Building Astropad Podcast Episode 13:
After getting wrapped up in the antitrust investigation into Apple, we spent a lot of time thinking about how the App Store needs to change. So we’re sharing our solutions for how Apple could avoid future anti-trust action. We talk through 5 changes Apple could make right now which would stop government intervention, build a more vibrant app economy for developers, and give consumers more choices.
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Links and resources
- Matt Ronge on Twitter
- Savannah Reising on Twitter
- Blog post: Apple, here’s how to stop the antitrust investigations
- Blog post: Why getting sherlocked was a blessing in disguise
- House report: Investigation of competition in digital markets
Matt Ronge 00:06
Well, hi everyone, Matt here, here with Savannah.
Savannah Reising 00:32
Matt Ronge 00:33
Yeah. And so today we’re talking about Apple and antitrust and how to fix the app store. So Savannah wrote this really great piece on some ideas on how to fix the app store because Apple has been under a lot of anti-trust, actually big tech in general has been under a lot of antitrust scrutiny recently because of the amount of power they control over the economy and people’s lives. And Apple’s been one of them. But one thing we noticed is everybody was talking about how Apple – and we’re going to talk a lot about Apple because that’s the one we understand the most, we’re most familiar with – a lot of people talk about how apple has a monopoly, but nobody talks about what to do about it. What are some remedies other than massive government intervention? What are other ways? What are ways that, say Apple could go about fixing the problem themselves? And so Savannah put this awesome piece together on that.
Savannah Reising 01:24
Yeah. Everyone likes to talk about the problem, but no one is offering solutions. And the only solutions that I have seen are very high level and not very, I dunno, actionable or tangible things that could happen easily. So, I mean, yeah, there’s been so much commotion and discussion about this over the past year, but not a lot of, you know, solutions that have been out there. So that’s what my hope with this article was to do is put some things forward that wouldn’t actually require legislation. It wouldn’t depend on the us government to step in and fix these problems. These recommendations that we’re going to talk about are all things that Apple could do today to fix some of these antitrust scrutinies that they’re under. Before we get started. I do want to say that we are not antitrust monopoly experts by any means.
Matt Ronge 02:26
Savannah Reising 02:28
No. We are just, you know, some people, part of a third party development company that happens to, you know, have gotten caught up with this anti-trust stuff. So I think that’s where we should start, is talking about how we did get, you know, tangled up in the antitrust drama that’s been going on.
Matt Ronge 02:53
Yeah, no, that’s a, that’s a good point. So our original product Astropad well, and actually Luna display to both extra pads, lunar display. We ended up getting what’s called sherlocked by Apple, which for those of you that don’t know, it’s common for Apple to see popular hardware or software in their ecosystem, and to essentially copy it and integrate it with their systems with their operating system, integrated with their hardware. And this has been going on for a long time. But, Apple’s never been as powerful as they are now. And big tech in general has never been as powerful as they are now. And in fact, I don’t think Apple’s ever done as much sherlocking as they’re doing now. And we were one of many that particular that got swept up in that and was, was sherlocked. And after that happened, we became a company that people were reaching out to and wanted to talk to about Apple and antitrust. So journalists started reaching out to us and started talking with us.
Savannah Reising 03:56
And that was happening because we were being very open about our experience being sherlocked, which was different from what a lot of other companies did when they were sherlocked. I think there’s this fear that if you speak out against Apple, you’re going to get crushed by them. And we, I mean, getting to Sherlock’s, it definitely hurt our business and so we kind of felt like we had, in a way, like nothing to lose, but to be open and candid about our experience, hoping that, you know, maybe we could start a conversation and maybe incite some change with the Sherlocking and all of the anti-trust stuff. So we’ve been outspoken and it’s not coming from a place of like, Oh, we were whining about being sherlocked. I mean, what happened, happened, and we’ve moved on from it. And we’re in a, honestly much better place now because we were sherlocked like, we are taking our products, cross-platform, launching on windows. And so in the end, it was for the best, but we learned a lot of really good lessons about it, about running a business and yeah, some like bigger lessons about big tech that we want to share. And so that’s where we’re coming from.
Matt Ronge 05:22
Yeah, it’d be a shame not to share a lot of the lessons we’ve learned. You know, we certainly don’t have everything figured out, but we’ve definitely learned some things in the school of hard knocks here and this stuff doesn’t apply just to Apple. This also applies to businesses that rely on Google services. This applies to companies being built off Facebook. This applies to companies selling goods off Amazon. All of these are major platforms that have to be really careful with their an overlord in a way, the platform they’re, they’re building on. So our experience comes from the Apple world, but this is applicable to so many different kinds of companies.
