Has European Commissioner Thierry Breton already announced that Apple will have to allow alternative app stores? A matter of interpretation.

One of the first LinkedIn posts I read this morning was from the Coalition for App Fairness, which was founded last year by Epic Games, Spotify, Match Group and others. When the CAF started, I firstly wanted to wait and see, but at the start of this year I already predicted on this blog that it would keep growing. My own app development company may at some point apply for membership, but even in that case I'd obviously retain my independent opinion. It was high time someone founded the CAF, given that a couple of other organizations claim to represent app developers while in reality being paid and remote-controlled by Apple in one case, Google in the other. It's laughable when an entity claims to represent app developers but doesn't support Epic against Apple, for example.

So the CAF pointed to an article published by EU Internal Market Commissioner Thierry Breton on LinkedIn, entitled DSA/DMA Myths -- What is the EU digital regulation really about?

According to CAF's interpretation of the article, Mr. Breton is "stressing the importance that all gatekeepers allow other app stores on their platforms. This would mean that for the first time, there will be real competition for the App Store." (emphasis added)

It's obvious that I would want this to happen. Competition works wonders. This isn't just about the commission on in-app payments. When they reject your app and won't let you publish it at all or force you to give up on your original concept, your focus is not on 15%, 30% or any percentage for that matters. As Epic will argue in the May trial, alternative app stores can do a better job at curation (app reviews). I don't know whether the Epic Games Store, if it already existed on iOS, would have accepted my app (we'd have to build a Windows version and submit it to them to find out), but considering that similarly-themed games are available on Steam (a pretty meaningful point of reference), the Samsung Galaxy Store, the Microsoft Store etc., I'd be reasonably optimistic. At a minimum I would know that whoever (Apple, Epic, or any third party) rejected it would have to assume that some other app store might carry it. That would discipline all of them, and rejections would become more reasonable. Some people blame the reviewers, such as the Coronavirus Reporter complaint against Apple; I prefer to focus on structural and systemic issues, but regardless of how structural or not a problem is, competitive constraints can only help.

The European Union's envisioned Digital Markets Act could become the most important piece of legislation in the technology space ever, way above such laws as the U.S. Digital Millennium Copyright Act (the substance of which I don't mean to criticize; I vocally supported its enforcement in a case involving Blizzard Entertainment).

But the question is: is Mr. Breton actually saying in that LinkedIn article that there will be alternative app stores on iOS (and Android)?

Here's the only passage in his statement that mentions apps:

"Gatekeepers will keep digital opportunities; providers of operating systems will always be able to offer all sorts of software and apps as they wish. In addition, the DMA empowers the users who do not like the preinstalled apps to switch to a different service or use a different app offered by another provider." (emphasis in original)

The narrowest interpretation would be that users must be provided with alternatives to any preinstalled apps, either by selecting different services within an app (such as by selecting a different search engine in a search app) or installing "a different app" made by another developer. In that case, one would interpret "provider" as "service provider" in the same sense that users could switch to a different service within an app.

But one doesn't even have to interpret "by another provider" as "by a different app store" in order to arrive at the CAF's desired outcome. The Apple App Store is an app itself (as is the Google Play Store). And it's a preinstalled one. So, arguably, Apple would have to offer an alternative by another service provider (such as the Epic Games Store) to the App Store. At a minimum, the CAF's interpretation is defensible, even though I'm not going to take a definitive position on whether it's the only proper interpretation (absent additional evidence).

What Mr. Breton primarily sought to accomplish with his LinkedIn article is to debunk the "myth" that Apple couldn't offer, say, a music streaming service. Instead, the DMA would impose obligations requiring "that business users and end users are not unfairly deprived of their free choice, a fundamental postulate of [the EU's] single market." An alternative app store would be as consistent with that vision as it gets. Many roads lead to a multi-app-store ecosystem, and the DMA is one of them, at least potentially.

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Arizona House of Representatives adopts law untying in-app payment method from mobile app store monopolies: now on to the State Senate

Here's a follow-up to my very recent commentary on HB2005, a legislative proposal preventing Apple and Google from requiring developers to use only one payment system per mobile app store. Republican state lawmakers Dr. Regina Cobb and Leo Biasiucci sponsored the bill.

