Apple’s “Security” Pitch Conveniently Protects the iOS-Android Duopoly

Commentary, Economy, Jack Buckby

In October, Apple Inc. warned that draft rules from the European Union that would require the technology company to open up its mobile operating system to third-party apps would pose a security risk to its users. 

Expanding on comments already made by CEO Tim Cook, a statement from the company said that if Apple were required to support the “sideloading” of apps—whereby users install software from outside of the official Apple App Store—then it would be “easier for cybercriminals to target them.” 

The proposed Digital Markets Act is an example of good legislation coming out of Europe. It aims to establish a set of “narrowly defined objective criteria for qualifying a large online platform as a so-called ‘gatekeeper.’” It would focus primarily on “large, systemic online platforms” that meet three criteria. 

The company must have a strong economic position and a good intermediation position whereby it links a large user base to a similarly large number of businesses, as well as an entrenched and durable position in the market. 

Under the proposed legislation, new innovators and tech startups would not be hindered by monopolistic, duopolistic or gatekeeping behaviour from Big Tech companies that already have dominance in relevant markets. In simple terms, it means that Apple won’t be able to decide what apps users are allowed to install on their mobile devices—and would stop the company from engaging in anti-competitive behaviour designed to drive its hardware users to become entrenched in its software ecosystem. 

For Apple, which is increasingly becoming a software and services business that uses its hardware wing as a gateway to attract customers, this legislation poses a huge problem. This year, Apple’s services revenue reached US$16.9 billion in the first quarter of the year—an increase over the US$13.3 billion just a year earlier. Apple now has its own subscription music service, subscription television service, an online cloud service, Microsoft Office-like apps and more. Apple is even working to make it difficult for iPhone and iPad users to use any non-Apple service for games, preferring users to instead subscribe to its Apple Arcade game plan. 

Apple has not explicitly banned other game platforms but has instead opted for a constructive dismissal-style approach that gives the company plausible deniability. The Apple App Store, where people download apps and services approved by Apple, requires the developers/owners of apps in the store to hand over 30 per cent of revenue made through those apps. For some, it’s a price worth paying to tap into a market of 1.5 billion active iOS devices—but for others, it destroys their business model.

Epic Games filed a lawsuit against Apple over its 30 per cent rate, arguing that it made services prohibitively expensive to the end user and impacted the gaming company’s own revenue structure. Microsoft experienced similar trouble, being forced to drop its launch of a game-streaming Xbox service on iPhone and instead encourage users to access the service through a browser. 

iPhone and iPad users who prefer non-Apple game streaming services are forced to use buggy and less-than-convenient traditional websites to play those games, as gaming providers would not be able to maintain a subscription streaming model if 30 per cent of that monthly revenue were handed over to Apple every month. 

How, exactly, can Apple claim this is a matter of security? 

Combined with the ongoing “right to repair” battle, which argues that users should not be forced by big companies like Apple to take their devices to official Apple stores for overpriced repairs, there is a compelling argument for this new European legislation. 

Not only would restricting Apple’s anti-competitive behaviour allow users to enjoy any software they prefer to use on their phones, rolling back Big Tech’s ability to censor social media apps which conservatives typically prefer, but it would also threaten the Apple-Google duopoly that has existed for roughly the last 10 years.

The Digital Markets Act is a start and the reasonable next step is app neutrality. Alternative operating systems and platforms, outside of Google Android and Apple iOS, must be able to compete in this mobile device space. Not only do Google and Apple control what apps can be installed on their operating systems, but they establish hurdles that make it harder for competing ecosystems to use these same apps. Developers may produce software that can easily run on other platforms, but those platforms are denied access to the software by the Google-Apple duopoly—making it impossible for users to choose non-Apple and non-Google devices to perform everyday tasks like online banking, using social media and viewing content.

Notably, Google blocks full use of apps developed for Android on competing operating systems, including Amazon’s FireOS, the now-retired BlackBerry 10 OS and the upcoming Windows 11 operating system by denying access to Google Play services. Android apps technically run on those operating systems, but many run inefficiently or without full access to various services simply because Google denies access to those services.

In other words, if you want to use apps, you must use Apple or Google—and if you use Apple or Google, you must only use the apps they allow you to use. 

The Digital Markets Act could be a step towards app neutrality, and towards a freer operating system market that gives users a choice. 

 

Jack Buckby is a research associate with the Frontier Centre for Public Policy. 

Photo by Medhat Dawoud on Unsplash .