Let’s try an experiment. Download Netflix to an iPhone, and then quickly sign up a new account.
Actually, I’ll save you the trouble, because you can’t do it.
Sure, you can download the Netflix app, but you can’t sign up and enter a credit card in the app itself. In fact, you’ll find a bewildering message that reads:
“Trying to join Netflix? You can’t sign up for Netflix in the app. We know it’s a hassle. After you’re a member, you can start watching in the app.”
Sometimes you read something, and you find yourself reflecting on a short passage that belies a much greater meaning.
In this case, it’s those five words: “We know it’s a hassle.”
Why would Netflix build something into its app that slows down new signups and creates a hassle for customers? It all comes down to the 30 percent commission that Apple takes when you make almost any purchase through an app.
Netflix doesn’t want to pay if it doesn’t have to. Who would?
Hold that thought. Because Netflix isn’t alone, and this week another huge app player, Epic Games, the company behind Fortnite, forced the issue in a different way. It went like this:
- First, Epic introduced an internal payment system in its app, that allowed it to bypass Apple’s interface and withhold the commission.
- Second, Apple quickly responded by removing the Fortnite app, for violating its terms of service. Google did the same thing, for the same reason — taking Fortite out of its own app store.
- Finally, Epic quickly filed twin lawsuits against both Apple and Google, and as my colleague Jason Aten wrote, had an an entire PR strategy ready to go.
But, I think there’s a piece missing in the analysis that some commentators have raised.
Because while Epic would face a years-long battle to prevail in court, and while the court of public opinion can be unpredictable, there’s another factor at play.
In the United States especially, we have a two-prong antitrust system. Individuals and companies can bring private actions, as Epic is doing here. But, we also have a robust state and federal enforcement system.
Often, the goal of bringing a private action is to try to prompt government action, which carries with it much greater risk.
To put it simply, the best possible outcome for a plaintiff in a civil action will usually be measured in dollars or an order from a court telling a defendant to do something (like, say, restore Fortine’s app).
But, governments have practically unlimited litigation budgets and patience, and their actions offer the possibility of far more drastic remedies: at the extreme, asking courts to break up companies to cure monopalistic behavior.
Lo and behold, over the summer, a coalition of state attorneys general, along with the U.S. Department of Justice, were reportedly “taking the first steps toward launching an antitrust probe of Apple,” after having…
“spoken to several companies unhappy with Apple’s ironclad control of its App Store, the source of frequent griping by developers who say the company’s rules are applied inconsistently — particularly for apps that compete with Apple’s own products — and lead to higher prices and fewer choices for consumers.”
Hmmm. That sure sounds like Epic Games’s argument, doesn’t it? Beyond that, Apple CEO Tim Cook had to answer dozens of antitrust-related questions at a Congressional hearing over the summer.
It’s interesting. Netflix seems to believe it’s a big enough brand that its new users will put up with the “hassle” of having to download an app in one place, and sign up in another.
Fortnite is in a different position. So, my guess on its strategy is that it involves the PR push and social pressure, and of course the private court actions, but that it also hopes to increase the threat of government antitrust action.
That could wind up threatening the entire app store business model–and theoretically companies like Apple and Google (Alphabet) themselves.
And since these are some of the most robust publicly traded companies on the market, with incredibly activist investors, there’s a reasonable expectation that Apple’s shareholders might push it to resolve the issue.
It’s a strategic decision, and a long-term fight. If it works out, it will seem brilliant in retropect.
And for Epic, totally worth the hassle.
Let's try an experiment. Download Netflix to an iPhone, and then quickly sign up a new account.
n
Actually, I'll save you the trouble, because you can't do it.
n
Sure, you can download the Netflix app, but you can't sign up and enter a credit card in the app itself. In fact, you'll find a bewildering message that reads:
n
"Trying to join Netflix? You can't sign up for Netflix in the app. We know it's a hassle. After you're a member, you can start watching in the app."
n
Sometimes you read something, and you find yourself reflecting on a short passage that belies a much greater meaning.
n
In this case, it's those five words: "We know it's a hassle."
n
Why would Netflix build something into its app that slows down new signups and creates a hassle for customers? It all comes down to the 30 percent commission that Apple takes when you make almost any purchase through an app.
n
Netflix doesn't want to pay if it doesn't have to. Who would?
n
Hold that thought. Because Netflix isn't alone, and this week another huge app player, Epic Games, the company behind Fortnite, forced the issue in a different way. It went like this:
n
t
- First, Epic introduced an internal payment system in its app, that allowed it to bypass Apple's interface and withhold the commission.
t
- Second, Apple quickly responded by removing the Fortnite app, for violating its terms of service. Google did the same thing, for the same reason -- taking Fortite out of its own app store.
t
- Finally, Epic quickly filed twin lawsuits against both Apple and Google, and as my colleague Jason Aten wrote, had an an entire PR strategy ready to go.
