- unless you're willing to sit out half the market, and assuming that Google doesn't do the same thing. As a software guy, I consider that a bigger deal than the % cut (which is not entirely unreasonable given how much of that goes to credit card fees for low-dollar-amount transactions)
  - thaumasiotes 7y ago
    > They have somewhere around 50% of the global market in terms of smartphone revenue (not devices shipped). On a monopoly/monopsony theory, devices shipped is the relevant metric, and revenue isn't.
lilyball 7y ago
Something odd about this argument is the fact that 30% is pretty much an industry standard. Apple isn't jacking up the price.
- cjfd 7y ago
  There is more going on besides price. The review process is also completely arbitrary. I don't like the whole thing that the only place to get apps is the app store. I will never buy any apple device as long as that is in place.
  - lotsofpulp 7y ago
    That’s exactly what keeps me buying Apple for my family and I. I credit their locked down App Store with saving me from spending hundreds of hours of my time dealing with malware over the last 10 years.
    - strbean 7y ago
      I've used android phones for a decade now and never once been affected by malware. If the issue is kids installing shady apps, you should probably use a parental lock for that.
      - lotsofpulp 7y ago
        The issue is people clicking on every link that comes their way via email or whatsapp. And since I can’t stop them from clicking them, my only solution is to have them use iOS devices.
- smilespray 7y ago
  I thought Apple was the originator of the 30% cut for app stores, and everybody else followed suit?
  - stuaxo 7y ago
    Yes, this is true. People forget that there were phones before the iPhone decided all phones would be rectangles with touchscreens. Those phones ran apps and games, and you downloaded them from app stores... there was in fact a cambrian explosion of app stores, when you made software you had to publish it to hundreds of them. I can't remember the %, but it seems unlikely, in the fact of all that competition that it was as high as 30%.
GeekyBear 7y ago
Next up: Nintendo, Microsoft and Sony's game consoles?
- notduncansmith 7y ago
  As the only buyer of goods sold to me, and the only seller of goods sold by me, I suppose I'm running a monopsony and then some. May as well add me to the list. On a serious note: would a judgement in this case have immediate impact on other companies, or would it set a precedent? Also, what are the proposed damages? How is Apple supposed to repair the situation? Honestly, this feels entirely arbitrary (Apple is far from the only one that leverages their position as digital goods market makers). I'm not saying conspiracy or anything, but I wonder if this is related to the POTUS's vendetta against AAPL.
  - stuaxo 7y ago
    It's not arbitrary, the appstore is a de-facto monopsony, the ordinary user doesn't install apps from anywhere. Most Android phones come with an alternate appstore installed (e.g. Samsung come with their own one as well as google play) and you can easily install others. To install alternates on the iPhone you have to root it.
    - Razengan 7y ago
      That applies to game consoles too, since the 1980s.
      - ernesth 7y ago
        In the 80s, the game console makers did not operate the store where you were buying games. Even, you could buy second-hand games without Atari or Nintendo receiving any part of the fee!
        scarface74 7y ago
        Even back in the 80s, the console makers “controlled distribution”. Nintendo forced third parties to use their manufacturing facilities and they all force third parties to distribute their haves with a license key. Console makers have always forced third parties to pay a fee to distribute their games.
_-dobe-_ 7y ago
In the EU we had a ruling that forced Microsoft to offer choices for web browsers when installing Windows for the first time. I.e. IE wasn't set as the default browser by default. They were forced to do this for 5 years, I think so people become aware that there are other choices out there besides IE. They should do the same for the AppStore. When you set up your iPhone, it should give you an option of AppStores, not just the Apple one.
- nobodyshere 7y ago
  It would be just enough to allow people to install third party apps without having to use app store.
  - BlueTemplar 7y ago
    Lol, how is that working out on Android ?
    - itg 7y ago
      Working out great with F-Droid :)
      - cmsj 7y ago
        Working out great for F-Droid. FTFY ;)
    - swebs 7y ago
      Pretty well. What exactly are you implying?
    - nobodyshere 7y ago
      Just fine, actually.
- Zenst 7y ago
  But you have that choice at purchase. Hence this aspect does feel akin to somebody buying a Tesla and the customer expecting the ability to switch to diesel, petrol instead of being stuck with electric. Also remember how long that Microsoft rulling took and what it actualy ended-up being in the end - which for most was an annoying popup for those who already knew how to change web browsers. These days what happens is EU will start the long process and before it hits court some agreement is made. But the difference for Android and Apple is that Android is `open source`, IOS is not. Buy an android phone and change the app store - kinda entails rooting the phone in most if not all cases in some way and that for most phone sellers does void the warranty. So say Apple did offer you to change app store - but in doing that voided your warranty, which would be fair from their perspective. May even be case of, well you have non Apple app store - no Apple services for you as we do not trust your device as you have modified it - enjoy. Again, something that they could justify and in a way which would be fair from their perspective. After all, nobody wants to open up a system in a way that may expose it to outside security or stability issues now. Remember Apple is more about reputation than the products, though they do go hand in hand, it is the reputation that carries them as much if not more than any individual product. Another way to view this is a hotel has a nice inhouse restaurant, should they be forced to allow McDonalds to open a store in their hotel or leave that choice to the guests who can go to another hotel if they want that experience.
