Apple execs describe a “unique arrangement” with Netflix (2018) • Hacker News Board

Re: Apple execs describe a “unique arrangement” with Netflix (2018)

#181

Post by hackerfromthefu » Mon, Oct 04, 2021, 11:17 PM UTC

jiveturkey wrote: post #153

jacurtis wrote: post #145

Earlier quoted context omitted.

For comparison Netflix spends about $1.2 Billion dollars per year on AWS (Amazon Web Services). Their total revenue last year was 27.5B. So that means that AWS fees account for 4.3% of Netflix's revenue. AWS is streaming video, operating hundreds of edge location CDN locations, and everything else running on expensive server infrastructure. AWS has real serious costs with offering that service, to the point that Netf…

> Apple is wildly delusional on the value that they provide. I haven't studied it, so I'm speaking out of turn, but I'm thinking that it's cheap for smaller players and expensive for larger ones, and not as a smooth function. NFLX is well past the knee in the curve I guess. If you buy that, then it's unfair to say Apple is delusional about their value add. On average it's probably fair within reason.

In the same way that the mafia is being fair taking your money for not removing your kneecaps

Re: Apple execs describe a “unique arrangement” with Netflix (2018)

#182

Post by callalex » Mon, Oct 04, 2021, 11:17 PM UTC

tornato7 wrote: post #123

drexlspivey wrote: post #113

Earlier quoted context omitted.

Netflix doesn’t want their content to show up in apple TV search because they don’t want to give access to their user’s data to Apple. It’s a terrible anti-consumer decision and frankly it was one of the last straws that led me back to piracy after many years. All I wanted was a universal search for content instead of having to go into each provider’s app. I am now using Plex/Sonarr/Radarr and it works flawlessly, a…

I think it's more than that - if users are finding shows through the Apple TV search then Apple is able to promote their own shows and services in that search functionality. Netflix wants people to use their app so they can push their own content and features. Similar to why Amazon doesn't like it when you Google for products and end up at Amazon, they would rather you just visit amazon.com and search from there so t…

The argument is more nuanced than that. For example if I tell my TV “Hey Siri, play Top Gear” it will show me an Amazon logo for a few seconds while the app starts and then the video plays. At no point in that interaction did Apple attempt or even have a chance to say “are you sure you don’t want to watch {other-car-show}”. This decision by Netflix is hurting consumers.

Re: Apple execs describe a “unique arrangement” with Netflix (2018)

#183

Post by CPLX » Mon, Oct 04, 2021, 11:19 PM UTC

Cederfjard wrote: post #177

spywaregorilla wrote: post #109

Earlier quoted context omitted.

So what happens to the company spending 10.5bn to earn 11 bn? They just get a net loss of 0.5 bn? edit: Or lets pick a real example and see how that works out. ArcelorMittal is a major steel provider. They sold $53B last year. They had a tough year though, so their final net loss was actually about half a billion. Under your proposal, they would have lost 43 billion dollars. Uh oh, you just collapsed the steel indust…

I assume the idea is that large companies such as this would have a period of time to scale down operations to the largest size where it still makes sense, and then more competitors would pop up to take over the market share they leave behind. I’m not defending the proposal since I’m too ignorant to have an opinion worth speaking out loud, but that was my interpretation at least.

It’s even simpler. They’d split up into pieces.

Seeing as how there are very few massive companies that weren’t created by piecing together smaller companies in the first place it shouldn’t confuse anyone. Also companies spin off parts constantly when they think it’s in their interest so they idea they won’t know how to do it is frivolous.

You could certainly make an argument that my $10bn number is too low, or that there should be a sliding scale of some sort but the concept and it’s likely outcome is very easy to understand.

Re: Apple execs describe a “unique arrangement” with Netflix (2018)

#184

Post by elliekelly » Mon, Oct 04, 2021, 11:56 PM UTC

drdaeman wrote: post #127

haunter wrote: post #3

>Rep. Johnson: Does Apple treat every app and every developer the same? >Cook: “We treat every developer the same. We have open rules. It’s a rigorous process. Because we care about privacy and quality, we do look at every app before it goes on. We apply these rules equally to everyone.”

To be fair, from the third email it's clear they meant for Netflix to be treated as everyone else (after they figured the rules for the program they mention), eliminating this special treatment. In my personal belief, Cook would've won more by admitting they may have some exceptions, but actively try to get rid of those. It's arguable of course, but it the email he justifies it by end-user interests and he probably m…

> It's arguable of course, but it the email he justifies it by end-user interests and he probably means it.

