Apple's App Store Subscription Policies Raise Antitrust Issues as Content Providers Fume

100956 in app purchase icon

With Apple's announcement yesterday of new App Store subscription offerings and policies requiring all content providers to offer at least the option of in-app subscriptions at the same prices as external options, questions have been raised about how providers will respond to the likelihood that significant numbers of customers will likely choose options that require them to hand over 30% of their revenue to Apple.

The Wall Street Journal explores possible antitrust issues, with experts noting that any such case would hinge on the definition of the market, as that would determine how dominant Apple's position is in it.

"My inclination is to be suspect" about Apple's new service, said Shubha Ghosh, an antitrust professor at the University of Wisconsin Law School. Two key questions in Mr. Ghosh's mind: Whether Apple owns enough of a dominant position in the market to keep competitors out, and whether it is exerting "anticompetitive pressures on price."

Experts note that publishers might be able to argue that tablet devices constitute the market for their offerings, and Apple's dominance in that market could subject it to antitrust investigation. But a broader market encompassing the entire App Store ecosystem and thus smartphones and tablets in their entirety would likely not raise red flags due to Apple's much smaller share of that larger market.

"Millions will be spent litigating how broad the market is," said Herbert Hovenkamp, an antitrust professor at the University of Iowa College of Law.

Mr. Hovenkamp said digital media is the most plausible market. He said he doubted that Apple, currently, has a sufficiently dominant position in that market to warrant antitrust scrutiny.

All eyes are of course also on the content providers themselves, who would have to raise prices by 43% in order to provide Apple with a 30% cut and still maintain their existing income, should all transactions shift to in-app subscriptions.

While many content providers have yet to respond publicly to Apple's announcement as they weigh their options, music streaming service Rhapsody spoke out yesterday, noting that it will be talking with other companies in its same position in "determining an appropriate legal and business response to this latest development."

Our philosophy is simple too - an Apple-imposed arrangement that requires us to pay 30 percent of our revenue to Apple, in addition to content fees that we pay to the music labels, publishers and artists, is economically untenable. The bottom line is we would not be able to offer our service through the iTunes store if subjected to Apple's 30 percent monthly fee vs. a typical 2.5 percent credit card fee.

Publishers of existing App Store applications have until June 30th to comply with Apple's new policies.

Top Stories

REC ASA CODE2016 20160601 205816 2745

Elon Musk Reportedly Demanded to Become Apple CEO as Part of Potential Tesla Acquisition [Update: Musk Denies]

Friday July 30, 2021 9:04 am PDT by
Tesla CEO Elon Musk reportedly once demanded that he be made Apple CEO in a brief discussion of a potential acquisition with Apple's current CEO, Tim Cook. The claim comes in a new book titled "Power Play: Tesla, Elon Musk and the Bet of the Century," as reviewed by The Los Angeles Times. According to the book, during a 2016 phone call between Musk and Cook that touched on the possibility of ...
General Apps Messages

Android iMessage Competitor Puts Pressure on Apple

Friday July 30, 2021 3:15 am PDT by
Google and the three major U.S. carriers, including Verizon, AT&T, and T-Mobile, will all support a new communications protocol on Android smartphones starting in 2022, a move that puts pressure on Apple to adopt a new cross-platform messaging standard and may present a challenge to iMessage. Verizon recently announced that it is planning to adopt Messages by Google as its default messaging...
iPhone 13 Always On Feature

iPhone 13 to Bring Over a Major Feature From the Apple Watch

Wednesday July 28, 2021 2:21 am PDT by
Apple's upcoming iPhone 13 lineup will feature an always-on display akin to the Apple Watch Series 5 and Series 6, according to recent reports. In his weekly Power On newsletter, Bloomberg journalist Mark Gurman, who often reveals accurate insights into Apple's plans, said that the iPhone 13 may feature an Apple Watch-inspired always-on mode. The Apple Watch Series 5 and Apple Watch...
duracell battery bitter coating

Apple Says Don't Buy AirTag Replacement Batteries With Bitter Coating

Wednesday July 28, 2021 11:08 am PDT by
Since AirTags were just released earlier this year and are expected to have a year-long battery life, it may be some time yet before AirTag users need a replacement battery, but when the time comes for a refresh, Apple is warning customers not to buy batteries with a bitter coating. AirTags use coin-shaped CR2032 batteries, which happen to be a size that's easy to swallow. Some battery...
a15 chip

iPhone 13 and Redesigned MacBook Pro Chip Production Hit With Gas Contamination

Friday July 30, 2021 5:44 am PDT by
The most important TSMC factory that manufactures Apple's chips destined for next-generation iPhone and Mac models has been hit by a gas contamination, according to Nikkei Asia. The factory, known as "Fab 18," is TSMC's most advanced chipmaking facility. TSMC is Apple's sole chip supplier, making all of the processors used in every Apple device with a custom silicon chip. Industry...
apple rtp land

Apple Preparing to Occupy 200,000 Square Feet of Temporary Space Ahead of New $1 Billion North Carolina Campus

Thursday July 29, 2021 9:14 am PDT by
Back in April, Apple announced a $430 billion investment over the next five years to create more than 20,000 new jobs as the company continues to expand. One significant piece of that plan is a new engineering and research center in North Carolina where Apple will be investing over $1 billion and hiring at least 3,000 employees. Assemblage of seven properties in Research Triangle Park owned by ...
Apple Leak Feature

Apple Demands Leaker Reveals Sources Under Threat of Being Reported to Police

Wednesday July 28, 2021 6:53 am PDT by
Apple has sent a cease and desist letter to a leaker based in China as part of its continuing attempts to curtail leaks of unreleased products, according to Vice. A Chinese citizen who shared images of stolen Apple prototypes on social media was sent a warning letter from Fangda Partners, Apple's law firm in China, on June 18, 2021. An extract from the letter read:You have disclosed without ...
macos monterey tidbits feature copy

Apple Releases New macOS 12 Monterey Public Beta

Wednesday July 28, 2021 10:19 am PDT by
Apple today seeded the third public beta of the macOS 12 Monterey beta to public beta testers, allowing non-developers to test the new macOS Monterey software ahead of its public release. The third beta comes two weeks after Apple released the second macOS Monterey public beta. Public beta testers can download the macOS 12 Monterey update from the Software Update section of the System...
iOS 15 General Feature Purple

Apple Releases New Public Betas of iOS 15, iPadOS 15, watchOS 8, and tvOS 15

Wednesday July 28, 2021 10:16 am PDT by
Apple today seeded the third betas of iOS and iPadOS 15 to public beta testers, allowing non-developers to download and test the new updates ahead of their fall release. The third public betas come two weeks after Apple released the second public betas. Public beta testers who have signed up for Apple's beta testing program can download the iOS and iPadOS 15 updates over the air after...
nothing ear 1 buds 1

Nothing 'Ear (1)' True Wireless Earbuds Launch to Take on AirPods Pro With ANC and Unusual Design for $99

Tuesday July 27, 2021 7:57 am PDT by
Nothing, a new brand from OnePlus founder Carl Pei, has today officially launched the "Ear (1)" true wireless earbuds after months of anticipation around the company's AirPods Pro rival. The Ear (1) features an in-ear design, Active Noise Cancelation, Bluetooth 5.2, IPX4 water resistance, and a charging case with Qi-compatible wireless charging and a USB-C port. Fast pairing is supported on...