Apple apparently argues 'shall' means 'must' in appeal of UK antitrust authority CMA's decision to investigate mobile browsers and cloud gaming based on allegedly elapsed deadlines

On Friday the UK Competition Appeal Tribunal (CAT) published a summary of application (PDF) of Apple's January 18, 2023 appeal of the November 22, 2022 decision of the UK Competition & Markets Authority (CMA) to make a market investigation reference (MIR) into the markets for mobile browsers (particularly browser engines) and for the distribution of cloud gaming services. The court also announced that the initial case management conference would be held on Tuesday, January 24.

Apple's appeal on procedural grounds is not unreasonable, and I say so even though I

• called the market inquiry that gave rise to this MIR "a great initiative",

• encouraged my readers to make submissions to the CMA at that stage,

• welcomed a former Twitter CEO's "enDorseyment" of the Open Web Advocacy group's work on this issue, and

• defended in a Twitter discussion the CMA's decision to look at the combination of mobile browser and cloud gaming issues.

For as much as I'd like to see the CMA fend off this challenge to its MIR decision, this appeal could go either way.

The court summarizes Apple's sole ground of review ("... the MIR Decision [...] is ultra vires") as arguing that none of the following statutory requirements have been met:

"Apple contends that in circumstances where the CMA has published a Market Study Notice ('MSN'), sections 131A and 131B of the Act require that (i) any proposal for a market investigation reference must be made, and consultation on that proposal must begin, within six months of the date of the publication of the MSN; (ii) the CMA is required to issue its final report on the market study within 12 months of the MSN; (iii) the final report must state any decision to make a market investigation reference pursuant to section 131 of the Act, the reasons for that decision, and such information as considered necessary to facilitate an understanding of that decision; and (iv) where a market study report contains a decision to make a market investigation reference, the reference must be made at the same time as the publication of the final report." (emphases added)

In the quoted passage, I highlighted the words that indicate hard and fast deadlines.

If that statutory interpretation is right, then it has to be applied to the following facts summarized by the court:

The CMA

• launched a mobile ecosystem market study on June 15, 2021,

• gave notice of a decision not to make a market investigation reference on December 14, 2021 (and on the same day published an Interim Report that mentioned the decision not to investigate further),

• on June 10, 2022 published a Final Report, "taking account of representations made to it after the [Interim report] and after the CMA itself having conducted further analysis" and launching a public consultation as to a potential MIR, and

• made the MIR decision on November 22, 2022.

So let's compare the deadlines based on Apple's interpretation to the actual dates of the procedural events:

Procedural milestone	Deadline according to Apple	Actual date
Market study notice	N/A	June 15, 2021
Final report on market study	June 14, 2022	June 10, 2022
Market investigation reference	June 14, 2022	November 22, 2022

The dispute about whether the deadline for the final report on the market study was met turns on what one believes to be indispensable elements of that report. In the court's summary, Apple argues that the final report must state any MIR decision, the reasons for that decision, and further information that facilitates an understanding of the decision. Here, the final report came first, and the MIR came later.

The statute (Sec. 131B of the Enterprise Act 2002) consistently uses the term "shall" with respect to what the CMA is supposed to do ("shall ... within", "shall ... contain").

So what shall we make of that? Has Apple "shall"-shocked the CMA or is its whole argument an empty shell?

The Bar and Bench website says:

"Shall is one of the most corrupted and litigated words in the language of the law. Over 100 pages in the encyclopaedia of Words & Phrases are devoted to a summary of more than 1,300 precedents from common law jurisdictions interpreting shall! This misuse or abuse of shall extends to legislation and private legal documents in equal abundance."

Apple is not the first party to litigate over the meaning of "shall" nor will it be the last.

Cornell Law School's Legal Information Institute first describes "shall" as a pretty strict term in the United States:

"Shall is an imperative command, usually indicating that certain actions are mandatory, and not permissive. This contrasts with the word “may,” which is generally used to indicate a permissive provision, ordinarily implying some degree of discretion."

But it points to precedent from Illinois according to which it really depends on the context:

"[W]hen used in a statute, the term ‘shall’ does not have a fixed or inflexible meaning and may be given a permissive or directory interpretation depending on the legislative intent. If a statutory provision using the term ‘shall’ merely directs a manner of conduct to guide officials or is designed to secure order, system, and dispatch in proceedings, it is generally 'directory'."

The law firm of Allen & Overy reported on a Court of Appeal (for England & Wales) decision acccording to which "shall" is merely an expression of the parties' intention at the time of contracting.

