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That Apple has used its App Store to offer itself a competitive advantage is nothing new. TechCrunch and others have been reporting on this problem for years, including those times when Apple chose to display its apps in the No. 1 position on the Top Charts, for example, or when it stole some of the App Store’s best ideas for its own, banned apps that competed with iOS features or positioned its apps higher than competitors in search. Now, in the wake of antitrust investigations in the U.S. and abroad, as well as various anti-competitive lawsuits, Apple has adjusted the App Store’s algorithm so fewer of its own apps would appear at the top of the search results.

The change was reported by The New York Times on Monday, which presented Apple with a lengthy analysis of app rankings.

It even found that some searches for various terms would display as many as 14 Apple-owned apps before showing any results from rivals. Competitors could only rank higher if they paid for an App Store search ad, the report noted.

That’s a bad look for Apple, which has recently been trying to distance itself and its App Store from any anti-competitive accusations.

In May, for example, Apple launched a new App Store website designed to demonstrate how it welcomes competition from third-party apps. The site showed that for every Apple built-in app, there were competitors available throughout the App Store.

But availability in the store and discoverability by consumers are two different things.

Apple admitted to the NYT that for over a year many common searches on the App Store would return Apple’s own apps, even when the Apple apps were less popular or relevant at times. The company explained the algorithm wasn’t manipulated to do so. For the most part, Apple said its own apps ranked higher because they’re more popular and because they come up in search results for many common terms. The company additionally said that one feature of the app’s algorithm would sometimes group apps by their maker, which gave Apple’s own apps better rankings than expected.

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Above: via the NYT, the average number of Apple apps that returned at the top of the search results by month

Apple said it adjusted the algorithm in July to make it seem like Apple’s own apps weren’t receiving special treatment. According to the NYT, both Apple VP Philip Schiller, who oversees the App Store, and SVP Eddy Cue, who oversees many of Apple’s apps, confirmed that these changes have not fully fixed the problem.

The issue, as Apple explains it, is that its own apps are so popular that it had to tweak its algorithm to pretend they are not. Whether or not this is true can’t be independently verified, however, as Apple doesn’t allow any visibility into metrics like searches, downloads or active users.

Maybe it’s time for Apple’s apps to exit the App Store?

The report, along with the supposed ineffectiveness of the algorithm’s changes, begs the question as to whether Apple’s apps should show up in the App Store’s charts and search results at all, and if so, how.

To be fair, this is a question that’s not limited to Apple. Google today is facing the same problem. Recently, the CEO of a popular software program, Basecamp, called Google’s paid search ads a “shakedown,” arguing that the only way his otherwise No. 1 search result can rank at the top of the search results page is to buy an ad. Meanwhile, his competitors can do so — even using his brand name as the keyword to bid against.

The same holds true for the App Store, but on a smaller scale than the entirety of the web. That also makes Apple’s problem easier to solve.

For example, Apple could simply choose to offer a dedicated section for its own software downloads, and leave the App Store as the home for third-party software alone.

This sort of change could help to eliminate concerns over Apple’s anti-competitive behavior in the search results and chart rankings. Apple might balk against this solution, saying that users should have an easy way to locate and download its own apps, and the App Store is the place to do that. But the actual marketplace itself could be left to the third-party software while the larger App Store app — which today includes a variety of app-related content, including app reviews, interviews with developers, app tips and a subscription gaming service, Apple Arcade — could still be used to showcase Apple-produced software.

It could just do so outside the actual marketplace.

Here’s how this could work. If users wanted to re-install an Apple app they had deleted or download one that didn’t come pre-installed on their device, they could be directed to a special Apple software download page. Pointers to this page could be in the App Store app itself as well as in the iOS Settings.

An ideal spot for this section could even be on the existing Search page of the App Store.

With a redesign, Apple could offer a modified search screen where users could optionally check a box to return a list of apps results that would come only from Apple. This would indicate intentional behavior on the consumer’s part. That is, they are directly seeking an Apple software download — as opposed to the current situation where a user searches for “Music” and sees Apple’s own music app appear above all the others from rivals like Spotify and Pandora.

Alternately, Apple could just list its own apps on this page or offer a link to this dedicated page from the search screen.

And these are just a few variations on a single idea. There are plenty of other ways the App Store could be adjusted to be less anti-competitive, too.

