Things to Note about Apple’s App Store Issues
Things to Note about Apple’s App Store Issues
Apple has recently been the subject of debate. Though monopoly practices in its App Store are more contentious. Apple isn't alone in this. Microsoft used to be a hot topic. Microsoft's growth is governed by court orders and laws. Let's look at five recent Apple issues.
1. The Microsoft of Two Decades Ago
This week marks the 20th anniversary of Microsoft's settlement with the DOJ. In the case of Windows and Internet Explorer bundling, they were successful. Microsoft avoided being split, but it paid the price later.
To comply with anti-monopoly laws, Microsoft halted its previous expansion. This aided the software industry's growth. The Gates era ended and was replaced by the Ballmer era.
Microsoft dominated PC software before being sued for antitrust. It was the world's most valuable stock. This year, Apple faces the same regulatory challenges as Microsoft did 20 years ago.
Apple, the once-proud smartphone giant, is gradually giving in to government and developer anti-monopoly scrutiny. This year's iPhone is Apple's most significant hardware release in fifteen years. The App Store came a year later. Apple's growth among app developers is due to the App Store. It helps the iOS ecosystem grow and prepares the iPhone for rapid expansion.
iOS is undeniably the most valuable mobile Internet platform. Last year, the iOS ecosystem platform generated $643 billion. This is a 24% increase year-on-year. Apple App Store sales reached $64 billion, up 28% year-on-year.
Apple, on the other hand, sells and distributes mobile apps. So Apple charges developers a 30% “Apple Tax”. Unlike Android, iOS users can't get apps from other places. Only the App Store sells and distributes apps. Apple must get a cut of developers' profits.
2. For Ten Years, the Apple Tax Has Been Under Fire
The fight against the “Apple Tax” (30 percent commission) has been going on for a while. Apple has always insisted on a 30% share ratio. Of course, individuals, small businesses, and large corporations constantly sue Apple.
Apple is adamant about justice. They can take years and even involve appeals to the US Supreme Court. Amerikans have been suing Apple since 2011 to break its app distribution monopoly. Americans also believe Apple's 30% app store share drives up prices.
Apple appealed to the Supreme Court after losing in the Federal District Court and the Court of Appeals. In 2019, the Supreme Court voted 5:4 to approve the class action. “If retailers engage in monopolistic behavior and cause consumers to pay higher prices than competing markets,” the Supreme Court wrote in its ruling.
The Supreme Court did not directly rule that Apple is a monopoly, but only that consumers can sue in class. This class action antitrust case has been remanded. Apple can now continue to pursue the lawsuit and appeal to the Supreme Court. This could go on for a decade or more.
3. Apple Is Pressed To Make Arrangements
Apple led the way in 2017 in giving to China. After that, Apple defined reader behavior as "in-app purchases" for tax purposes. So WeChat disabled iOS reward. There was much debate in China over this rule. Chinese users see online rewards as gifts.
Three months later, Apple clarified its App Store policy and removed the reward commission requirement. But it requires all platforms to give full rewards to recipients. Apple will charge a commission if you give digital content or services as a gift.
In the eyes of many analysts, Apple considered the massive Chinese market. US antitrust pressure is the real regulatory crisis.
4. Is Apple Actually Changing?
Apple recently lowered its “Apple Tax” rate. On August 26, Apple announced a $100 million class-action settlement with American small app developers. The Northern District of California Federal District Court must first approve the settlement.
The $100 million will go to the Small Developer Assistance Fund. Recipients earn less than $1 million annually in the Apple App Store. Each developer receives $250-$30,000.
The company agreed to “clarify” its app store policies, allowing developers to use emails with users' consent.
This settlement was reached two years ago. Several small and medium-sized developers sued Apple in June 2019 in Northern California. Apps and in-app purchases are claimed to be abused by Apple.
Apple Has Spent A Lot
Apple is represented by Hagens Berman. They sued Apple in 2016 for forcing publishers to raise e-book prices. The lawsuit was settled for $560 million.
Apple also lost in Korea. It amended the “Telecom Law”. So the app store must accept multiple payment methods. Clearly, this bill is aimed at them. After the new law takes effect, Apple must not only relax payment restrictions but also speed up the app review process. Of course, it can't remove apps at will.
Apple also has an agreement with the Japanese FTC (JFTC). Netflix, Spotify, Kindle, and other “reading apps” can now accept payments directly.
Apple Does Not Have Any Concession in the Important Gaming Market
Apple's app store profits come from games. Apple's app store revenue was 81 percent games in 2016, according to Epic. Apple CEO Tim Cook admitted in court that games drive most App Store revenue.
Apple's recent concessions to small developers and “reading” app developers are thus strategic and soft. App Store revenue losses are not expected to be in the billions. But gaming apps and services may impact Apple's earnings immediately.
5. Where Are The Lawsuits Against Apple Filed?
Markets and governments eat differently. Apple has a monopoly in some markets but is challenged in others. Apple is being investigated for antitrust violations in the EU, UK, India, and the US. The European Commission announced last year that it was investigating Apple App Store share and competitor suppression.
What do coders need? On Twitter, Spotify CEO Daniel Ek stated, “We want to restore competition, not make a concession through arbitration.” Epic's US App Store monopoly lawsuit has been heard and awaits trial.
