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Apple’s “monopsony” power, and the woman who named it

npr.org

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Re: Apple’s “monopsony” power, and the woman who named it

#11

Post by e_y_ »

vturner wrote: post #6

The key point I presume is the definition of "market" here; and I'm not convinced the market "software that runs on iOS" is so large that monopwhatever can be declared there and used to justify price control. Though as a thought experiment Apple is like a wealthy landed gentleman who sets up a well maintained outdoor market for the tradesmen to bring goods and the lower classes to buy them. If Apple owns so much land…

I don't think we need to divide the market into specialized segments (iOS devices, luxury smartphone, etc) to make the case against Apple. They have somewhere around 50% of the global market in terms of smartphone revenue (not devices shipped).

For the App Store, which is what matters to developers, revenue was around $25 billion in the first half of 2019, vs $14 billion for Google Play Store.

It's not literally mono- but as the article notes, just having a significant share of the market (I would say 30% would be enough) allows companies to dictate prices, and iOS has more like 2/3rds of the revenue.

That's not even getting into all the restrictions that Apple puts on third-party developers, including categories of apps that you can't even make if you wanted to -- unless you're willing to sit out half the market, and assuming that Google doesn't do the same thing. As a software guy, I consider that a bigger deal than the % cut (which is not entirely unreasonable given how much of that goes to credit card fees for low-dollar-amount transactions)

Re: Apple’s “monopsony” power, and the woman who named it

#12

Post by eru »

RandallBrown wrote: post #4

So, since Apple is the only company "buying" apps from developers, they could raise their cut as high as they want and developers can do nothing about it. Could Apple then argue that they aren't the only game in town because of things like subscriptions and web apps? (e.g. I don't pay for Netflix or Spotify through Apple, but the apps work fine)

> So, since Apple is the only company "buying" apps from developers, they could raise their cut as high as they want and developers can do nothing about it.

No. Monopsony and monopoly don't work like that.

See eg https://en.wikipedia.org/wiki/Monopoly_price

Basically, when a monopolists or monopsonists tries to abuse their position, they will shift less volume. There's a finite optimal cut that maximizes profits.

So: when Apple increases their cut, they'll get fewer apps developed. Marginal app developers will go work on Wall Street or flip burgers etc.

Re: Apple’s “monopsony” power, and the woman who named it

#13

Post by cjfd »

lilyball wrote: post #9

Something odd about this argument is the fact that 30% is pretty much an industry standard. Apple isn't jacking up the price.

There is more going on besides price. The review process is also completely arbitrary. I don't like the whole thing that the only place to get apps is the app store. I will never buy any apple device as long as that is in place.

Re: Apple’s “monopsony” power, and the woman who named it

#16

Post by notduncansmith »

GeekyBear wrote: post #14

Next up: Nintendo, Microsoft and Sony's game consoles?

As the only buyer of goods sold to me, and the only seller of goods sold by me, I suppose I'm running a monopsony and then some. May as well add me to the list.

On a serious note: would a judgement in this case have immediate impact on other companies, or would it set a precedent? Also, what are the proposed damages? How is Apple supposed to repair the situation?

Honestly, this feels entirely arbitrary (Apple is far from the only one that leverages their position as digital goods market makers). I'm not saying conspiracy or anything, but I wonder if this is related to the POTUS's vendetta against AAPL.

Re: Apple’s “monopsony” power, and the woman who named it

#17

Post by stuaxo »

smilespray wrote: post #15
lilyball wrote: post #9

Something odd about this argument is the fact that 30% is pretty much an industry standard. Apple isn't jacking up the price.

I thought Apple was the originator of the 30% cut for app stores, and everybody else followed suit?

Yes, this is true.

People forget that there were phones before the iPhone decided all phones would be rectangles with touchscreens.

Those phones ran apps and games, and you downloaded them from app stores... there was in fact a cambrian explosion of app stores, when you made software you had to publish it to hundreds of them.

I can't remember the %, but it seems unlikely, in the fact of all that competition that it was as high as 30%.

Re: Apple’s “monopsony” power, and the woman who named it

#18

Post by JamesBarney »

vturner wrote: post #6

The key point I presume is the definition of "market" here; and I'm not convinced the market "software that runs on iOS" is so large that monopwhatever can be declared there and used to justify price control. Though as a thought experiment Apple is like a wealthy landed gentleman who sets up a well maintained outdoor market for the tradesmen to bring goods and the lower classes to buy them. If Apple owns so much land…

Large by what measure? Size of the market in dollar amount? % of market?

Re: Apple’s “monopsony” power, and the woman who named it

#20

Post by thaumasiotes »

e_y_ wrote: post #11
vturner wrote: post #6

The key point I presume is the definition of "market" here; and I'm not convinced the market "software that runs on iOS" is so large that monopwhatever can be declared there and used to justify price control. Though as a thought experiment Apple is like a wealthy landed gentleman who sets up a well maintained outdoor market for the tradesmen to bring goods and the lower classes to buy them. If Apple owns so much land…

I don't think we need to divide the market into specialized segments (iOS devices, luxury smartphone, etc) to make the case against Apple. They have somewhere around 50% of the global market in terms of smartphone revenue (not devices shipped). For the App Store, which is what matters to developers, revenue was around $25 billion in the first half of 2019, vs $14 billion for Google Play Store. It's not literally mono…

> They have somewhere around 50% of the global market in terms of smartphone revenue (not devices shipped).

On a monopoly/monopsony theory, devices shipped is the relevant metric, and revenue isn't.

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