{"id":30375,"date":"2020-10-07T12:59:54","date_gmt":"2020-10-07T16:59:54","guid":{"rendered":"https:\/\/mjtsai.com\/blog\/?p=30375"},"modified":"2021-06-18T07:04:25","modified_gmt":"2021-06-18T11:04:25","slug":"house-report-on-competition-in-digital-markets","status":"publish","type":"post","link":"https:\/\/mjtsai.com\/blog\/2020\/10\/07\/house-report-on-competition-in-digital-markets\/","title":{"rendered":"House Report on Competition in Digital Markets"},"content":{"rendered":"

John Gruber<\/a>:<\/p>\n

The House Judiciary subcommittee that held a hearing with the CEOs of Amazon, Apple, Facebook, and Google back in July has issued a 449-page report on its findings and recommendations.<\/p><\/blockquote>\n

The report is here<\/a>. Some of the parts I found interesting:<\/p>\n

Apple’s market power is durable due to high switching costs, ecosystem lock-in, and brand loyalty. It is unlikely that there will be successful market entry to contest the dominance of iOS and Android.<\/p>\n

[…]<\/p>\n

In response to these concerns, Apple has not produced any evidence that the App Store is not the sole means of distributing apps on iOS devices and that it does not exert monopoly power over app distribution. Apple says it does not create—nor is it aware of third-party data—that tracks market share in the app distribution market.<\/p>\n

[…]<\/p>\n

Apple’s monopoly power over software distribution on iOS devices appears to allow it to generate supra-normal profits from the App Store and its Services business. Apple CEO Tim Cook set a goal in 2017 to rapidly double the size of the Services business by the end of 2020. Apple met this goal by July 2020, six months ahead of schedule.<\/p>\n

[…]<\/p>\n

Apple also makes some exceptions to its rules and may change or update its rules.<\/p>\n

[…]<\/p>\n

Industry observers have also challenged Apple’s implicit claim that the iPhone was the start of the online software distribution market.<\/p>\n

[…]<\/p>\n

In an interview with Subcommittee staff, Phillip Shoemaker, former director of app review for the App Store, estimated that Apple’s costs for running the App Store is less than $100 million. […] Although only estimates, these figures indicate that as the mobile app economy has grown, Apple’s monopoly power over app distribution on iPhones permits the App Store to generate supra-normal profits. These profits are derived by extracting rents from developers, who either pass on price increases to consumers, or reduce investments in innovative new services. Apple’s ban on rival app stores and alternative payment processing locks out competition, boosting Apple’s profits from a captured ecosystem of developers and consumers.<\/p>\n

[…]<\/p>\n

In Apple’s internal documents and communications, the company’s senior executives previously acknowledged that IAP requirement would stifle competition and limit the apps available to Apple’s customers.<\/p><\/blockquote>\n\n

Juli Clover<\/a>:<\/p>\n

Apple in a statement to MacRumors<\/em> said that it strongly disagrees with the conclusions reached in the report in respect to Apple, and that Apple does not have dominant market share in categories where it does business.<\/p><\/blockquote>\n\n

See also: Hacker News<\/a>, Steve Troughton-Smith<\/a>, Steve Streza<\/a>, Brent Simmons<\/a>, Michael Love<\/a>, Matt Birchler<\/a>, Ben Thompson<\/a>.<\/p>\n\n

Previously:<\/p>\n