Another British law firm, Ashurst (which represents UEFA in the European Superleague Company EU antitrust case, successfully so far), published a highly instructive overview of how UK market studies and market investigations work, and appears to give the statute a similar interpretation as Apple's counsel from Gibson Dunn does:

"Unless the CMA has issued a market study notice, it is not bound by statutory time limits nor does it have any of the compulsory information gathering powers when conducting work under its general review functions."

Put differently, if a market study notice was issued (such as in this case), the CMA would be bound by statutory time limits according to Ashurst.

That is a defendant-friendly interpretation that presupposes a legislative intent of giving the targets of a market study legal certainty after hard and fast deadlines.

It's "legit" for Apple to ask the Competition Appeal Tribunal to rule on this question of statutory interpretation, and clarification would indeed be helpful. That said, the iOS browser engine monopoly must be broken and all cloud gaming providers should be free to offer their services to iPhone and iPad users without having to submit each game to Apple's arbitrary app review and being subjected to an excessive app tax.

A market investigation lowers the hurdle for the CMA: it doesn't have to prove wrongdoing, just adverse effects on competition (abbreviated as AEC, which in other antitrust jurisdictions, however, stands for "as efficient competitor") and has greater powers to impose remedies. Otherwise a conventional antitrust investigation of Apple's conduct would be required, and Apple would have to be shown to have abused a dominant position in the relevant market. Apple would like to deprive the CMA of its more powerful tool, and essentially argues that the CMA has deprived itself of that tool by failing to abide by the applicable statute.

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The three-letter acronym soup of UK tech antitrust enforcement: CMA, MIR, DMU, and temporarily ABK

This post is mostly a glossary of an alphabet soup. But first I'd like to draw your attention to a very interesting and well-crafted speech that Sarah Cardell, the Interim Chief Executive of the UK Competition & Markets Authority (CMA), delivered yesterday at the British Insttitue of International & Comparative Law (BICCL) and Linklaters Tech Antitrust Roundtable. Mrs. Cardell discussed the CMA's enforcement activities under the current legal framework as well as "the Digital Markets, Competition and Consumer Bill [that] will be introduced in the third session of [the British] Parliament" (emphasis added). That speech is a roadmap, and explains in very understandable terms why certain actions must be taken in order to remedy and ideally even prevent market failures.

The Digital Markets, Competition and Consumer Bill is somewhat comparable to the European Union's Digital Markets Act (DMA), but that analogy isn't meant to downplay its distinct nature. It is easy to confuse the two, however, as this UK legislative initative is often referred to as the Digital Markets Unit (DMU). But a unit is not a bill. The Digital Markets Unit of the CMA already exists, but it will make an impact on the market only after the Digital Markets, Competition and Consumer Bill is passed into law. The legislative process could have been massively delayed or even derailed as the country has very recently had three different prime ministers, but is now--fortunately--going forward.

The bedrock of the DMU as well as the EU's DMA is the realization that traditional antitrust rules are not suitable to task in a field in which unprecedented network effects giving gatekeepers an unhealthy degree of power. Many U.S. lawmakers agree, yet we are still waiting for Congress to enact at least the Open App Markets Act (OAMA).

There is something in between traditional antitrust enforcement (investigations that lead to fines for and/or injunctions against abusive conduct) and a so-called ex ante regime like the one envisaged for the DMU. Without having to establish a violation of antitrust law, the CMA has the power to conduct market investigations, which may then lead to structural measures. In other words, the standard is a market failure, not a finding of abuse (though in practice, there will be findings of abuse, just that the legal standard for such findings doesn't have to be met). I have stated on various occasions--most recently on Friday when commenting on a tweet by Internet luminary Jack Dorsey (of Twitter and Block/Square fame)--that the CMA correctly identified a need to look into (and, as I believe it will at the next stage, to take measures) relating to mobile browsers and cloud gaming. Apple's WebKit dictate--forcing all other browsers on iOS to use the same engine as Safari--is terrible for innovation and competition.

One week ago, the CMA announced that after a public consultation, the agency is now carrying out a market investigation. The next three-letter acronym is MIR: Market Investigation Reference. The MIR is a formal decision to open a market investigation (PDF) that may indeed lead to structural remedies. The CMA published the Terms of Reference (PDF) "in relation to the supply of mobile browsers and mobile browser engines, and the distribution of cloud gaming services through app stores on mobile devices (and the supply of related ancillary goods and services) in the United Kingdom."

On another occasion I'll comment on some of the submissions by stakeholders. Apple's claim of acting procompetitively is so very absurd that I don't know how they can even make that claim with a straight face, but now is not the time to go into detail on that. The market investigation will take up to 18 months and has enormous potential to bring about change. The Platform Law Blog explains the scope of the MIR very well.