dfsdfklgjljg 7y ago
This title is complete bs, and the court ruling (linked in the article) only mentions monopsony very briefly. The question addressed by the court is regarding who is the cause of any overcharging to the customer. The opinion argues that because Apple is exclusively dealing with the customer, it is able to sell on whatever terms it wants to the customer, so any overcharge is their fault. The dissent argues that because the developer has the power to dictate the price of the app on the store, any overcharge the customer pays is directly caused by the developer, because the developer could have chosen to sell the app at a fair price. It is true that the ruling mentions that developers may sue apple, but that was never in question. Both the opinion and dissent agree on that fact.
- dmos62 7y ago
  Off topic: I like your nickname. In that vein, here are two variations of the same sequence of keypresses shifted up and down respectivelly: "erweriotuout" and "cvxcv,.bm.mb". While something like "4694372" is motorically meaningful to a person typing it on the keypad, or to someone watching him do it, it translates to the screen space as gibberish. Another way to put it is that when typed it has an obvious structure, but when read on the screen, the structure is prohibitively difficult to discern. That's interesting, because it's all too easy to forget that the computer as we know it today can interface with only a very small portion of our faculties.
- abduhl 7y ago
  This is an unfair treatment of the decision. The question addressed by the court isn’t “who is the cause of supracompetitive prices?” but rather “if Apple is the cause, can consumers sue?” Apple’s defense argued that only the app developers could sue under a certain view of the precedent where Apple’s role as a pass through is essentially transparent to the law. Their argument attempted to shift who the customer was ultimately doing business with: Apple or the app developer. One of the theories underpinning the precedential rule is that not stopping impacted downstream parties from suing may potentially subject Apple to multiple liability. Apple argued that they were already liable to app developers so shouldn’t also be liable to consumers. The Court is saying here that that theory does not hold water because Apple, as a middleman, may be liable to both upstream and downstream parties (damages from app developers and consumers, respectively).
pornel 7y ago
Apple made themselves an exclusive payment provider for all iOS in-app subscriptions and payments for digital products. Merely mentioning anywhere that cheaper payment options exist is an AppStore ToS violation.
- zionic 7y ago
  I generally support Apple but this is inexcusable. Regulators need to come down hard on this kind of payment monopoly.
  - mikhailt 7y ago
    It makes perfect sense to me. If I was a businessman running a store, I definitely would NOT allow anyone that wants to sell in my store any mentions that they could be found cheaper elsewhere or get a discount somehow that could reduce my cut.
alfonsodev 7y ago
I think 30% (15% after a year) would be all right if there was another way for the user to install the app by downloading from vendor website. I know part of the value proposition of Apple is actually not letting user download apps from sites, but then something like Udemy model where the cut varies if you bring the user or they bring the user, could make sense. Then Apple taking the cut as referral wouldn't feel that bad.
braythwayt 7y ago
Amusingly, there are two sets of people arguing about why Apple is bad, and each have their own argument: 1. Android sells more, and offers more variety of mobile and wearable devices than Apple. And here’s the data to prove it. 2. Apple is a monopoly/monopsony and should be forced to allow more user choice of apps, allow sideloading, lower their prices, lower their app store cut, &c. Which one is is? Apple is like Tesla. They don’t sell more cars than anyone else. They don’t have a stranglehold over vendors. They sell more luxury cars than a bunch of other people. And while you see lots of Teslas on the road, you still see more F-150s. Their market is insanely profitable, and for many developers, their little market is highly profitable. But how is it their fault that app developers don’t shun them for Android-only, or Windows (do they still make a phone OS?) Apple make their own devices. They don’t license an OS and then use shenanigans to force vendors not to offer consumers a choice, like Microsoft did. They make a desirable product, and offer developers a desirable market. But they don't have enough of the market to do whatever they like. They can’t charge $5,000 for a phone and succeed because of network effects. Android phones can call and text Apple phones. They don’t tell developers that apps must be iOS-exclusive to be in the app store. Apple’s current success is exactly what the free market is for. People may grumble about the price of a phone or the keyboards, or the app store cut, but those who pay it do so because the value is there, not because of arbitrary constraints. They aren’t Facebook. Nobody has to buy an iPhone to keep in touch with all their friends who have iPhones.
