Apple's exclusionary app store scheme: An existential moment for the DMA

https://cepr.org/voxeu/columns/apples-exclusionary-app-store-scheme-existential-moment-digital-markets-act

by malermeister • 2 years ago

61 28 2 years ago

isodev• 2 years ago

The adoption of this contract by a monopoly [Apple] distributor at the moment it is faced with entry from rivals looks like anticompetitive conduct.

Of course it is anticompetitive and it's unfortunate that Apple is taking this stance. It would have helped a lot if consumer and market protection was also working in the US as to apply pressure on both fronts.

threeseed2• 2 years ago

This is because on the App Store paid apps subsidise free apps.

Apple may just end up charging the $0.50 technology fee the same way for all developers in the EU. Which would hurt apps like Deliveroo but at least would be fair to all of the app stores and satisfy the rules.

Because the EC, US etc have never that Apple can't charge a fee. And it would be extraordinary to see the impact on a number of businesses e.g. consoles if they did.

kryptiskt• 2 years ago

Maybe the next step is to react to the malicious compliance and be crystal clear that app stores can't charge any mandatory fees whatsoever, they just have to run it at a loss or deliver services that their customers actually want to pay for, being a platform is rewarding in itself, they don't need that money, it's just their out-of-control greed that craves it.

Anyway, the solution is to not back down and make these execs understand that any heel-dragging will be met with even harsher measures that will cost them dearly. Any threats to leave the market is empty, the unlimited greed that make them bullies make them unable to do that.

threeseed2• 2 years ago

deliver services that their customers actually want to pay for

Like selling data about which apps people are downloading to Meta.

Look forward to that utopia.

Hugsun• 2 years ago

This is because on the App Store paid apps subsidise free apps.

The fee is only for apps hosted outside of Apple's app store. Those apps only cost Apple because of Apple's new self imposed rules.

The cost to Apple is also proportional to the number of apps, not the number of users.

The pricing of these rules is clearly intended to stifle innovation while maliciously complying with the DMA, as the article explains.

dkjaudyeqooe• 2 years ago

The key thing for the EU at this moment and more generally with its Big Tech regulation is establishing credibility. It's important that the corporates fear EU sanctions and take EU regulation seriously.

What the EU needs to do, even though it's not in its nature, is to make an example of someone. Apple would be the perfect target. If it did this it could have a lighter touch going forward because the corporates might self-regulate more, knowing they risk serious consequences.

Probably won't happen but we'll see.

rjzzleep• 2 years ago

The EU unfortunately spent the last two years destroying it's credibility on the world stage. In both its legal institutions as well as its financial systems.

We are indeed at a critical moment in the sense that they might still be a small window to turn things around, but as it stands, it seems like a parasite cannibalizing its host. Already we are seeing places that just don't care about complying with EU regulations anymore.

Personally I had a little flicker of hope that they would force Apple to open its ecosystem, but it seems like that was just wishful thinking...

mjburgess3• 2 years ago

1) the "EU" is not homogenous at any level. The regulators of tech seem much more anti-trust inclined than others.

2) Even if companies withdraw from the EU, the EU can still wreck their operations outside of the block in a large variety of ways. They could, eg., place DMA restrictions on what tech can be invested in by EU citizens -- then we're talking a massive loss of customers and FDI to the US. etc. etc.

3) Many US states, esp. california, will largely be copy/pasting this approach; as will many countries around the world. The EU is innovating and leading legislation, it is not an outlier.

4) If the EU is steamrolled, that will be a major worry of regulators elsewhere. Other countries (, states) will end up being much more draconian to prevent it. Consider, eg., many regs in california being actually more restirctive than those in the EU (child safety, etc.

mstolpm• 2 years ago

EU regulations are very messy and DMA doesn't seem to be different. There are so many loop holes in the regulation that the "intention" and the effect are in part disjunct.

See the GDPR and cookie laws: End users should have been protected, but big companies (not only Meta et al, but e.g. German media corporations) are finding ways to "comply" and screw the users at the same time. Cookie consent is a mess. On the other hand, small businesses are struggling to comply and fear getting fined or getting an "Abmahnung" from a competitor.

The new rule that requests electronic invoicing (ZUGFeRD) is a welcome step towards more digitalization, but requests a human readable PDF with an embedded XML containing the structured invoice. The regulations require a human (!) to ensure that the PDF and XML match. Anyone who has ever worked with XML knows that a freelancer or small business outside of IT services doesn't have the knowledge and ability to do so. Again, they have to rely on external tools and services that not only imply costs, but themselves don't guarantee compliance.