n
But, I think there's a piece missing in the analysis that some commentators have raised.
n
Because while Epic would face a years-long battle to prevail in court, and while the court of public opinion can be unpredictable, there's another factor at play.
n
In the United States especially, we have a two-prong antitrust system. Individuals and companies can bring private actions, as Epic is doing here. But, we also have a robust state and federal enforcement system.
n
Often, the goal of bringing a private action is to try to prompt government action, which carries with it much greater risk.
n
To put it simply, the best possible outcome for a plaintiff in a civil action will usually be measured in dollars or an order from a court telling a defendant to do something (like, say, restore Fortine's app).
n
But, governments have practically unlimited litigation budgets and patience, and their actions offer the possibility of far more drastic remedies: at the extreme, asking courts to break up companies to cure monopalistic behavior.
n
Lo and behold, over the summer, a coalition of state attorneys general, along with the U.S. Department of Justice, were reportedly "taking the first steps toward launching an antitrust probe of Apple," after having...
n
"spoken to several companies unhappy with Apple's ironclad control of its App Store, the source of frequent griping by developers who say the company's rules are applied inconsistently -- particularly for apps that compete with Apple's own products -- and lead to higher prices and fewer choices for consumers."
n
Hmmm. That sure sounds like Epic Games's argument, doesn't it? Beyond that, Apple CEO Tim Cook had to answer dozens of antitrust-related questions at a Congressional hearing over the summer.
n
It's interesting. Netflix seems to believe it's a big enough brand that its new users will put up with the "hassle" of having to download an app in one place, and sign up in another.
n
Fortnite is in a different position. So, my guess on its strategy is that it involves the PR push and social pressure, and of course the private court actions, but that it also hopes to increase the threat of government antitrust action.
n
That could wind up threatening the entire app store business model--and theoretically companies like Apple and Google (Alphabet) themselves.
n
And since these are some of the most robust publicly traded companies on the market, with incredibly activist investors, there's a reasonable expectation that Apple's shareholders might push it to resolve the issue.
n
It's a strategic decision, and a long-term fight. If it works out, it will seem brilliant in retropect.
n
And for Epic, totally worth the hassle.
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pageInfo.articles = [{"inc_headline":"Apple Just Faced its Biggest Threat in Years. These 5 Words Explain it All","inc_homepage_headline":"Apple Just Faced its Biggest Threat in Years. These Five Words Explain it All","inc_homepage_headline_ab_test":null,"inc_twitter_headline":"Apple Just Faced Its Biggest Threat In Years. These 5 Words Explain It All ","inc_newsletter_headline":"Apple Just Faced its Biggest Threat in Years. These 5 Words Explain It All","inc_rubric":null,"inc_title":"Apple Just Faced its Biggest Threat in Years. These 5 Words Explain It All","inc_custom_byline":null,"inc_deck":"It's all about who bears the burden: your company, your customers, or somebody else.","inc_homepage_deck":"It's all about who bears the burden: your company, your customers, or somebody else.","inc_sharing_deck":null,"inc_clean_text":"
Let's try an experiment. Download Netflix to an iPhone, and then quickly sign up a new account.
n
Actually, I'll save you the trouble, because you can't do it.
n
Sure, you can download the Netflix app, but you can't sign up and enter a credit card in the app itself. In fact, you'll find a bewildering message that reads:
n
"Trying to join Netflix? You can't sign up for Netflix in the app. We know it's a hassle. After you're a member, you can start watching in the app."
n
Sometimes you read something, and you find yourself reflecting on a short passage that belies a much greater meaning.
n
In this case, it's those five words: "We know it's a hassle."
n
Why would Netflix build something into its app that slows down new signups and creates a hassle for customers? It all comes down to the 30 percent commission that Apple takes when you make almost any purchase through an app.
n
Netflix doesn't want to pay if it doesn't have to. Who would?
n
Hold that thought. Because Netflix isn't alone, and this week another huge app player, Epic Games, the company behind Fortnite, forced the issue in a different way. It went like this:
n
t
- First, Epic introduced an internal payment system in its app, that allowed it to bypass Apple's interface and withhold the commission.
t
- Second, Apple quickly responded by removing the Fortnite app, for violating its terms of service. Google did the same thing, for the same reason -- taking Fortite out of its own app store.
t
- Finally, Epic quickly filed twin lawsuits against both Apple and Google, and as my colleague Jason Aten wrote, had an an entire PR strategy ready to go.
n
But, I think there's a piece missing in the analysis that some commentators have raised.
n
Because while Epic would face a years-long battle to prevail in court, and while the court of public opinion can be unpredictable, there's another factor at play.
n
In the United States especially, we have a two-prong antitrust system. Individuals and companies can bring private actions, as Epic is doing here. But, we also have a robust state and federal enforcement system.
