Welcome to the Future Media podcast on a momentous day for those publishers which rely on subscriptions and ads for revenue.
I’ve notched this as my favourite pod to date. It’s a cracker with some important messages for everyone in the news industry.
It’s about Apple.
Apple has enjoyed a long reputation as the Teflon Don of the tech giants.
Everyone kinda always suspected it was anti-competitive and didn’t play nice, but liked it so much they were willing to look the other way.
But after a series of product flops, scandals and embarrassing AI gaffes, the glitter is falling off and regulators and policymakers are suddenly paying more attention.
And in the past week they struck.
A Californian court held Apple in contempt in an antitrust trial with the makers of Fortnite, Epic, over the app store.
The implications are wild for Apple, and worried investors immediately sent its market cap skidding $164 billion. BTW, that’s $569,444 every tenth of a second!
The ruling is disastrous for Apple, but may also bring a whole new era of additional scrutiny on Big Tech more broadly.
To discuss it,
and I are joined by noted antitrust lawyer Gene Burrus. Apart from being a deadset legend, he also cut his teeth at Microsoft during its antitrust woes.That means he knows his stuff, and his insights are powerful and reveal a tangible opportunity for optimism around publisher subscriptions and ad income.
First, let’s set the scene…
Epic Games, the maker of hit game Fortnite, sued Apple arguing that the phone giant charged an unfair 30 per cent fee for purchases in its app store.
Apple won the case, Epic appealed, and Apple won that too, only it wasn’t quite over.
Another case flew off the side under California’s state unfair competition law, and Apple was dragged back into court.
This time, the judge found Apple’s practices were unfair, in “steering” customers and developers to use its products whether they wanted to or not.
There were then some shenanigans with Apple trying to charge some other fees, and some bullying, and Epic said this violated the court’s decision.
It wanted Apple declared to be in contempt. There were eight months or hearings, mostly getting little or no coverage, then days ago a decision.
Apple was in contempt, and that was not good.
What was worse was the wording of the ruling. It was brutal.
Gene said: “I’ve been practicing in and around courtrooms for big companies for more than 30 years, and that’s one of the most scathing decisions I’ve ever seen.
“She even made a criminal referral both of Apple, and one of their executives to the US Attorney’s Office because she thinks he lied to her face and Apple was dishonest throughout.”
The decision threatens Apple’s ability to charge customers to use its app store, and puts a $100 billion super-high 75 per cent margin business line at risk.
Apple stock tumbled five per cent on the news, and after it admitted tariffs were punching a $900 million hole in its revenues.
iPhone sales are flatlining, AI is in disarray and the $26 billion straight profit it has booked from Google’s illegal backhanded for search defaults is also going away.
Gene has a unique perspective as he was part of the legal team at Microsoft when it fought US Government antitrust action 25 years ago.
We asked him what he thought it would mean for consumers?
“It’s been pretty remarkable to see how quickly some companies have moved to take advantage of the ruling,” he said.
“Spotify literally rolled out its new version of the app in the US and had it approved, which hasn't always been an easy process with Apple and Spotify in the past.
“Spotify ceased processing payments within the app a long time ago because there was no margin on selling a subscription with those fees. Now it can.
“Obviously, Epic is ready to go too. Others will now start to build in links to payments and avoid that 30 per cent cost.
“I’ve worked with dating company Match. It has paid literally hundreds of millions in 30 per cent payments to Apple, so it’ll update quickly and give consumers a discount.
“I think customers will see lower prices on a lot of the things they buy within the app store, and you’ll see new capabilities in apps like Spotify and Netflix.”
He said it will also mean a 30 per cent fall in the fees publishers will need to pay for subscriptions acquired through the app store.
Don’t miss this ep here or on Spotify, Apple or wherever your find your pods. Why not bookmark it now.
Hope you enjoy this ep.
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