Savannah Reising 06:02
Yeah. I think if we had to sum up like the biggest lesson that we learned from. Getting sherlocked is that you can’t rely solely on one platform, which is what we were doing. Like, we were totally wrapped up in the Apple ecosystem and now we’ve learned our lesson and yeah, I think that’s applicable for any platform that you could be developing for, but we have a different podcast all about everything that we learned getting Sherlocked. And I don’t want to talk too much about that today because I want to talk about actually like the app store and what could happen to make the app store a more even playing field for third-party developers like us.
Matt Ronge 06:48
Yeah. Yeah, no, definitely. And if you are interested in more of the sherlocking story and the immediate aftermath and how we reacted as a team, go back to our first episodes of Savannah and I did. Our first ever podcast episode was on that. So check that out, but yeah, let’s talk app store.
Savannah Reising 07:03
Yeah. So we have five recommendations for the app store and before we get into them, I want to say, like the ultimate goals for each of these recommendations is that they level the playing field for developers and that they promote a rich app economy for consumers. If those two things happen, then developers, win consumers win and Apple wins, really like I do think that it can be like a win-win-win. If Apple did these things, it would be good across the board. So that was my metric for coming up with these recommendations, is it going to help developers, but also ultimately are consumers going to win and benefit from these things? So just to like from the top, give an overview of the five recommendations they are. Enabling users to set default app preferences. The second one is open up alternate payment mechanisms without the Apple tax. Allow sideloading of iOS apps, give third party developers equal access to APIs. And the fifth one is to stop sherlocking third-party developers – which we can speak directly to. So going back to the first one, which is enabling users to set default app preferences, Matt, what are some of the current limitations for users when it comes to setting out preferences.
Matt Ronge 08:43
Yeah. So Apple did recently open this up some, and I really should pull up my iPhone here and see what they allow you to do now. But it used to be that you could not change at all, any of the default apps. So if you clicked an email link, if you clicked a web link, if you clicked an address, it would go to whatever app Apple felt it should go to. So in the case of a link, it would go to, you know, Apple’s Safari web browser, an email, it forced you into the email app. There was no way to override the defaults. You were forced to use what Apple wanted you to use, which in their case is often their services as well. Like Apple maps. They don’t really want you using Google maps and they’ve made it really hard to switch out the defaults, even though there’s a wealth of. Third-party alternatives from other, from both big and small companies, they have not made it easy to change that until recently. And this is a result of people speaking up and that antitrust pressure working. I mean, Apple is making changes. The more people talk about this. So since this article was written, they have changed it some. I’m actually going to pull it up on my iPhone here. I need to find it right now, but yeah. And those, the thing too is the defaults are super powerful. I mean, very few people are going to go out of their way to use a third-party app when clicking on an address automatically takes them to Apple maps. Right. They’re going to stick with Apple maps. It’s very unlikely. You really. Have to know what you’re doing to even work around that. So it’s extremely powerful, extremely sticky to be able to set those defaults. And on top of it, former Apple, the former, I think it was director of app review, even admitted that Apple had talked about this internally. And they didn’t want to allow changing the defaults because they knew that having the default so sticky to a drive so much user engagement by not being able to change it. So they were, they were afraid of, for example, being able to set Gmail and Google, you know, basically override the phone, right. In their nightmare scenario you’re using Google voice for making phone calls, you’re using Gmail for email, you’re using Google maps as the mapping app. You’re basically no longer really interacting with Apple’s software at that point. And that’s not what Apple wants happening with their devices.
Savannah Reising 11:06
Yeah. And by if it was completely open for users to set their default preference, then it really forces Apple to compete based on merit, you know, and like the quality of their apps, rather than forcing people into using Apple maps when they really, they really don’t want to. So not only would it be more freedom for the consumers, like the people using iPhones or whatever .But yeah, it kind of raises the standards across the board because now Apple is going to be competing with, you know, all of the other third-party developers on the quality of their apps and a good example of this and how it’s been going on for a long time is back in the nineties with Netscape and Microsoft.
Matt Ronge 12:03
Do you want to talk? Yeah, yeah, yeah, no, that was so. You know, Netscape was at the time, the, the most popular, it was the popular browser at the time. And Microsoft viewed this as a serious threat, a serious threat to their, their windows monopoly and the control they had over desktop computing and they didn’t want to see more people using web-based stuff. And if they were going to do it, they wanted it to be done through Microsoft software. So they put together Internet Explorer. But Internet Explorer wasn’t very good and people didn’t want to use it. And so they made it difficult. So that people would use internet Explorer by default. You know, they ship that as the default, they made it so you couldn’t easily switch over to Netscape. And they even used some private APIs on windows too, that only Internet Explorer had access to the, try to use their ownership of the platform and their ability to set defaults to edge out Netscape. Ultimately the department of justice brought an antitrust lawsuit against him and it went on for years and years and years in the meantime, Netscape actually pretty much collapsed right?
Savannah Reising 13:13
Yeah. Even though before that, it was like, you know, the star of Silicon Valley, you know, it was doing super well. And then I think over that whole process, it just kind of, you know, deflated.
