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If a company sells coffee both in a shop and on the street it would have to charge 43% more to the in-shop purchaser to get the same revenue, even though the us

If a company sells coffee both in a shop and on the street it would have to charge 43% more to the in-shop purchaser to get the same revenue, even though the user gets exactly the same experience. Would you call that a tax or would you call that rent?

paulgb 6y ago
I'd say the difference is that the tax is not uniformly charged by a middleman. If a mall made its profit by charging 43% on every purchase, I would think of it (informally) as a tax.
- vr46 6y ago
  But suppose that mall didn't charge for anything else? Electricity, water, security, gravity all came free, and you just paid only if you made a sale? (Ok, there's a $100 developer fee and the cost of a Mac and iOS device.) Maybe Apple should offer two deals to publishers: 1) Pay £1,000,000 up front and keep all the revenue 2) Pay As You Earn.
turbinerneiter 6y ago
At least you are calling Apple's behavior what it is: rent-seeking.
- vr46 6y ago
  Well, kind of... Conventionally, rent-seeking is a poor quality activity which doesn’t generate any new wealth, it just transfers it. But that’s not the case here, at least from my perspective, as Apple invests huge amounts in developing their hardware and software and millions of developers around the world (ok, maybe thousands, I don’t know) and their families have benefited from this. It’s not like they’ve inherited a vast real-estate portfolio that was amassed through violence and war (see British aristocracy, est. 1066) and have invested relatively little into it.
  - asimpletune 6y ago
    I’m not sure why this is being downvoted. A huge consideration into whether Apple is truly anti-competitive should be if this has caused harm to consumers.
    - DangitBobby 6y ago
      How is harm measured, exactly? I feel harmed when a company makes huge margins on me from something.
    - webmaven 6y ago
      > I’m not sure why this is being downvoted. A huge consideration into whether Apple is truly anti-competitive should be if this has caused harm to consumers. Prior to the 1980s, monopolies were considered bad (or at least extremely dangerous and suspicious) by default, and leveraging one to privilege your entry into another market was a huge no-no (though I'm not sure leveraging a monopoly to create a monopolized adjacent market would always have been seen the same way). Robert Bork's theory of "consumer harm" as the guiding light of anti-trust enforcement (and further conceiving of "harm" mostly in the form of higher prices, or at least "value for money") has given corporations too much wiggle room and consequently led to a lot of contorted legal and economic arguments, substantially reducing antitrust scrutiny and enforcement (which was the whole point, AFAICT).
  - projektfu 6y ago
    It kind of is like rent seeking though. Apple has developed a product with some software but not the software we call Fortnite. They are now acting similar to a company like ExpressScripts, who created an organization in the form of a platform so they could extract rents from both the drug makers and the (insurance company) buyers. If Epic keeps the game off iPhone, there’s some overall loss to consumers. If they keep prices the same but pay the Apple fees, they pay rent to Apple. If they raise prices across the board to compensate, consumers pay rent to Apple and there is some deadweight loss because of a likely reduction in demand.
Okawari 6y ago
If there was only one entity owning all the houses, and to operate a business you needed space, then the terms rent and tax would be practically interchangeable
- simonh 6y ago
  One entity doesn’t own all the buildings though. Google, Microsoft, Nintendo, Sony, etc all have their own malls and properties you can go to to get your Fortnite. It’s up to the customer which they go to. If iOS was a monopoly, how is it possible to get Fortnite on all these other platforms? That just doesn’t make any sense. The only monopoly Apple has is on selling and licensing their own products.
  - Okawari 6y ago
    Fair Point but I from the viewpoint of someone who has already purchased an iOS device, Apple is the only mall. That is the problem, not the existence of the stores themselves. In the case of Sony, Microsoft and Nintendo they do operate the same kind of platforms which are equally scummy in my opinion, but honestly not on my Radar as I don't really play console games. In the case of Google I would like to disagree, if only for the fact that I have options as where to procure my software and run it in a manner that is intended, but I must concede that it is more cumbersome that I would like. That is the key difference that makes what Apple does so egregious, and why I don't really have much problems with Google at the current time. For me it is not about the fees or the stores, its that Apple in practice forbids anyone in the digital marketplace to do business with any of their consumers unless it goes through them, as they own the app store and for the average user, their devices only run apps that are on the app store. Epic is in no position to reject the proposition of using Apple's payment service or their store entirely and still do business with the million of customers that are playing Fortnite. Apple should be definitely be able to charge for the access to their App store customer base, but Epic should be allowed to reject that price and still be allowed to do business with the iOS user base on their own terms, just like they did on Android with side loading before striking a deal to be on the Google Play store.
    - 6y ago
dogweather 6y ago
I don't think that works: The customer gets vastly different experiences because in a shop you're benefitting from the rented space's protection from weather, etc. The same is true in the case of the iPhone vs. Desktop + web experience: it's different. One way that highlights the added benefit of the iOS app store is that it's safer than the open web.
- rieter 6y ago
  But you can purchase a Spotify subscription on a different platform (say, Web), and then use your account on iOS, enjoying the same experience as every other iOS user. The only part of the experience that's different is the one time sign-up process, for which Apple wants to charge a permanent 30% fee for the entire duration of the subscription (even if after that you happen to primarily use Spotify on Desktop or Android). This puts Spotify in a weird spot. Their only options are: 1) Charge more to iOS users. This seems unfair to them and of course they will complain and blame Spotify when they find out they've been overcharged since Apple explicitly forbids informing customers about their fees. 2)Charge ~10-20% (depending on the share of iOS subscribers) to users of all platforms to compensate for Apple's fees. Why should I as an Android user pay extra so that someone else can make purchases on an iPhone? 3) Status quo - disable subscriptions on iOS entirely, make customers jump through the hoops to figure out how to purchase a Spotify subscription. I don't have the exact figure, but I imagine that quite a few Spotify customers use their subscriptions on multiple platforms. Apple just wants to take a permanent 30% cut if the the initial subscription was handled through an iOS app. Maybe this isn't such a huge problem for game DLC where there is no fixed unit cost, but companies like Spotify need to pay royalties to music labels, etc.

