Apple’s big motive for fighting a new antitrust law

This article was first mentioned in Yahoo Finance Tech, a weekly newsletter highlighting our original industry content. Get it sent directly to your inbox every Wednesday at 16 ET. Subscribe

Wednesday, April 13, 2022

Apple has a better motivation than privacy to fight the antitrust reform

Apple (AAPL) CEO Tim Cook made his most public statement this week against proposed antitrust laws targeting the company’s App Store. Cook claims it would make them less secure to let customers download apps to their iPhones from third-party sources.

“If we are forced to allow unchecked apps on the iPhone, the unintended consequences will be profound,” Cook said during a gathering of the International Association of Privacy Professionals on Tuesday.

Cook is right that the App Store helps protect users from malware, and third-party options would open up iPhone users to the increased risk of downloading scammers’ apps. However, the Apple boss has one more reason to protest the legislation: Apple’s bottom line.

This is because if users download apps outside the App Store, Apple would lose out on the 30% fee it charges on many app sales. Apple does not distribute revenue for its App Store, but its service department, which includes the App Store, brought in $ 68 billion of the company’s total $ 365 billion in revenue in 2021. Since 2008, the App Store has cashed in $ 260 billion.

“Maintaining central control is hugely profitable for Apple – it’s the mechanism that allows Apple to set prices for users on both sides of its platform, app developers and consumers,” Penn State Law Professor John Lopatka told Yahoo Finance. “And maintaining central control inevitably harms competitors.”

Apple’s App Store keeps users safe

Cook claims that the proposed antitrust law, called the Open App Markets Act, would make users less secure by removing Apple’s ability to investigate all app users who install on their devices.

And he’s right.

Without the App Store, users would be able to download and install apps from any third-party app store or site of their choice. While it gives users more freedom, it also opens up the possibility for them to download malware-laden apps that can steal their information, retrieve their login information, or capture their banking data.

“Tim Cook is right that there is a real-trade off here,” NYU Tandon School of Engineering professor Justin Cappos explained. “And it’s not a small trade-off. There will be a trade-off of privacy and security that happens if things change, especially for side-loading. “

Nor is it a unique position. Lopatka reiterated Cappos’ concerns about consumer safety and privacy, saying that removing Apple’s central control over apps “undoubtedly creates a risk of malicious and invasive software entering phones.”

It is a basic way of thinking. Of course, giving users more ways to download apps makes them more susceptible to dangerous apps.

Of course, Apple’s App Store does not keep you completely safe. According to a 2021 report from The Washington Post, 2% of the App Store’s 1,000 highest-earning apps in one day were scam apps.

Still, Apple’s iOS and iPadOS are more secure than competing products because they have the latest software updates. Apple devices automatically download security and feature updates as soon as they are available, protecting users from malware exploiting bugs in Apple software.

It’s about Apple’s bottom line

Apple’s privacy and security breaches are one of its biggest selling points. For consumers who are tired of having their data sucked up or sold by apparently any organization online and offline, it’s worth paying a premium for the company’s devices. Apple’s entry-level iPhone SE starts at $ 429, while Samsung’s A03s start at $ 159.

Of course, Apple also benefits from user data. The company’s Safari browser uses Google as its default search engine, giving Apple between $ 8 billion and $ 12 billion a year, according to a lawsuit from the Justice Department. Of course, Google uses information retrieved from users’ searches to inform its advertising business.

Tim Cook arrives at the Oscars on Sunday, March 27, 2022 at the Dolby Theater in Los Angeles. (Photo: Jordan Strauss / Invision / AP)

Other than that, Apple would lose control of the App Store hurting Apple’s bottom line. The company currently charges 15% or 30% fees on the sale of some apps. However, Apple only charges these fees when developers use their payment technology in the app. Of course, only developers can only use Apple technology, so they are forced to pay every time a customer buys an app.

That, developers say, is forcing them to raise prices, hurting them and their customers. Spotify (SPOT), Epic and a number of other developers have been fighting this for years. With antitrust legislation finally on its way through Congress, it looks like Apple may finally be forced to loosen its iron grip on the App Store.

This does not mean that users are left to fend for themselves. Under the proposed legislation, covered organizations will not violate the Open App Markets Act for actions aimed at protecting users’ security and privacy or preventing spam or fraud.

This does not mean that Apple will be able to completely protect users, especially those who want to use third-party app stores. This means that Apple will still have the ability to provide users with at least some security.

Apple is already working to ensure that their macOS products remain protected, even though it allows users to page load apps on Mac desktops and laptops. The company will simply have to do the same with its iOS and iPadOS products if the Open App Markets Act becomes law.

While it will not be as secure as when Apple had complete control over the App Store ecosystem, it will allow for more competition. It will help consumers in another way – by protecting their wallets.

By Daniel Howley, Technical Editor at Yahoo Finance. follow him @DanielHowley

Read the latest financial and business news from Yahoo Finance

Follow Yahoo Finance on Twitter, Instagram, Youtube, Facebook, Flipboardand LinkedIn

Leave a Comment