Today, the Arizona House of Representatives--one of the two chambers of the state legislature--PASSED the bill!

This screenshot is from the status webpage (click on the image to enlarge; the "PASSED" information may not be visible otherwise):

The result of the third reading vote was 31-29. There are 31 Republicans and 29 Democrats in the Arizona State House, and one member per party crossed the aisle, thereby canceling each other out.

A couple of proposed amendments failed, while a proposal by Dr. Cobb (enabling app developers to complain to Arizona's Attorney General about any failure by Apple or Google to comply) was adopted. (Technically, the App Store part of HB2005 was an amendment to a multi-purpose bill, which amendment then in turn got amended in the way just described.)

The Coalition for App Fairness is pleased, but notes that this is merely a first step toward a level playing field for all:

The Coalition for App Fairness is pleased to see the House passage of #HB2005, which will encourage business innovation in Arizona and protect consumer choice. While this is cause for celebration, it is only a first step toward achieving a truly level playing field for all.

— Coalition for App Fairness (@appfairness) March 3, 2021

In order for this measure to be passed into law, the Arizona Senate would have to adopt it as well, and the Governor would have to sign it (as opposed to vetoing it). The (counter)lobbying onslaught by Apple and Google has been massive already, and may further intensify. There are 16 Republican and 14 Democratic senators. It is counterintuitive that Arizona Democrats have such strong reservations concerning this measure, considering that the Democratic majority in the United States House of Representatives took a clear position on tech monopolies and walled gardens in October.

This remains interesting, and meanwhile there are initiatives in various other states. Today, the Minnesota Reformer website published an opinion piece by Justin Stofferahn and Pat Garofalo, calling on the Minnesota state legislature to "curb anti-competitive tactics" in order to become, once again, "an innovation center."

And in precisely two months from today, the Epic Games v. Apple antitrust trial will start in Oakland, California.

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Could a single state legislature topple both mobile app store monopolies? At least it could make a historical contribution.

This is just my first post on legislative initiatives in multiple states concerning mobile app stores, so I've really just begun to research the topic and have a lot to learn.

A couple of weeks ago, the North Dakota state senate voted against a bill that would have required Apple's App Store and the Google Play Store to allow app developers to use other payment in-app payment systems. The fact that the state legislature decided against it doesn't represent a ringing endorsement of the status quo of mobile app stores. It's possible that many of the lawmakers who voted against the proposal simply didn't want their state, with not even a million inhabitants, to take such a fundamental decision against two of the country's largest and most powerful companies.

There definitely is broadbased political support for the fight against app store monopolies: last fall, the Democratic majority of the United States House of Representatives adopted a report on digital markets that condemns the current situation in pretty strong terms.

All three branches of U.S. government are dealing with the issue in different ways: the judiciary has various antitrust lawsuits against Apple and Google before it (with a case management conference in Epic Games v. Apple taking place tomorrow, Monday); the executive government (the DOJ's Antitrust Division and various state attorneys-general) may bring antitrust cases as well; and as far as lawmakers are concerned, there's the aforementioned House report (which is non-legislative, though it does recommend that measures be taken) as well as activities in multiple states.

As a developer who's experienced (and continues to experience) how tyrannical and harmful those app store monopolies are, I welcome any initiative that has the potential bring about change, or at least to raise the level of awareness. The situation is unsustainable. I've been in this industry for decades, and I remember the times when Microsoft was accused of expanding into other markets by abusing its control over Windows. What was alleged at the time was, seriously, negligible compared to the present setup. I remember computer book publishers who were unhappy about the creation of Microsoft Press; established office app makers like WordPerfect and Lotus complaining about Microsoft using secret Windows API calls, though I never saw any evidence for that (and, in fact, those companies initially didn't even want to make the transition from MS-DOS to Windows); and there were antitrust issues, but they affected only those competing with Microsoft at the operating system level, like Digital Research with DR-DOS, or at least at the network server level, like Samba, which got help from the European Commission. But the market was wide open then compared to what it is today. Microsoft didn't (as it couldn't) prevent anyone from publishing anything. Microsoft made itself comfortable at the top of the food chain, but a self-serving, arbitrary, or tyrannical gatekeeper it was not.