- Quarrelsome 7y ago
  > They don’t tell developers that apps must be iOS-exclusive to be in the app store. They do force us to build the package on their devices though. Which is a wholly arbitrary demand which is frustrating to map into a build process that is already automated on the cloud. Prior to services that rent out Apple devices its an awkward fit. They're very aggressive with their posturing and they ruthlessly exploit the power they have. Just reading the dev EULA in full is evidence of that.
  - scarface74 7y ago
    And for most of the history of the consoles you had to have overpriced developer machines. Are you proposing that Apple be forced to port XCode to Windows?
mikece 7y ago
Having Apple take a 30% cut of sales in exchange for not having to run an e-commerce operation is far less odious than having to pay $5,000 for a MacBook Pro which has less RAM, a smaller SSD, and less powerful processor than $2,500 worth of Dell, Lenovo, HP, or Acer gear. The hardware is the real rip-off to me. I would gladly pay a reasonable fee if I could write my apps in VS Code on Debian and then ship the code to an Apple service to compile the code.
- rimliu 7y ago
  There is a more to laptop than just raw numbers of RAM, SSD and CPU. Paying six-digits for the car that has same number of wheels as Tata — outrageous.
  - mikece 7y ago
    The inability to augment the MacBook Pro is a bigger pain. With my 3 year old Lenovo P50 I can swap BOTH NVMe slots, upgrade the RAM, etc. With the MacBook Pro I can only buy USB-C cables and adapters. Your point about six-figure cars is a good one. I can either spend $90k to $120k on a car to drive to work that's super quiet on the inside, or spend $12k on a used Accord and another $400 on the top-flight Bose noise-cancelling headphones and achieve the same level of quiet on my commute. The way Apple builds their hardware you can't modify it to improve how it works for you; the only option is to take it or leave it.
    - danaris 7y ago
      You can use the same Bose headphones with your MacBook, y'know, and they aren't any more a modification of the MacBook than they are of the Accord. You can also plug in external Thunderbolt SSDs that are effectively indistinguishable from an internal in terms of speed. Your analogy kinda falls apart there. But if upgradeability and replaceable parts are your #1 concern, then...yeah, you're not in the target market for a Mac laptop. So that means that it's unlikely you'd ever have been looking at having a Mac be your primary machine in the first place—if you needed one to do development on, it would be a secondary machine, where you'd probably set up your dev environment, check out the code, compile it, and test it, then go back to the computer you actually enjoy using for the rest. Maybe look into a Mac Mini?
base698 7y ago
Who writes like this: > If the idea of monopoly were Beyoncé, then monopsony would be Solange. They're close sisters, yet their styles are pretty different. And while only one of them has been famous for a long time, the other one seems to be getting a lot of attention more recently.
- Japhy_Ryder 7y ago
  An intern at NPR trying _way_ too hard, probably.
- untog 7y ago
  People who try to make tech writing relatable to a wide audience. Is it really so bad?
  - splintercell 7y ago
    Yes.
    - untog 7y ago
      Counter point: no.
      - base698 7y ago
        I'd argue it's an attempt to appeal to 30 and 40 somethings who feel out of the cool demo. It's praying on their insecurities by allowing the reader to think, "I know Beyonce, I'm still cool." Definitely isn't an appeal to wider community--specifically targeted to NPRs demo.
        untog 7y ago
        I’d argue... not that. It’s a pop culture reference. Beyoncé is known by people of pretty much every age group. Are you saying Gen Zers wouldn’t get the reference? Because I’m not convinced by that at all.
generalpass 7y ago
Modern definition of all definitions in the United States: See: SCOTUS decisions.
LockAndLol 7y ago
> But Kavanaugh went further. He said Apple could also be sued by app developers, most of whom are forced to fork over a big percentage of their potential revenue, "on a monopsony theory." Is it possible for users to easily install alternative app-stores? Wouldn't that solve the problem?
- sangnoir 7y ago
  > Is it possible for users to easily install alternative app-stores? No, not on iOS > Wouldn't that solve the problem? Yes, because Apple will cease to be a monopsony for iOS apps. That is, if SCOTUS rules that Apple does have a monopsony. Kavanaugh only suggested they might have.
Animats 7y ago
If you don't know what monoposony is, ask a farmer.
andoju 7y ago
Arstechina published similar article regarding Apple's monopsony in 2005...nothing changed from last 15 years https://arstechnica.com/gadgets/2005/09/1190/ https://arstechnica.com/gadgets/2005/09/1190/
runeks 7y ago
So, via legislation (e.g. DMCA), we give Apple the right to tightly control the use of its “intellectual property” (the iOS software), which results in Apple being the only entity that can legally offer iOS apps for purchase. And now, via legislation, we want to remove this power, first given to them via some other legislation. How about we critically assess current legislation, instead of just piling more on top of it?
musicale 7y ago
How do Apple's licensing and payment policies for the (iPhone, iPad, Apple TV) compare with those of other game and streaming device manufacturers?

