Epic, Spotify, Match, and more team up to fight Apple
Let's talk about what I think is going to be just a fantastically entertaining battle that is shaping up here. So This all started about a month ago between fortnight their maker, epic games and Apple, where fortnight tried to skirt apples, app store rules and say, Hey, if you pay through our platform on a certain on an apple device and do it in a certain way, it will be cheaper than if you are buying credits through Apple. Apple then responded by kicking epic games by first kicking fortnight off of its APP store, then by kicking everything epic games made off of their app store, which then epic game sought an injunction because epic games makes what's called the unrealized gin, which is the backbone for a whole lot of other games that they don't even make what they licensed the technology out too. That of Junction injunction was upheld. And so now what you have is that other companies, including the streaming giant Spotify and the company that owns tinder Match group have joined a non profit called the Coalition for AP Fairness, the the calf If you Will, and What they are doing is they're saying Look, we object to the way that Apple and other APP store's collect quote excessive commissions from software developers and the reason I think that this is fantastic is if there are three things that you can't mess with in this world. Well, look one of one thing that you can't mess with his liquor. But there's no real liquor sales on the AP story still have to buy it and take delivery at some point. You don't mess with people dating people playing video games or people listening to music. And so now you have the three biggest companies effectively in each of those areas. Going head to head with apple. This is this is everything that I want to see at this point. Yeah, It's such an interesting duel here, because if it were the case where this was our competitive market, then you would see teams groups like this breaking out and saying, OK, well, we're going to form a coalition and we're dropping apple. You won't be able to access our stuff on apple anymore. It's not a competitive environment right? There's two providers of APP stores for these platforms. It's apple and it's Google and so instead They're forming this coalition seemingly Tio go about this one of two ways. Either. We're goingto lobby are politicians or we are going to fight this in court. And if one works, then we'll avoid the other. And if one doesn't work won't go towards the other. And so I continue to believe it will be a very interesting case. I still think that even with this coalition These companies have a pretty big uphill battle against Apple. So there's something really interesting that I was thinking about this back in August. I tweeted about it, but I don't think I ever talked about it on the show. So where do most Phone makers make their money at this point. The hardware makers were too hard. Let's answer this question. Actually do hardware makers aside from Apple? Do phone hardware makers make any meaningful kind of money? No. Apple makes more than 100% of the profits in the hardware phone industry just about everyone else making smartphones whether it's Samsung LG. I think Nokia still makes a few models, you know, like there's only a few games in town. And the reason why is that pretty much No one makes money off the hardware apples, the only company that does and it's because of their scale in their brand and the fact that they condemn and higher prices than their competitors. For inferior phones. And I say this is an apple. Using my phone is not usually is good is an android one. What's really interesting is so Let's say that Apple and Google lose these battles here, okay? And so they can't charge 30% for their app stores anymore. If the only place that you really see money being made from smartphones is through the revenue generated by the APP stores and things along those lines if you reduce the ability for companies to make money there So you actually raised barriers to entry because it reduces the availability of profits for new competitors to come and take like no one sits there and, says G. I want to be a smartphone maker because I could make money on the hardware can't do it. No one could do it. So if you take away the profit making avenue in theory, might you actually see us competition in the space supposed possible? I I guess I would question where do Samsung LG. And I mean, I understand that Google manufacturers its own phones, and I own one of them, So I know that they are making this money on the 30% marketplace mark up. But if your Samsung Or if you're algae, or you're one of these other phone makers. Oh, you know, reasonably being most of what you have. Here is the sale price. They all have these small market places that they are selling their own software on But by and large, they're not participate in the same stuff that Google and apple are there. But I guess so, what I'm getting at is like this isn't going to open up competition firm or different types of app store like now you're not gonna have you're not gonna have like a Samsung app store and Google already has theirs. But you don't have a Samsung and LG and a Nokia. You're not gonna have those springing up because He's not gonna be enough money in it. So Sumers don't want it either on DH. That's the interesting question here is usually if the court finds that Apple and Google are being anti competitive, the normal avenue would be to break them up in some meaningful way. In this case, I don't know if that happens, they treated as a utility or something like that. And what's really interesting here is that the argument from Apple and Google is look, we act as the gatekeepers to make sure that you're not getting anything that's going to harm your phone or anything that's going toe, you know, allow you to commit terrorist acts on your phone or things like that. But I guess here's where I'm going with this. Think about back to the 19 nineties, when any program that you had to put on your computer. You couldn't download it because you had, you know, a 21 of 28 kilobyte Internet connection It would take, you know, 4000 hours to download doom or something like that. Well, it fact fact but so the only Yeah. You two of your family's phone line for like the entire deck. Your phone bill would be like $8000 and no one would be able to call you for the month, which was really cool, but it was fantastic. But so where I'm going with this is when companies made whether it were games were processing APS. You know the original QuickBooks or whatever we had, you know, CD ROM's and disks. Microsoft and Apple didn't go and take a 30% cut of that. To put it on their platform. It was just the company made it and it was compliant with, you know, the the operating system that was running, and so this is kind of a unique case where, hey, you're downloading this and just by virtue of using our store, we're going to take a percentage of revenue. I find that kind of interesting. They're just the comparison and the juxtaposition Because this business model would not have worked in the 19 nineties. You would've run right into that antitrust lawsuit that Microsoft did with Internet Explorer right and the fact the matter is that while other smartphone market places don't really exist, plenty of other digital market places do exist. Such as You know the marketplace for computer games on PC, and they do not charge a 30% mark up there, And I think you could make the same argument that you know these these marketplaces are doing the same thing in terms of protecting their users Hardware.