The fight against the abuse of app store monopolies is generally a marathon, not a sprint. In particular, antitrust enforcement and ligitation are time-consuming. But there can always be a sudden breakthrough somewhere that brings about change. To topple the app store monopolies thorough state legislation is rather ambitious, but my initial analysis is that the Coalition for App Fairness (CAF) has everything to gain and nothing to lose by playing that game. That's because even if a dozen state legislatures voted against such initiatives, the House report would still be far more persuasive--but if any single state enacted an app store law, app developers might find ways to benefit from it, such as by setting up shop in that state, and Congress would have a pressing reason to prioritize this subject at the federal level.

That said, it's just hyperbole that Apple claimed a measure like the North Dakota bill would be the end of the App Store as we know it. Shopping apps like Amazon or parking apps (I just used one a couple of weeks ago) are also allowed to use their own payment systems. Many users may still prefer to create just one account with Apple and to use it across all apps, but the market should decide. Apple's position is that because it made iOS, it shouldn't have to face competition in app distribution.

My own #1 (and #2, #3, #4, ...) issue with Apple and Google is about their rules relating to apps that mention COVID. I see the point, however, in some organizations' criticism of the restrictions those platforms impose on in-app payment systems. We can't solve all issues at the same time, and maybe the payment context is the one in which the cost to consumers is clearest (after all, the Supreme Court allowed a consumer class action against Apple to go forward). But it would be a misconception to believe it's just about "the 30%." In a twittersation on Thursday, the founder and CEO of Epic Games clarifies what this is fundamentally about. In response, I listed a handful of related issues:

Where there is a monopoly, overcharging is just *one* of various negative effects. Apple restricts one billion users' choice using bad apples for a pretext, whether it's payment systems, promotional methods, functionality, themes, or presentation. And makes arbitrary decisions.

— Florian Mueller (@FOSSpatents) February 25, 2021

For state legislatures, the in-app payment part is particularly intriguing because lawmakers can directly benefit consumers in their states and, potentially, attract app development companies. State-level initiatives have been reported from various states, such as Minnesota (StarTribune article) and Arizona (KAWC News).

The Coalition for App Fairness reported that the Arizona House Rules Committee "voted unanimously that [a bill including a part on app stores] is constitutional and in proper form." As a result of Apple's and Google's counterlobbying efforts (which show that they take those initiatives seriously), the question came ujp whether the proposal is allowed under the Commerce Clause, which gives U.S. Congress the power to legislate commerce. However, my research shows that the Commerce Clause doesn't prevent states from regulating commerce in their states as long as what they do doesn't run counter to federal legislation.

Of the three bills I've seen so far (Arizona, Minnesota, and North Dakota), my personal favorite is the language of the Grand Canyon State's version of the bill, which would make it illegal for Apple and Google to "require a developer that is domiciled in this state to use a particular in-application payment system as the exclusive mode of accepting payments from a user to download a software application or purchase a digital or physical product or service through a software application" (emphasis added). As Apple and Google are based in California, not Arizona, the argument is apparently made by the bill's opponents that this is interstate commerce and Arizona is just trying to favor its own companies, but again, the vote on constitutionality was unanimous and in favor of this proposal.

Assuming for the sake of the argument that Arizona (though it could also be any other state) passed such a statute into law, what would happen? Apple and Google could theoretically try to stop providing their app stores in that state, just so they would stop to meet the threshold (number of downloads, or revenue level) set forth in the bill. But after selling numerous iPhones in a given state, Apple could hardly stop serving those customers. The same applies to Google after its OEMs have sold tons of Android devcies somewhere.

Could Apple (or Google) stop doing business with app developers based in that state, especially if companies from other states set up offices in Arizona to benefit from the law? If they did so, they might be required under federal antitrust law or state UCL (unfair competition law) to make their essential facilities available to developers.

