Apple is pitching itself to investors and customers as not only a hardware maker and platform owner, but also a company that sells a variety of services to its users.
Last week, Apple held a launch event at its headquarters in California to underscore the shift and announce new subscription services, including Apple News+ and a new a streaming video package called Apple TV+.
Apple CEO Tim Cook has implied he wants the company’s services business to generate $50 billion in revenue by 2020. Apple’s services include fees collected from the App Store, subscriptions like iCloud and Apple Music, gadget warranties from AppleCare and licensing fees from Google to be the Safari web browser’s default search engine.
But at the same time, several groups have started to accuse Apple of abusing its power over the App Store to favor its own services over third-party apps.
“Apple, you’ve got to break it apart from their App Store. It’s got to be one or the other,” Democratic presidential candidate Sen. Elizabeth Warren said in an interview with The Verge. “Either they run the platform or they play in the store. They don’t get to do both at the same time.”
Spotify recently submitted an antitrust complaint against Apple to the European Commission.
“In recent years, Apple has introduced rules to the App Store that purposely limit choice and stifle innovation at the expense of the user experience — essentially acting as both a player and referee to deliberately disadvantage other app developers,” Spotify CEO Daniel Ek wrote in a letter. Apple posted a response to Spotify on its website that said that Spotify was trying to use Apple’s platform without paying the cost.
However, whether Apple’s control over the App Store is anticompetitive is a tricky question, antitrust experts said. One reason is that consumers who want an alternative can easily buy an Android phone, meaning that Apple may not be technically dominant.
“Apple doesn’t have the same broad monopoly power that Google and Facebook have,” Open Markets legal director Sandeep Vaheesan said.
“Antitrust challenges arise when Apple tries to restrict other entities on its platform,” he continued. “It’s a real concern because Apple has told both iOS users and developers if you want to sell or purchase you have to go through the App Store, and there’s no other way for the two sides to connect with each other.”
Another fact that could stymie Spotify and Warren’s arguments is that Apple has legitimate product reasons to control access to the App Store, including security and its brand value.
“Apple generally believes they have to control the entire user experience from beginning to end, and all of these rules on the App Store can be said to be necessary for the quality of the experience,” said Chris Sagers, a professor of law at Cleveland State University.
“Antitrust cases boil down to the details. Figuring out what exactly these rules that Apple imposes and how they actually keep other people from competing with Apple — that’s complicated,” he continued.