Now the DMA. Regulations are welcome and needed for big players, but again, the rules seem to be arbitrary and full of loop holes. This is the EU and it already shows that the DMA leads to more fragmentation, both geographically (inside EU vs outside) as well as in the device space (iOS regulated, iPadOS not?). The relevant parts for AppStores ("Marketplaces") don't even mention the end user, but other competing market actors. Apple, Google, Meta all are interpreting the regulations different and of course "comply" in a way that favors their bottom line - of course, because the EU market is just a small portion of the revenue and the share holders would be angry if management would act different. And the end user already sees a growing enshitification in the EU: No more click through from Google search mini maps to Google Maps (no disadvantage for other maps providers). Browser choice menus with browsers nobody ever heard of. Requirements to accept new TOS without understanding what changed. Requests for "combining data" across services for "better experience"... But there is no mention of, for example, free side loading in the DMA, and no clear definition how to interpret the regulation.

We had all this in the EU with "Windows N" editions: special editions of Windows for European countries with unbundled components and more "free choice". Nobody wanted them: neither customers nor OEMs. And they had more bugs that the regular versions and were hated by Microsoft as well. And we have seen the flaws of GDPR and cookie law in recent years. Oh, and we have seen huge fines for large corporations as well ... and years and years of fighting them in courts, often reducing the fines significantly.

Moreover, the DMA mostly targets American "gate keepers" and this language already shows that the regulation is protective in its nature. It's interesting that even many US HN users hope for a strong reaction of the EU against Apple in particular, despite nobody has ever clearly shown the Apple has a monopoly in the EU or that customers were harmed. But what would the reaction if the EU would truly ban Apple from business in the EU or demand a split up? What would be the retaliations if the EU really tries to have the upper hand on how US corps can operate? And what would be the reaction of EU citizens if e.g. Apple, Meta oder Google would face a ban?

tempodox• 2 years ago

It is disappointing, but not surprising to me that Apple would drag their feet and concede no more than malicious compliance. They really need to be forced.

mjburgess3• 2 years ago

Apple is helpfully providing the malicious compliance strategies the tech industry will use to avoid gatekeeper regulation.

Legislators in Asia & the us are no doubt thrilled to observe this, at a distance, so they can better design their versions.

I dont think we have to worry about gatekeeper platforms throwing their toys out the pram (stroller); every major gov is watching this.

throw623424• 2 years ago

I wish I shared your optimism that the US would ever legislate anything even remotely approaching the DMA.

It seems to me that American culture is so entrenched in this (absurd, IMO) notion of "liberties" and "freedoms" ... which in practice only ever seem to apply to corporations with trillion dollar market caps.

The FTC has been chaired for years now by someone who wrote their thesis on the anti-competitive practices of $FB and $GOOG and whatever. And yet, despite her best intentions/efforts, the FTC under her leadership has proved to be utterly toothless time and again.

If they can't even stop M$ from gobbling up Activision/Blizz, how on earth would sweeping changes to how (digital) business is done in the US ever hope to succeed?

mjburgess3• 2 years ago

The United States has 50 dice to roll. Only one needs to land

ankit2193• 2 years ago

In recent years, the number of apps that users have been installing on their handsets has declined. This is the case despite the increasing number of applications of all kinds that make a handset more useful. Among the reasons for this decline could be the low quality of the discovery process and the lack of innovation in distribution. All apps are distributed through one large monopoly store that has limited functionality;

People are installing fewer apps, but that is very unlikely because of poor discovery. Infact, a lot of these apps would never be discovered if not for app stores/play stores. Then, there are networks many apps rely on, facebook and google ads, and best of all word of mouth. A more likely reason is the app fatigue and wariness of people being prompted to download apps for everything.

dob12• 2 years ago

Agreed. And it’s not only that we are supposed to install apps for everything, those apps are also completely contaminated with unnecessary micro transactions. You want to sell me a thing that solves a problem for me? Sure, here you have a buck or two. But nowadays everyone is forcing me to subscribe to a service. I’ve just seen enough of it.

rchaud2• 2 years ago

The reason for this could also be that native apps constantly send notifications and use far too many device permissions. This annoys users, who then decide to use the website instead and discover a largely equivalent experience, minus the surveillance.