The first state legislature to enact such an app store state law could make history, and would benefit consumers and developers alike. I keep my fingers crossed, but there are so many other things going on that I'm sure it's not a question of if, but when, the app store situation will improve. When I campaigned against the EU software patent directive in 2004 and 2005, I thought it was the most fundamental threat to developers ever. It's how I became a campaigner for the first time in my life, and a little over a year after joining the fray, I received an award that went to Governor Schwarzenegger two years later, and I received more votes than fellow nominee Bono, which shows there were a number of people who thought I had made an impact on a major issue. But this app store cause is more important. I'm not going to be a full-time campaigner again, but I am determined to make my little contribution.

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Epic Games files antitrust complaint against Apple with the European Commission's Directorate-General for Competition (DG COMP): media reports

Frankfurter Allgemeine Zeitung (FAZ) and the Financial Times report that Fortnite and Unreal Engine maker Epic Games has filed an EU antitrust complaint against Apple. Epic is being represented by Clifford Chance (the FAZ article quotes Mr. Ashwin van Rooijen), a major global firm that has been a key player in many EU tech antitrust matters over the years.

When asked why they filed this complaint against only Apple, and not simultaneously against Google, Epic's lawyers apparently said that Apple was presently the focus of EU antitrust enforcement in this context. There is an ongoing investigation of Spotify's complaint against Apple. Both Epic and Spotify are members of the Coalition for App Fairness (CAF), an organization whose positions on app distribution Microsoft has supported publicly without joining the organization.

For proper disclosure, I am a member of the informal #AppRising movement and brought my own complaints against Apple and Google in multiple jurisdictions last month (EU case numbers: AT.40747 Apple, AT.40748 Google). I consider this kind of topic to be the single most important tech antitrust issue of the 2020s. Standard-essential patent (SEP) issues continue to be very important, but are eclipsed by the #AppRising. But the concerns raised by app developers are diverse, and just like I haven't seen Epic comment on my complaint regarding COVID-related apps, I don't want to take a position on Epic's (and others') complaints over in-app payments--which doesn't mean that I necessarily disagree, just that at this point it's too early for me to speak out on a legally complex issue.

As I just mentioned my own complaints, a few hours ago iClarified mentioned me in connection with a new rule--or maybe it's more of a clarification of an existing rule--by Apple in connection with "health pass" apps (apps that enable users to show to others, such as airport security staff, that they have been vaccinated or have recently been tested negatively). So here's a bit of a clarification from my end in the context of iClarified's report on Apple's potential clarification regarding health apps: I don't envision my own app company to offer any "health pass"-like functionality and, therefore, prefer not to comment on that category of COVID-related apps other than noting that governments--rather than private entities--should regulate health passes, such as by ensuring that only health passes with a certain stamp of approval would be recognized at airports, sports venues, and so forth.

I don't mean to comment on Epic's choice of bringing a complaint against only Apple, not Google. I'm sure they had their reasons, and it's possible they previously talked to DG COMP and made their decision based on the feedback they got.

My company, however, seeks to resolve its issue with both major platforms at the same pace. Last week's decision by the Munich I Regional Court against Google, of which I've meanwhile translated the remaining 10% I just summarized a week ago, makes it clear that "gatekeepers" (the ruling already uses that key term of the upcoming Digital Markets Act) must not disadvantage high-quality health-related offerings just because they don't come from a governmental source. My company is going to bring a lawsuit in Munich on that basis pretty soon. The Munich court's holding is very clear, and Google's rule on COVID-related Android apps is fundamentally more abusive--because it results in complete foreclosure--than its preferential treatment of a government-run health information portal by its search engine. If Google doesn't take the Munich court's holdings seriously, it will just have to be enjoined again. After filing the complaint, I will publish an English translation on this blog.

