The DOJ and the FTC and the EU, oh my!

The Wall Street Journal: Antitrust Enforcers Eye Apple Anew

The Justice Department and the FTC are both interested in examining whether Apple is running afoul of U.S. antitrust laws by funneling media companies’ customers into the payment system for its iTunes store—and taking a 30% cut, the people familiar with the situation said. The agencies both enforce federal antitrust laws and would have to decide which one of them would take the lead in the matter. … Apple’s rules don’t stop media companies from selling digital subscriptions on their own. But the company imposed restrictions that could make that option less attractive to customers, and steer more sales through its own system.

Let’s hope they don’t focus solely on subscriptions or music, but look at the eBook business too. I pick that one because Apple joined the eBook business on iOS late in the game and is now using these rules to try and force the existing companies to either go out of business or to raise their prices significantly higher than those of Apple’s iBookstore (thus going out of business later, or otherwise pushing their customers to Apple).

There’s also the question of the value provided by Apple’s in-app purchasing channel:

  • If the value is in the in-app-purchasing API, then that doesn’t scale between a $100/month and a $1M/month vendor: both using the same API, yet one is paying $30/month, the other $300’000/month.
  • If the value is in the ease of payment processing, then the question is whether it’s unfair of Apple to mandate that everyone uses their service at 30% commission rather than, say, PayPal for 3%, when they both provide the same service (PayPal has an API too, after all).

If this really is all about the end-user experience and not about gaining competitive advantage or making a cash-grab, then Apple should be willing to open up a layer of the in-app purchasing API such that it could hook into alternative payment providers (similar to the NSAtomicStore for CoreData). That way the users get the great experience, vendors don’t necessarily have access to the users’ payment details, but they can feed the transaction into a separate payment handler, for instance PayPal or others. At this point, PayPal could also charge a flat fee or an increased commission for the use of their iOS in-app-purchase payment connector as well. But if you’re selling your own content directly and value ease-of-development, then Apple still has a good value proposition, and can make other changes to further entice users.

It’s all about market forces. Having one arm of a company simply mandate the use of the same company’s other profits is somewhat naughty.

At least Microsoft played dirty to get rid of Netscape and WordPerfect— they didn’t outright ban their use in the EULA.

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