When Mark Zuckerberg says that Apple charges ‘monopoly rents’ and that it has a ‘stranglehold’ on apps allowed on its store, thereby curtailing innovation, you have to sit up and listen. You also might think that it is a bit rich, considering that he, arguably, runs one of the biggest monopolies ever created –his properties Facebook, Instagram and WhatsApp together have more than 90% of all digital pictures.
Lately, the two app stores which divide up the world, Apple’s App Store and Google’s Play Store, are under attack. This onslaught is by its own citizen apps, alleging that these ‘gatekeepers’ have started behaving like monopolists and sometimes cannibalizing their own. Let us sift through the litany of evidence.
Exhibit 1: Epic Games, maker of Fortnite threw down the gauntlet to both Apple and Google, refusing to always pay the ‘usurious’ thirty percent fee that they charged to host its game on their App stores, claiming that taking a third of its revenue was not justified.
Exhibit 2: Spotify introduced a streaming music service at $10, and Apple followed soon with Apple Music at $10 too, but Spotify had to pay $3 out of their $10 to Apple! Spotify delisted from the App Store, saying that this competition was unfair
Exhibit 3: The Store wars hit closer home, when Google’s Play Store suddenly pulled the Paytm app out. Now, Paytm is India’s most valuable unicorn, a generic term for digital payments in India, and, interestingly, the biggest competitor of Google’s own Pay app on the store. Google said that this was because Paytm was indulging in ‘gambling’. “This is bullshit to a different degree,” said the pugnacious Vijay Shekhar Sharma, the founder of Paytm. “Google is not allowing us to acquire new customers right now. That’s all what this is,” Google claimed that, besides gambling, Paytm’s latest IPL Cricket themed campaign was promoting fantasy gaming too. Google famously does not allow fantasy gaming apps (Apple does), and Dream11, India’s largest fantasy gaming company, is locked out of 95% of India’s smartphones. Very curiously, though, Google permits fantasy sports app operators to advertise on Search in India…
There are plenty other such instances: Mike Isaac, who wrote ‘Super Pumped: The Battle for Uber’ narrates how its famously combative Travis Kalanick did not bow down to city mayors and national governments, but went up to Apple’s headquarters and kissed the ring, when Apple threatened to take them off the App Store.
There is a lot of buzz about tech monopolies getting created; the recent Netflix documentary The Social Dilemma brings home how they have started controlling our lives, societies and politics. As I have written before, they are classically not monopolies since they do not ‘price gouge’ the customer, most of these products are free. They do monopolize and monetize our attention though, making billions in the process, and pushing us further into the ‘attention economy’.
Whenever we think of a monopoly, we think of Google’s Search, which has more than 90% of the market in most countries, or Facebook’s social network, which is the Internet in many countries of the world, or Whatsapp, or even Amazon. But, while they dominate their spaces, there is still an alternative – you can use Bing or Duckduckgo for search, be off Facebook and still survive, use SMS instead of Whatsapp, and Amazon does dominate ecommerce but is still a relative minnow in retail overall. So, all of these monopolies do theoretically present an alternative.
Where there is no real alternative whatsoever, are the two app stores. If you do not exist there, you might as well cease to do so – they are the powerful tollkeepers, choosing which guests qualify to cross the velvet ropes. They have largely been fair and had good governance over which apps to let in, but what happens when they start having products which directly compete with them, or if considerations other than economics come in. It is not a trifling matter these days, when apps have become embroiled in geopolitics. Apps have become the new battlegrounds for governments – notice the takedown of TikTok in India and the US, the ‘digital strikes’ against Chinese apps by the Indian government. Both apps and governments are fighting over the app store real estates. Vijay of PayTM emphasizes this point when he says that “It’s disgraceful that we are standing here at the cusp of an internet revolution in India and we are being sanctioned by companies that are not governed by the law of this country.”
Heimdall, in Norse mythology, was the gatekeeper to Asgard, the dwelling of the Gods. He was very powerful – slept less than a bird, could see a hundred leagues, and could hear grass growing in the meadows and wool growing on sheep. He wielded the “ringing” horn, Gjallarhorn, which could be heard throughout heaven, earth, and the lower world; it was believed that he would sound the horn to summon the gods to war. The horns have started blowing.
(This article was published as an OpEd in Mint dated Oct 1 2020)