Perhaps I’m just cynical but I can’t help but think all of the Apple execs have had “best for the consumer” drilled into them for the purposes of the antitrust issues that are inevitably coming. If I were a shrewd Apple exec trying to posture against antitrust litigation and/or regulation I’d be sprinkling “best for the consumer” at every possible opportunity. Memos. Emails. Slide decks. Fucking everywhere. There’s no down side to mentioning it and a ton of upside if the document ever becomes public.

Re: Apple execs describe a “unique arrangement” with Netflix (2018)

#185

Post by fragmede » Tue, Oct 05, 2021, 12:01 AM UTC

PoignardAzur wrote: post #156

garblegarble wrote: post #148

Earlier quoted context omitted.

>AWS is streaming video, operating hundreds of edge location CDN locations, and everything else running on expensive server infrastructure. AWS has real serious costs with offering that service, to the point that Netflix has yet to determine that it is better to build it themselves. Somewhat off the core topic, but netflix run their own CDN (I also don't see any evidence for that 1.2 billion AWS bill figure, can you…

I'm not sure Netflix Open Connect counts as a CDN? They might still use distributed servers from AWS.

The hardware they use for their CDN was recently discussed on HN. They don't use AWS hardware for their CDN.

https://news.ycombinator.com/item?id=28584738

Re: Apple execs describe a “unique arrangement” with Netflix (2018)

#186

Post by 908B64B197 » Tue, Oct 05, 2021, 12:05 AM UTC

jacurtis wrote: post #145

ksec wrote: post #83

I am pretty sure I read something similar before. Probably from Benedict Evans or somewhere else. I think the most important issue from these email isn't the lack of Alternative App Store, IAP, or 70/30 split. It is that Apple Execs has Zero understanding of how other business works especially with respect to Internet or Software Services. They continue to think Netflix as a physical product ( As they often like to c…

For comparison Netflix spends about $1.2 Billion dollars per year on AWS (Amazon Web Services). Their total revenue last year was 27.5B. So that means that AWS fees account for 4.3% of Netflix's revenue. AWS is streaming video, operating hundreds of edge location CDN locations, and everything else running on expensive server infrastructure. AWS has real serious costs with offering that service, to the point that Netf…

> Apple by comparison demands 15% which is 3.5x as much of a cut. Apple provides credit card processing, and approval into the App Store [...] . This isn't anywhere near the value that AWS provides, despite demanding a much higher premium.

It's access to an extremely valuable demographics. Everyone ships on the App Store first because that's where paying customers and high value users are.

All that AWS infrastructure to stream media is worthless without consumers at the other end of the wire.

Re: Apple execs describe a “unique arrangement” with Netflix (2018)

#187

Post by JohnBooty » Tue, Oct 05, 2021, 12:06 AM UTC

jacurtis wrote: post #145

ksec wrote: post #83

I am pretty sure I read something similar before. Probably from Benedict Evans or somewhere else. I think the most important issue from these email isn't the lack of Alternative App Store, IAP, or 70/30 split. It is that Apple Execs has Zero understanding of how other business works especially with respect to Internet or Software Services. They continue to think Netflix as a physical product ( As they often like to c…

For comparison Netflix spends about $1.2 Billion dollars per year on AWS (Amazon Web Services). Their total revenue last year was 27.5B. So that means that AWS fees account for 4.3% of Netflix's revenue. AWS is streaming video, operating hundreds of edge location CDN locations, and everything else running on expensive server infrastructure. AWS has real serious costs with offering that service, to the point that Netf…

    Apple by comparison demands 15% which is 
    3.5x as much of a cut. Apple provides 
    credit card processing, and approval into 
    the App Store (plus according to a comment 
    in this email, it sounds like they keep 
    Netflix in the App Store promotion rotation 
    as "free" ad-space). This isn't anywhere
    near the value that AWS provides

That's debatable. To put it mildly.

Apple provides them access to, literally, nearly a billion potential customers who, on average, spend twice as much on app store purchases relative to Android users. [1]

Apple spends billions of dollars to do this, by creating (by many measures) best-in-class hardware devices, including designing their own bespoke in-house CPUs that trounce the majority of their consumer level competition.

It's not directly comparable to what AWS does, so I'm not sure we could possibly quantify how valuable it is to Netflix vis-a-vis AWS. However: it sure isn't nothing, and may well be 3.5x the value that AWS provides.

[1] https://timesofindia.indiatimes.com/gadgets-news/iphone-user...

Re: Apple execs describe a “unique arrangement” with Netflix (2018)

#188

Post by spywaregorilla » Tue, Oct 05, 2021, 12:06 AM UTC

CPLX wrote: post #183

Cederfjard wrote: post #177

Earlier quoted context omitted.

