Elon Musk expressed the obvious. CMA (UK) Mobile Ecosystems Report pointed it out earlier. Apple's #Monopoly
In November 2022, Elon Musk claimed that Apple has "threatened" to remove Twitter from its iOS app store. This action might have been disastrous for the business Musk recently paid $44 billion to acquire. Musk made this statement in one of several tweets criticising Apple and its CEO for purported actions that could harm Twitter's business. "Apple has also threatened to withdraw Twitter from its App Store, but won't tell us why," Musk tweeted.[1]
Musk asserted that Apple has largely stopped using Twitter advertisements in a subsequent post. He said, seemingly in regard to his frequently expressed wish to support his vision of free speech on the platform, "Do they hate free speech in America." "What's going on here, Tim Cook?" Musk continued in a subsequent tweet. Additionally, he questioned Apple's size, asserted that it practises "censorship," and drew attention to the 30% transaction fee the company imposes on big app developers in order to be included in its app store.[2]
Later in December 2022, the two meet up at Apple headquarter. Elon Musk tweeted after the meeting: “Good conversation. Among other things, we resolved the misunderstanding about Twitter potentially being removed from the App Store. Tim was clear that Apple never considered doing so.”[3] the tension between Elon Musk and Apple is seemed to be cooled down for now. However, the position, where Apple is the monopoly on its App store and app purchase on IOS devices, as many claims, remains. This made a recall on CMA (UK) Mobile Ecosystems Report 2022.
In the background of the report, CMA pointed out earlier that: Due to their duopoly, Apple and Google have a stranglehold on these important gateways. There are numerous possible interventions that could open up competition and safeguard the millions of businesses and customers who depend on their services.
Numerous limits and requirements must be accepted by tens of thousands of UK firms, such as app and web developers, that depend on these ecosystems to serve their clients. Customers can miss out on cutting-edge developments, have fewer options, and ultimately pay more.[4]
As the issue is stated, the main focus of that report was on the duopoly of Apple and Google. This market analysis examined the mobile ecosystems in depth in the following four areas:[5]
- Mobile devices and operating systems (IOS and Android)
- Distribution of native apps (such as via app stores) (Apps are rarely downloaded from open Websites. They are mostly done by App & Google Store)
- Mobile browsers and browser engines (In 2021, 97% of all mobile web browsing in the UK was powered by either Apple’s or Google’s browser engine. Browsers also enable people to access ‘web apps’, which have the potential to be similar to native apps without being tailored to each operating system.)
- Apple and Google’s role in the competition between app developers (They unilaterally determine; what apps are allowed; how they are ranked and discovered; and set commission rates and many other rules)
While making a basis of research CMA had taken into account examples of concerns raised by businesses. Many of the viewers were complaining about Apple's monopolistic and anti-competitive approach:
“I am a UK resident who performs two roles as a Technical Lead of a large technology consultancy and as a CTO of a start-up... In both roles, Apple's monopolistic and anti-competitive approach to their platform fundamentally harms the businesses I work for and the clients I serve.”
“Safari is the only browser option that killed my start-up… I was building a web app because building the same app, three times, concurrently doesn't make sense for an early start-up. I knew it'd be an uphill battle, but apple was insufferable.”
“As a developer, Apple's treatment of the web on iPhones and iPads costs my business extra manhours and effectively forces me into Apple's pay-to-play ecosystem. My apps could largely exist exclusively on the Web if Apple wasn't putting its thumb on the scale.”[6]
From the consumers' feedback to CMA, CMA points out the fact that, with the current status, Consumers might lose out on new and valuable innovations. Particularly, where they affect Apple’s and Google’s businesses. The new types of services like cloud gaming on iOS or technological developments like web apps could be examples. On the other hand, for consumers, choices become more limited. For example, in browsers and app stores, hindering the development of new bespoke curated app stores to meet people’s different needs such as stores for different age groups or gaming enthusiasts. Moreover, prices become higher than they should be. For instance, currently, prices for Apple’s devices, Google’s search advertising fees, and both firms’ app store commissions are all above a competitive rate. This would ultimately be leading to higher prices for the end consumer or worse quality.
In contrast between Google and Apple, the discrepancy between their main sources of income best demonstrates how they have different incentives. Apple generates the largest bulk of its revenue (about 80%) from the sale of products, where it leads the market for more expensive, higher-end devices and enforces stringent controls over the hardware and software used by its 6 devices. On the other hand, Google receives the majority of its funding (about 90%) from advertising. In some ways, Google's ecosystem is more open than Apple's and places fewer overt limitations on users. However, Google leverages its dominance over services and products like Android, Chrome, and the Play Store to boost demand and usage for each one, ultimately directing users to its search engine. It accomplishes this in large part thanks to a number of partnerships with makers of Android devices. In some ways, Google's ecosystem is more open than Apple's and places fewer overt limitations on users. However, Google leverages its dominance over services and products like Android, Chrome, and the Play Store to boost demand and usage for each one, ultimately directing users to its search engine. It accomplishes this in large part thanks to a number of partnerships with makers of Android devices.[7]
CMA also highlights the fact that there are no significant threats from other competitors.[8] Despite some competitors' efforts, there have been no effective attempts to overturn the dominance of Apple's and Google's ecosystems. It is extremely difficult for other businesses to enter and grow in certain sectors due to a number of factors, including:
- Network effects.
- Pre-installation, defaults and choice architecture. (What comes pre-installed, and the default settings are directly decided by Apple. Google has less direct power over Android device manufacturers, but it still has a significant impact thanks to its hefty pre-installation fees.)
- Barriers to switching. (Potential impediments to switching exist, particularly the perception of switching problems and difficulties. Most individuals rarely switch operating systems when purchasing a replacement device rather than choosing a new system for the first time, especially Apple customers.)
- Large established ecosystems are difficult for rivals to challenge. (Apple's core business is selling hardware and related operating systems. This means there is an incentive to invest in new features and services and replace older devices.)
In conclusion, for the next steps, CMA Report stated that there is the importance of a new pro-competitive regulatory regime.[9] CMA decided a new investigation into Google’s app store and its associated terms and conditions, as well as progressing our similar investigation into Apple’s App Store. This will be aimed be done by building a global consensus with our international and UK partners. CMA will aim to ensure that the UK has a dynamic tech sector, where consumers and businesses benefit alike from the increased innovation, investment, choice and many other benefits that come from competitive markets.
[1] Duffy C, “Elon Musk Claims Apple Has 'Threatened to Withhold'
Twitter from Its App Store | CNN Business” (CNN November 29, 2022)
References
- CMA, (2022) Mobile Ecosystems Market Study Final Report, GOV.UK. GOV.UK. Available at: https://www.gov.uk/government/publications/mobile-ecosystems-market-study-final-report (Accessed: December 28, 2022).
- Duffy C, (2022) “Elon Musk Claims Apple
Has 'Threatened to Withhold' Twitter from Its App Store | CNN Business”
(November 29, 2022)
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