Plenty of things that are apps work perfectly fine on mobile web: online shopping, and social media would be the biggest categories here.

oskarkk• 2 years ago

I can imagine that discoverability may be a factor. I've only ever used Google Play Store, and looking for good apps there can be extremely discouraging. The best apps are sometimes buried, you have no sorting options in search results or even in categories, almost no filters. The categories are very basic. I would want to sometimes look for apps with <1m downloads, that are <10 MB for simple apps, have at least X reviews, maybe recent updates, etc. And maybe filter for no ads, but that filter could be too bad for business for free apps (I understand that devs have to earn some money).

I know that things I'm describing are more for power users, but a filter like app size (or just showing it right in the search results) would be a godsend for regular people with cheaper phones (and you have A LOT of cheap phones in most of the world). And smaller app size usually means better performance and less stupid "features". putting on my tinfoil hat But maybe smaller and more performant apps would mean less money for manufacturers.

As with everything, when looking for a good app, I search "xxxxx android app reddit" in Google.

ankit2193• 2 years ago

There are two major ways people find apps - facebook/Google ads and word of mouth in personal network or on the internet. I know playstore gets a lot of visitors, but mostly useful just for getting top interesting apps (curation) rather than really discover a great app. You can search for some use case and more often than not find one that works. Discovery outside app store is still discovery, and by sheer numbers, if the number of apps are large, individual app discovery will be low.

I don't think features you describe are needed by many. Given the traffic to search pages and two companies heavily reliant on user analytics, we would have gotten it a long time ago, if thats what people were searching for. (Factors are images, videos, and reviews that people look at, and look at its prominence on app page).

skywhopper• 2 years ago

I want to be sympathetic but the fundamental premise here seems to be flawed:

    In recent years, the number of apps that users
    have been installing on their handsets has
    declined. This is the case despite the increasing
    number of applications of all kinds that make a
    handset more useful.

But I’d propose a counter-narrative: Users have slowed down installing apps because they’ve learned the lessons of the past 15 years that most dedicated apps are intrusive and counterproductive trash that track you, spam you, burn through your battery, and don’t actually provide any useful functionality.

It goes on to suggest that allowing other app stores may increase “innovation in discovery and distribution”. But the only innovation that would be happening is new levels of confusion as not all apps are available in all app stores, and different stores will have conflicting policies and procedures that will make them impossible to coexist, and many app stores will inevitably be taken over by scam lookalikes.

I find no reason to believe that alternative app stores would ever provide a beneficial experience to users. If we’re unhappy with Apple’s monopolistic practices and conflicts of interest, then we need to be improving regulation of things like app store fees and user tracking; forcing divestment of problematic integrated business lines like streaming content, ad sales, and cloud services; requiring device makers to provide open specs for ports like lightning and access and tools not only for repair but for installing alternative OSes or buying hardware without anything pre-installed.

But fiddly little things like forcing alternative “app stores” just to satisfy financially abusive wannabe monopolists like the video game companies is not a solution that will help anyone.

dpkonofa• 2 years ago

This is almost exactly my assessment of this. Based on the action of these companies in the past (and especially Epic), the only thing I see happening by forcing Apple to further concede is the further "enshittification" of the user experience for less tech-savvy users. I'm the "tech guy" for my family and lots of my friends and I don't want to spend any more time than I currently do troubleshooting their purchase and subscription experiences. In my mind, Apple cultivated the App Store and iOS/iPhone experience and that's what got the platform to the place it is currently. Adding the option of shittier providers and shittier platforms only makes the entire situation shittier so that a small subsection of users can install the niche apps that they want.

graemep• 2 years ago

I find using an alternative in android makes it far easier to find useful apps, so why would the same not happen on ios? alternatives will need to provide some advantage to consumers.

asadotzler3• 2 years ago

hacker news hates hackers providing alternatives and defends proprietary walled gardens. this is the way and has been for years now. what a loss.

asadotzler3• 2 years ago

You can find what ever you want to find or not, but we cannot know because until very recently Apple disallowed the experiment.

pankajdoharey• 2 years ago

This will just increase piracy as is prevalent in the Android ecosystem. Stealing apps will become common and so would hacking if the entire app ecosystem is opened up for apps. This will stifle innovation everyone knows the money is in the iOS ecosystem where the user pays not Android.

rchaud2• 2 years ago

This sounds like a Daring Fireball post. "Apple is only looking out for the safety of developers".

Did game developers abandon Windows for consoles because of piracy? How much did BitTorrent cost the industry in 'stifled innovation'?

Apple's exclusionary app store scheme: An existential moment for the DMA

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