The fourth and final three-letter acronym in this UK tech antitrust context is different from the others because it's non-governmental: it's the abbreviation of a company name, Activision Blizzard King (ABK).

The official company name is only Activision Blizzard, but King (the maker of Candy Crush) is key and it's in third place only for chronological reasons (Activision first acquired Blizzard, later the combined entity acquired King), not as an indicator of strategic importance. The CMA is reviewing Microsoft's purchase of ABK. While merger cases have their own legal framework, there are factual overlaps here that matter to me as an app developer.

Microsoft's response to the CMA's Phase 2 Issues Statement discusses the problems facing Fortnite on Xbox Cloud Gaming. In that section of the blog post I also show a conversation on Twitter in which I defended the CMA's decision to consider the iOS browser monopoly issue closely related to cloud gaming.

It was also in that UK merger review process that Microsoft publicly revealed its plans to compete with the incumbent mobile app stores. Section 2.15 of Microsoft's October 23 submission to the CMA explains that it takes two factors to make this work. The walled gardens must be opened up, but then there will still be the challenge of convincing consumers to use app stores other than the default ones:

"In particular, the concept of a next-generation game store that operates across a range of devices ('Universal Store') is risky. Moving consumers away from the Google Play Store and Apple App Store on mobile devices will require a major shift in consumer behaviour. Microsoft hopes that by offering well-known and popular content, gamers will be more inclined to try something new. But this is far from guaranteed and also depends on proposed regulations and legislation in the U.S., and around the world, that would require Apple and Google to make their platforms and app stores more open to third-party stores and commerce platforms. As such, in seeking approval from its Board of Directors as a public company, Microsoft leadership could [REDACTED]. Nevertheless, as Mr. Spencer confirmed, Microsoft will measure the strategic success of the Merger on [REDACTED]."

It looks like Microsoft is prepared to make a ten-year commitment to the PlayStation. If that helps in the EU, it may also be deemed satisfactory in other jurisdictions--including, but not limited to, the United Kingdom. At any rate, I hope the CMA will take the same holistic perspective on digital markets when making a decision on Microsoft-ActivisionBlizzard (and will take the potential benefits to app developers into account) as Mrs. Cardell did in her speech yesterday, which covered a lot of ground (and in which she mentioned that so far the CMA has actually blocked only one tech merger, Facebook-Giphy, which is easily distinguishable from Microsoft-ABK).

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Twitter and Block (Square) founder Jack Dorsey attacks #AppleBrowserBan, thereby validating UK CMA's regulatory initiative, and throws his weight behind Open Web Advocacy

More and more tech luminaries call out Apple on its shameless abuse of market power and the damage it does to innovation and the economy at large. As Epic Games' CEO Tim Sweeney has repeatedly said on Twitter, "Apple must be stopped." Nothing is even half as urgent in the tech regulation context (Google is a clear but distant second). Instead of addressing the issues, Apple brazenly keeps causing additional problems. Apple is the tech industry equivalent of the Lernaean Hydra.

Not everyone dares to speak out against the tyrant. That's always been a problem in any dictatorship in history. But Apple has gone so far, and suffering is so widespread, that slowly but surely its critics grow in numbers and in profile.

Take Twitter's current owner--Elon Musk has more than one reason to fight Apple's (and Google's) app store monopolies--and its former chairman, serial entrepreneur Jack Dorsey. On Thanksgiving, Mr. Dorsey tweeted the following:

We need a new mobile OS that’s web-only.

— jack (@jack) November 24, 2022

He then laid out the three priorities, the first one of which he described by means of a hashtag: #AppleBrowserBan.

this is great (and great 3 priorities: #AppleBrowserBan, deep system integration, web app equality): https://t.co/wUNUdVNotB

— jack (@jack) November 24, 2022

I'm particularly happy to see that Mr. Dorsey pointed to www.open-web-advocacy.org. In June, I republished various charts that Open Web Advocacy had previously posted to Twitter. They really do great work on the Apple browser engine monopoly issue.

That same month I also drew addition to long-time web browser developer Alex Russell's write-up that explains Apple is not defending browser engine choice. Apple forces all iOS browsers to use its WebKit engine (like Safari).

Apple's browser engine dictate is bad for competition, for innovation, for choice. It's a shame that Apple got away with it for so long, but it won't stay that way.

