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Michael Tsai – Blog – House report on competition in digital markets



John Gruber:

The House Judiciary Subcommittee, which held a hearing with the CEOs of Amazon, Apple, Facebook and Google back in July, has released a 449-page report on its findings and recommendations.

The report is here. Some of the parts I found interesting:

Apple’s market power is sustainable due to high replacement costs, ecosystem lock-in and brand loyalty. It is unlikely that there will be successful market entry to challenge the dominance of iOS and Android.

[…]

In response to these concerns, Apple has not provided evidence that the App Store is not the only means of distributing apps on iOS devices, and that it does not exercise a monopoly over the distribution of apps. Apple says it does not create ̵

1; nor is it aware of third-party data – that tracks market share in the app distribution market.

[…]

Apple’s monopoly power over software distribution on iOS devices seems to allow it to generate above-normal profits from the App Store and its service business. Apple CEO Tim Cook set a goal in 2017 to quickly double the size of its Services business by the end of 2020. Apple reached that goal by July 2020, six months ahead of schedule.

[…]

Apple also makes some exceptions to the rules and may change or update the rules.

[…]

Industry observers have also challenged Apple’s implicit claim that the iPhone was the start of the online software distribution market.

[…]

In an interview with subcommittee employees, Phillip Shoemaker, former director of app reviews for the App Store, estimates that Apple’s costs for running the App Store are below $ 100 million. […] Although only estimates, these figures indicate that Apple’s monopoly power over app distribution on the iPhone allows the App Store to generate supra-normal profits as the mobile app economy grows. These profits come from extracting rents from developers, which either provide price increases to consumers, or reduce investment in innovative new services. Apple’s ban on competing app stores and alternative payment processing are blocking competition, increasing Apple’s profits from a captive ecosystem of developers and consumers.

[…]

In Apple’s internal documents and communications, the company’s top executives previously acknowledged that the IAP requirement would stifle competition and restrict the apps available to Apple customers.

July Clover:

Apple in another statement MacRumors said that it strongly disagrees with the conclusions reached in the report with regard to Apple, and that Apple does not have a dominant market share in categories in which it conducts business.

See also: Hacker News, Steve Troughton-Smith, Steve Streza, Brent Simmons, Michael Love, Matt Birchler, Ben Thompson.

Earlier:

App Store Apple Business Purchasing iOS iOS 13 Legal

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