Why Apple's New Pricing May Not Be Sinister

Sometimes, it is just business

Key Takeaways

  • Apple’s reduction in small developer pricing is seen as a smart business plan but exacerbates antitrust claims from larger developers.
  • The most damning antitrust claim, self-preferencing, has remained unaddressed by Apple and could be its undoing amid price reductions.
  • Pressure continues to mount against Apple by large companies and growing sentiment against Big Tech may cause problems down the road.
Closeup of a mobile phone with the App Store icon displayed.
@olegmagni via Twenty20

Apple's move to reduce pricing is seen by some experts as an attempt to skirt monopoly accusations, but others say it’s more likely simple business maneuvering.  

Paraded as a reprieve for small developers battling with the fallout from the coronavirus pandemic, Apple’s move to reduce its commission rate from 30% to 15% for developers with $1 million or less in annual revenue has come under fire from larger developers. These developers see the move as an attempt to stifle competition by saving face as the company continues to take a 30% commission from the largest developers on the App Store. 

“This would be something to celebrate were it not a calculated move by Apple to divide app creators and preserve their monopoly on stores and payments, again breaking the promise of treating all developers equally,” Epic Games CEO Tim Sweeney said in a statement. "By giving special 15% terms to select robber barons like Amazon, and now also to small indies, Apple is hoping to remove enough critics that they can get away with their blockade on competition.”

Sweeney was not alone in his criticisms of Apple’s move to drop prices for select developers. Executives at other large companies that make up the Coalition for App Fairness also had some choice words for the Silicon Valley corporation. Namely, a repudiation of its decision to play in different sectors like the television and music streaming (App TV+ and Apple Music) while having the ability to set pricing for its competition and take an additional cut should they get too big and grow past the $1 million revenue threshold.

Effect on Antitrust Claims

Legal experts suggest monopoly claims are little more than white noise as the company’s pricing decisions have no bearing on anti-competition accusations. Instead, it's little more than a simple business move likely seeking to undercut other app store competitors like Google and Microsoft.

“Normally, antitrust regulation does not intervene in a firm’s internal pricing behavior. It is also difficult for regulators to decide what is fair pricing, so I think these app developers have a relatively weak antitrust case,” Angela Huyue Zhang, director of the Center for Chinese Law and author of the new book Chinese Antitrust Exceptionalism: How The Rise of China Challenges Global Regulation, said in an email interview. “Apple’s decision to lower its prices for the developers has more to do with competition from other platforms rather than antitrust concern.”

A top down view of an iPhone next to a laptop.
unsplash / Mockup Photos

Google, its largest mobile app competitor, brings up the rear with nearly half the annual revenue of Apple’s App Store. Together, the two account for nearly 100% of mobile app sales globally. The third-largest, Windows Apps, does not even register on the list. Monopoly accusations against Apple continue to fall short, but concerns regarding its ability to dominate the mobile app industry persist. Lending an air of legitimacy to the otherwise threadbare antitrust accusations.

The House Subcommittee on Antitrust, Commercial and Administrative Law found Apple to be nominally violating the competitive nature of the market. “Apple’s monopoly power over software distribution to iOS devices has resulted in harms to competitors and competition, reducing quality and innovation among app developers, and increasing prices and reducing choices for consumers,” the subcommittee wrote in a statement recommending the federal government overhaul its antitrust laws.

More Business Than Monopoly?

There has been a growing concern about this type of conduct in antitrust. It is called self-preferencing, and this is where antitrust complaints against Apple are the strongest.

“It is also possible to argue that, whatever rate Apple offers to small developers if Apple continues to give preferential access to its own apps such as Apple Music while charging a high commission to certain competing apps, this is still anti-competitive conduct under the controversial ‘self-preferencing’ theory,” Renato Nazzini, a law professor and adviser to the International Competition Network, said in an email interview with Lifewire.

The self-preferencing antitrust theory in the world of technology is based on a current case that made its way through the EU courts, where Google used its position as the leading search engine to favor its new shopping vertical. When consumers would use Google to search for items to buy, the top results would direct them to Google Shopping as opposed to the more popular outlets the algorithm would usually generate. 

The concept of self-preferencing is not new in the legal world, but as tech conglomerates continue to grow and bleed into other industries the ability to self-preference has come under additional scrutiny.

A definitive answer to whether Apple partakes in monopolistic behavior is unlikely to be settled as litigation wages on. However, with mounting pressure from government officials and a soured relationship with large tech developers, the possibility for Apple to unravel by way of antitrust violations remains possible in a political climate primed against Big Tech.

Was this page helpful?