311 points by moorage 7y ago

So, since Apple is the only company "buying" apps from developers, they could raise their cut as high as they want and developers can do nothing about it. Could Apple then argue that they aren't the only game in town because of things like subscriptions and web apps? (e.g. I don't pay for Netflix or Spotify through Apple, but the apps work fine)

unlinked_dll 7y ago
They could if they didn't strong arm developers into giving them a cut of subscriptions. This is a major point in the Spotify antritrust suit against Apple.
- mifreewil 7y ago
  To clarify, Apple takes 30% of in-app subscriptions for customers < 1 year. If you retain a customer for a year, then they take 15% of the revenue after 1 year. If a customer signs up and setups payment for the service outside the app, then Apple doesn't take a cut. That's why you can't buy books in the Audible iOS app, or subscribe to Netflix via the iOS app. But you can login and watch/listen to content you've already bought or subscribed to.
  - teruakohatu 7y ago
    What is the justification for the 30% in year one, Apple's costs don't halve after one year? Sounds like they are simply hurting competitors profitability.
    - e_y_ 7y ago
      I think their argument is that they're providing you exposure through the App Store, so they deserve a referral fee for maintaining the App Store, reviewing apps, etc. Normally, user acquisition (getting a user to even think about installing your app the first time) is much more expensive than maintaining a subscription -- also why so many companies are pushing subscription models -- so Apple probably considers it to be worth more. There's also a higher risk of fraudulent purchases or refunds (and associated support costs) for the initial purchase than a subscription. In the past, developers were prohibited from telling users that they could sign up cheaper on your website, allegedly to avoid user confusion; I think it was relaxed somewhat so I don't know if it's still the case. Of course the main reason why they charge 30% for the first year is because they can, and the reason they charge 15% after that is because app/content developers have been starting to gripe about it (probably after realizing they need to make a profit and can't live entirely off VC money). It has little to no relation to how much it actually costs Apple. There's no justification for why it takes a year to get the reduced rate, instead of something like 2 months.
    - lotsofpulp 7y ago
      What is the justification for a doctor making $500k? For a programmer making $500k? For a hotel maid making $30k? Supply and demand. Same with the App Store.
    - monkin 7y ago
      Justification is the same as Google's: https://support.google.com/googleplay/android-developer/answer/112622?hl=en https://support.google.com/googleplay/android-developer/answ... I really don't get why everyone is bashing Apple for this like everyone else is doing the same thing. Yes, we can argue about openness of Google Play Store, but it's also full of malware, crapware, shitware and other BADware. ;)
    - simonh 7y ago
      Apple makes no distinction between companies on it's platform that compete with it and those that do not, they are all treated the same, so it's hard to see an argument that this is mainly targeted at their competitors holding water. Furthermore e.g. Apple does compete with Amazon kindle store on the Apple platform, but Google doesn't compete with AMamzon yet imposes almost identical terms on the Amamzon kindle store on Android. So if it's ok for Google to apply those terms on Android, why is it not ok for Apple to apply those terms on iOS? This whole line of reasoning simply doesn't make a lick of sense. If it is reasonable for Apple to charge companies on their platform at all, then the evidence in the market is that their current charges are competitive and reasonable.
      - ajscanlan 7y ago
        > Apple makes no distinction between companies on it's platform that compete with it and those that do not, they are all treated the same, so it's hard to see an argument that this is mainly targeted at their competitors holding water. There was that story last year about them ranking their own apps above competing 3rd party apps when searching. https://www.wsj.com/articles/apple-dominates-app-store-search-results-thwarting-competitors-11563897221 https://www.wsj.com/articles/apple-dominates-app-store-searc...
        simonh 7y ago
        Yep that was pretty skeevey, I’m glad they were held to account and stopped that, but it’s actually nothing to do with the point about not treating individual third parties differently.
throwGuardian 7y ago
Also, please omit webapps on iOS Safari as an alternative. Apple gives no explanations on why it cripples Safari's W3C compatibility, especially features around PWA, but everyone knows it's to drive developers, users and hence revenue/profits to the app store. Someone needs to sue Apple for this, and the truth will be revealed when the case enters discovery mode, when Apple internal communications on this are laid bare
- anoncareer0212 7y ago
  Honestly, they just don't have headcount to pull it off/the manager doesn't care. (hi maciej!) He lionizes it on Twitter as not jumping on the latest fads and gets kudos from Apple fans who conflate "new web API" with "slapdash nonsense Google is rushing to try and make the web beat apps" as if it's 2008 still.
- BlueTemplar 7y ago
  Remember how the first iPhone released without an app store and the plan was for developers to use web apps?
- dwaite 7y ago
  Progressive Web Apps aren't a standard but a Google web strategy term. Different browsers just have different priorities. For example, Apple prioritized service workers over web app manifests (which BTW are not yet a W3C recommendation). I can only assume this is partly because there have been so many failed attempts at static web app manifests in the past. Them prioritizing other features for earlier release doesn't mean that Web App Manifest support isn't in active development ( https://bugs.webkit.org/show_bug.cgi?id=158205 https://bugs.webkit.org/show_bug.cgi?id=158205 ).
  - throwGuardian 7y ago
    Missing in iOS Safari: 1. Binary WebRtc data channel messages 2. Browser notifications that a PWA can use 3. Web App storage beyond 50MB, and guarantee that the OS won't whimsically delete storage, despite being below 50 MB 4. You've already cited Web App Manifest There's probably a ton of other W3C standards not in compliance, but the above list is pretty damning.
eru 7y ago
> So, since Apple is the only company "buying" apps from developers, they could raise their cut as high as they want and developers can do nothing about it. No. Monopsony and monopoly don't work like that. See eg https://en.wikipedia.org/wiki/Monopoly_price https://en.wikipedia.org/wiki/Monopoly_price Basically, when a monopolists or monopsonists tries to abuse their position, they will shift less volume. There's a finite optimal cut that maximizes profits. So: when Apple increases their cut, they'll get fewer apps developed. Marginal app developers will go work on Wall Street or flip burgers etc.

