Very quietly for the past seven years, Apple has been in a legal battle regarding their walled garden App Store. The case is now to be heard in the highest court in the US and will help determine if the App Store is a monopoly.
The case also looks at the 30% so-called “Apple Tax” and if developers of apps are being forced to price their services higher to cover Apple's charges.
Recently a number of high profile companies including Netflix, Spotify, and Fortnite game makers Epic Games have hit back at Apple's fees. Netflix has worked around the rules in recent weeks and directed users to signup outside of Apple and Spotify has complained many times about Apple's “GateKeeper” approach.
Ultimately this affects the revenue received by companies that build apps on the IOS platform including Spotify, Netflix and every other app on the store.
For music platforms this causes a couple of issues;
- Apple Music doesn't have to pay Apple commission
- Spotify's profit margin is less than it could be by a whopping 30% for subscribers who signup via Apple – although this reduces to 15% after 1 year of subscription.
The case is heard again in the supreme court on Monday. This won't be a short fight though. It's been brewing for 7 years so far.
Spotify, Deezer, and other digital platforms are also urging EU regulators to put new policies in place to stop the monopoly.
The Case (Pepper vs Apple)
Robert Pepper and three other Apple users claim only offering the phone on one network (the case began in 2011 after Apple exclusively sold its iPhone through AT&T) and forbidding third-party apps harmed competition and amounted to an antitrust violation. Pepper and co. argue apps would be cheaper if a competing iOS marketplace existed.
Of course, Apple sees this differently. They say they are selling users a device and giving developers access to that device. The access just happens to come with 30 percent commission for Apple on any profits that the developer makes.
The case further argues that Apple “controls all aspects of the sale of apps through the App Store, including the prices at and terms on which apps are sold,” the latter point is reinforced by the company’s requirement that all prices are rounded up to their pricing tier levels that end in either .49 or .99 (Cents/Pound/Euros)