The big motivation for Apple to fight the new antitrust law

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Wednesday 13 April 2022

Apple has a better motive than privacy to fight antitrust reform

Apple (AAPL) CEO Tim Cook made his biggest public announcement this week against proposed antitrust legislation targeting the company’s app store. Cook claims that allowing customers to download apps to their iPhones from third-party sources will make them less secure.

“If we had to allow unchecked apps on the iPhone, the unintended consequences would be profound,” Cook said during a meeting of the International Association of Privacy Professionals on Tuesday.

Cook is right that the App Store helps protect users from malware, and that third-party options will open iPhone users to an increased risk of downloading fraudulent apps. However, the Apple boss has an even bigger reason to protest the legislation: Apple’s bottom line.

This is because if users download apps outside the App Store, Apple will lose out on the 30% fee it collects on many app sales. Apple doesn’t generate revenue for its App Store, but its services division, which includes the App Store, brought in $68 billion of the company’s total revenue of $365 billion in 2021. Since 2008, the App Store has earned $260 billion.

“Maintaining central control is very profitable for Apple — it’s the mechanism that allows Apple to set prices for users on both sides of its platform, app developers, and consumers,” Penn State law professor John Lopatka told Yahoo Finance. “And maintaining central control inevitably hurts competitors.”

Apple App Store keeps users safe

Cook asserts that the proposed antitrust legislation, called the Open Application Markets Act, would make users less secure by removing Apple’s ability to scan every app users install on their devices.

And he’s right.

Without the App Store, users will be able to download and install apps from any third-party app store or website of their choice. While this gives users more freedom, it also opens up the possibility for them to download malware-laden apps that can steal their information, extract their login credentials, or capture their bank details.

“Tim Cook is right that there is a real trade-off here,” explained Justin Nightmare, a professor at NYU Tandon’s School of Engineering. “And this is no small trade-off. There will be a trade-off related to privacy and security that happens if things change, especially for sideloading.”

This is not a unique situation either. Lopatka echoed Cappos’ concerns about consumer security and privacy, saying that removing Apple’s central control over apps “undoubtedly creates the risk of malware and invasive software making its way onto phones.”

It is a basic line of thinking. Giving users more ways to download apps naturally makes them more vulnerable to dangerous apps.

Of course, the Apple App Store doesn’t fully protect you. According to a report by The Washington Post in 2021, 2% of the 1,000 App Store apps in a single day were fraudulent.

However, Apple’s iOS and iPadOS are more secure than competing products because they have the latest software updates. Apple devices automatically download security and feature updates as soon as they become available, protecting users from malware that exploits flaws in Apple’s software.

It’s about Apple’s bottom line

Apple’s privacy and security pieces are one of its biggest selling points. For consumers who are tired of their data being sucked up or sold by seemingly every organization both online and offline, it’s worth paying a premium for the company’s hardware. Apple’s entry-level iPhone SE starts at $429, while Samsung’s A03 starts at $159.

Apple of course makes use of user data as well. The company’s Safari browser uses Google as its default search engine, which brings Apple between $8 billion and $12 billion annually, according to the Department of Justice lawsuit. Google, of course, uses information gleaned from users’ searches to inform its advertising actions.

Tim Cook arrives at the Academy Awards on Sunday, March 27, 2022, at the Dolby Theater in Los Angeles. (Photo by Jordan Strauss/Invision/Associated Press)

Regardless, Apple’s loss of control over the App Store would hurt Apple’s bottom line. The company currently charges a 15% or 30% fee on the sale of some apps. However, Apple only applies these fees when developers use in-app payment technology. Of course, developers can only use Apple’s technology, so they have to pay every time a customer purchases an app.

Developers say this is forcing them to raise prices, which hurts them and their customers. Spotify, IPC, and a large number of other developers have struggled with this for years. With antitrust law finally being enacted in Congress, it looks like Apple may finally have to loosen its iron grip on the App Store.

This does not mean that users will be left to fend for themselves. According to the proposed legislation, the covered organizations will not violate the Open Application Markets Act for actions intended to protect the security and privacy of users or prevent spam or fraud.

This does not mean that Apple will be able to fully protect users, especially those who wish to use third-party app stores. This means that Apple will still have the ability to provide users with at least some security.

Apple is already making sure its macOS products stay secure, even though it allows users to sideload apps onto Mac desktops and laptops. The company would simply have to do the same with its iOS and iPadOS products if the Open App Markets Act became law.

While it won’t be as secure as it was when Apple had complete control over the App Store ecosystem, it will allow for more competition. This will help consumers in a different way – by protecting their wallets.

by Daniel Holly, technical editor at Yahoo Finance. follow him Tweet embed

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