Matt Ronge 13:26
Yeah, no. And the, and the department of justice law, you know, the antitrust lawsuit that takes a really long time. And it’s hard to say, even if what happened, did that have an effect, even an effect on Microsoft other than perhaps distracting them? Where they were busy fighting the government and court rather than being able to work on new products. So it ultimately didn’t end well for Netscape, but that was an example of like the power of defaults and how, being able to lock it in. And there was other things too, that Microsoft did on top of it. There was a, there was a host of things, you know, private APIs. They had requirements with the PC manufacturers, all sorts of things that they eventually did get in trouble with. And it’s not too different from what Apple’s doing right now with default apps on, on iOS. And that’s why they’re relenting to some of the pressure and they’re allowing, and I just looked it up. It’s, it’s pretty clunky. Still to, to change the default tab, you can do it for email and web browser. I don’t think you can do it for anything else. Like Google, like mapping or anything like that would be great if it was truly open, you could do it for anything, but again, their incentives are not… they don’t want to allow that. And even when they are allowing email and web browser, they’re not making it easy to do.
Savannah Reising 14:39
Um, yeah. So definitely some room for improvement there.
Matt Ronge 14:44
Savannah Reising 14:46
So then moving onto the next way to fix the app store, which is; opening up alternate payment mechanisms without the Apple tax. So I think there are two things to break down here. What does alternate payment mechanisms mean? And also what is the Apple tax?
Matt Ronge 15:06
Yeah. Yeah. So the Apple tax is that anybody that goes through the app store has to pay 30% of their revenue to Apple. Their sales to the app store, to Apple. And they do have a provision in there allowing for subscribers that you’ve had for over a year, if you’re a subscription app, only pay at a 15% rate. But that was very deliberately calculated as well. They know that most people don’t renew beyond a year. So therefore effectively they’re still getting their 30%. It’s something sneaky there as well that it doesn’t seem obvious at first, like, Oh, they’re allowing 50%. It’s like, well, yes, but that’s a very small percentage of users because there’s a lot of churn in B2C subscriptions.
Savannah Reising 15:52
So with the Apple tax, like we have one of our products, Astropad standard $30 on the app store. And every time someone buys that we give $10 to Apple, which is kind of crazy, 30% is a lot. Yeah. That’s wow, hard to wrap my mind around.
Matt Ronge 16:09
Yeah, no, and you’re not getting a lot for it. Apple would say that they’re providing a lot they’re providing hosting, they’re providing payment
Savannah Reising 16:18
Matt Ronge 16:19
Security, but a lot of this already existed before as well. You know, there’s other ways to just distribute software, payments on the internet are pretty much a solved problem now with things like Stripe. And that’s also what we mean by alternate payment mechanisms. So. If you’re on the web and you say, are going to a e-commerce store and you checkout often, there’s a lot of different options for you can do PayPal, you can do credit card, you can do Apple pay Google’s payment thing now, Amazon pay there’s like lots of different ways. So we consider all those to be alternate payment mechanisms. You can choose how you want to pay versus the app store. The only way you can pay for a software, or in our purchase or a software subscription, is via the app store via Apple’s payment mechanism. They don’t allow any other way to do that.
Savannah Reising 17:15
Wow. So this came up over the summer. I believe it was with Epic and the Fortnite battle with they were kind of having beef with Apple and Google, I believe kind of talking about the 30% Apple tax and they, they were kind of making a big deal about this, not so that they would get a special deal with Apple, but really they wanted, they were trying to. Help all sorts of developers by encouraging Apple to, you know, minimize that Apple tax and cut it down from 30%. And I think they ended up getting kicked off of the app store actually because they kind of rerouted their, their payment method around the app store. So that they didn’t have to give up that 30% tax.
Matt Ronge 18:14
Yeah. They added basically an alternate payment method and they actually priced it differently too. And they priced it cheaper. They were like, Oh, we’re going to pass on some of the savings to our customers. And Apple was not happy. They pulled the app. In fact, they tried to revoke their developer accounts so they couldn’t do iPhone iPad or Mac apps. But a judge actually got involved, prevented Apple from revoking their developer accounts. So it got pretty nasty. And that’s still going on right now. I think the trial is set to begin in the summer between Epic and, who makes Fortnite and Apple. They’re both Apple being the most valuable company in the world and Epic being a multi-billion dollar company as well. So they’re going to really, really duke it out.
Savannah Reising 18:58
That’ll be interesting.