m463 7y ago

so: - monopoly: the only seller - monopsony: the only buyer So app store customers can only buy from apple. And the app developers can only sell to apple.

olliej 7y ago
PlayStation, Xbox, Nintendo, sega, ... are the same: You can only sell for those devices with manufacturer licensing (that includes profit sharing and mandatory annoyances like “achievements”), and consumers can only buy games licensed by those manufacturers. The only difference is that PC developers haven’t experienced that before. It seems like this would have been established in the 80s/90s, so I’m surprised we’re getting to court - is there a change in judicial philosophy? That said, as far as I can tell every platform charged the same ~30% so I’m sure any company can simply point to the entire market as having established that under fair conditions (after all, if there was a cheaper platform surely they’d prioritize that?)
- simion314 7y ago
  Or maybe we could get side loading on console.
  - wheelie_boy 7y ago
    The fixed hardware that is long-lived and affordable is possible because the hardware manufacturer subsidizes it, especially at the beginning. If they were not able to rely on money from game sales, the hardware would be much more expensive. An alternative way for companies to make money manufacturing gaming hardware is to keep the prices low until there are a lot of great games for the system, and then jack up the hardware prices later on. So you might want a hardware standard that multiple companies could produce, which games could interface with and be portable between.. Eventually it just turns back into PC gaming.
    - mrep 7y ago
      And it is anti-competitive business model. By selling the consoles at such a low price that you cannot make a profit on them and then relying on a volume of game sales to effectively extract your rent from, it by design limits the number of companies that can compete that way because there is a limited number of game sales.

oleganza 7y ago

"Merchants at Macy's can only sell at Macy's". There are many options for you as an app developer. You can enjoy the scale and tooling provided by Apple, at one cost. Or you can write apps for any other computer at some other cost. Or you may choose not to be an app developer at all and do something else useful.

JamesBarney 7y ago
Monopsony doesn't mean option-less. Just because you can take a horse doesn't make standard oil not a monopoly.
- 52-6F-62 7y ago
  And that's where the argument is: Standard Oil had a monopoly on oil itself. Apple doesn't have a monopoly on phones. They've just dictated how their phone is going to work. The options aren't Apple iOS ecosystem, or no phone dev at all. There are numerous other smartphone companies out there. Apple isn't even close to the largest share of operating systems used in the market—by far (https://www.statista.com/statistics/266136/global-market-share-held-by-smartphone-operating-systems/ https://www.statista.com/statistics/266136/global-market-sha...)

vturner 7y ago

The key point I presume is the definition of "market" here; and I'm not convinced the market "software that runs on iOS" is so large that monopwhatever can be declared there and used to justify price control. Though as a thought experiment Apple is like a wealthy landed gentleman who sets up a well maintained outdoor market for the tradesmen to bring goods and the lower classes to buy them. If Apple owns so much land they are the only ones capable of setting up a large enough market, maybe we should regulate that gentleman's fees to the tradesmen? By virtue of people's need to be fashionable and the enormous cost to develop a smartphone and OS, Apple effectively controls enough "land" to warrant regulation. I don't know... Finally, this rationale also it seems causes a dilemma with B2B relationships. What if your market is quite specialized? Are you a "monopsony"?

