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“Don’t be evil” served as the unofficial motto of Alphabet from its earliest days until the first half of 2018, when the company quietly removed the slogan from the code of conduct distributed to employees.
Simple enough, some would think, but in the adage that actions speak louder than words, perhaps it was removed too late.
Apple
AAPL,
Alphabet’s
GOOG,
neighbors in California, enjoys an almost uncontested reputation as both cool and innovative. And while the company didn’t ever explicitly place its intent to avoid evil in its handbook or make it an unofficial slogan, the world seems to have an appreciation for Apple’s contributions to the world.
Also by Daniel Newman: Democrats’ new bills to regulate Big Tech are a reckless rewriting of antitrust law — and they won’t protect consumers
In the eyes of regulators, neither company is necessarily playing fair, and this has drawn the attention of politicians, policymakers and regulators, all of which are calling for greater regulation of “Big Tech.”
Alphabet is under fire from regulators worldwide, including recently becoming the defendant in a lawsuit brought against it by 36 states attorneys for antitrust violations, including unfair developer terms. Apple, meanwhile, has been facing its own barrage of antitrust probes and lawsuits from the U.S., the European Commission, the U.K. and, most recently, Germany’s competition oversight.
So while regulation runs rampant, the platform sits at the epicenter of the debate, and the iOS-versus-Android battle is undoubtedly the most visible of them all.
And for a straightforward reason. Mobile use generates more than half of all internet usage, and this number continues to rise, which means that the apps we have on our devices dictate the downstream use of social media, content, e-commerce and more — putting the operating system and its coinciding developer platform at the top of the food chain.
We can’t even go on Facebook
FB,
or Amazon
AMZN,
without one of these operating systems, leaving little wonder why Facebook thought about building its own.
Choice is the determinant of fairness
The focal point of most of the probes into Apple and Android have to do with the fees charged to developers and the options that developers have to go to market a different way. Essentially, being in the app store is a toll, and are there alternative routes that developers can take to create, market and distribute their applications.
For some reason, this seems to be where the courts, regulators and lawmakers continue to get stuck. Still, this is the apparent intersection of anti-competitive and unfair practices — at least for Apple. All of which is due to the company’s closed ecosystem, strict rules for developers and exorbitantly high fees (30%).
It’s pretty simple: Apple doesn’t let its developers take alternative routes, better known as “sideload” apps. It doesn’t allow developers to avoid the toll even if the path to purchase subverts that app store. If you want to put the Spotify
SPOT,
app on your iPhone and use your paid account, Apple gets its pound of flesh.
Android certainly isn’t perfect here. Alphabet faces its own unique challenges from a reputation among developers of higher development costs, and lower-income and demand for Android apps. Quality and security have been an issue for a long time in the Play Store but has improved over recent years with the company increasing app vetting.
However, Android does allow sideloading, and this means its consumers and developers have greater choice. And if the experience of a sideloaded app is worse due to lack of vetting and quality control, then so be it. But the option to sell an app off the platform and use it on the device, in my opinion, means no one “has to” pay the toll. Instead, it’s a choice to sell on Amazon
AMZN,
or Shopify or eBay
EBAY,
or just build your own e-commerce site.
It’s that simple. Choice or no choice. Android gives its developers a choice, and Apple does not unless you consider not selling to over half of the addressable market in the U.S. choice. Something I suppose regulators will need to determine?
Who really benefits from antitrust?
Android enjoys a larger global market share than Apple, but it isn’t even close as it relates to anti-competitive policies on the respective platform. Apple’s policies are far more restrictive, and the cases brought against it by the likes of Spotify and Epic Games serve as clear examples of how Apple can wield its power even against multi-billion dollar global brands.
If we are talking about the U.S, the case becomes even more evident because of the sizable preference for iOS versus Android, where Apple holds 54% and well more than twice its 23% global market share.
And while some questionable practices could lead to unfair terms for app developers, the real question should be whether all of this big-tech-regulation talk will lead to any material action. So far, it has only led to a series of hefty fines, which to companies the size of Alphabet and Apple is nothing more than a speed bump.
Perhaps the most provocative question of all, would society benefit in any way from a meaningful antitrust ruling that didn’t only penalize but broke up or materially fractured the experience that platforms like iOS and Android deliver to its users?
To most of society, that would be far more evil.
Daniel Newman is the principal analyst at Futurum Research, which provides or has provided research, analysis, advising, and/or consulting to Nvidia, Qualcomm, Microsoft, Amazon and dozens of other companies in the tech and digital industries. Neither he nor his firm holds any equity positions with any companies cited. Follow him on Twitter @danielnewmanUV.