Matt Ronge 18:59
Yeah, it’s going to definitely be interested in, what’s also been revealed from this, is that, it turns out that for some time some apps have been getting sweetheart deals. Now I told you earlier that your average developer, your indie developer your small business on the app store has to pay 30%. Well, it was revealed that some like Netflix, Amazon actually had negotiated 15% deals. So it turns out it’s not even even playing field and even worse, it’s for companies like Spotify. That compete directly against Apple services. They’re really in a tough spot because for Spotify, the music business is a very competitive industry, very price-driven as well. And for Spotify, they have to pay 30% of their subscription done through, you know, the iPhone and iPhone is probably, has to be the most popular way to listen to Spotify and they have to pay 30% of that to Apple. Versus Apple’s own service, Apple music. Well, it’s the same company. So of course they’re not giving up that 30%. Right. So they’re at a major advantage just by being the owner of the platform compared to a Spotify. So it makes it, it makes it hard to compete with Apple music. It makes it hard to compete with Apple services and ultimately, you know, you’re going to see less options and surfaces out there because of that 30% where some businesses aren’t able to compete. And what’s interesting is Apple even internally admitted that. So what’s been going on since this as well. Is there was a house judiciary committee who we actually have spoken to. That’s doing investigation antitrust into big tech. They’ve been investigating Apple and they’ve requested emails and documents from Apple. And within those documents early on with the app store, there was some emails between executives saying yeah, the one issue is with 30% roughly – I’m paraphrasing here, but – roughly with a 30% cut. If we do stick to that with the app store, that’s going to make some businesses non-viable on there. And they were like, well, that that’s okay. We realize that that’s okay. And that might’ve been fine in 2008, 2009, but the app store and mobile devices were not such a huge part of our everyday lives and the economy as well. And so that needs to be, I believe, looked at with a fresh set of eyes, you know, because even Apple knows that the 30% doesn’t work for some businesses.
Savannah Reising 21:30
And some companies, you know, they’ve found ways around this, that work like Netflix for example, if you try to sign up for a Netflix subscription on your iPad, it’s going to tell you to, to go online right. And, and purchase it, you know, not directly through the Netflix app. And so that creates some friction there. Like it’s, it’s harder for the consumer because it, now it’s not like a direct process to, to make that purchase. But the reason that they do that is so they avoid the Apple tax. So by opening up these other payment mechanisms, It, you know, is going to make it better for consumers to choose the payment method that they prefer. And then, again, it raises the standards for developers to create the most frictionless paywalls. So right now, you know, on the app store, the frictionless payment method is, and the only payment method is to purchase directly through iTunes or Apple pay. And if there were more payment methods, they would all be competing based on, okay, which one is the easiest. And of course Apple would have the benefit there of being directly integrated because there’s always going to be some friction with going to your wallet, taking out your credit card, going through that process. But again, it just gives consumers more options and raises the bar to create a better experience for consumers.
Matt Ronge 23:12
Yeah, definitely. And if there’s one of these recommendations here that, you know, we talked about the default apps that when, when you wrote this piece, Savannah, hadn’t happened yet, and that has happened to some degree. Now, the second one opening up alternate payment mechanisms. I think this is another one that’s likely to happen. I’m just reading the tea leaves. I think it’s a matter of when, not if, at this point that Apple is going to have to compete on the merits of their own payment system. And a lot of their arguments too are undermined. You know, they say, well, this is for user experience. Well you just pointed out with the Netflix app. It’s super confusing. You go in there and you’re like, how do I sign up? Well you can’t. Right? Because of Apple’s arbitrary rules where they say, Oh, it would be too confusing to have, have multiple ways to pay. It’s just so much simpler. If there’s just one way the Apple app store way to pay, it’s so much simpler. Well, that argument is undermined already by what’s on the app store because. What happens is, is for digital goods, digital things, you need to use the app store, but for anything physical, you’re not allowed to using that purchases or any payment through the app store. So you might have noticed if you do Uber eats, you call up Uber, DoorDash, anything of that sort, that. It’s more like the physical world. Let’s say even it’s an e-commerce app, you order order something in there, right. That’s not going through the app store. You’re entering in a credit card. You’re using PayPal. And that’s also to Apple’s rules that for physical goods. It can’t go through the app. So they’re already doing it. They’re already doing it for some of the most popular apps on the app store right now. And nobody’s confused by it. Right. It’s not a problem. If it was a problem, they would, they would change the rules on it. Right. So it’s just that they want to keep that, that revenue stream, they have a very healthy revenue stream from that in-app purchase and that, and that 30%, but ultimately, you know, it’s not 2008. It’s not 2009 anymore. App stores are a major part of our everyday lives, the economy, and it’s going to change. I really think it’s going to change. It’s just a matter of when.
Savannah Reising 25:12
So moving on to the next point here, the next way to fix the app store, we’re going to talk about side loading of iOS apps. So can you explain what sideloading is. And why it isn’t currently allowed.