I assume the idea is that large companies such as this would have a period of time to scale down operations to the largest size where it still makes sense, and then more competitors would pop up to take over the market share they leave behind. I’m not defending the proposal since I’m too ignorant to have an opinion worth speaking out loud, but that was my interpretation at least.

It’s even simpler. They’d split up into pieces. Seeing as how there are very few massive companies that weren’t created by piecing together smaller companies in the first place it shouldn’t confuse anyone. Also companies spin off parts constantly when they think it’s in their interest so they idea they won’t know how to do it is frivolous. You could certainly make an argument that my $10bn number is too low, or that…

It's a silly idea because plenty of companies have high revenue and low profit (or net loss), and are not anti-competitive in the slightest. An arbitrary revenue cap doesn't help the situation at all, as evidenced by the steel company.

Disincentivizing growth is... dumb.

Re: Apple execs describe a “unique arrangement” with Netflix (2018)

#189

Post by barry-cotter » Tue, Oct 05, 2021, 12:18 AM UTC

abvdasker wrote: post #77

djyaz1200 wrote: post #12

Tech companies that reach monopoly scale (like Apple, Facebook, Amazon) should have to disclose all their agreements and honor a "Most Favored Nation" clause giving all companies the same pricing and access as the best negotiated agreement with any one company. This is the most reasonable way I can think of without breaking them up to prevent them picking winners and losers as new opportunities emerge. If you have a…

This is a solved problem. Just do what most American cities do with other natural monopolies like utilities: use careful price controls to cap margins and slow rate increases. You don't need to invent some esoteric market-based solution, especially for a service where marginal costs are near zero and supply is almost infinite.

There's no historical evidence of natural monopolies existing at the scale of cities. There are multiple American examples of decades long competition in utilities. The economic rationale for politicians to give their friends local monopolies long postdates the practice of doing so.

> The Myth of Natural Monopoly

> Most so-called public utilities have been granted governmental franchise monopolies because they are thought to be "natural monopolies." Put simply, a natural monopoly is said to occur when production technology, such as relatively high fixed costs, causes long-run average total costs to decline as output expands. In such industries, the theory goes, a single producer will eventually be able to produce at a lower cost than any two other producers, thereby creating a "natural" monopoly. Higher prices will result if more than one producer supplies the market.

> Furthermore, competition is said to cause consumer inconvenience because of the construction of duplicative facilities, e.g., digging up the streets to put in dual gas or water lines. Avoiding such inconveniences is another reason offered for government franchise monopolies for industries with declining long-run average total costs.

>It is a myth that natural monopoly theory was developed first by economists, and then used by legislators to "justify" franchise monopolies. The truth is that the monopolies were created decades before the theory was formalized by intervention-minded economists, who then used the theory as an ex post rationale for government intervention. At the time when the first government franchise monopolies were being granted, the large majority of economists understood that large-scale, capital intensive production did not lead to monopoly, but was an absolutely desirable aspect of the competitive process.

http://mises-media.s3.amazonaws.com/rae9_2_3_3.pdf

Re: Apple execs describe a “unique arrangement” with Netflix (2018)

#190

Post by CPLX » Tue, Oct 05, 2021, 12:23 AM UTC

spywaregorilla wrote: post #188

CPLX wrote: post #183

Earlier quoted context omitted.

It’s even simpler. They’d split up into pieces. Seeing as how there are very few massive companies that weren’t created by piecing together smaller companies in the first place it shouldn’t confuse anyone. Also companies spin off parts constantly when they think it’s in their interest so they idea they won’t know how to do it is frivolous. You could certainly make an argument that my $10bn number is too low, or that…

It's a silly idea because plenty of companies have high revenue and low profit (or net loss), and are not anti-competitive in the slightest. An arbitrary revenue cap doesn't help the situation at all, as evidenced by the steel company. Disincentivizing growth is... dumb.

Nah. Splitting up ArcelorMittal is a fucking great idea.

Our competitive landscape is being absolutely choked by anti-competitive behavior, monopoly, and single point of failure problems in supply chains, labor markets, commodities markets, and everything else.

It’s unsafe and bad for society and we should take decisive and aggressive action to stop it.

Instead we’re so accustomed to it and dulled into submission by decades of corporate PR efforts that people will somehow think it makes sense to reflexively advocate for lawless monopolists[0] on message boards in the name of “growth”.

[0] https://www.reuters.com/article/us-arcelor-africa-antitrust-...

https://www.hindustantimes.com/business/arcelormittal-fined-...

https://www.luxtimes.lu/en/business-finance/arcelormittal-fi...