Saturday, February 19, 2011

Can Apple really get away with this?

Apple is now doing their best imitation of Microsoft.  Let's look at what they are doing:

  1. Charging 30% for all in-app subscriptions
  2. Ordering app makers to remove links to their sites where they could subscribe outside of the app store
  3. Ordering app makers to charge the same or better amount in the app store as they do in their own site.
I think they can get away with item 1 and maybe even 2, but 3?  Remember when Microsoft used to charge OEMs like Dell and Gateway Windows licenses per CPU sold, regardless of whether the customer chose Windows?  I see this as similarly pernicious.  The FTC stepped in and looked at antitrust implications and basically told Microsoft that you can't charge Windows licenses for computers where Windows is not installed.  Microsoft had to back down on these Draconian licensing schemes, because they were killing competition in the Operating System market.  The OEMs could simply not afford to be paying the "Microsoft Tax" or encourage the development and sales of alternate operating systems.

Now Apple is doing something which, although technically different, amounts to the same thing.  They are holding the App Store approval hostage for iOS devices.  They are in effect saying, "If you want to sell your stuff in the app store, we get some say over what you charge OUTSIDE of the app store."  This is a bridge too far, and given Apple's dominant position with tablets with the iPad, should draw close antitrust scrutiny.  Apple should have no right to tell any business how to conduct its affairs or price its products outside of the App Store.  Apple's argument is, of course, that the user who subscribes outside the app store would then be able to download the company's app, and access their subscription, without Apple getting anything more than the possible price of the app itself. 

To this I say: so be it.  Apple has no business trying to collect subscription fees for in-app purchases, in my opinion.  The app store exists as a store for (bear with me now) APPS.  Now, I recognize that this doesn't stop Pandora from making a free app and charging subscribers outside the App, and Apple gets nothing.  I get it.  So, if you're Apple, and you want your cut so bad, you simply make a rule that says that a content producer providing an App in the App Store must charge the user enough for the app so that Apple 30% gets the cost of a single subscription.  What this does is pass on to the consumer the Apple tax...but it limits that cost to the APPLE CONSUMER, not all consumers.  Because make no mistake, if a company has to charge the same amount for both in app and out of app subscriptions, they will simply raise the price of ALL subscriptions, meaning that an Android customer is effectively subsidizing the Apple tax.  Think about that.  You own an android device and you now are paying a 30% higher price for your Android subscription to cover the expenses of that company having to give Apple a 30% cut in the App Store.  That's ABSURD.  

Of course, Apple won't bend on this matter, because Apple is power and money hungry.  They are obsessed with profit and will get it regardless of who they tick off (at least until someone stands up to them or pushes them into being a niche provider again).  Apple wants to pretend that this is customer friendly, because of the convenience to the customer of an in-app purchase, but the reality is Apple wants to make the rules for the entire content distribution market.  Apple is betting that the content publishers are just going to bend over and take it.  That's why we need competitive devices and OS's.  Android is already there as a phone.  Now the Android tablets need to take root.  Once content providers see enough money in the alternate landscape, there will be competition, and once Apple users finally say "Enough" and start bailing, Apple will be brought to heel.  But as long as the sheep-like Apple fans continue to just drink the kool-aid and take this nonsense, they will end up paying the Apple Tax, because the content providers will just pass it on to you.

The ball is in your court, Apple customers.

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