The latest rage among some developers on Twitter and the internet is to say that Apple is unfair for charging a 30% cut of selling apps or services through Apple iOS APP Store. Fine, it might be unfair, but sometimes business is unfair. But what really doesn’t make sense is that some developers are claiming that Apple is a “monopolist” and violating Antitrust Laws by charing 30% for app or services on the Apple iOS App Store. This makes no sense.
For example, this developer, Russell Ivonovic, said:
The issue is, Apple also makes the iPhone, and has mandated that there’s no other way to get software onto an iPhone except through their store. So what you have is the company which has a monopoly on installation of software on the iPhone, mandating that you use their store, and give them 30%. If you don’t like that deal, there’s no alternative available. It’s the definition of anti-competitive monopolistic behaviour: taking the market dominance you’ve created in one market, to give you an unfair advantage in another.
This logic makes no sense. It claims that because Apple makes the iPhone, and has an exclusive App Store for the iPhone, it is a monopolist and abusing monopoly power. By this logic, anyone who makes any device and any service that controls its device and service and limits what can go on that service is monopolizing its device and service and thus is a monopolist. By that definition, Nintendo is a monopolist because Apple, Google, and Microsoft and no one other than Nintendo can operate an App store for Nintendo devices. How about Walmart? By that logic isn’t Walmart a “monopolist” because Walmart controls what it sells in its stores? What if I want to sell a product in Walmart’s stores? Can I force Walmart to allow me to set up a stand in Walmart and sell it? No. That would be stupid.
It is well established in Antitrust Law that for a company to be deemed to have “monopoly” power, it must have more than 50% and closer to 80% and 90% in the relevant market. So there are two key things to properly define. First, what is the relevant market? And then what is that company’s market share in that relevant market.
Apple Does Not Have Monopoly Power In The Smartphone Market And That Is The Relevant Market.
What Rusty and other get wrong is that the relevant market is not iPhones in and by themselves. The relevant market is at the very least all smartphones, if not also all computing devices. Lets take the smartphone market. The smartphone market is dominated by two types of smartphones iPhones and Android Devices. These devices are so similar, that in the early days of Android, Apple engaged in major litigation with Samsung claiming that Samsung violating its patents on iPhones and iPhone designs so that customers couldn’t tell the difference between iPhones and Android. And if you go to websites and YouTube channels covering Androids, customers who are using Android smartphones claim Android smartphones are much better than iPhones.
So most customers would say the market between iPhones and Androids is very competitive. And in terms of market share, the data shows Android has a larger share of the market than Apple. In fact, data shows that Apple sold fewer than 30% of all the smartphones in recent quarters and years.
Rather than being dominant in the smartphone market, IDC’s data shows that the iPhone currently counts for only about 15% of all smartphones shipped worldwide and will fall to 13% in the coming years.
In terms of installed mobile operating systems world-wide, i.e. smartphones being used world-wide rather than ones just recently purchased, Apple has less than a 30% market share.
So with far less than 50% share in the smartphone market, there is no way any court can find Apple to have monopoly power in the smartphone market. And that makes sense. A monopolist is such that it can raise prices and customers have no choice but to pay the monopolist and can switch to another supplier . For example, ConEdison, the Electric Utility in New York City, is a monopolist in New York City. I have to purchase electricity through ConEdison. For that reason, the government regulates ConEdison’s prices. But Apple can’t raise the price of its iPhones and then require me to pay it. There are all those Android smartphones that my Android friends say are better than the iPhone. So if Apple raises the prices of its top new iPhone to $3000, I don’t have to purchase it. I can purchase the latest Samsung smartphone for $1500.
Apple Is Not A Monopolist Because Its IOS APP Store Is Better for Developers Than the Android App Stores.
Now Rusty Rants claims there is no other choice for developers than Apple’s App Store. But Rusty there is. You and other developers can make apps for the Android Store. It is a bigger market. There are man more Android customers than iPhone customers. Now those Android stores are not as lucrative. But that is because Apple made a better app store. And it is a better app store than the market for Apps on the Android smartphones, because Apple curates the iOS App Store to make sure there isn’t malware and other terrible apps on the app store. It is not a perfect, but many customers like it because Apple keeps iOS devices safe and not destroyed by malware.
Apple’s App store is more lucrative than the Android app market, because Apple’s exclusivity has made it a better store. Ironically, the very thing that some developers want to do, open up iPhones to have additional app store, or allow side loading, is the very thing that will destroy the quality of the iPhone experience and cheapen the quality of the iOS App store.
Developers who complain: “Cry my a river.” You don’t have to develop for iPhones, or smartphones. There are various other devices that you can develop for, like the Web, and Web apps, like plug-ins for WordPress, like apps for linux devices like Raspberry Pis.
You can develop for PCs and Macs. There are enterprise developers. The market for developers services is incredibly large and iOS developers are only a tiny slice of the developer market.
These complaints of Antitrust violations are ridiculous.