Some of Apple's sycophants, astroturfers and others vassals, and brainwashed followers incredibly argue that if Apple opened up browser engines on iOS, Google's Chrome would win and the last bastion to a total Chrome monoculture would fall. We should not take people seriously who say that. It's just crazy. If Google abused a browser monopoly, regulators would have to deal with it. But the fundamental difference between Chrome and Safari is that Chrome is a meritocratic monopoly. Chrome got there because of quality. Again, that doesn't justify abuse, but the first question is how a market gets monopolized, and Google undoubtedly did something right while Safari's market share on iOS is the result of anticompetitive wrongdoing that will hopefully be found unlawful. Safari never got serious traction on a third-party operating system, while Chrome managed to displace anyone, anywhere, provided that Chrome could come with its own engine.

Without mentioning the UK's Competition & Markets Authority (CMA), Mr. Dorsey effectively endorsed its very recent decision--a so-called market investigation reference (MIR)--concerning mobile browsers and cloud gaming.

In my commentary on two documents that became public on Wednesday owing to the CMA's Microsoft-ActivisionBlizzard merger review, I noted that Fortnite hasn't really succeeded on mobile devices as an Xbox Cloud Gaming offering and that Apple (and, to a lesser degree, Google) are responsible for large parts of the problem, and mentioned the CMA's market investigation reference.

The timing of Mr. Dorsey's public criticism of Apple's browser ban could hardly have been better.

I will soon write about the CMA's market investigation as well as a UK legislative initiative called Digital Markets Unit (DMU), but wanted to immediately share the news of one of the most famous tech entrepreneurs having spoken out in no uncertain terms. I also made my little contribution on Twitter:

Thank-you Florian and Jack for the support. We have a long way to go, but the momentum is building!

— Open Web Advocacy (@OpenWebAdvocacy) November 25, 2022

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Indian antitrust ruling: "App developers are super dependent on Google" -- device makers choose "between signing a non-negotiable [contract] and commercial failure" -- consumers are "locked-in to [Android]"

On Thursday, the Competition Commission of India (CCI) announced an antitrust ruling against Google, and the following day, the full 293-page order was published. I've read it in full, and even though it's a long read (despite generous spacing), I recommend it to everyone with a professional interest in Google--particularly Android--antitrust issues.

Hierarchical summary of remedies

• device makers' (OEMs) rights:

  • (i) no more "package deal" for preinstallation of Google apps (such as search, Maps, YouTube, and GMail), but à la carte choice for OEMs and free arrangement on home screen

  • (ii) no more tying of other Google services and products to the must-have Google Play Store

  • (iii) no more denial of Android forks' access to Play Services APIs (Maps, Cloud Messaging, In-App Purchasing, Google+, and others) ("forks" means Android versions deviating from Google's specifications and requirements)

  • (iv) no more exclusivity agreements (with or without incentives) between Google and OEMs favoring its search service

  • (v) no more anti-fragmentation obligations preventing OEMs from (additionally) making devices that run Android forks

  • (vi) no incentives or obligations preventing OEMs from (additionally) making devices that run Android forks

• Android users' rights:

  • (vii) no restrictions on deinstallation of preinstalled apps

  • (viii) users must get to choose their default search engine on all entry points starting with the initial setup of a device, and those default settings must be modifiable later, requiring as few user interface actions as possible

• app developers' rights:

  • (ix) the Google Play Store must carry the storefront apps of third-party app stores

  • (x) no restrictions on app developers' ability to distribute apps through sideloading (the CCI is aware of the fact that Google allows it in principle, but also knows that users are at this point simply discouraged from installing sideloaded apps)

In other words, if Google ultimately had to comply with the order, its Android business model--which has always been primarily about monopoly maintenance and the exploitation of the Android app distribution monopoly--would no longer work. As Google told the CCI, "Google would need to charge a license fee for Android and/or GMS [Google Mobile Services] apps in India as it does in Europe." So the cost of Google-licensed Android devices in India might increase, but there would be--which would ultimately bring down prices and/or spur innovation--much more competition (at least in India) in

• (licensable) smartphone OSs (device makers could make Android-compliant and Google-licensed devices on the one hand and different (though not necessarily different on the hardware side) devices running "forks" on the other hand),

• general web search services,

• video hosting platforms (see my commentary further below on that market definition), and

• Android app distribution (alternative app stores and sideloading would represent viable alternatives to the Google Play Store).

Five relevant markets (each of them geographically limited to India)

• (a) licensable operating systems (OSs) for smart mobile devices (smartphones, tablets)

  Google offering: Android

• (b) app stores for Android

  Google offering: Google Play Store

• (c) general web search services

  Google offering: Google search engine, related services

• (d) non-OS-specific web browsers

  Google offering: Chrome

• (e) online video hosting platforms (OVHP)

  Google offering: YouTube

I concur with market definitions a (licensable OSs for smartphones and tablets) and b (Android app distribution), and those parts are consistent with the European Commission's and Epic Games' approach, which I've previously declared myself in agreement with. There can be no doubt about market c (general web search services).

