Prices are signal, they must match the cost of the product. Otherwise the customer can't properly decide whether it's worth it. Subsidizing phones with app rev

Prices are signal, they must match the cost of the product. Otherwise the customer can't properly decide whether it's worth it. Subsidizing phones with app revenue means customers buy phones even though the benefit they gain from them is lower than the cost of the phone. Conversely, they don't buy apps when the benefit would have outweighed the cost.