Apple defends the App Store ahead of antitrust debates

A 16-page letter argues its mobile marketplace must remain closed.

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In this article: iOS, Debate, news, gear, App Store, Apple, Antitrust
Apple CEO Tim Cook testifies before the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law on "Online Platforms and Market Power" in the Rayburn House office Building on Capitol Hill in Washington, DC on July 29, 2020. (Photo by MANDEL NGAN / POOL / AFP) (Photo by MANDEL NGAN/POOL/AFP via Getty Images)
MANDEL NGAN via Getty Images

Apple has today published a 16-page report that essentially explains why it would be a bad idea to open up its mobile App Stores. The report, dubbed “Building a Trusted Ecosystem for Millions of Apps,” sets out the company’s defense of the status quo. It says that, should the US force Apple to let third parties load apps onto iPhones and iPads, it would irrevocably harm the app market.

As CNBC reports, the timing of this publication coincides with the US’ plan to debate a series of antitrust bills looking to curb Big Tech’s power. These bills will look at a wide variety of topics, from unspooling Facebook’s acquisitions of WhatsApp and Instagram to Apple’s App Store. Lobbyists for rival companies, led by Epic Games, have said that the way Apple runs its developer platform is unfair, and monopolistic.

Currently, the only way any user can install an app on their iOS (or iPad OS and WatchOS) device is through Apple’s App Store. The company charges developers a flat fee of 15 percent on their first $1 million of sales, with that figure rising to 30 percent afterward. Buyers are also restricted to using Apple’s secure payment platform, and each App is vetted by the company before sales. There are a number of extra rules around this, each with the stated aim of reducing the risk of scammers to defraud, cheat or otherwise harm iPhone users.

Apple justifies this by saying that its mobile devices are repositories of information that can never be left exposed. Unlike, say, the Mac, which it treats as a more open general-purpose computing platform, which can install apps from any developer without restriction. It says that the trust people place in their iPhones is paramount, and cites advice from the US Department of Homeland Security to avoid side-loading apps onto their devices.

(The company knows only too well what happens when ecosystems, or at least accounts on those platforms, are breached. In 2014, hackers were able to gain access to accounts hosted on iCloud through spear phishing, and published images from those accounts online.)

By comparison, Apple says that Android — which does allow the side-loading of apps and is regarded as a more open platform — is riddled with security holes. It said that “Android apps aimed at children were discovered to be engaging in data collection practices that violated kids’ privacy” and that “malicious actors have placed inappropriate or obscene ads on apps targeted at kids.” The company added that side-loaded games can circumvent parental controls, trigger ransomware attacks or trick people into handing over cash.

Apple sums up its position by saying that, opening up the platform would “put all users at greater risk,” since it would encourage malicious actors to find holes in the platform. Users who had “grown to take the safety and protection of iPhone and the App Store for granted would have to constantly be on the lookout for the ever-changing tricks of cybercriminals and scammers.” And, consequently, users would be more reticent to download apps altogether, which could harm the developer community.

Of course, Apple’s detractors would take issue with much of what the company has outlined here, and even some of its fans. For instance, Apple’s apparently rigorous system for screening and blocking scam apps is sufficiently lax that a large number have reached the storefront. Developer Kosta Eleftheriou, as explained in a lengthy piece at The Verge, has identified a number of scam apps which are defrauding users but somehow made it through Apple’s review process. There are questions, too, about the fact that Apple makes money on these fraudulent transactions. (As TechCrunch reported at the time, the company's Kyle Andeer said that tracking such scams was a "cat-and-mouse game" and that Apple acts to "rectify" app scams "very quickly.")

Developers, too, are chafing at the idea that they should be liable for such a large commission given Apple’s size and wealth. At the start of 2021, CNBC reported that the store earned gross sales of around $64 billion, and developers are asking what can justify that sort of cash. Until November 2020, the cut was a flat-rate of 30 percent, although the company halved it for smaller companies making under $1 million in sales

The row over Apple’s insistence that in-app purchases must use its platform to guard against fraud came to a head in mid-2020. Epic Games, makers of smash hit Fortnite, pushed an update to the app which circumvented the ban on third-party payments. Apple duly responded by blocking the app for violating its policies, and Epic retaliated by taking the company to court. A similar situation occurred when email app Hey was approved, and then pulled, from the App Store for requiring users to pay for the service on its website.

There has also been a number of objections raised to the way that Apple can make exemptions for some businesses, but not others. Documents published during the Epic / Apple trial seemed to indicate that the iPhone maker made several overtures to Netflix, offering perks to prevent the streamer from dropping in-app purchases. Similarly, Apple seemed to give Amazon more favorable terms to get the Prime Video app onto the platform than it does for other so-called “reader apps.” 

And situations where Apple both restricts how rival companies operate on the App Store and competes with them applies to businesses like Spotify. The Sweden-based audio streaming giant raised a complaint to the European Union which then opened one of several antitrust investigations into the iPhone maker. This was mirrored by a number of investigations across the world, with regulators promising to examine how exactly Apple keeps its App Store house in order.

In its 16-page missive, Apple said that it is a combination of hardware, software and oversight that makes its devices so secure. “Apple’s many layers of security provide users with an unparalleled level of protection from malicious software, giving users peace of mind.” Some developers, however, feel that Apple’s devices are sufficiently secure that side-loading would not as catastrophic as the company is making out. Last year, GK8’s Yair Ivnitsky told Engadget that iOS was sufficiently secure that it’s too time-and-money-consuming for hackers to even bother with it.

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