paulgb 6y ago

I'd say the difference is that the tax is not uniformly charged by a middleman. If a mall made its profit by charging 43% on every purchase, I would think of it (informally) as a tax.

vr46 6y ago
But suppose that mall didn't charge for anything else? Electricity, water, security, gravity all came free, and you just paid only if you made a sale? (Ok, there's a $100 developer fee and the cost of a Mac and iOS device.) Maybe Apple should offer two deals to publishers: 1) Pay £1,000,000 up front and keep all the revenue 2) Pay As You Earn.

turbinerneiter 6y ago

At least you are calling Apple's behavior what it is: rent-seeking.

vr46 6y ago
Well, kind of... Conventionally, rent-seeking is a poor quality activity which doesn’t generate any new wealth, it just transfers it. But that’s not the case here, at least from my perspective, as Apple invests huge amounts in developing their hardware and software and millions of developers around the world (ok, maybe thousands, I don’t know) and their families have benefited from this. It’s not like they’ve inherited a vast real-estate portfolio that was amassed through violence and war (see British aristocracy, est. 1066) and have invested relatively little into it.
- asimpletune 6y ago
  I’m not sure why this is being downvoted. A huge consideration into whether Apple is truly anti-competitive should be if this has caused harm to consumers.
  - DangitBobby 6y ago
    How is harm measured, exactly? I feel harmed when a company makes huge margins on me from something.
  - webmaven 6y ago
    > I’m not sure why this is being downvoted. A huge consideration into whether Apple is truly anti-competitive should be if this has caused harm to consumers. Prior to the 1980s, monopolies were considered bad (or at least extremely dangerous and suspicious) by default, and leveraging one to privilege your entry into another market was a huge no-no (though I'm not sure leveraging a monopoly to create a monopolized adjacent market would always have been seen the same way). Robert Bork's theory of "consumer harm" as the guiding light of anti-trust enforcement (and further conceiving of "harm" mostly in the form of higher prices, or at least "value for money") has given corporations too much wiggle room and consequently led to a lot of contorted legal and economic arguments, substantially reducing antitrust scrutiny and enforcement (which was the whole point, AFAICT).
- projektfu 6y ago
  It kind of is like rent seeking though. Apple has developed a product with some software but not the software we call Fortnite. They are now acting similar to a company like ExpressScripts, who created an organization in the form of a platform so they could extract rents from both the drug makers and the (insurance company) buyers. If Epic keeps the game off iPhone, there’s some overall loss to consumers. If they keep prices the same but pay the Apple fees, they pay rent to Apple. If they raise prices across the board to compensate, consumers pay rent to Apple and there is some deadweight loss because of a likely reduction in demand.