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Epic Games ignores Apple's property rights and technical contributions as it reinforces motion for judgment on pleadings against counterclaims

Before I talk about Epic Games' latest filing in the antitrust dispute with Apple in the Northern District of California, here's a follow-up to what I posted one month ago when I wrote that the political clout of the newly-founded Coalition for App Fairness (Epic Games, Spotify, the Tinder company, and others) would depend on its ability to attract more members. This week, the CAF announced the addition of 20 members, and claimed that more than 400 other app developers have applied for membership. The names of the would-be members awaiting approval of their request to join aren't known, so I can't tell how credible and significant they are.

There are at least a couple of shady ones among those who have been allowed to join. It appears that Prepear's real issue with Apple is a trademark dispute, and I think Apple made a reasonable and responsible decision when it disallowed Eristica's "challenge" system as such challenges can indeed be quite dangerous.

But at least the majority of the CAF's members appear legit. Should this group continue to grow at a similar pace, it may at some point be in a position to claim that there's widespread disagreement with Apple's App Store and Google's Google Play business terms. A few dozen companies can't claim to speak for those who make millions of apps--but Apple will have to keep an eye on the CAF's momentum going forward because at some point it could become an influential organization and lend credence to Epic's and Spotify's narrative.

Now, on to Epic's latest court filing (this post continues below the document):

20-10-23 Epic Games' Re... by Florian Mueller

In order to eliminate the risk of punitive damages, Epic seeks to limit the dispute with Apple to an antitrust case if Epic wins and a contract dispute in case Epic's antitrust claims don't succeed. For that purpose, Epic brought a motion for judgment on the pleadings (somewhere between a motion to dismiss and a motion for summary judgment) against Apple's non-contract counterclaims, which Apple opposes. Late on Friday, Epic filed the above reply brief in support of that motion.

Philosophically, Epic Games v. Apple is in no small part about the relative value of the contribution each party makes to, for instance, Fortnite's commercial success on iOS. While it's obvious that there wouldn't be a Fortnite on iOS without Epic or without Apple, either party's counsel is now trying to convince the court that their respective client is the more important contributor. And that leads them to paint a self-centric picture.

Last month I agreed with famous and vocal iOS app developer Marco Arment that Apple shouldn't reduce to its 30% commission the value that we developers (my next title is slightly delayed, but we'll apply for TestFlight beta distribution in a matter of days) add to iOS. But the introductory part of Epic's latest filing makes a very one-sided statement: "Consumers who choose to make in-app purchases in Fortnite pay for Epic's creativity,innovation and effort—to enjoy an experience that Epic has designed." The fact of the matter is that Epic is standing on the shoulders of giants; Fortnite does not exist in a vacuum; and without the mobile revolution (which the iPhone sparked), app developers would today have fewer viable platform options.

The question of what actually belongs to Apple is relevant to certain counterclaims Apple brought against Epic. Apple wants to hold Epic responsible for having defrauded its app reviewers by sneaking a prohibited alternative payment system past the review process, and Epic argues that Apple isn't entitled to anything other than what Epic owes on a contractual basis. Apple, however, argues that only because it's protected itself against fraudulent acts through contractual provisions doesn't mean it doesn't have claims against Epic under tort law. Epic acknowledges that a breach and a tort can co-exist, but insists that the tortious act must be "independently wrongful." And that is, in my opinion, ultimately a question of whether one takes Epic's perspective, which is that they have every right to provide apps to iOS users and it's just Apple that restricts this right by uniterally imposing contract terms, or whether one primarily views Apple's App Store and the iOS platform as Apple's property, giving Apple the right to decide which apps become available via the App Store (and, therefore, to review those apps).

The "property" question is even more central to Apple's "conversion" claim (the civil law equivalent of theft). Epic argues that it's not theft to take money from Fortnite users on iOS, as opposed to "stealing cash from a vault in Apple Park, or raiding Apple's bank account."

My feeling is that the part about defrauding the app review process is not ripe for decision at this point; some of what Epic says may be valid, but not sufficient to defeat the counterclaims at this early stage. Conversion, which requires a possessory interest, may be ripe for judgment.

