Tech This Week | Apple’s anti-trust hearing could be an exercise in cross talking

In an event that's set to send out sparks flying through the entire global tech ecosystem, the CEOs of Apple, Amazon, Google, and Facebook have decided to testify to the American Congress for an anti-trust inquiry. Even before the inquiry, there's been cynicism around whether it is a good thought at all to have Tim Cook, Sundar Pichai, Jeff Bezos, and Mark Zuckerberg answering questions consequently close to each additional. Because most of these companies have completely different business designs, the limited period is likely not going to be adequate to achieve a whole lot. 

Each one of the four corporations comes with been labelled as potentially ‘too big’ and arguments have been made in favour of breaking them up. But it is merely Apple that involves the event with a very recent chip on its shoulder. The App Retailer was involved in an extremely public attack with Basecamp around whether an application by the developer ought to be allowed on to the platform without paying the 30% cut that Apple expenses.

Since then, there has been lots of attention surrounding Apple’s App store practices, due to Basecamp CTO David Heinemeier Hansson who (in)famously compared Apple to the mafia on The Vergecast. Going into this hearing, Apple sanctioned a report from the creatively named ‘The Evaluation Group’ that aimed to guard Apple’s 30% commission billed to developers by comparing it to the commission billed by other platforms.

I'd not be surprised if the findings from the analysis were used during the hearings as talking tips for Tim Cook. The study itself will probably be worth a read if you would like to get a better understanding of the way the space operates. However, to me it essentially sensed like an example of cross-talking. It’s the equivalent of noticing an elephant in the area, and then changing the conversation to chat about how small the area feels.

Let me describe why. The study raises a few tips. Firstly, there is the argument that Apple, like all platforms, incurs significant costs in retaining the platform to make sure a good user experience. For example, verifying apps and ensuring that they respect user personal privacy. Secondly, and this is spotlighted in the primary page of the analysis, ‘Apple’s App Store commission rate is comparable in magnitude to those of additional software stores and digital content marketplaces’. Thirdly, the analysis highlights that Apple will a lot for developers. The App Retailer offers App Analytics, repayment providers, and search functionalities that make it possible for users to get new apps. Finally, there is also the broader point that platforms such as the App Store aren't public goods. Instead, companies such as Apple have to have incentives to maintain these ‘commons’, and the fee is a means to enable that.

In the event that you just look a little bit closer inside most of these arguments, the problem that they are trying to address is that a 30% lower is normal and justified considering how hard Apple functions for it. Especially considering that a program such as for example Audible charges a 75% cut to host audio tracks books. There are also multiple tables (like the one below) offering handy comparisons stating accurately that.

Even though you could argue that a 30% commission could be justified, that's not the problem that Apple is being called to court for. Had the commission been 20% or 10%, the problem would even now persist. The issue is that App Store may be the only medium to reach iPhone users. And since no developer are able to ignore a segment such as for example iPhone users, no one can avoid spending the commission.

And that's not the issue with any other major app store here. Actually, none of these stores possess entry barriers like Apple does. Developers can even tend to sidestep Google’s Take up Store to get to Android users. Similarly, while Audible might demand a 75% commission, no one can be obligated to fork out it. Instead, audiobooks could be marketed at Storytel, Google’s Play Books, and so on.

It is also vital that you keep in mind that most of these stores have modelled their commissions on Apple’s, because the App Retailer was the primary mover here. Therefore the only reason different persons charge the same trim is because they will be borrowing from Apple’s playbook. 

In essence, the App Store is similar to a tollbooth. The study acknowledges that in passing when discussing indirect network results and claiming they are why is a platform priceless. It does not execute a lot else to handle this. Perhaps that’s since there is not a whole lot to be said below.

If this report is helpful information, there is every possibility that Apple might finish up cross talking in the hearings, resulting in the anti-trust warming up soon. Watch this space.