I can see why the CCI believes its market d (non-OS-specific web browsers) makes most sense in this particular India-specific case, where Safari is irrelevant because hardly anyone buys Apple devices there and Chrome faces competition from a cross-platform browser made by Alibaba and named UC Browser, but I wouldn't necessarily endorse that definition in other geographic markets.

Where I have my doubts even with a view to India is market e (online video hosting platforms), an arguably gerrymandered definition under which YouTube's only significant challenger would be Vimeo and which may take the TikTok phenomenon into account to an insufficient degree. TikTok has features of a social network and of a video hosting platform (as opposed to a platform that doesn't offer user-generated content), and there may be some indications by now that TikTok's popularity comes at the expense not only of some other social networks but also YouTube. Also, TikTok keeps evolving and widening its impact zone. In India, it was banned two years ago along with dozens of other Chinese apps, though many users still sideload it and others use alternative services. But the YouTube-specific part of the CCI's decision is the one I'm less interested in (and which other regulators than the CCI don't seem to consider a priority either).

Comparison to other jurisdictions' approaches

This is the most comprehensive Google Android antitrust case I've seen so far. In other jurisdictions, this would be enough for two or three cases, if not more.

There are definitely synergy effects. The CCI decision has to explain certain dynamics only once, and can then build on that foundation.

I'm not suggesting that one approach is better than the other. What the CCI has put together is impressive in terms of breadth, depth, cogency, and clarity. The people who work on that case did a great job. But they were standing on the shoulders of giants as the CCI order references what some call "the Cicilline report"--the Majority Staff Report and Recommendations of the Antitrust Subcommittee of the U.S. House of Representatives (PDF). And while it isn't officially referenced, I assume that the CCI officials working on their Google case were well aware of the European Commission's Google Android decision, which the EU General Court largely affirmed last month.

It's possible that antitrust watchdogs in other jurisdictions opted for a piecemeal approach (instead of a sweeping ruling) to err on the side of caution. Also, DG COMP and others may feel they need to underpin their findings with even more detail in order for their decisions to withstand judicial review.

Country-specific factors

When comparing the comprehensive Indian Android case to parallel cases in other jurisdictions, it's important to understand some key characteristics of the Indian market:

• Android has a market share of about 97%.

• Apple is vanishingly small in India. It's a price-sensitive market and, as the CCI decision notes, Apple's products are simply too expensive for most customers there. In fact, if Apple's worldwide market share was like the one in India, app developers would deprioritize iOS and Apple would struggle even to survive in a niche.

• Google's search engine also has a market share around 97% in India. So the CCI had to look at one monopoly reinforcing the other.

• Many of the devices sold in India are also made in India by local companies like Micromax and Karbonn.

"Best Of" Collection

There's a lot that I like about the CCI ruling. It reflects a profound understanding of the interplay of the different elements of Google's strategy, arguing that "the impact of Google’s practices [...] cannot be seen in isolation, but cumulatively through web of restrictions pursuant to multiple agreements."

In no uncertain terms does the decision express the agency's disagreement with some weak arguments and transparent pretextual justifications. Let me show you some real gems:

• "The so-called choice for OEMs that Google refers to is between signing a non-negotiable MADA [Mobile Application Distribution Agreement] and commercial failure."

• "[F]ragmentation can be a source of competition and innovative products, as confirmed by the fact that Google itself created Android by breaking compatibility with Sun Microsystem's Java."

• "Google utilizes these so-called ‘security measures’ to create a barrier around its basket of apps which lets them flourish at the cost of competitors." (quoting from an app developer's submission)

• "Surveys can be indicative or misleading on occasions, data cannot."

• "App developers are super dependent on Google for distribution and reach of their Apps."

Chart: three-sided Android ecosystem

On page 42 of the CCI decision you can find the following chart that explains the three sides of the Android ecosystem (click on the image to enlarge):

For a recent post on Epic Games' aftermarket arguments in the Apple case I drew up a similar chart (click on the image to enlarge):

Obviously, the CCI didn't "steal" anything from me, nor the other way round. Those charts are two independent creations.

Observations on responses from third parties

Amazon explained to the CCI how its own Android fork named Fire OS couldn't compete. Given how powerful and sophisticated Amazon is, that fact bears significant weight.

Microsoft shared its experience with how it is now practically impossible even for them to compete with iOS and Android in the smartphone OS market due to the "app gap." Microsoft also discussed the challenges facing its Bing search service.

Some Indian app developers explained their problems very well. Those are real app developers, not the fake developer lobbying fronts that Apple (ACT | The App Association) and Google (Application Developers Alliance) use.