Matt Ronge 25:29
Yeah. So what this would be is it would allow the iPhone or iPad to actually function more like the Mac in that, so if for the Mac, there’s multiple ways to get apps for Mac, you can go to Apple’s Mac app store and you can download, I mean, purchase, if it’s not free, in the app on the Mac app store, or you can often go straight to the developer’s website and purchase and download directly as well. And it’s been that way for a long time versus the iPhone. You can only – and iPad – you can only get stuff via the app store Android on the other hand has allowed a sideloading mechanisms. So what that means is you can get things from Google’s play store, or you can from alternate app stores or from a developer’s website, install apps as well. So it’s a way to install apps that doesn’t go through Apple’s app store. And the reason this is important is because Apple has app review on the app store. And it’s actually put them in a really tricky spot in many, in many ways where you have to be, your app has to be reviewed and approved by Apple before they allow it. And there has been cases where people have said that has been used for anti-competitive reasons where it’s held up apps that are potentially competitive. It’s pulled apps from the store that are potentially competitive. A good example of that is the parental control apps where Apple, after Apple introduced a parental control feature, many third-party parental control apps were actually pulled from the app store. And the New York times has a whole whole piece on this. That was really good. Another example, that’s been really tricky, and I think this is another example of how, not only is this good for the economy and consumers, but it would also be good for Apple as well is there’s been some censorship cases too, where in China, the Chinese government has asked them to pull certain apps. There was like a Hong Kong app when protests were going on, that Apple was forced to pull. That helps protesters avoid, I think it was like a police, something along those lines. And many people in democratic countries were very uncomfortable with the idea of Apple, an American company pulling this app that was helping protesters in Hong Kong, fighting the government. So. That’s a case I’m sure where they love would have loved to have a way to do a side sideloading of the app and not have to be the one deciding what goes and what doesn’t go on the app store.
Savannah Reising 28:00
So why does there need to be app review for iOS and not Mac OS or is that process. Is there a different process going on?
Matt Ronge 28:12
Well, for any of the app stores, the Mac app store as well, there’s a review. And there, I mean, there’s good reasons too, to have some kind of review on the app store, because if you don’t want something that, because it’s an Apple’s app store, some people view it as being, I would say, cleared, okayed by Apple. And so you don’t want things that are clearly fraudulent. On there. Right? Cause in a way it’s being sanctioned by Apple, but on the Mac. Yeah. You have those both ways. So only on stuff in the Mac app store has to be reviewed, but stuff downloaded directly from developer websites doesn’t and Apple would say that, you know, it’s for security it’s to prevent against fraud. But the thing is, is we’ve been doing it on the Mac for a long time. And there’s actually more security mechanisms in place than compared to there used to be a lot of the security on the iPhone and the iPad comes from the sandboxing environment, which means that an app can only access certain data. It’s only really allowed to…it’s isolated. Yeah, that’s a way to think of it is each of the apps are isolated from each other at any time they interact and it tries to pull data from the system, you’ll get a system prompt and it will be like, Hey, would you like to allow access to the microphone? Hey, would you like to allow access to the photos? Right so by default, it’s, it’s isolated and that’s built into the operating system and that has nothing to do with the app store. So those protections could still be in place even if it was done via side-loading.
Savannah Reising 29:39
So Apple is kind of saying. You know, we need this app review process for the iPhone because, or for iOS, for security reasons. But then on the Mac side, like they’ve already found a way to do it without going through app review and maintain that security.
Matt Ronge 30:00
Yeah, that’s right. And on the Mac, they still have some security mechanisms as well for apps that are distributed through developers’ websites, where apps are verified. And that means that Apple has a remote kill switch so that if one of those apps was ever deemed to be a virus or a malware of some kind, Apple could remotely turn it off and it’s able to do that completely without the app store. So there’s still a lot of security protections that can be in place without the app store, but it gets Apple out of the business of determining what’s good and isn’t good for consumers to have on their iPhone, which I think a lot of people would believe that Apple, Apple, shouldn’t be the one deciding that. Especially when they have their own apps, you know, competing apps and they have their own vested interest in pushing their apps like Apple Music or Apple Arcade, or they’ve got a fitness thing coming up, right. They have an incentive to push their Apple fitness app in front of Peloton. Right? On the app store. So it’s really in the consumer interests and to create a fair and even playing field that Apple’s not in that business and that these can be distributed multiple ways.
Savannah Reising 31:10
Yeah. And a lot of people say, yeah, the app review process can be a bit arbitrary sometimes. Like the rules. I don’t know Apple, it just seems like enforces some rules sometimes. And then other times, you know, it’s, it doesn’t seem as strongly enforced and we ran into that a few years ago with the camera button debacle. When we tried to launch a new feature in Luna display called the camera button where you would tap the front facing camera and it would bring up some UI on the screen in our app. And we didn’t even submit this to the app store. Right? Yeah. It never even made it to app review before you got a call from Apple saying yeah, don’t even try. Yeah. Yeah. We released a preview video and it was super cool. People loved it. We’d still have loved to put it in the app still today would love to put it in our apps.
