Sunday, August 16, 2020

Facebook criticizes Apple's App Store policies--Microsoft, Amazon, Oracle also stand to gain from Epic's app store battle royale against Apple and Google

The fight over App Store policies and, especially, commissions is escalating fast. The day after Epic Games brought its antitrust lawsuits against Apple and Google in the Northern District of California (which have for now been assigned to judges in San Francisco and San Jose), Facebook went public with harsh criticism of Apple's unwillingness to waive its 30% App Store commission (which Facebook, like Epic's lawyers, labels a "tax") in connection with an effort on Facebook's part to support small and medium-sized businesses (SMBs) struggling during the COVID-19 crisis.

Normally, companies don't blog about their App Store submissions. They just make them, wait for approval, and that's it. But Facebook published screenshots comparing how its "paid online events for small business recovery" will look on Android (where small businesses get to keep 100% of that income as Facebook doesn't take a dime) versus iOS (where Apple charges 30%). This is an apparent attempt to up the pressure on Apple's App Store team not to reject Facebook's submission over the fact that the iOS version of Facebook's app states: "Apple takes 30% of this purchase." And beyond just securing approval of this version of its app, Facebook is probably still hoping that Apple might match Google's generosity in this politically sensitive context. All of this is obviously also meant to make Apple look bad on Capitol Hill.

Let's briefly talk about some other behemoths who have a vested interest or at least the potential to gain from Epic Games' fight against Apple and Google:

  • Microsoft is an app store operator itself, but the Windows App Store is nowhere near as important as the iOS and Android app stores, as Windows apps have traditionally been sold directly. But in its Office productivity app business, Microsoft has to pay Apple and Google a 30% commission, which must hurt. On the bottom line, Microsoft would probably benefit from Epic accomplishing its mission.

  • Amazon runs its own "Appstore" for Android, but it appears to be relevant only on Amazon's own Kindle devices. Amazon would be in an incredibly strong position to run competing app stores on all Android devices and on iOS.

  • Oracle still has that Android-Java copyright infringement case pending against Google, and whatever becomes known as a result of Epic Games' litigation could still come in handy for the business software maker at the remedies stage. I still expect Oracle to prevail on the merits, though it's taking time. Oracle is known to have backed various antitrust efforts against Google.

One option that Apple and Google always have is to enter into special agreements, labeled "strategic partnerships" or whatever, with organizations that might otherwise be formidable challenges to their app store business models. In its complaint against Google, Epic Games states the following:

"Epic has publicly advocated for years that Google cease the anticompetitive conduct addressed in this Complaint. Google refused to change its industry-impacting conduct. Instead, Google offered to placate Epic by offering it preferential terms on side deals, such as YouTube sponsorships and cloud services, if Epic agreed to distribute Fortnite in the Google Play Store and acceded to Google's 30% tax. Google has reached at least one preferential deal with another mobile game developer, Activision Blizzard, and Epic believes that Google is using similar deals with other companies to allow Google to keep its monopolistic behavior publicly unchallenged. But Epic is not interested in any side deals that might benefit Epic alone while leaving Google’s anti-competitive restraints intact; instead, Epic is focused on opening up the Android ecosystem for the benefit of all developers and consumers."

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