newswire: 7/9/2020
- As iPhone sales slow, Apple is shifting gears from selling products to services, which includes App Store fees. Both in Europe and in America, these platform fees are pushing Apple into the crosshairs of antitrust action by consumers and by government. (The Economist)
- NH: I've been saying for nearly two years that the threat of antitrust action against the tech giants--now that both parties are onboard the anti-monopoly bandwagon--is rising fast. (See "Declining Business Dynamism: A Visual Guide.") Now it looks like Apple may provide the first bellwether test case.
- What's the problem? Apple charges app developers a 30% commission for electronic payments (and often for app downloads) made from its platform. Consumers and app developers claim that this practice is abusive since there are few other convenient platforms on which to complete the transaction. Big app firms like Spotify, Tile, Kobo, the Match Group, and others are irate.
- Last May, the Supreme Court allowed a large consumer suit against Apple to go forward. Last August, the DOJ announced it was opening a wide-ranging antitrust inquiry against major digital platforms like Apple's and Google's. And then a couple of weeks ago, the EU launched two new investigations into Apple's conduct, one looking into overpricing and the other into discriminating in favor of its own offered services.
- No, Senator Elizabeth Warren isn't going to the White House. But the gist of the current case against Apple--that a "platform utility" should be broken up or regulated and should be unable to participate on its own platform--sounds like it's right from her playbook.
- And don't look to GOP senators to rush to Apple's defense. Some of them sound just like Warren. Here's the hard-line young Missouri Republican, Josh Hawley: "What passes for innovation by Big Tech today isn’t fundamentally new products or new services, but ever more sophisticated exploitation of people." Don't look for fellow tech titans, either. Microsoft President Brad Smith recently agreed that Google and Apple paywalls deserved antitrust scrutiny--and added that what they're doing is much worse than anything Microsoft did when it was formally sued by Justice Department nearly twenty years ago.
- Here's the challenge for Apple. The world's affluent customers are already saturated with its phones. Its shipments just aren't rising any more. Nor, apparently, is Tim Cook coming up with the next big thing. So there only real future is expanding digital services. And that means lots of toll-gate fees designed to take full advantage of its incumbency.
- In response to the Supreme Court's ruling last fall, Apple responded by stating that "we work hard every day to make our [online] store the best, safest and most competitive in the world." Sure, in one sense this is true: Apple wants to beat the competition that's out there. But in another sense it's obviously not: As Peter Thiel observed in Zero to One, no CEO in their right mind wants competition: The goal of every sane entrepreneur, he declared, is to build a "monopoly business."