Android OEMs mostly tried to keep clear of coming across as de facto complainants. Some provided minimalistic answers while others explained their problems in ways that were distinguishable from a complaint, but have helped the CCI understand the issues.

Revenue-sharing agreements

In Western jurisdictions it has recently been difficult for antitrust enforcers to make cases against revenue-sharing and other types of exclusivity agreements. The CCI, however, is undeterred by that fact. The following sentence is food for thought also in other jurisdictions:

"In digital markets strong network effects makes the application of as efficient competitor test difficult."

The CCI explains quite convincingly that "OEMs would not have any incentive to pre-install competing search services" because "in one instance, the competing search service has to offer 90% revenue share to the OEM to secure a default position on the secondary browser, as against 10% offered by Google (generally). This is un-sustainable for the competitors."

I don't want to take a firm position on the applicability of the as efficient competitor test to digital markets here. But if the numbers in that example given by the CCI are right and a competing search engine would have to offer a 90% revenue share in order to compete with a Google offer of a 10% revenue share (because Google's search engine is also a much stronger economic engine), it's obvious that under the traditional AEC test Google could maintain its monopoly for all perpetuity by doing deals with all the major access points.

Google's huge payments to Apple are mentioned by the CCI as evidence of how much value Google derives from being the default search engine, but given Apple's tiny market share in India (compared to which its investments in manufacturing in that country are really huge), I can see why the focus is now more on what Google does alone than what it does in collusion with Apple.

Differentiated perspective on fragmentation

When I saw the CCI press release, I was worried that the negative take on anti-fragmentation rules went too far. The actual decision is nuanced and differentiated. Some anti-fragmentation rules are acceptable, but fragmentation must not serve as a pretext for monopolization.

As a small app developer I just wish to note that for the most part, we have the same interests as OEMs in loosening Google's death grip on the ecosystem, but I would hope that regulators and courts would also take into consideration that the little guys will struggle with a degree of fragmentation that may still be profitable for a major device maker and the very largest app makers.

Incomplete understanding of switching costs

There is really just one sentence in the CCI decision that in my eyes doesn't reflect as favorably on the CCI's understanding of the issus as the rest:

"Thereafter, the end consumer is locked-in to the OS and faces substantial switching costs, primarily in terms of cost of new smart device."

Switching costs are a big issue in all those mobile platform cases, such as the EU Commission's Google Android case and Epic Games' lawsuits against Apple and Google. The CCI is right about lock-in and substantial switching costs, but it's not a good idea to focus too much on just the cost of a new phone or tablet. Users are locked into those operating systems, not so much into devices. Devices are replaced from time to time; many people's upgrade cycle is two years (which is when mobile carriers typically offer a discount on a new phone if one renewes for another 24 months). It's about apps (for lack of a multi-platform app store like the ones that Epic Games and Microsoft--as know from a recent filing with the UK's Competition & Markets Authority-- would like to operate on mobile devices) and media content. It's also about familiarity with user interfaces. It's about having to re-enter lots of passwords. I migrated from Android to iOS and back, so I know that purchasing a device is really just a limited part of the picture.

In another context the CCI order at least recognizes the part about having to repurchase apps:

"[T]he users of smart mobile devices in India face considerable switching cost to shift to iOS between Android and iOS (and the need to download and purchase existing apps for the new smart mobile OS)."

Given that Apple's products aren't much of an option for most customers in India, it's understandable that the CCI didn't have to go into a lot more detail concerning switching costs. That's different in other jurisdictions. Let there be no doubt that the CCI order is a great piece of work. Someone will always find something to disagree with or identify room for improvement. That changes nothing about what a world-class job those CCI officials did. I hope they can defend at least the most important parts of the ruling in the further process.

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Stats suggest Apple's browser engine monopoly poses threat to national security--at minimum, anti-competitive rule is unjustified by security concerns

This is a follow-up to yesterday's post on Apple's browser monopoly abuse, Anti-innovative effects of Apple's Orwellian prohibition of alternative browser engines finally being discussed and investigated. After that post I spotted a top-notch Twitter thread by the Open Web Advocacy group:

Apple's claim is that it bans other browsers for security AND NOT because it's protecting its 70b of AppStore Revenue or 15b of Google Search Revenue in Safari.

The CMA says the ban not only doesn't protect security it could make it worse!