Okawari 6y ago

If there was only one entity owning all the houses, and to operate a business you needed space, then the terms rent and tax would be practically interchangeable

simonh 6y ago
One entity doesn’t own all the buildings though. Google, Microsoft, Nintendo, Sony, etc all have their own malls and properties you can go to to get your Fortnite. It’s up to the customer which they go to. If iOS was a monopoly, how is it possible to get Fortnite on all these other platforms? That just doesn’t make any sense. The only monopoly Apple has is on selling and licensing their own products.
- Okawari 6y ago
  Fair Point but I from the viewpoint of someone who has already purchased an iOS device, Apple is the only mall. That is the problem, not the existence of the stores themselves. In the case of Sony, Microsoft and Nintendo they do operate the same kind of platforms which are equally scummy in my opinion, but honestly not on my Radar as I don't really play console games. In the case of Google I would like to disagree, if only for the fact that I have options as where to procure my software and run it in a manner that is intended, but I must concede that it is more cumbersome that I would like. That is the key difference that makes what Apple does so egregious, and why I don't really have much problems with Google at the current time. For me it is not about the fees or the stores, its that Apple in practice forbids anyone in the digital marketplace to do business with any of their consumers unless it goes through them, as they own the app store and for the average user, their devices only run apps that are on the app store. Epic is in no position to reject the proposition of using Apple's payment service or their store entirely and still do business with the million of customers that are playing Fortnite. Apple should be definitely be able to charge for the access to their App store customer base, but Epic should be allowed to reject that price and still be allowed to do business with the iOS user base on their own terms, just like they did on Android with side loading before striking a deal to be on the Google Play store.
  - 6y ago

dogweather 6y ago

I don't think that works: The customer gets vastly different experiences because in a shop you're benefitting from the rented space's protection from weather, etc. The same is true in the case of the iPhone vs. Desktop + web experience: it's different. One way that highlights the added benefit of the iOS app store is that it's safer than the open web.

rieter 6y ago
But you can purchase a Spotify subscription on a different platform (say, Web), and then use your account on iOS, enjoying the same experience as every other iOS user. The only part of the experience that's different is the one time sign-up process, for which Apple wants to charge a permanent 30% fee for the entire duration of the subscription (even if after that you happen to primarily use Spotify on Desktop or Android). This puts Spotify in a weird spot. Their only options are: 1) Charge more to iOS users. This seems unfair to them and of course they will complain and blame Spotify when they find out they've been overcharged since Apple explicitly forbids informing customers about their fees. 2)Charge ~10-20% (depending on the share of iOS subscribers) to users of all platforms to compensate for Apple's fees. Why should I as an Android user pay extra so that someone else can make purchases on an iPhone? 3) Status quo - disable subscriptions on iOS entirely, make customers jump through the hoops to figure out how to purchase a Spotify subscription. I don't have the exact figure, but I imagine that quite a few Spotify customers use their subscriptions on multiple platforms. Apple just wants to take a permanent 30% cut if the the initial subscription was handled through an iOS app. Maybe this isn't such a huge problem for game DLC where there is no fixed unit cost, but companies like Spotify need to pay royalties to music labels, etc.