Apple May Provoke Anti-Trust Issues With New App Store Subscription Policy

[Michael Essany]

Within hours of Apple unveiling its new App Store subscription policy for digital content publishers wishing to provide subscription based materials through the App Store, suspicions are mounting that Apple may have effectively placed itself squarely into an anti-trust dilemma over its characteristically stringent control preferences.

Within hours of Apple's announcement Tuesday, law professors who spoke with the Wall Street Journal alleged that Apple's new subscription service "could draw antitrust scrutiny." The reason is rooted in how Apple will allow content publishers to sell subscriptions through the App Store. To begin with, Apple demands all subscriptions be sold through the App Store. As a result, if a magazine wants to publish to the iPad in the form of an app, the publisher cannot include in the app a link back to the website where the subscription is also sold. You see, Apple nets a 30% share of any subscription it manages to sell through the App Store. That's why Apple is also stipulating that publishers cannot offer their subscription elsewhere at a price different from that which is advertised through the App Store.

"My inclination is to be suspect" about Apple's new service, said Shubha Ghosh, an antitrust professor at the University of Wisconsin Law School. Two key questions in Mr. Ghosh's mind: Whether Apple owns enough of a dominant position in the market to keep competitors out, and whether it is exerting "anticompetitive pressures on price."

For now, Apple is not offering comment on any potential antitrust implications. And for that matter, neither is the US Justice Department. But it's clear from the initial wave of reactions to Apple's new subscription policy that more than one legal challenge to its apparent "anticompetitive" nature could follow.

Wall Street Journal

[steve-z17]

Well you either want to publish with Apple and their rules or you don't. That's just how it is.

[Daerid]

What?!? Apple pissing someone off again? No...

[badass1469]

**** apple, they can suck my ****.

[xwinger]

**** apple, they can suck my ****.

[Zokunei]

^were six pictures really necessary?

[StealthBravo]

haha

[Travisjunky]

Apple is a greedy company. Too bad they make kick *** phones I want to buy.

[ShredNasty]

^were six pictures really necessary?

Yes.

[Dnice1987]

Those 6 pictures was very much needed in this post lmao loved everybit of it

[dale1v]

^were six pictures really necessary?

Yes.

8, yeah

[dale2]

oh god the memes

also, i made my name before i knew there was a dale1 lol

maybe i'm missing something, but how is apple wrong for wanting a cut of the pie if someone is using their SDK, and appstore to make money? anyone could make a free app that links to a subscription and bypass apple.
if they wanted to do it their way, they could offer the same subscription through safari

[feidhlim1986]

Well you either want to publish with Apple and their rules or you don't. That's just how it is.

That's why it provokes breaking anti-trust and anti-competitiveness laws.
But I prefer in-app payments or subscriptions rather than having to go through safari to a devs/publishers website and enter my credit card details there too.
Maybe Apple should renegotiate the 70/30 split for subscriptions?

[CaptainChaos]

It's Apple's store. What's the argument here?

[Tidbits]

That's why it provokes breaking anti-trust and anti-competitiveness laws.

I think not for a few reasons.

1. No matter what store you go to they will want profit from anything that goes through their stores.
2. They want an option within the apps to allow competition. It gives choices on where you buy it. iBooks or whatever app/location.
3. I'd want a commission for stuff that I have done. Do you think App store would be successful without putting effort into it? Apple is bringing customers to them, but want an option for them to get some money for it. If these companies have a problem with it why don't they make their own devices, and make their own stores, and see how much money they'd make. I bet it'll cost them more than it does paying 30% to Apple by a large margin even if the device sold more than the kindle, and the nook combined.

[CaptainChaos]

Cydia? How cool would that be?

[dsg]

Appl£ shouldn't stipulate anything they're just a shop.

That like my local shop saying to the sauce manufacture, you can only advertise that you sell that sauce here and no where else, the sauce manufacture wouldn't enter a deal like that because it's bad for business

It's just Appl£ control bull **** again

[j.eck.art.3d]

I think not for a few reasons.

1. No matter what store you go to they will want profit from anything that goes through their stores.
2. They want an option within the apps to allow competition. It gives choices on where you buy it. iBooks or whatever app/location.
3. I'd want a commission for stuff that I have done. Do you think App store would be successful without putting effort into it? Apple is bringing customers to them, but want an option for them to get some money for it. If these companies have a problem with it why don't they make their own devices, and make their own stores, and see how much money they'd make. I bet it'll cost them more than it does paying 30% to Apple by a large margin even if the device sold more than the kindle, and the nook combined.

You are missing a very big point in your rebuttal: Apple is insisting that the publishers not offer their subscriptions elsewhere for a different (lower) price. Apple is effectively price fixing a segment, which is very illegal.

And for those of you here that claim "it's apple's store, you have to play be apple's rules, or just leave". There is a big issue you guys are missing: Apple's extreme success (and for the most part sheer dominance) of the app marketplace is what is going to hurt them. Apple's rules and price fixing wouldn't be contended if it was the underdog upstart because underdog upstarts don't have the ability to influence an entire segment by exuding their will. Upstarts don't have the market share to do that (obviously). If the government sees Apple's app store and iPad as the only "real game in town" (which it currently is) there isn't anywhere else for a publisher to go (there isn't any competition). And on top of which, print is seen as a fast-dying segment, who future is currently relying solely on the iPad. This just compounds the support for an anti-trust suit because a free market economy isn't totally free... it is more like a fair market economy. The US is all about competition, it's what drives innovation and strengthens our economy. The justice department will not like the fact that the only game in town is trying to price-fix the desperate and dying institution.

You see, the more dominant a company gets in a given segment, the more careful it has to be to not fall into an anti-trust suit. It is the nature of the beast, the bigger and more successful you are, the greater chance that your actions will effectively force an entire segment to conform to your will in order to survive.

Apple isn't used to being "top dog", they have always been the "little guys" from the 1984 anti-IBM Superbowl ad until the iPod (and iTunes) took off. They will soon find that with their massive success comes even more massive scrutiny.

[D.J.C.]

I think there is a little something that people are missing. Apple isn't saying you can't sell your subscriptions elsewhere. They are just saying you can't link to an alternative subscription purchase method from within the app itself. Apple's stance behind this is end user simplicity. Give them one easy way to purchase from within the app. If you add more options it would just get too confusing for a lot ( but not all ) users.

[bigboyz]

Either play ball or go home! It is up to a company/publisher to deal with Apple altogether...no one strong arms a company to do business with Apple. EVERYONE knows about Apples stringent business practices...are we to be surprised NOW...??? I don't think so....once again, either play ball or go home :]