June 25, 2024
Apple vs Europe

Greg Joswiak and Craig Federighi at The Talk Show Live, June 11, 2024.

I’ve been watching the hot tea being spilled in Brussels with intense interest over the past year. Thanks to the Digital Markets Act, the European Commission has done something it seems nobody else can: they’ve challenged Apple (and the other massive US-based technology firms) with regulation that could change their business models.

The Digital Markets Act is a massive body of legistlation, and there’s no way to have a single opinion about it; there are good pieces and bad in there. That’s really the core of what’s driving me to write this piece now. Too many people are out there on the extreme edges of this debate: capitalist, corporatist Apple stans on one side, loony lefty regulatory zealots on the other. Let’s split this baby down the middle. There’s some pieces I really like about the DMA.

1. Breaking the App Store Monopoly

The only way your app is getting on a person’s iPhone is through the Apple App Store. Because Apple’s rules about what gets on the store are so restrictive, there are many apps that have never been created, or worse, created and then rejected with no recourse. The DMA encourages the creation of alternative App Stores as well as sideloading, so that users can get apps from developers directly. There’s risks involved here, to be sure. But I feel that Apple’s platforms are too important and used by too many people to remain so tightly restricted. When you can’t survive modern life without a mobile device, it has to be treated differently.

2. Allowing steering

Currently, Apple doesn’t permit an app to link to a website where the user might pay for it outside of their in-app purchase system. This policy is so zealously enforced that Apple will ride any hyperlink in your app to the developer’s website and explore every reachable page; if there’s a Buy button at the end of 10+ clicks, you’re getting rejected. Apple’s In-App Purchase system is actually quite limited, and controls the business models of apps on the store. One glaring omission: there’s no such thing as upgrade pricing. In fact, it’s arguable that the structure of IAP has led directly to the proliferation of subscriptions as the only viable business model on iOS, which I feel has been super-harmful for small developers.

3. Enforcing Openness for Third Parties

No other company could make a watch, or wireless earbuds, or an AI assistant, with the same level of integration as Apple provides for Apple Watch, AirPods or Siri. The iPhone in particular, as a platform used by over a billion people, puts it in a place where a lively ecosystem of vendors should explode around it, hooking their hardware and software into this vital core device.

However, Apple very carefully restricts access to its hardware and only slowly provides public APIs to access it. In iOS 18, Apple is providing improved privacy-preserving system setup for Bluetooth devices, with a similar experience to AirPods. The DMA may threaten to slow down or restrict these kinds of integrations, but I think it’s so important as to be worthwhile.

So that’s the good stuff. But there’s a darker side to the DMA that, I think, threatens Apple more than the other technology companies named in the legislation. It was articulated by John Gruber and Ben Thompson in a recent episode of the Dithering podcast (alas, it’s a paid feed, so I cannot link to it!).

In a nut, the risk they see is that the DMA targets the very core of what makes Apple so successful: it’s integration between its hardware platforms, its software and its services. By insisting that Apple break those things apart and allow third parties to provide their own solutions, the DMA threatens to break the quality and security guarantees that make iPhone so successful.

There’s absolutely a danger to Apple here. The company’s primary public rationale for criticizing the EC is that their products preserve privacy and security for its users. That isn’t just bullshit; the tightly-integrated ecosystem does obviate numerous vectors for bad actors to make the platform measurably worse. I mean, look at the modern Web, a Wild West, lowest-common-denominator platform absolutely brimming with scams, phishers and PII-grabbing ads. In this regard, Apple is a champion of consumer rights! It just so happens to also be incredibly lucrative.

Which is, I think, the root of the problem. Apple spent years seeing the threat of regulation get closer. They’ve heard the complaints about distribution exclusivity, high revenue sharing costs, bizarre and arcane rules, pleas to loosen the controls… and instead of conciliation, Apple gave us double-birds on its way to the bank.

I strongly believe Apple could have stopped this issue in its tracks, years ago, by strategically opening the doors. Instead, they stood firm and talked shit about regulators, developers and users (“if you want an Android phone, go buy it”, Craig? Really?). They don’t want to talk about a strategy that mitigates the risk while providing more open access to third parties.

So this is the result: broad regulation, occassionally wrong-headed and certainly punitive in terms of delivering future products and changing existing ones.

But I am having a hard time feeling much sympathy for Apple. The DMA is the biggest footgun of the 21st century.

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