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.

Popular Stories

Apple WWDC23 macOS Sonoma hero

macOS Sonoma Launching This Week With These New Features

Sunday September 24, 2023 12:45 pm PDT by
Apple previously announced that macOS Sonoma will be released this Tuesday, September 26. The free software update includes many new features and changes for the Mac, including the five that we have highlighted below. In addition to these five features, we have shared the full release notes for macOS Sonoma below for a complete overview of everything new. Desktop Widgets macOS Sonoma...
iPhone 16 Mock Header With Dynamic Island

Skipping the iPhone 15 Pro? Here's What's Rumored for iPhone 16 Pro

Friday September 22, 2023 9:29 am PDT by
Are you skipping the iPhone 15 Pro and waiting another year to upgrade? If so, we already have some iPhone 16 Pro rumors for you. Below, we recap new features rumored for the iPhone 16 Pro models so far:Larger displays: The iPhone 16 Pro and iPhone 16 Pro Max will be equipped with larger 6.3-inch and 6.9-inch displays, respectively, according to Ross Young, CEO of Display Supply Chain...
iPhone 16 Side Feature

iPhone 16 to Include an Additional Capacitive 'Capture' Button

Monday September 25, 2023 12:50 pm PDT by
The iPhone 16 series is expected to gain an additional capacitive button, known internally as the "Capture Button." Codenamed "Project Nova," the button is likely to be one of the main selling points of the iPhone 16 lineup, assuming it gets past the initial testing phase. The Capture Button is located on the same side as the Power button, only positioned slightly lower - where the mmWave cutout...
ipad mini blue

Apple to Launch iPad Mini 7 Later This Year, Industry Report Suggests

Monday September 25, 2023 3:16 am PDT by
Apple could be preparing to release a seventh-generation iPad mini before the end of the year, based on a new report by DigiTimes. In an article discussing stagnating global tablet demand in the second half of 2023, the Taiwan-based outlet forecasts an uptick in Apple's share of the market owing to orders for a "small-size" iPad in the fourth quarter. From the report (see bold): In the...