Matt Ronge 32:10
It was effectively adding another button to the iPhone or iPad. Yeah, but Apple saw a wind of it and we’re like, yeah, we don’t like this. Don’t even try submitting. We’re going to reject it. Yeah. And it’s another spot too, where it’s like, Oh man, should Apple be solely the one to choose? Like which innovations they want to allow on mobile devices in which they don’t. And you could say, well, there’s well, there’s Android, right? There’s Android. But the reality is. 50% or even it’s a little bit more than 50% of mobile devices in the US are iPhones. So you can’t ignore it. Right. It’s not like you can just be like, Oh, I’m going to nor the iPhone and just go to Android. No, it doesn’t, it doesn’t work that way. Not when 50% of the market is on the iPhone.
Savannah Reising 32:52
So I think the big benefit of like higher level benefit of allowing sideloading is that it would allow third-party developers to innovate without the fear of getting rejected from app review or worse kicked off of the app store, which has happened before. So again, it helps consumers ultimately, because you get. Innovations in these apps that are going to keep pushing the boundaries, which is better for users. They want more innovative things and it doesn’t have to be limited by whatever Apple wants to accept or reject in the app review process.
Matt Ronge 33:37
Yeah, and I would, I would add too and, you know, gets Apple out of the censorship business too where they’re being told by different governments around the world to pull certain apps. At that point, it wouldn’t matter. Right? Like it could be that there’s an app that okay, the Chinese government forces Apple to pull it, but you know what, it’s still available as a side-load. So it doesn’t really matter. Right. Because yeah. It’s a tricky spot for Apple and it would allow them to sidestep that issue.
Savannah Reising 34:04
So moving on to the fourth suggestion for fixing the app store is giving third-party developers equal access to APIs. Do you want to start by explaining what an API or a private API is?
Matt Ronge 34:20
Oh, yeah. Yeah. Good point. So private, so API, Application Programming Interface, that’s what it stands for, but it’s a way in which you build your apps, you build your app using APIs, and those APIs allow you to hook into the system. So if you want to get photos from the system, or if you want to set a certain color on the screen, that’s all done through APIs. That’s how you control the device as a third party developer. And there is a certain set of APIs that are public and are vetted and tested and documented and officially supported by Apple. And those are the public APIs. And then Apple also internally has their own private set of APIs. And they’ve done this for a long, long time where they’ve had private APIs for things that they want to do internally that, maybe for security reasons they don’t expose. Maybe it’s something they don’t want to commit to supporting a long time, because once you put an API out there and third party developers start using it, you need to support it. So there’s many reasons they may not want to put a API out there as a public API. And so they’ve had private APIs, but developers have been quite frustrated with this recently. And that’s again, because it used to be that Apple really only made for the most part really only made the operating system and the hardware and the third party developers supplied most of the software on top of it. But now as the hardware business has slowed down for Apple, because. Basically everybody in the world is, you know, there’s, they’ve run out of people to sell iPhones to essentially, right? Like there’s only so many computers, iPads, and iPhones, and they’ve, they’ve really saturated the market. So they’ve turned more to services and software to boost their revenues. And so that puts Apple in direct competition with third party developers. And so in the case of things like, let me use Apple fitness as an example, versus Peloton. Peloton being a third party app developer and Apple fitness, Apple fitness now because they’re part of Apple, they have access to some APIs that a third party developer like Peloton doesn’t have access to. And so that can put them at an unfair advantage where they can access things. For example, things on the Apple watch, right? If Apple could access whatever they want, right on the Apple watch and integrate that with them, their Apple fitness app versus Peloton is limited to what’s available, but then the public APIs, which is not everything. And again, you may say, well, that’s fine. It’s Apple’s device. It’s. Apple created the Apple watch. They should be able to do that. They own the platform. Yes. To a point, but their such a large portion now, or the economy their such a huge player, their the most valuable company in the world. And so many other businesses are built on top of what they do that, to me, that argument doesn’t hold water anymore. They’re too big. They’ve been too, too successful and they have used private APIs to edge out third-party developers recent example of that that’s Tile. They make a tracking system where you can track items and Apple use their access to location data. And they’re rumored to be coming out with their own Tile competitor versus tile that has to jump through hoops and different prompts to get access to that location data that makes it a lot more difficult to set up and use a Tile, a third party systems. So that’s an example of how Apple can tilt the board in their favor by having access to this APIs or even creating their own APIs, that third party developers don’t.