n
Often, the goal of bringing a private action is to try to prompt government action, which carries with it much greater risk.
n
To put it simply, the best possible outcome for a plaintiff in a civil action will usually be measured in dollars or an order from a court telling a defendant to do something (like, say, restore Fortine's app).
n
But, governments have practically unlimited litigation budgets and patience, and their actions offer the possibility of far more drastic remedies: at the extreme, asking courts to break up companies to cure monopalistic behavior.
n
Lo and behold, over the summer, a coalition of state attorneys general, along with the U.S. Department of Justice, were reportedly "taking the first steps toward launching an antitrust probe of Apple," after having...
n
"spoken to several companies unhappy with Apple's ironclad control of its App Store, the source of frequent griping by developers who say the company's rules are applied inconsistently -- particularly for apps that compete with Apple's own products -- and lead to higher prices and fewer choices for consumers."
n
Hmmm. That sure sounds like Epic Games's argument, doesn't it? Beyond that, Apple CEO Tim Cook had to answer dozens of antitrust-related questions at a Congressional hearing over the summer.
n
It's interesting. Netflix seems to believe it's a big enough brand that its new users will put up with the "hassle" of having to download an app in one place, and sign up in another.
n
Fortnite is in a different position. So, my guess on its strategy is that it involves the PR push and social pressure, and of course the private court actions, but that it also hopes to increase the threat of government antitrust action.
n
That could wind up threatening the entire app store business model--and theoretically companies like Apple and Google (Alphabet) themselves.
n
And since these are some of the most robust publicly traded companies on the market, with incredibly activist investors, there's a reasonable expectation that Apple's shareholders might push it to resolve the issue.
n
It's a strategic decision, and a long-term fight. If it works out, it will seem brilliant in retropect.
n
And for Epic, totally worth the hassle.
","inc_code_only_text":null,"inc_pubdate":"2020-08-15 05:30:00","inc_promo_date":"2020-08-15 05:30:00","inc_custom_pubdate":null,"inc_show_feature_imageflag":true,"inc_test_before_social_promotionflag":true,"inc_image_caption_override":null,"inc_autid":null,"inc_typid":1,"inc_staid":7,"inc_serid":null,"inc_prtid":null,"inc_activeflag":true,"inc_copyeditedflag":false,"inc_flag_for_reviewflag":false,"inc_filelocation":"bill-murphy-jr/apple-just-faced-its-biggest-threat-in-years-these-five-words-explain-it-all.html","inc_override_url":null,"inc_hide_article_sidebarflag":false,"inc_lock_articleflag":false,"inc_react_displayflag":true,"inc_custom_sidebar":null,"inc_show_read_moreflag":true,"inc_display_video_at_bottomflag":false,"inc_hide_video_prerollflag":false,"inc_full_width_read_moreflag":false,"inc_custom_css":null,"inc_custom_javascript":null,"inc_canonical_url":null,"inc_meta_keywords":"apple, apple app store, app store, fortnite apple, netflix apple, apple commissions, apple antitrust","inc_column_name_override":null,"inc_newsworthyflag":true,"inc_notepad":null,"inc_track_changesflag":false,"id":257057,"channels":[{"id":4,"cnl_name":"Lead","cnl_filelocation":"lead","cnl_custom_color":"009CD8","cnl_calculated_color":"F7CE00","cnl_contributor_accessflag":true,"cnl_current_priorityflag":false,"sortorder":0},{"id":5,"cnl_name":"Technology","cnl_filelocation":"technology","cnl_custom_color":null,"cnl_calculated_color":"9DC786","cnl_contributor_accessflag":true,"cnl_current_priorityflag":false,"sortorder":1},{"id":374,"cnl_name":"Wire","cnl_filelocation":"wire","cnl_custom_color":null,"cnl_calculated_color":null,"cnl_contributor_accessflag":false,"cnl_current_priorityflag":false,"sortorder":2},{"id":471,"cnl_name":"Icons & Innovators","cnl_filelocation":"icons-of-entrepreneurship","cnl_custom_color":null,"cnl_calculated_color":null,"cnl_contributor_accessflag":true,"cnl_current_priorityflag":false,"sortorder":2}],"categories":[],"authors":[{"aut_name":"Bill Murphy Jr.","aut_last_name_for_sort":null,"aut_title":null,"aut_column_name":"Action Required","aut_imgid":"51492","aut_blurb":"Bill Murphy Jr. is the founder of Understandably.com and a contributing editor at Inc.com. Contact and bio at www.billmurphyjr.com.","aut_footer_blurb":"Bill Murphy Jr. is a contributing editor at Inc.com. Contact and bio at www.billmurphyjr.com.","aut_twitter_id":"BillMurphyJr","aut_googleplus_id":null,"aut_entid":null,"aut_usrid":"428030","aut_admin_username":null,"aut_base_filelocation":"bill-murphy-jr","aut_atyid":"2","aut_parsely_dashboard_token":null,"aut_notes":null,"aut_monthly_commitment":null,"aut_compensated_authorflag":null,"aut_newsletter_location":"http://www.billmurphyjr.com/","aut_tracking_pixel":null,"aut_engaged":null,"aut_engaged_status_change_time":null,"aut_allow_syndicationflag":null,"time_created":null,"time_updated":null,"id":"3275","sortorder":1,"tbl":"author","fields":null,"application_path":"/public_web_sites/www.inc.com/reflex/","core_application_url":"http://www.inc.com/","featureimage":"https://www.incimages.com/uploaded_files/image/170x170/Bill-Murphy_51492.png","f2image":"https://www.incimages.com/uploaded_files/image/100x100/Bill-Murphy_51492.png","f3image":"https://www.incimages.com/uploaded_files/image/50x50/Bill-Murphy_51492.png","f0image":"https://www.incimages.com/uploaded_files/image/336x336/Bill-Murphy_51492.png","display_footer_blurb":"BILL MURPHY JR. is a contributing editor at Inc.com. Contact and bio at www.billmurphyjr.com.
