Apps: An assault on Apple’s walled garden
Apple’s multibillion-dollar App Store is on the defensive, said Malathi Nayak and Mark Gurman in Bloomberg.com. Last week, the European Union charged Apple with violating antitrust laws by requiring music-streaming apps such as Spotify to use its in-app payments system—a charge that could bring a multibillion-dollar fine. But an even more pressing test for Apple is the landmark trial that began this week of the case brought by Epic Games, maker of the popular video game Fortnite. U.S. District Judge Yvonne Gonzalez Rogers will consider “whether Apple has a legitimate reason” to mandate that in-app purchases be made “only through its App Store.” An Epic win could “force Apple to roll back its commissions on the Fortnite app,” encouraging other developers—who pay as much as 30 percent of sales to Apple— to “demand similar concessions.”
Epic’s argument is actually “more subtle” than saying the App Store is a monopoly, said Russell Brandom in TheVerge.com. It doesn’t question Apple’s control over its operating system, iOS, but says Apple is “using the market power from that monopoly to dominate the secondary market for app distribution.” One solution to this would be to allow competing app stores on the iPhone. But Apple considers this a fundamental threat to iOS. Much of “Apple’s genius”—and one reason, why, for instance,
Apple devices are less susceptible to malware—has been its ability to carefully control its “walled garden.”
Epic has played up a story of how it’s standing up for small companies against a giant, said Tim Higgins and Sarah Needleman in The Wall Street Journal, even calling its effort “Project Liberty.” The conflict started when Epic’s executives “hatched a plan” to allow thirdparty developers to create new content to boost Fortnite’s waning appeal. To pay those creators, Epic felt it needed to “wrest itself from Apple’s fees and control.” It asked Apple CEO Tim Cook for “an exemption from App Store rules,” while at the same time surreptitiously adding alternative payment systems to both its Apple and Google apps. Epic’s plan all along seems to have been to “draw Apple into a larger conflict” where it could paint the company as a threat rather than a friend to developers.
Developers don’t want to be in the middle of this, said Bruce Gustafson in InsideSources.com. The narrative is that “app stores are ‘taxing’ the little guy to feed their own greed.” But Epic isn’t a little guy. For emerging apps, the costs are justified because the App Store lets new apps reach a huge market. App developers recognize that “when billion-dollar companies say they’re fighting for the little guy, it’s usually the little guy that comes out bruised.”