Savannah Reising 38:02
Yeah. So it’s like they’re competing on, with some insider knowledge that yeah. And yeah. I guess again, looking at like a high level benefit for consumers is that if, if third-party developers have better access to APIs, they’re going to create products that have better integrations with the hardware and, you know, overall it, it’s going to create better products, more choices for consumers. And that’s, I mean, that’s what, you know, competition and healthy competition is all about like more choices, better choices, but it’s limited when the large force here, Apple that is very powerful, has insider knowledge that can just kind of suffocate the rest of the competition. I think that’s what a lot of these points boil down to is that Apple is a platform provider. But it’s also competing on its own platform. That’s the same problem with Google and Amazon. They control the platform, in this case, the app store, but they are also pushing their own apps and that creates a conflict of interest and, you know, people who offer like other suggestions for fixing these problems are talking about actually breaking apart the app store from Apple, it’s called breaking apart the platform utilities pretty much. I think that’s the term for it, which, you know, that’s a bit more complicated. I think that requires a lot of legislation and I mean, people like Elizabeth Warren, that’s her proposal for antitrust and, and monopolies and big tech. And yeah, I think, I think there’s a lot of merit to that because it, it really isn’t fair to be competing on, on the platform that you control. But again, like with all of these points that we’re talking about today. These things are things that Apple can do today that don’t require legislation and the government stepping in and it’s going to, again, benefit everyone, consumers, competition. So it, it, yeah, it all kind of boils down to that one thing though, which is that Apple is competing on the platform that it owns. So, yeah, I think that brings us to the, sorry.
Matt Ronge 40:41
I was gonna say you’re totally right. That’s totally the absolutely is it, you know, on the approach you’re talking about is really. The dynamite approach where, what we’re saying here with some of these changes that I know Apple doesn’t know on a mic, but it’s more a chisel and hammer compared to having the government come in and dynamite the whole thing and force Apple to separate the app store from Apple or forcing Amazon to separate their marketplace from the rest of the Amazon. Right? Because these things apply in the Amazon as well.
Savannah Reising 41:11
Yeah. Yeah. I mean, that would be worst case scenario for those companies. I’m sure that they really don’t want that to happen, but it’s like if they don’t get on top of these things, then it’s kind of heading that way because there are more and more cases coming out like with Epic and Spotify that are just bringing more attention to this. It’s bringing more attention to how outdated our monopoly laws are. Like these laws were written like over a hundred years ago and we’re trying to apply them to big tech, which I think we’re learning the limitations of that right now.
Matt Ronge 41:53
Definitely. And especially considering, you know, in the world of digital goods and services to, and software where things can be done for free. Right. A lot of the existing laws where things are gone on, on consumer price, like does this lower the price for consumers? And I know that’s been tricky with things like Facebook or Google, where they’re ultimately free for the users. So how do you, how do you argue a case that it’s, that it’s bad for consumers when you’re a metric is price. Right? You know, I think I just one of many examples of how, the way the antitrust law has been interpreted. Yeah, ve made this difficult.
Savannah Reising 42:30
Yeah. Like the antitrust laws that we have today, they assume that the…the ones that were written, you know, over a hundred years ago, they assume that the ultimate benefit for consumer is price and low price. But in actuality, there are a lot of other factors that play into, you know, a healthy market for consumers, which is like variety and quality. And those are the things that, in the case of the app store, the third party developers are able to add in sure, you can get the free options, like the default apps that come with your iPhone. But if you want something that’s really custom to your needs, that’s where, you know, the third-party developers come in with their options. So, so yeah, I think there’s definitely some room for improvement with monopoly laws, but. Yeah, we need to get into our last recommendation for the app store here, which is that Apple should stop sherlocking third-party developers. Which we know about firsthand.
Matt Ronge 43:39
Yeah. Yeah. Certainly. And for this one may just sound like sour grapes too, but that’s not, as you’re saying early on that’s, that’s not what this one is about either. It’s like, how can this benefit the ecosystem in the future for us, we were, we are moved on to other things. Cross-platform new products. We’ve got all sorts of stuff for us. So this isn’t about us. This is about for the future of the ecosystem. And you know if every time that there’s a brilliant new idea that a third-party developer does. If Apple’s frequently copying that fewer and fewer people are going to be willing to go out on a whim and try something crazy and innovative for these devices versus compare that to, if Apple didn’t have such a history of sherlocking and instead would acquire many of these companies, even these like. One, two person companies, right? They come up with something super innovative that would create a whole new effect on the market. In fact, you have this cottage industry of all these people trying wild ideas. It’d be like an R&D factory for Apple, right? If everybody’s like, yeah. Apple tends to buy when they find something really cool, they tend to buy it and bring it in house versus today where it’s like, Oh, they did see something cool. And they tend to copy it. And just do it themselves. Right? Think of the effect that would have on the overall ecosystem. You’re going to have a lot more people trying and a lot more innovative ideas. You’re going to have a lot more options out there for people. You’re going to have a lot more innovative apps because right now, if somebody’s got an innovative idea that’s potentially difficult to do, and it’s going to acquire a lot of time and commitment for all the reasons we’ve talked about today on the podcast, you know, those are all things that can scare them away and be like, you know, as soon as Apple sees that this is a good idea they’re probably going to get into this space, you know? And so I’m not sure I really want to build this on Apple’s platforms. I’m not sure I want to, you put the work in to do this. Right? And that would be, I think, completely different. If Apple was more likely to acquire a lot of these companies and bring them in house.
