Why did Apple kill iTunes

"This is how Apple killed my company" - Tinder, Spotify and a Swiss app provider are mobilizing against the market power of the tech companies

End customers would pay excessive prices because of the market power of Google and Apple, criticize app providers from all over the world. Now they have founded a new lobby group.

"This is how Apple killed my company," is the title of the blog post. In it, the CEO of the startup Eristica, Nikita Akimov, describes how Apple blocked its app. The app is called Challenge, in which users sent videos in the style of “Truth or Dare?”. A screenshot shows that Apple informed the startup in July that the app could "cause physical damage to the user or others".

Eristica then introduced several changes, such as the pre-moderation of the videos, writes Akimov. But it didn't work. Apple rejected seven new versions of the app, each with a brief, vague reason. Inquiries, calls and emails would not have helped. Apple did not want to comment on request. "Challenge" is still blocked in the App Store to this day. Akimov claimed that 90 percent of its sales were made through Apple's store. Eristica and its 13 employees are now forced to temporarily stop operations until the problem is perhaps resolved.

From Facebook to the "Wall Street Journal"

This cry for help joins a growing chorus of developers who criticize Apple and increasingly also Google for the rules of their app stores. The best known case is that of the computer game developer Epic, who no longer wants to pay 30 percent fees on in-app sales. Epic launched a campaign against Apple and Google in August, including lawsuits. Previously, complaints from Facebook, Airbnb, the messenger service Telegram, the blog portal Wordpress and American newspapers about the “New York Times” and the “Wall Street Journal” received less attention.

What they all have in common is that they criticize the supposed monopoly position of the two tech companies. Here are a few figures: Worldwide, practically all mobile devices such as smartphones and tablets run on Apple's iOS operating system (market share around 25 percent) or Google's Android system (around 75 percent). Apps for Apple devices can only be downloaded from the company's own store. There are also alternatives for Android from Huawei or Microsoft, but Google's Play Store clearly dominates with around 90 percent.

The resistance to this is now becoming more professional. In September, a dozen critical companies and two media associations joined forces to form the Washington-based Coalition for App Fairness. The coalition is amazingly colorful. It includes Epic and the music streaming provider Spotify, on whose complaint the EU Commission opened proceedings against Apple in June. Spotify's competitor Deezer is also there, as well as the Tinder provider Match Group, the cryptocurrency exchange Blockchain.com and the Swiss email provider Protonmail. This is joined by the European Publishers Council (EPC) - and with it some of the largest media groups on the continent such as Springer, Gruner and Jahr, The Guardian and Ringier.

According to its website, the new coalition wants to “establish eye level” with the app stores. She has formulated ten principles that she believes should apply across the industry. For example, no developer should be forced to use a certain app store exclusively. Nor should anyone have to accept additional services and obligations such as a specific payment system for access to an app store. And every developer should always have access to all app stores, as long as their app meets clearly defined standards.

Google is targeted

So far, criticism from app providers has mainly focused on Apple. Its so-called ecosystem is hermetically sealed; At the same time, the offer there is considered better than in Google's store because of the more intensive preliminary checks. Now, however, Google is also coming into focus. At the end of September, the group published new rules and a “clarification” with regard to its fee policy. Accordingly, all apps in the Play Store for in-app sales must use Google's payment system from October 2021. As with Apple, developers should pay 30 percent fees; Alternatives such as credit cards or PayPal will then no longer work.

The protest followed immediately, especially in South Korea and India, where there are many game developers affected. According to Google, games are mainly affected by the fees because the rules only affect digital goods, such as additional weapons in fighting games - but also music and media subscriptions. In South Korea, the competition authority has been investigating Google for some time. At a hearing in parliament last week, the head of the agency said he believed that competition in the industry was not working properly. The telecom regulator also determines, specifically for the fees in the Play Store. Google wants to reassure the Korean developers with a "support fund" of 100 million US dollars - too little, the ICT minister decided.

Apple critics are also preparing to take action against Google as well. The Coalition for App Fairness did not respond to a request, but two of its members found clear words for Google. The director of the European Publishers' Association EPC, Angela Mills Wade, said that until recently her association had focused on Apple's App Store because the "exploitative nature of the terms and conditions there was monstrous". But after Google's recent announcement, the EPC sees "similarly worrying problems" coming, which the association is currently investigating. In the meantime, EPC member Ringier only announced on request that it was currently analyzing the Google announcement.

The e-mail provider Protonmail illustrated the effects of Google's fee policy to this newspaper. Those 30 percent "would be higher than our margin, so it is likely that we would have to increase prices in the Google Play Store, similar to what we were forced to do in Apple's App Store," said media spokesman Edward Shone. Protonmail's entry-level account is free; For one with extended functions, customers pay 48 euros a year on the website - and 64 euros 99 in the Apple store. This is also a shame for Protonmail because fewer Apple customers bought the payment account.

Direct Competitor Fees

In the case of Protonmail, there is also the fact that the company competes with Google and Apple because the companies also operate e-mail services. Protonmail therefore finds it all the more offensive to have to pay a 30 percent fee to a direct competitor. There is a similar constellation between the music providers Deezer and Spotify and Apple with iTunes.

The case of the two music providers is a reminder that some critics of the app stores walk a fine line to hypocrisy. Deezer and Spotify have the market power for musicians, which they criticize at Apple and Google. And the supposed David Epic Games is 40 percent owned by the Chinese tech goliath Tencent, the world's largest game provider and inventor of WeChat, the proverbial “app for everything”. In the light of the US-Chinese tech conflict, it is also interesting when Epic Games of all places takes on two American global corporations.

Microsoft also has to put up with the suspicion of hypocrisy. At the beginning of October, the group promised to apply the ten principles of the Coalition for App Fairness in its app store. In other areas, however, Microsoft is consistently playing its market power. Where the group has none, it can easily insist on fairness.