As for the question of whether Epic's offering an alternative payment mechanism (which Epic did in order "to illustrate that competition could exist on iOS, and that consumers would welcome and benefit from it") constitutes interference with Apple's customer relationships, Epic points to a passage in Apple's agreement with end users (Apple Media Services Terms and Conditions) that says "Apple acts as an agent for App Providers in providing the App Store and is not a party to the sales contract or user agreement between you and the App Provider." On that basis, Epic describes itself as the "principal" in the relationship with end users, and Apple as an "agent" at best and "an outright non-party" at worst. However, iOS users have a relationship with Apple that goes beyond Fortnite.

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App Store Battlemap: all antitrust investigations and complaints targeting Apple's App Store and Google Play from around the globe in one chart

Battlemaps are a signature element of this blog. Ten years ago I created a number of them to visualize the smartphone patent disputes between the likes of Microsoft, Apple, Google's Motorola, HTC, and Samsung. Two years ago to the day I published a new one featuring Apple, Huawei, Intel, Qualcomm, and Samsung. And now I proudly present what is--unless I missed something--the first chart to show the global app distribution antitrust landscape--all players and all cases--as a one-pager (click on the image to enlarge; this post continues below the image):

I intend to update this chart from time to time. And here's the PDF version, which comes with two additional pages of explanations and information:

20-10-14 App Store Antitrus... by Florian Mueller

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Desktop OS monopolist Microsoft criticizes app distribution terms of smartphone OS makers Apple, Google: closing ranks with Epic Games, Spotify

Everyone in the industry has known for years that Microsoft hates the notion of Apple and Google retaining 30% of whatever end users pay for and in Microsoft Office and other smartphone apps. Microsoft was exceedingly hesitant but ultimately accepted. The word "hates" has a meaning here that transcends purely financial considerations--in fact, Microsoft has been in business for more than long enough to know and remember that traditional distribution channels used to ask and get up to about twice that margin when Office was installed from a bunch of DVDs, CDs, or floppy disks. There's also a psychological problem here. The need to agree to a revenue split that the likes of Epic Games and Spotify--midgets compared to Microsoft--are fighting against is nothing short of a major humiliation for Redmond. The combination of a revenue split one would rather avoid (or at least minimize) with a constant reminder of having lost in the smartphone operating system (OS) market--and, in fact, no longer being the world's #1 OS company if all device categories are considered--presumably feels toxic.

In an alternative universe in which Microsoft would have extended its desktop operating system monopoly (as a matter of fact, Microsoft didn't even appeal an EU court decision that concluded it was a desktop OS monopolist) to smartphones, which it tried very hard but ultimately unsuccessfully,

• Microsoft itself would likely have found itself on the receiving end of antitrust complaints (maybe not by Epic and Spotify, but by others, possibly even Apple and Google),

• Microsoft wouldn't have provided sworn declarations to a plaintiff challenging an alleged OS monopolist (as it has already done twice: 1, 2), and

• there definitely wouldn't have been today's public statement by Microsoft, 10 app store principles to promote choice, fairness and innovation.

It's not like Microsoft hadn't found other great opportunities, such as its Azure cloud. It's a terrific, innovative company and has reinvented itself. Of course, it's still milking its Windows and Office cash cows. But paying what the likes of Epic describe as the "Apple tax" and "Google tax" is comparable to a dethroned king having to pay for the upkeep of his castle after decades of being in the position to tax his subjects (which Microsoft still can and does, but in other ways and other markets).

In the wake of a Congressional report that, among various other topics, also discussed app distribution terms, Microsoft informally joins the Coalition for App Fairness (CAF).

There's also a close personal connection here: Horacio Gutierrez, Spotify's legal and licensing chief, was Microsoft's head of IP and widely considered its #2 lawyer (after Microsoft President Brad Smith). I've said it on another occasion that Spotify couldn't have made a better hiring choice. But that doesn't mean I necessarily agree with his positions.

A few years ago, Microsoft and Google actually made peace in the sense that neither was going to instigate antitrust investigations against the other. Those EU antitrust complaints against Google had been backed by Microsoft. But then Microsoft left certain organizations. Now, while Microsoft hasn't formally joined the Epic-Spotify-led CAF yet, it's in a de facto anti-Google alliance again. Who knows--maybe Google will (again) lend support to anti-Microsoft initiatives at some point.