e_y_ 7y ago
I don't think we need to divide the market into specialized segments (iOS devices, luxury smartphone, etc) to make the case against Apple. They have somewhere around 50% of the global market in terms of smartphone revenue (not devices shipped). For the App Store, which is what matters to developers, revenue was around $25 billion in the first half of 2019, vs $14 billion for Google Play Store. It's not literally mono- but as the article notes, just having a significant share of the market (I would say 30% would be enough) allows companies to dictate prices, and iOS has more like 2/3rds of the revenue. That's not even getting into all the restrictions that Apple puts on third-party developers, including categories of apps that you can't even make if you wanted to -- unless you're willing to sit out half the market, and assuming that Google doesn't do the same thing. As a software guy, I consider that a bigger deal than the % cut (which is not entirely unreasonable given how much of that goes to credit card fees for low-dollar-amount transactions)
- thaumasiotes 7y ago
  > They have somewhere around 50% of the global market in terms of smartphone revenue (not devices shipped). On a monopoly/monopsony theory, devices shipped is the relevant metric, and revenue isn't.

lilyball 7y ago

Something odd about this argument is the fact that 30% is pretty much an industry standard. Apple isn't jacking up the price.

cjfd 7y ago
There is more going on besides price. The review process is also completely arbitrary. I don't like the whole thing that the only place to get apps is the app store. I will never buy any apple device as long as that is in place.
- lotsofpulp 7y ago
  That’s exactly what keeps me buying Apple for my family and I. I credit their locked down App Store with saving me from spending hundreds of hours of my time dealing with malware over the last 10 years.
  - strbean 7y ago
    I've used android phones for a decade now and never once been affected by malware. If the issue is kids installing shady apps, you should probably use a parental lock for that.
    - lotsofpulp 7y ago
      The issue is people clicking on every link that comes their way via email or whatsapp. And since I can’t stop them from clicking them, my only solution is to have them use iOS devices.
smilespray 7y ago
I thought Apple was the originator of the 30% cut for app stores, and everybody else followed suit?
- stuaxo 7y ago
  Yes, this is true. People forget that there were phones before the iPhone decided all phones would be rectangles with touchscreens. Those phones ran apps and games, and you downloaded them from app stores... there was in fact a cambrian explosion of app stores, when you made software you had to publish it to hundreds of them. I can't remember the %, but it seems unlikely, in the fact of all that competition that it was as high as 30%.

GeekyBear 7y ago

Next up: Nintendo, Microsoft and Sony's game consoles?

notduncansmith 7y ago
As the only buyer of goods sold to me, and the only seller of goods sold by me, I suppose I'm running a monopsony and then some. May as well add me to the list. On a serious note: would a judgement in this case have immediate impact on other companies, or would it set a precedent? Also, what are the proposed damages? How is Apple supposed to repair the situation? Honestly, this feels entirely arbitrary (Apple is far from the only one that leverages their position as digital goods market makers). I'm not saying conspiracy or anything, but I wonder if this is related to the POTUS's vendetta against AAPL.
- stuaxo 7y ago
  It's not arbitrary, the appstore is a de-facto monopsony, the ordinary user doesn't install apps from anywhere. Most Android phones come with an alternate appstore installed (e.g. Samsung come with their own one as well as google play) and you can easily install others. To install alternates on the iPhone you have to root it.
  - Razengan 7y ago
    That applies to game consoles too, since the 1980s.
    - ernesth 7y ago
      In the 80s, the game console makers did not operate the store where you were buying games. Even, you could buy second-hand games without Atari or Nintendo receiving any part of the fee!
      - scarface74 7y ago
        Even back in the 80s, the console makers “controlled distribution”. Nintendo forced third parties to use their manufacturing facilities and they all force third parties to distribute their haves with a license key. Console makers have always forced third parties to pay a fee to distribute their games.

_-dobe-_ 7y ago

In the EU we had a ruling that forced Microsoft to offer choices for web browsers when installing Windows for the first time. I.e. IE wasn't set as the default browser by default. They were forced to do this for 5 years, I think so people become aware that there are other choices out there besides IE. They should do the same for the AppStore. When you set up your iPhone, it should give you an option of AppStores, not just the Apple one.

nobodyshere 7y ago
It would be just enough to allow people to install third party apps without having to use app store.
- BlueTemplar 7y ago
  Lol, how is that working out on Android ?
  - itg 7y ago
    Working out great with F-Droid :)
    - cmsj 7y ago
      Working out great for F-Droid. FTFY ;)
  - swebs 7y ago
    Pretty well. What exactly are you implying?
  - nobodyshere 7y ago
    Just fine, actually.
Zenst 7y ago
But you have that choice at purchase. Hence this aspect does feel akin to somebody buying a Tesla and the customer expecting the ability to switch to diesel, petrol instead of being stuck with electric. Also remember how long that Microsoft rulling took and what it actualy ended-up being in the end - which for most was an annoying popup for those who already knew how to change web browsers. These days what happens is EU will start the long process and before it hits court some agreement is made. But the difference for Android and Apple is that Android is `open source`, IOS is not. Buy an android phone and change the app store - kinda entails rooting the phone in most if not all cases in some way and that for most phone sellers does void the warranty. So say Apple did offer you to change app store - but in doing that voided your warranty, which would be fair from their perspective. May even be case of, well you have non Apple app store - no Apple services for you as we do not trust your device as you have modified it - enjoy. Again, something that they could justify and in a way which would be fair from their perspective. After all, nobody wants to open up a system in a way that may expose it to outside security or stability issues now. Remember Apple is more about reputation than the products, though they do go hand in hand, it is the reputation that carries them as much if not more than any individual product. Another way to view this is a hotel has a nice inhouse restaurant, should they be forced to allow McDonalds to open a store in their hotel or leave that choice to the guests who can go to another hotel if they want that experience.