🧵 Lets dig in... pic.twitter.com/LL9TZaVsQz

— Open Web Advocacy (@OpenWebAdvocacy) June 27, 2022

Note that they subsequently clarified that the 70 billion figure for App Store Revenue is greater than Apple's income from the "app tax" (usually 30%; exceptions apply, but only to a small portion of App Store-related revenues). Also, for the avoidance of doubt, what Open Web Advocacy means is that Apple disallows alternative browser engines (Chrome or Firefox on iOS aren't truly Chrome or Firefox--they're just Safari with a slightly different UI, but with WebKit--Safari's engine--under the hood) in order to (a) ensure that the user experience of web apps is too bad to seriously challenge native apps (on which Apple imposes its app tax and over which Apple acts as a tyrannical censor) and (b) to be able to collect huge amounts of money--around $15B per year--from Google for making it the default search engine on the iPhone (alternative browser engines could have other defaults--or even no default at all).

According to its website, Open Web Advocacy is "a group of software engineers from all over the world who have come together to advocate for the future of the open web by providing regulators, legislators and policy makers the intricate technical details that they need to understand the major anti-competitive issues in our industry and how to solve them." (emphasis in original)

Based on the material they've put as well as a brief chat I had with them via Twitter direct message, I can attest to their in-depth technical understanding. They are actual software developers, which is more than certain folks defending Apple's anticompetitive conduct can say. For more background on Open Web Advocacy, I recommend this Register article by Thomas Claburn, Web devs rally to challenge Apple App Store browser rules.

When lobbying against such initiatives as the Open App Markets Act, Apple emphasizes two pet pretexts: privacy and security--and in order to give the term security more gravitas, Apple--and all sorts of people beholden to it--stress that it's about national security. What no one can deny is that Apple is the market leader in the U.S. smartphone business, so security issues affecting the iPhone are, by extension, an issue of concern to the country as a whole. But at the heart of Apple's national security argument resides a total non sequitur:

Apple considers it an axiom that whatever Apple does is inherently secure, and whatever anyone else does is inherently insecure. It's Apple's version of what's called infallibility in connection with various religions.

Against that backdrop, it's impossible not to ask the question of how Apple's browser security stacks up against other browser technologies. Open Web Advocacy (OWA) says that the UK Competition & Market Authority (CMA) has found--at the preliminary investigation stage--that Apple's prohibition of browser engine competition fails to serve the interests of security, and may even compromise security.

Competition is one of the most powerful forces in the technology universe. One of the benefits--we may call it a consumer surplus--that robust competition can bring is that different vendors have to compete with each other on security. In the absence of competition, companies will be tempted to engage in rent-seeking. They get lazy.

While the district judge presiding over Epic Games v. Apple got the law, the economics, and the technology terribly wrong in connection with (at least) market definition, she did say some great things throughout the trial, culminating in how she effectively got Tim Cook to admit that Apple's C suite doesn't give a damn about developer satisfaction. The single best thing she said (weeks before Tim Cook's deposition) was that competition could also be desirable from a security point of view.

What I find so interesting about the OWA's work (by the way, here's a link to their response to the UK CMA's interim report) is that they've compiled information that throws into doubt Apple's conclusory claim of monopolistic behavior being in the interest of (national) security.

I encourage you to read the OWA's Twitter thread. I'm going to be following the UK investigation with great interest, and I guess there'll be more opportunities to discuss the OWA's--as well as other organizations'--material related to the iOS browser engine monopoly issue. For the purposes of this post, I'd just like to show you the four charts shown at the start of the OWA's Twitter thread.

First, there are two charts according to which in the years 2014-2021 Apple's Safari (again, WebKit is the engine that all other iOS browsers are forced to use) was responsible for twice as many browser code execution vulnerabilities--that's the worst stuff because it means that a security issue arises only because of someone visiting a website containing malicious code--as Chrome and Firefox combined (click on an image to enlarge):

2024-2021 is an eight-year timespan. How did things change? Unfortunately, another chart suggests it's getting worse, with Safari's browser code execution vulnerabilities more recently (particularly in 2020 and 2021) having dwarfed those of the other two browsers, as the high red columns (compared to the low blue and yellow ones) in the following chart indicate:

The other important metric--besides the number of vulnerabilities--is how swiftly an issue is resolved. Security isn't static: issues will arise, so it takes an ongoing effort to solve the problem. It's about closing the window of opportunity for those seeking to exploit a vulnerability, and this is all the more critical when a security issue is widely known.

In that regard, the OWA also sees Apple underperforming its hamstrung-on-iOS rivals:

Here's how to interpret that chart, called a histogram: the Y axis (height of columns) shows the percentage of all security issues that got fixed during the relevant period (number of days on the X axis). Again, the red columns relate to Apple's WebKit browser engine, the yellow ones to Firefox, and the blue ones to Chrome. Columns can overlap. Apple has a small percentage (4) of fixes that shipped at the earliest point (0). But there's no red on the next several columns, which indicate bugfixes shipped within 5 to 25 days--only Chrome and Firefox play int hat league. Starting at 30 days, you can see some red columns again, and toward the end (80, 85, and 91+ days), Apple is alone because the other browser engines have long fixed their problems.