Microsoft is apparently going to make adjustments to the app distribution terms on Windows to the extent it's necessary to be CAF-aligned. From an app developer perspective, I actually welcome that move, and it may very well shield Microsoft against allegations of hypocrisy as far as Windows app store commissions are concerned. But what about the XBox? Microsoft writes:

"We also operate a store on the Xbox console. It’s reasonable to ask why we are not also applying these principles to that Xbox store today. Game consoles are specialized devices optimized for a particular use. Though well-loved by their fans, they are vastly outnumbered in the marketplace by PCs and phones. And the business model for game consoles is very different to the ecosystem around PCs or phones. Console makers such as Microsoft invest significantly in developing dedicated console hardware but sell them below cost or at very low margins to create a market that game developers and publishers can benefit from. Given these fundamental differences in the significance of the platform and the business model, we have more work to do to establish the right set of principles for game consoles."

That's a non sequitur distinction. It means that the device maker can just let app developers pay for what consumers get. And what should Google say then? Google makes Android available on open-source terms. Whether or not it actually does get paid by device makers, I'm sure it's much less than the price of an Xbox.

At least Microsoft promises to give further thought to "the right set of principles for game consoles." That is very vague. When? What? How? And why not now?

Is Microsoft really giving up much? Certainly not with respect to Windows. The alternative would have been for Microsoft to make technical changes to Windows so as to prevent direct installations. Apart from the enormous logistical effort this would have involved in order to avoid major disruption, it would have raised antitrust issues because Windows is clearly a destop OS monopoly. By contrast, Apple and Google are fiercely competing with each other in a two-horse race. And while Microsoft would have imposed terms now that it's been a monopolist for several decades, Apple and Google asked for the same 30% when they started (and therefore weren't monopolists), and if anything, the terms for app developers have only improved since then. Now, as an app developer I'm always happy about further improvement. But for now I'm talking about it from an antitrust perspective. If Microsoft leveraged its monopoly to impose something it hadn't done in decades, that would be much easier to attack than the fact that Apple and Google haven't made their terms more favorable to app developers.

There have been times, even quite recently, when Microsoft's market capitalization was the highest of any company at least in this industry. Today, Apple is about $400 billion ahead, and Alphabet about $600 billion behind. Doing some damage to those companies would make it easier for Microsoft to reclaim the top spot.

Microsoft is calling for a constructive dialog, which is always good to have. But whatever Microsoft does with respect to its own platforms is motivated by the factors I outlined in this post, and probably others I'm not even aware of. What I see happening here is that some of those who dislike Apple's and Google's app distribution terms create their own app stores or sweeten the terms of existing app stores only to up the pressure on Apple and Google. It's something one can also observe in the patent licensing space where deals are sometimes struck and targets are picked primarily for the purpose of establishing "comparable transactions" and then they impose the same terms on others.

If regulatory agencies are simply looking for "evidence" they can hold against Apple and/or Google, they might make use of those "comparables." It's another question whether any courts that may one day have to review their decisions, or make their own decisions (such as in Epic Games v. Apple and Epic Games v. Google, both in the Northern District of California), will be impressed once they figure out what's going on and why.

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Political clout of newly founded Coalition for App Fairness will depend on more app firms joining Epic, Spotify, Match Group (Tinder), others

Through a Wall Street Journal article (behind paywall) I just became aware of the announcement of the newly created Coalition for App Fairness (CAF). Its Twitter handle is @appfairness.

The primary location, as per the website and the Twitter profile, is Washington, DC, but the press release states two locations: "BRUSSELS and WASHINGTON D.C." This means the CAF seeks to influence not only the Antitrust Division of the Department of Justice and the Epic v. Apple and Epic v. Google lawsuits in the Northern District of California, where an Epic v. Apple preliminary injunction hearing will be held on Monday (September 28, 2020), but also the ongoing investigation of Apple's App store terms by the European Commission's Directorate-General for Competition (DG COMP).