dfsdfklgjljg 7y ago

This title is complete bs, and the court ruling (linked in the article) only mentions monopsony very briefly. The question addressed by the court is regarding who is the cause of any overcharging to the customer. The opinion argues that because Apple is exclusively dealing with the customer, it is able to sell on whatever terms it wants to the customer, so any overcharge is their fault. The dissent argues that because the developer has the power to dictate the price of the app on the store, any overcharge the customer pays is directly caused by the developer, because the developer could have chosen to sell the app at a fair price. It is true that the ruling mentions that developers may sue apple, but that was never in question. Both the opinion and dissent agree on that fact.

dmos62 7y ago
Off topic: I like your nickname. In that vein, here are two variations of the same sequence of keypresses shifted up and down respectivelly: "erweriotuout" and "cvxcv,.bm.mb". While something like "4694372" is motorically meaningful to a person typing it on the keypad, or to someone watching him do it, it translates to the screen space as gibberish. Another way to put it is that when typed it has an obvious structure, but when read on the screen, the structure is prohibitively difficult to discern. That's interesting, because it's all too easy to forget that the computer as we know it today can interface with only a very small portion of our faculties.
abduhl 7y ago
This is an unfair treatment of the decision. The question addressed by the court isn’t “who is the cause of supracompetitive prices?” but rather “if Apple is the cause, can consumers sue?” Apple’s defense argued that only the app developers could sue under a certain view of the precedent where Apple’s role as a pass through is essentially transparent to the law. Their argument attempted to shift who the customer was ultimately doing business with: Apple or the app developer. One of the theories underpinning the precedential rule is that not stopping impacted downstream parties from suing may potentially subject Apple to multiple liability. Apple argued that they were already liable to app developers so shouldn’t also be liable to consumers. The Court is saying here that that theory does not hold water because Apple, as a middleman, may be liable to both upstream and downstream parties (damages from app developers and consumers, respectively).

pornel 7y ago

Apple made themselves an exclusive payment provider for all iOS in-app subscriptions and payments for digital products. Merely mentioning anywhere that cheaper payment options exist is an AppStore ToS violation.

zionic 7y ago
I generally support Apple but this is inexcusable. Regulators need to come down hard on this kind of payment monopoly.
- mikhailt 7y ago
  It makes perfect sense to me. If I was a businessman running a store, I definitely would NOT allow anyone that wants to sell in my store any mentions that they could be found cheaper elsewhere or get a discount somehow that could reduce my cut.

alfonsodev 7y ago

I think 30% (15% after a year) would be all right if there was another way for the user to install the app by downloading from vendor website. I know part of the value proposition of Apple is actually not letting user download apps from sites, but then something like Udemy model where the cut varies if you bring the user or they bring the user, could make sense. Then Apple taking the cut as referral wouldn't feel that bad.

braythwayt 7y ago

Amusingly, there are two sets of people arguing about why Apple is bad, and each have their own argument: 1. Android sells more, and offers more variety of mobile and wearable devices than Apple. And here’s the data to prove it. 2. Apple is a monopoly/monopsony and should be forced to allow more user choice of apps, allow sideloading, lower their prices, lower their app store cut, &c. Which one is is? Apple is like Tesla. They don’t sell more cars than anyone else. They don’t have a stranglehold over vendors. They sell more luxury cars than a bunch of other people. And while you see lots of Teslas on the road, you still see more F-150s. Their market is insanely profitable, and for many developers, their little market is highly profitable. But how is it their fault that app developers don’t shun them for Android-only, or Windows (do they still make a phone OS?) Apple make their own devices. They don’t license an OS and then use shenanigans to force vendors not to offer consumers a choice, like Microsoft did. They make a desirable product, and offer developers a desirable market. But they don't have enough of the market to do whatever they like. They can’t charge $5,000 for a phone and succeed because of network effects. Android phones can call and text Apple phones. They don’t tell developers that apps must be iOS-exclusive to be in the app store. Apple’s current success is exactly what the free market is for. People may grumble about the price of a phone or the keyboards, or the app store cut, but those who pay it do so because the value is there, not because of arbitrary constraints. They aren’t Facebook. Nobody has to buy an iPhone to keep in touch with all their friends who have iPhones.

