I wrote yesterday on Elizabeth Warren’s plan to break up yesterday. I thought that was that, but apparently she followed up with a call to break up Apple as she laid out in an interview with The Verge.
You were very specific in how you’d break up Google and the rest. How would you break up Apple?
Apple, you’ve got to break it apart from their App Store. It’s got to be one or the other. Either they run the platform or they play in the store. They don’t get to do both at the same time. So it’s the same notion.
Pulling that apart, the App Store is the method by which Apple keeps the iPhone secure. It’s integrated into the platform. How would you propose that Apple and Google distribute apps if they don’t run the store?
Well, are they in competition with others who are developing the products? That’s the problem all the way through this, and it’s it’s what you have to keep looking for.
If you run a platform where others come to sell, then you don’t get to sell your own items on the platform because you have two comparative advantages. One, you’ve sucked up information about every buyer and every seller before you’ve made a decision about what you’re going to to sell. And second, you have the capacity — because you run the platform — to prefer your product over anyone else’s product. It gives an enormous comparative advantage to the platform.
Users love Apple products because of the combination of hardware and their exclusive software. What good is a phone without functioning and useful apps? Apple distributes apps on their devices through App Store and that’s why I don’t understand what she meant by “breaking it apart from App Store”. From a consumer standpoint, Apple leads all manufacturers in terms of customer satisfaction. If any of her plans were about protecting consumer interests, this one didn’t seem to fit the bill.
Here is what Tim Cook reported in the latest earning call:
The latest survey of U.S. consumers from 451 Research indicates customer satisfaction of 99% for iPhone XR, XS and XS Max combined. And among business buyers who plan to purchase smartphones in the March quarter 81% plan to purchase iPhones. Based on the latest information from Kantar, iPhone experienced a 90% customer loyalty rating for iPhone customers in the U.S. 23 points above the next highest brand measured.
The most recent consumer survey from 451 Research measured a 94% customer satisfaction rating for iPad overall, with iPad Pro models scoring as high as 100%.
Source: Seeking Alpha
Among business customers who plan to purchase tablets in the March quarter, 68% plan to purchase iPads.
From a developer perspective, I wrote about how much Apple paid out to developers over years:
As of June 2017, developers earned $70 billion from App store since its launch in 2008. As of January 2019, the figure went up to $120 billion. Moreover, we are about to see their investment in original content as their streaming service is reportedly going to be live this April.
I can understand why folks complain about the hefty 30% Apple tax on App Store, but thanks to Apple and AppStore, developers and businesses have generated a tremendous amount of revenue, to the tune of $120 billion over the years. Techcrunch reported a comparison between Google Play and AppStore about 5 months ago
According to SensorTower, an average iPhone user spent more on apps in 2018 than they did in 2017.
If Apple and AppStore are making consumers happy and bringing developers/app makers money, what exactly is the reason for breaking Apple apart from the AppStore, undermining the control over the ecosystem?
Also, there is a difference between making money off user data and making money off products/services improved by the use of data analysis. If you can mine data to improve services and products, you must be a fool not to. Website administrators use Google Analytics to improve website performance. Netflix uses data to see what shows you may be interested in. Google uses your data to improve the search algorithm to make it more relevant and fast. What is wrong with all of that? I also fail to recall an instance where Apple released a certain product/service and abused its power to favor the product/service.
In short, the interview with The Verge made me even more disappointed in her after yesterday, something I didn’t imagine would happen so fast. A friend of mine mentioned that she represented the left. I don’t think this has anything to do with the political ideologies. Understanding how these technology companies work has nothing to do with one’s political view. It’s concerning to have a Presidential candidate with that ill-informed hostility to the growth engine of the US economy.
Minh Quang Duong 