Savannah Reising 45:54
Yeah. Apple has shown that now they have this pattern of sherlocking and I think that is…it discourages innovation. It stifles it. It really does because it, it sort of backs the third-party developer into a corner where if they get sherlocked, I mean, the scenarios that happen from there are, you know, they’re either going to be out of business, which is scary, and then in the consumer loses, ultimately because now the consumer no longer has access to that app or that business, or in the other scenario, like with what happened with us, if you know, you get sherlocked and it’s such a devastating blow, you’re going to have to quickly pivot and go into other markets, which, I mean, ultimately is. Well, it’s great for us that we’re going to the windows market and expanding, but it just means that we, we can’t prioritize Apple. Like we were before. Like now we’re going to be prioritizing a different market alongside of that. So, yeah, I think, I think overall with sherlocking it just, it creates this fear. Like every time you watch, you know, an Apple developer conference, it’s like, Oh my gosh, is today going to be the day that your business is ruined by whatever Apple is now baking into its ecosystem. So it’s like this constant fear versus yeah. Well, you said how awesome would it be if it was just. Like constant innovation where everyone was competing to get Apple’s attention. That’s not the case though.
Matt Ronge 47:46
Yeah, no. And, and what you’re saying about the developer conference is totally true. I mean, it’s been something of a joke in the developer community where people are like, all right, All right. Start the developer keynote. Who’s going to be sure like today, right? Like they come to expect it each year now. Yeah. And another thing has made me think of two that this doesn’t apply just to apples. Well, this applies to other big tech companies, but in terms of innovation and advancement, a lot of these industries, there’s in the house report that went out. On antitrust, the house subcommittee on, on antitrust, they talk about in there, how they spoke to a venture capitalist that described anything that competes with big tech as being in the kill zone. And what they mean by that is that they don’t like to fund stuff in those arenas because they know if it has success, that big tech is going to copy it and use their control over the platforms and try to kill it. So you have these whole, like areas now we’re less R&D money, less investment is going into because everybody’s afraid of big tech and what they’re going to do. Right. And that that’s cutting, cutting down on the innovation in these areas, you know? So that’s. Yeah. Ultimately not, not a good thing for consumers or the end users as all. They’re getting fewer options and less innovative.
Savannah Reising 49:06
Yeah. I mean, I really, I really stand behind these recommendations that we put together. I think a lot of good could come from these things and yeah, it seems like every developer conference, Apple. It talks about how they, they love their third-party developers, like all, everyone who supports their ecosystem, but seems like they’re not really walking the walk by, you know, competing and suffocating these small developers that really push, you know, ultimately we push their products to be better. And so, yeah, I really stand behind these and I, I would love to see. Apple continue to move towards some of these. It seems like there have been some good things happening already, but it’s not enough. And I mean, if we rely on the government to step in and try to fix these, it’s going to take forever. And by the time it happens, you know, big tech will be evolving into something else. But I think where we are today is that. Everyone relies on these products. Amazon, Apple, Google, like they are so ingrained in our lives. And it is time for the monopoly laws to catch up a little bit because it’s like, I think, Matt, you, you talk about like the example of the electrical grids, like back, you know, over a hundred years ago where, you know, they weren’t, they weren’t regulated and then they just became, so like such a part of our lives, where it was time, it was time to regulate it. And because it was so widespread, and I think that’s where big tech is right now. It’s like, we’ve big tech has grown so big that it’s time to sort of wrangle it in a little bit.
Matt Ronge 51:04
Yeah. Yeah, definitely. It’s like any new innovation, like you were saying, the electrical grid or cars or the telephone system, right? These are all at one point were all new innovations, only a select few people had them, but then over time it came to everybody and as it came to everyone, it became more and more important to business and society. Like you were saying, Savannah. It became important to regulate it and make sure that access was fair and equal to everybody. And yeah, I think that’s the point we’re rich with big tech tech has become such a part of our lives, both business personal, especially during this times right now, during COVID right where so much of what we do is through technology. So, yeah, it’s time as you’re saying to catch up and I think, yeah, all this would be great for the Apple ecosystem and a lot of these things would be great for, for big tech as well.
Savannah Reising 52:00
Yeah. And ultimately, what we’re looking out for is the consumer. That’s what these regulations are supposed to protect. Competition, the consumer. Yeah. We want to, we want to create a, an ecosystem that, that brings the best innovation to people. So, so yeah. We’ll have to wait and see what happens. I think the story is still unfolding. It seems like every few months there’s sort of an update on what’s happening in the big tech antitrust world. Yeah. We’ll have to wait and see.
Matt Ronge 52:37
Yeah, no, still a lot to come on. This is certainly not settled. Yeah. Well, yeah. Thanks for the good discussion, Savannah.
Savannah Reising 52:44
Yeah. Yeah. Maybe we’ll have a part two sometime.
Matt Ronge 52:47
I think we will, there are going to be more developments here, but for now part one. All right. We’ll take care now.
Savannah Reising 52:53
All right. See ya. .