Apple’s insistence that its devices only support apps sold directly through its app store is potentially monopolistic, a US appeals court has concluded.
This means a legal challenge originally filed in 2012, but chucked out by a lower court, can be reinstated. The original class-action suit was filed on behalf of consumers, who claimed the 30% of the cost of an iOS app they pay direct to Apple was unfair and excessive, enabled by the fact that Apple doesn’t allow apps purchased anywhere else to run on its devices.
Apple’s initially successful defence was that it doesn’t sell the apps to consumers itself, it just provides the platform for developers to do so and effectively derives a rent from said developers. The appeals court has decided users do purchase apps directly from Apple, thus overturning the original decision.
The broader precedent being explored here is how much power the owners of operating systems should have over the activities conducted on them. Microsoft has spent decades being punished for pushing its luck with Windows and if this reinstated law-suit concludes against Apple it could be the first of many challenges to the commercial domination of not just the iOS ecosystem by Apple, but the Android one by Google.
In 2012 Acer attempted to launch a smartphone running a modified version of Android before Google made it clear this would result in the loss of its rights to use the Play Store and other Google services. Acer cancelled the device.
Apple likes to regularly crow about how much money developers earn from iOS. At the start of this year it issued a press release saying developers earned $20 billion in 2016, 40% up from the 2015 figure. This does also mean, however, that Apple will have trousered around $8.5 billion from all that App Store action. Aymco reckons iOS has generated around a trillion dollars for Apple since the first iPhone.
The issue here isn’t the App Store itself but whether, by compelling developers to conduct all their commercial activity through it, Apple has created a monopoly which it used to grab a bigger piece of the action than it could have in a competitive environment. This is ultimately about control and the implications for mobile commerce could be far-reaching.