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Apple’s antitrust mess continues to deepen, and today’s announcement of Apple Pay is the latest example. The company is now under attack from so many fronts in so many countries that it spends half of its PR life defending its position, and the law will eventually force it to change anyway.

What baffles me the most about the company’s tenacity on this issue is that the mess can be resolved so easily and I’m sure it won’t even cost the company a lot of money.

If you think this is about monopolies, read this first.

First of all, we need to dispel a very common misconception about antitrust laws: that they only apply to monopolies. This literally never happened. Indeed, as we point out in our guide, the very origin of the term suggests that several large companies operate in the same space:

In most jurisdictions around the world, large companies are prohibited from joining together to enter into agreements or “trusts” to behave in a certain way – for example, so that everyone sells their products at the same high price. Laws aimed at prohibiting such behavior are called antitrust laws.

We continue:

However, in a more general sense, the term is used to refer to laws designed to prevent companies from engaging in any anti-competitive activities, that is, any activities that may artificially distort competition in the market.

There is a large market for mobile phone applications. Globally, Apple controls about 27% of this market. In some countries it is about 50%. In the home market of Apple in the US, it is more than 50%. No matter how you cut the numbers, Apple is one of the biggest companies dominating this market.

Many antitrust disputes with one common element

Apple is facing antitrust battles on a number of fronts. Chief among them is that Apple has complete control over the App Store. It sets its own commission rates and iOS developers have no choice but to pay them. Many regulators want multiple app stores to be allowed so that there is competition to sell iPhone apps and that developers and consumers can choose which stores to support.

There are a bunch of other issues that overlap with the App Store…

Apple Music vs Spotify. This is a special case because Apple Music directly competes with Spotify, and Apple gives its app a big advantage when it comes to attracting paid subscribers:

You can subscribe to Apple Music in the app;
Spotify would have to pay Apple 30% for this (which is economically impossible) Apple has Apple Music promotions on iOS Apple Music is available as part of a discounted package (Apple One)

Preinstalled Apple Apps. Apple creates its own apps and preinstalls most of them on the iPhone. This gives them a huge advantage over competing third party apps because people will use Apple apps by default. If iPhone owners had to choose which apps to download, it would be a more level playing field.

Apple Arcade vs Epic Games. Apple allows itself to have a built-in game store (albeit by renting them, not buying them), but does not allow other companies (like Epic Games) to do the same.

Apple Pay. Apple only provides NFC access to its mobile wallet, denying it to competitors. Also, because banking apps don’t have access to the NFC chip, banks and card companies are required to enroll in Apple Pay if they want their customers to use iPhone and Apple Watch for contactless payments.

The common element in all of this is that Apple benefits financially while leaving competitors at a disadvantage.

Apple protection

If you listen to Apple, this has nothing to do with money. Oh no, siri! This is purely customer protection.

In fairness, it should be said that the company has the right to exist. If you compare the level of malware between iOS and Android, especially when it comes to those Android users who go beyond the Google Play Store to third-party stores and downloadable apps, it becomes clear that the App Store is safer.

Apple would do the same for Apple Pay. This is a very, very secure payment method. For example, Apple generates a one-time card number for every transaction and passes this unique number only to payment terminals.

But third-party companies may offer the same guarantees.

Apple says it guarantees the security of all apps allowed in the Apple Store. This is a bit of a disingenuous statement, since basically the security built into iOS, such as the sandbox, protects users. This would be true regardless of which app store the app was sourced from.

But, Apple continues, it also protects users from rogue apps. Em…

The broader point here is that any third-party app store is free to do its own review, and there’s no reason why it can’t do its job as well as Apple.

The same goes for Apple Pay one-time tokens. It’s not an Apple technology: it’s an industry-wide protocol known as EMV payment tokenization (EMV stands for Europay, MasterCard, Visa are the three organizations that jointly developed the approach). Google Pay and Samsung Pay do the same, and individual banks can create apps that use the same technology. However, only Apple Pay can use it on the iPhone because you can’t do it without access to the NFC chip.

As such, any protection offered by Apple may be offered by third parties. However, this is not even my main idea.

Most people would still choose Apple’s walled garden.

Even if Apple’s horror stories were true – that only Apple can properly protect customers from the big scary world outside of its own walled garden – it’s not entirely true.

While there has been speculation from time to time that Apple should be split, the vast majority of antitrust authorities do not tell Apple that it cannot offer its own app store, music streaming service, mobile wallet product, weather app, gaming subscription, or that something else.

All the regulators are saying that Apple should allow third parties to compete on an equal footing – in other words, Apple should continue to offer the official App Store, but allow third parties as well. iPhone owners can then choose which app store to use. Continue to offer Apple Pay and allow banking apps to use the NFC chip. Etc.

I bet it won’t even cost Apple a lot of money – for two reasons.

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First, the average non-tech savvy Apple customer will choose Apple every time. Offer them the Apple app store and the Epic Games app store, and the vast majority will choose the Apple store.

Second, even techies will mostly stick with Apple. One of the main reasons I buy an Apple kit is because I actively love and appreciate the Apple ecosystem. I like how everything is integrated because it’s all run by one company. So even people who are looking at alternatives and exploring what they have to offer will still basically stick to Apple’s offerings.

That’s why Apple’s stubbornness on antitrust issues baffles me: it’s practically free to open a case, and if you don’t, there is significant risk.

If Apple opens voluntarily, it can (within reason) choose its terms. As long as things are fair enough, politicians won’t have much reason to insist that this goes a little further.

But if he waits for lawmakers to set the terms, he risks being in a much worse position. Now, for example, many argue that Apple’s 30 percent commission for large developers is too high. If Apple waits for lawmakers to take action, it may have to charge a lot less. If he simply allows third-party app stores — which hardly any iPhone users will use — he can continue to take his cut, shrugging his shoulders and telling lawmakers that both developers and consumers are free to use any other iPhone app stores.

Apple is now the leader and should behave accordingly

Macworld’s Dan Moren suggests that this stubbornness is part of Apple’s DNA.

There’s something in the company’s DNA – probably handed down in part from the late co-founder Steve Jobs – that promotes the idea that there are two ways to do things: the Apple way and the wrong way.

Maybe there is something in this. Steve often did things that people called outlandish, and he won most of those bets.

But today’s Apple is not Steve’s Apple—an upstart company fighting well-established corporations. It’s no longer a little kid on the playground bravely challenging bullies. Apple is now a 240-pound high school quarterback who looks more and more like he wants to be bullied.

It’s time for a more mature approach. Apple, accept that antitrust pressure won’t magically disappear just because you want it to. Recognize that a voluntary change now will benefit you more than a managed change later. Recognize that fighting all the way to defeat comes at a cost to reputation, and taking action right now can earn you PR. Act like a leader, not like a stubborn follower.

This is my point of view; what about yours? Take our poll and share your opinion in the comments.

Photo: Rock Star/Unsplash

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