The EU investigation was instigated by Spotify, which has been running a "Time to Play Fair" website for a while, with no signs of others throwing their weight behind Spotify's cause. It appears that the "AppRising" (as some call it) of app firms against Apple's App Store and Google's Play Store terms has some momentum now as a result of Epic's aggressive action against Apple. Epic prepared a multi-level campaign against Apple, initially sneaking a Trojan horse-style payment system past Apple's App Store review only to activate it via the cloud after emailing down the gauntlet to Apple's leadership at an ungodly hour, provoking the removal of the non-compliant version of Fortnite from the App Store, doing the same with respect to Google's Android app store, and filing complaints of approximately 60 pages against either company and publishing a "Nineteen Eighty Fortnite" campaign video. Epic's legal team is led by former U.S. antitrust chief Christine Varney and former federal judge Katherine Forrest, both of the Cravath firm, which many of my contacts in the legal community profoundly admire.

Spotify was quick to publicly welcome Epic's private antitrust lawsuits--and Tim Sweeney, the outspoken CEO of Epic Games who had criticized Apple's App Store terms on Twitter long before bringing suit, said shortly after the filings that he was working on the creation of a broadbased coalition of companies.

Here's an overview of the founding members of the Coalition for App Fairness, in alphabetical order:

• Basecamp: describes itself as "the all-in-one toolkit for working remotely"

• Blix (maker of BlueMail): according to Israeli newspaper Haaretz the two brothers alleged that Apple "copied their email app and removed it from the App Store"

• Blockchain.com, a cryptocurrency trading app that claims to administer 54 million "wallets" and having enabled transactions worth more than $620 billion

• Deezer: a French music streaming app

• Epic Games: no introduction needed

• European Publishers Council: unlike Epic, Spotify, Blix, Blockchain.com etc., this is actually a group of traditional media companies, and while they claim to "uphold the freedom of expression, media diversity, and democratic debate," they just want to preserve partly obsolete business models, such as through overreaching copyright laws, which I publicly opposed last year (Article 13/17 etc., though this group was more interested in the news snippets part of the EU copyright reform bill)

• Match Group: the operator of online dating services, most notably Tinder, but also Match.com, Meetic, OkCupid, Hinge, PlentfyofFish, Ship, and OurTime

• News Media Europe: this is the complement to the European Publishers Council, claiming to represent "the progressive news media industry in Europe – over 2500 European news brands in print or online, and also on radio and tv [sic]"; News Media Europe issued a press release today declaring itself in support of the CAF

• Prepear: maker of a "connected cooking" app and embroiled in a trademark dispute with Apple

• ProtonMail: a Swiss company that offers a "secure email" service

• SkyDemon: flight planning app

• Spotify: no introduction needed

• Tile: lost-and-found network

The diversity of those companies and their interests may appear to be a strength, but it will presumably be a challenge for them to agree on anything other than the benefits to them of reducing Apple's and Google's app distribution fees. That's because their business models are so different. Spotify, for instance, is concerned with subscription revenues, while Epic Games sells virtual items through in-app purchasing.

In the short term, the CAF's activities may be more focused on Apple, but as the list of founding members shows, some longstanding Google foes are on board as well.

How influential this new group is going to be will depend on its ability to attract more members. On the group's website there's already a mentioning of a disagreement between the founder of WordPress and Apple, making it a possibility that his company (named Automattic) might join at some point.

The role model for the CAF is presumably the European Committee for Interoperable Systems (ECIS), an anti-Microsoft lobbying group that was effectively managed by a Clifford Chance antitrust lawyer in Brussels. But in the Microsoft EU antitrust context, a few major companies like IBM, Oracle and Sun were all it took for such an organization to be credible. If the CAF wants to convince policy-makers that there's widespread disagreement with Apple's and Google's app distribution terms, the group will need to represent a far more significant percentage of the millions of smartphone apps out there than it does today, with several of its members having very specific disagreements with Apple that are not per se representative of the relationships with Apple and Google that the app developer community at large enjoys.

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