Quarrelsome 7y ago
> They don’t tell developers that apps must be iOS-exclusive to be in the app store. They do force us to build the package on their devices though. Which is a wholly arbitrary demand which is frustrating to map into a build process that is already automated on the cloud. Prior to services that rent out Apple devices its an awkward fit. They're very aggressive with their posturing and they ruthlessly exploit the power they have. Just reading the dev EULA in full is evidence of that.
- scarface74 7y ago
  And for most of the history of the consoles you had to have overpriced developer machines. Are you proposing that Apple be forced to port XCode to Windows?

mikece 7y ago

Having Apple take a 30% cut of sales in exchange for not having to run an e-commerce operation is far less odious than having to pay $5,000 for a MacBook Pro which has less RAM, a smaller SSD, and less powerful processor than $2,500 worth of Dell, Lenovo, HP, or Acer gear. The hardware is the real rip-off to me. I would gladly pay a reasonable fee if I could write my apps in VS Code on Debian and then ship the code to an Apple service to compile the code.

rimliu 7y ago
There is a more to laptop than just raw numbers of RAM, SSD and CPU. Paying six-digits for the car that has same number of wheels as Tata — outrageous.
- mikece 7y ago
  The inability to augment the MacBook Pro is a bigger pain. With my 3 year old Lenovo P50 I can swap BOTH NVMe slots, upgrade the RAM, etc. With the MacBook Pro I can only buy USB-C cables and adapters. Your point about six-figure cars is a good one. I can either spend $90k to $120k on a car to drive to work that's super quiet on the inside, or spend $12k on a used Accord and another $400 on the top-flight Bose noise-cancelling headphones and achieve the same level of quiet on my commute. The way Apple builds their hardware you can't modify it to improve how it works for you; the only option is to take it or leave it.
  - danaris 7y ago
    You can use the same Bose headphones with your MacBook, y'know, and they aren't any more a modification of the MacBook than they are of the Accord. You can also plug in external Thunderbolt SSDs that are effectively indistinguishable from an internal in terms of speed. Your analogy kinda falls apart there. But if upgradeability and replaceable parts are your #1 concern, then...yeah, you're not in the target market for a Mac laptop. So that means that it's unlikely you'd ever have been looking at having a Mac be your primary machine in the first place—if you needed one to do development on, it would be a secondary machine, where you'd probably set up your dev environment, check out the code, compile it, and test it, then go back to the computer you actually enjoy using for the rest. Maybe look into a Mac Mini?

base698 7y ago

Who writes like this: > If the idea of monopoly were Beyoncé, then monopsony would be Solange. They're close sisters, yet their styles are pretty different. And while only one of them has been famous for a long time, the other one seems to be getting a lot of attention more recently.

Japhy_Ryder 7y ago
An intern at NPR trying _way_ too hard, probably.
untog 7y ago
People who try to make tech writing relatable to a wide audience. Is it really so bad?
- splintercell 7y ago
  Yes.
  - untog 7y ago
    Counter point: no.
    - base698 7y ago
      I'd argue it's an attempt to appeal to 30 and 40 somethings who feel out of the cool demo. It's praying on their insecurities by allowing the reader to think, "I know Beyonce, I'm still cool." Definitely isn't an appeal to wider community--specifically targeted to NPRs demo.
      - untog 7y ago
        I’d argue... not that. It’s a pop culture reference. Beyoncé is known by people of pretty much every age group. Are you saying Gen Zers wouldn’t get the reference? Because I’m not convinced by that at all.

generalpass 7y ago

Modern definition of all definitions in the United States: See: SCOTUS decisions.

LockAndLol 7y ago

> But Kavanaugh went further. He said Apple could also be sued by app developers, most of whom are forced to fork over a big percentage of their potential revenue, "on a monopsony theory." Is it possible for users to easily install alternative app-stores? Wouldn't that solve the problem?

sangnoir 7y ago
> Is it possible for users to easily install alternative app-stores? No, not on iOS > Wouldn't that solve the problem? Yes, because Apple will cease to be a monopsony for iOS apps. That is, if SCOTUS rules that Apple does have a monopsony. Kavanaugh only suggested they might have.

Animats 7y ago

If you don't know what monoposony is, ask a farmer.

andoju 7y ago

Arstechina published similar article regarding Apple's monopsony in 2005...nothing changed from last 15 years https://arstechnica.com/gadgets/2005/09/1190/ https://arstechnica.com/gadgets/2005/09/1190/

runeks 7y ago

So, via legislation (e.g. DMCA), we give Apple the right to tightly control the use of its “intellectual property” (the iOS software), which results in Apple being the only entity that can legally offer iOS apps for purchase. And now, via legislation, we want to remove this power, first given to them via some other legislation. How about we critically assess current legislation, instead of just piling more on top of it?

musicale 7y ago

How do Apple's licensing and payment policies for the (iPhone, iPad, Apple TV) compare with those of other game and streaming device manufacturers?