Another chart shows for the year 2021 that Apple (blue line) on average had far longer intervals between updates than Google, and it looks like things didn't get better at all during the second half of the year:

It does look like competitive constraints on Apple are needed, not only but also in the browser engine context, to make a better, more secure browser engine, and to work harder to fix any issues that arise. There should be far fewer issues, and Apple should address them much faster.

May other studies yield different results? Well, a company with such vast resources can even fund (through a third party) a poll according to which 71% of "American voters" say "it's extremely / very important for manufacturers to be able to license standard-essential patents [SEPs] in a way that is fair, reasonable, and non-discriminatory, just 23 percent say it's only somewhat or not too important." In reality, it would be hard to find even 0.071% of the U.S. electorate that even knows what a SEP is...

Apple's maintenance of its iOS browser engine monopoly is a serious issue. Google presumably doesn't like it either (otherwise it would do the same on Android, though there is a risk of Google adopting some of Apple's anticompetitive schemes unless regulators take action). But as long as Google can just pay Apple $15 billion or so per year to remain the default browser engine, Google can live with the status quo. The same company that always claims competition to its search engine is just one click away prefers to create an additional entrance barrier, as other search engines simply couldn't afford to outbid Google.

Apple's neo-absolutism is not in the interest of (national) security. The UK CMA is now ahead of other competition enforcement agencies to tackle the issue. Others will--hopefully--follow.

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Anti-innovative effects of Apple's Orwellian prohibition of alternative browser engines finally being discussed and investigated

Today I wish to draw some additional attention to long-time web browser developer Alex Russell's new post, Apple Is Not Defending Browser Engine Choice. On other recent occasions I've mentioned the UK Competition & Market Authority's market investigation into mobile browsers and cloud gaming. The fact that Apple allows only one browser engine on iOS--even Chrome for iOS is not really Chrome, but merely Safari in disguise, as it must be based on Apple's WebKit engine--is a serious problem, especially because Apple argues in the App Store context that developers should simply make web apps, while doing everything to ensure that those web apps won't be a practical alternative to native apps. It's like Apple--the tyrant--telling developers: "heads I win, tails you lose."

The argument with which Apple apologists seek to defend the Webkit engine monopoly is that Chrome and other browsers based on the Chromium engine would otherwise take over and turn the web into a browser monoculture. Apple would have plenty of resources--and resource allocation is at the heart of Alex Russell's concerns--to compete on the merits. It's just more profitable and more comfortable to abuse a typical aftermarket monopoly.

The suggestion that a browser monoculture on iOS is needed to prevent a browser monoculture on the Internet as a whole is a "fight fire with fire" argument. Apple is the gatekeeper standing between the technology industry at large and one billion users--by some describes as the world's richest billion people, which is not completely off base, though fortunately even some rich people prefer Android.

Far be it from me to deny that the concentration of power in Google's hands with its search engine, ad network, Android, and Chrome raises concerns. However, apart from Android, where Google leverages the Power of Default, Chrome actually managed to compete on the merits. OK, some antitrust enforcement accelerated its adoption--but that's precisely what is needed against Apple's single-browser-engine policy now.

The 2020 United States et al. v. Google antitrust complaint mentions Chrome, but only in contexts where Google leverages its power over Chrome to maintain its search engine monopoly. Only on Android does Google leverage its market power in another field to strengthen Chrome.

If you let Apple and Google compete on the merits, such as on Windows where neither Apple nor Google benefits from the Power of Default or simply disallows competition, Google will win. Safari never made it big on Windows, while Chrome did.

Alex Russell is right that "Apple has foundationally imperilled the web ecosystem by destroying the utility of a diverse population of browsers and engines." And CNET's Stephen Shankland interestingly noted that web developers are asking lots of questions about where Apple stands on new web standards, i.e., whether and how WebKit will implement them:

One data point related to @slightlylate's (newest) post complaining Apple is hurting the web: I follow browser mailing lists, and a large fraction of the Webkit messages are browser devs requesting Apple's stance on dozens of new web standards. https://t.co/e3SJJoaZHR pic.twitter.com/uyrDBPcVF8

— Stephen Shankland (@stshank) June 27, 2022

In closing, just like Alex Russell, let me, too, amplify Stuart Langridge's call to "help the [UK] CMA help the Web" by providing input to the CMA (deadline: July 22).

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