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Let's try an experiment. Download Netflix to an iPhone, and then quickly sign up a new account.
n
Actually, I'll save you the trouble, because you can't do it.
n
Sure, you can download the Netflix app, but you can't sign up and enter a credit card in the app itself. In fact, you'll find a bewildering message that reads:
n
"Trying to join Netflix? You can't sign up for Netflix in the app. We know it's a hassle. After you're a member, you can start watching in the app."
n
Sometimes you read something, and you find yourself reflecting on a short passage that belies a much greater meaning.
n
In this case, it's those five words: "We know it's a hassle."
n
Why would Netflix build something into its app that slows down new signups and creates a hassle for customers? It all comes down to the 30 percent commission that Apple takes when you make almost any purchase through an app.
n
Netflix doesn't want to pay if it doesn't have to. Who would?
n
Hold that thought. Because Netflix isn't alone, and this week another huge app player, Epic Games, the company behind Fortnite, forced the issue in a different way. It went like this:
n
t
- First, Epic introduced an internal payment system in its app, that allowed it to bypass Apple's interface and withhold the commission.
t
- Second, Apple quickly responded by removing the Fortnite app, for violating its terms of service. Google did the same thing, for the same reason -- taking Fortite out of its own app store.
t
- Finally, Epic quickly filed twin lawsuits against both Apple and Google, and as my colleague Jason Aten wrote, had an an entire PR strategy ready to go.
n
But, I think there's a piece missing in the analysis that some commentators have raised.
n
Because while Epic would face a years-long battle to prevail in court, and while the court of public opinion can be unpredictable, there's another factor at play.
n
In the United States especially, we have a two-prong antitrust system. Individuals and companies can bring private actions, as Epic is doing here. But, we also have a robust state and federal enforcement system.
n
Often, the goal of bringing a private action is to try to prompt government action, which carries with it much greater risk.
n
To put it simply, the best possible outcome for a plaintiff in a civil action will usually be measured in dollars or an order from a court telling a defendant to do something (like, say, restore Fortine's app).
n
But, governments have practically unlimited litigation budgets and patience, and their actions offer the possibility of far more drastic remedies: at the extreme, asking courts to break up companies to cure monopalistic behavior.
n
Lo and behold, over the summer, a coalition of state attorneys general, along with the U.S. Department of Justice, were reportedly "taking the first steps toward launching an antitrust probe of Apple," after having...
n
"spoken to several companies unhappy with Apple's ironclad control of its App Store, the source of frequent griping by developers who say the company's rules are applied inconsistently -- particularly for apps that compete with Apple's own products -- and lead to higher prices and fewer choices for consumers."
n
Hmmm. That sure sounds like Epic Games's argument, doesn't it? Beyond that, Apple CEO Tim Cook had to answer dozens of antitrust-related questions at a Congressional hearing over the summer.
n
It's interesting. Netflix seems to believe it's a big enough brand that its new users will put up with the "hassle" of having to download an app in one place, and sign up in another.
n
Fortnite is in a different position. So, my guess on its strategy is that it involves the PR push and social pressure, and of course the private court actions, but that it also hopes to increase the threat of government antitrust action.
n
That could wind up threatening the entire app store business model--and theoretically companies like Apple and Google (Alphabet) themselves.
n
And since these are some of the most robust publicly traded companies on the market, with incredibly activist investors, there's a reasonable expectation that Apple's shareholders might push it to resolve the issue.
n
It's a strategic decision, and a long-term fight. If it works out, it will seem brilliant in retropect.
n
And for Epic, totally worth the hassle.
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