Musk Versus Apple is a worthwhile fight
The first tweet from Twitter Inc. under the ownership of the world’s richest man was announcing a much-anticipated upgrade to its subscription feature. It was also a shot in the front of the biggest company on the planet, marking a potential showdown that could end up bringing much-needed changes to the mobile app industry.
Twitter Blue will relaunch on Monday with a handful of features that Elon Musk and his team are betting on to justify the monthly fee: a blue tick, longer videos, better visibility and an edit button. More importantly, Twitter has announced two prices for the same service: $8 (about Rs.660) per month if you subscribe on its website, but $11 (about Rs.900) if users choose to sign up through the Apple Inc.’s iOS platform. That 37.5% markup isn’t all that sweet for slashing Apple’s subscription fees that go through iOS and its App Store by 30%.
For years, app developers and content providers have lamented this “Apple tax” as being too high and too restrictive. If you buy an app, buy an upgrade, or subscribe to ongoing services, including streaming music or video, Apple gets 30%. This means that the company will receive $3.30 (around Rs 270) per month for each person who signs up for Twitter Blue through Apple. And that’s why Twitter decided to dissuade people from using Apple and registering on its own site. To be fair, Google Play Store collects similar commissions with its own set of restrictions.
Musk brought the charges to the attention of his 120 million subscribers last month, although he is one of many industry executives who have known about it and complained about it for years.
In August 2020, Epic Games Inc. did more than whine. The publisher of hit games, including Fortnite and Infinity Blade, has sued Apple over a particularly prohibitive set of rules that the iPhone maker buries in its 20-page license agreement. First, it requires subscriptions purchased in-app to use the in-app purchase platform, which prevents publishers from billing credit cards directly and ensures that Apple collects its tax. Second, it prevents developers from providing information or links to places a user might register outside of the Apple ecosystem.
It was this latest executive order that got in the way of Epic chief Tim Sweeney, who tweaked Fortnite’s app to bypass the payment system – a move that blocked Fortnite’s top-selling game. Apple’s App Store and triggered a lawsuit. Spotify Technology SA avoids this hullabaloo completely by only allowing subscriptions through its website.
Apple’s App Store fees are a de facto global internet tax. Epic is right.
— Elon Musk (@elonmusk) July 30, 2021
Unfortunately for Epic, software developers and smartphone users around the world, U.S. District Court Judge Yvonne Gonzalez Rogers ruled in favor of Apple on nine of the 10 charges brought by the Carolina-based company. North. Rogers found, among other things, that Apple does not have a monopoly because there are alternatives, including Alphabet Inc.’s Google Play Store. However, it decreed that Apple would relax its rules on external links. But the fight is not over, the case is now in the hands of the Ninth US Circuit Court of Appeal.
“Apple might win the battle but lose the war,” Jennifer Rie, senior litigation analyst at Bloomberg Intelligence, wrote last month. “The decision could also catalyze bipartisan support for pending legislation to regulate app stores.”
This is where Musk comes in. While Twitter’s new owner has recently used his access to the social media platform to fend off the “woke” crowd, expose supposed censorship of right-wing news and reinstate previously banned accounts, the long-long struggle term could move from the content of the platform to its business model.
To date, the battle over the Google-Apple duopoly has largely been played out in court. Both giants claim they provide infrastructure, marketing, and moderation support that ensures developers get paid and users are protected. This argument has merit. It’s a huge risk to allow software to be installed on a phone unchecked, and apps are most often found through the stores themselves, so getting fair compensation is an important part of the business model.
But a 30% fee for services where the app platform offers little added value, like video streaming, seems out of place, especially when those providers are limited in their ability to notify users of a alternative payment platform. The policy also forces software and content makers to spend more and more money on marketing just to be seen, which is especially difficult when those providers have their own products – like Apple Music and Apple TV+ – that come pre-installed. and directly compete with Spotify and Netflix. Inc.
The tweet from Twitter, from his @Twitter account, makes a mockery of the current situation. Twitter, the app, is not allowed to advertise in its own software that there is a cheaper price available — but Twitter, the user of Twitter, is able to use its own social media platform to tell the world about it.
It’s the kind of power that Epic, Spotify and Netflix don’t have. Even Microsoft Corp., which makes software but doesn’t compete in the mobile app market, is part of the growing chorus against Apple and in favor of Epic. But none of them can boast nearly every senator and congressman as account holders, or a high-level leader who doesn’t mind throwing grenades and burning bridges.
And now, maybe it’s time for Musk to shed his weight. The Open App Markets Act, a bipartisan bill introduced in August 2021 by Republican Senator Marsha Blackburn and Democratic Senators Amy Klobuchar and Richard Blumenthal, would require companies to offer app stores and alternative payment systems, and would prohibit Apple and Google from favoring their own. some products.
But that bill has yet to be tabled and could be further delayed if a procedural maneuver fails in the coming days, Bloomberg News reported last week. That means months, if not years, before the app giants are forced to mend their ways. Unless Musk decides to enter the fray and take on Apple directly.
© 2022 Bloomberg L.P.