Toeing the line

Apple app store antitrust case with SCOTUS

Today, SCOTUS will start hearings on a lawsuit brought against Apple’s practices to limit distribution of apps to their IOS devices and leaving the only option to distribute through Apple with a 30% surcharge.

I’ve written in the past that Apple’s walled garden is going to be problematic for them in the long run. With a 62% market share in the US for their smartphones, Apple effectively controls a large portion of the mobile app market and distribution. They charge a 30% markup for any sale and similar for subscriptions – though that one is tiered over time.

By no means can Apple substantiate the 30% margin they take. Their costs for distributing apps is nowhere near that. On the other hand, it’s their store and they can do what they like. It’s not that consumers do not have another option available to them. Right?

Wrong. The problem is that Google with their Android play store is doing the same. So effectively we’ve two players who control 99% of the market and charge an exorbitant fee to gain access to “their” consumers. The fact that the fees are similar is a dead giveaway and smells like price gouging.

At least the EU is on it and is forcing Google to “unbundle” Android and mandatory shipping of their Play store – Google’s Android has a 70% market share in the EU so that’s why they started looking at Google. I’m not sure if it’s enough. It feels a little like the unbundling of Internet Explorer and the web browser choice which was forced upon EU users when setting up a new Windows computer. I don’t think you can contribute Chrome’s popularity in the EU to this decision. But what it does do is signaling. It’s telling the owner to treat carefully in the future. Microsoft basically abandoned IE and got caught off-guard with the switch to mobile computing. This made the problem go away.

We’ll see what SCOTUS decides here. It’s clear that the app market is controlled by only two companies. It’s unhealthy.


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