As another example, Apple could also include the “You Might Also Like” section in its own apps’ App Store listings, as it does for all third-party apps.

ImageAbove: Apple Music’s App Store Listing

This section directs users to other apps that match the same search query right within the app’s detail page. Apple’s own apps, however, only include a “More by Apple” section. That means it’s keeping all the search traffic and consumer interest for itself.

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Above: Spotify’s App Store Listing

Or it could reduce the screen space dedicated to its own apps in the search results — even if they rank higher — in order to give more attention to apps from competitors while still being able to cater to users who were truly in search of Apple’s software.

But ultimately, how Apple will have to behave with regard to its App Store may be left to the regulators to decide, given Apple’s failure to bake this sort of anti-competitive thinking into its App Store design.

Read more: https://techcrunch.com/2019/09/09/apple-tweaks-its-app-store-algorithm-as-antitrust-investigations-loom/

Make way for another antitrust investigation into big tech. Step forward Russia’s Federal Antimonopoly Service (FAS), which has opened an official probe of Apple — following a complaint lodged in March by security company Kaspersky Labs.

Kaspersky’s complaint to FAS followed a change in Apple’s policy towards a parental control app it offers, called Kaspersky Safe Kids. Discussing the complaint in a blog post the security firm says Apple contacted it in 2017 to inform it that the use of configuration profiles is against App Store policy, even though the app had been on Apple’s store for nearly three years without it raising any objections. 

Apple told Kaspersky to remove configuration profiles from the app — which it says would require it to remove two key features that makes it useful to parents: Namely, app control and Safari browser blocking.

It also points out that the timing of Apple’s objection followed Apple announcing its Screen Time feature, in iOS 12 — which allows iOS users to monitor the amount of time they spend using certain apps or on certain websites and set time restrictions. Kaspersky argues Screen Time is “essentially Apple’s own app for parental control” — hence raising concerns about the potential for Apple to exert unfair market power over the store it also operates by restricting competition.

We’ve reached out to Apple for comment on the FAS investigation. The company referred Reuters to a statement it made in April about its policy towards parental control apps, following other complaints.

In the statement Apple says it removed several such apps from the App Store because they “put users’ privacy and security at risk” — calling out the use of what it described as “a highly invasive technology called Mobile Device Management” (MDM).

But Kaspersky claims its app does not, and never did, use MDM.

Following complaints and some press attention to Apple’s parental control apps crackdown), the company appears to have softened its stance on MDM for this specific use-case — updating the App Store Review Guidelines’ to allow using MDM for parental controls in limited cases.

Kaspersky also says that the Apple Developer Enterprise Program License Agreement “clarifies that the use of MDM-profiles and configuration profiles in applications for home users is only possible with the explicit written consent of Apple”.

However it argues that Apple’s updated rules and restrictions still “do not provide clear criteria allowing the usage of these profiles, as well as information on meeting the criteria, which is needed for obtaining written consent from Apple to use them”. Hence it’s not willing to drop its complaint yet.

It says it’s also continuing to prepare to file an antitrust complaint over the same issue in Europe — where a separate competition-related complaint was recently filed against Apple by the music service Spotify.

Kaspersky says now that only official written confirmation from Apple — of “the applicability of the new p.5.5. “App Store Review Guidelines” for Kaspersky Safe Kids for iOS” — will stay its complaint.

Russia’s FAS has shown itself to be relatively alacritous at handling big tech antitrust complaints — most notably slapping Google with an order against bundling its services with Android back in 2015, a few months after local search giant Yandex had filed a complaint.

It took the European Union’s competition regulator several more years before arriving at a similar conclusion vis-a-vis Google’s competition-blocking Android bundling.

Read more: https://techcrunch.com/2019/08/08/apple-is-under-formal-antitrust-probe-in-russia/

Two days after Spotify announced that it had filed a suit against Apple with the European Commission over anticompetitive practices, Apple today issued its own response of sorts.

In a lengthy statement on its site called “Addressing Spotify’s Claims”, Apple walks through and dismantles some of the key parts of Spotify’s accusations about how the App Store works, covering app store approval times, Spotify’s actual cut on subscription revenues, and Spotify’s rise as a result of its presence on iOS.

At the same time, Apple carefully sidesteps addressing any of Spotify’s demands: Spotify has filed a case with the European Commission to investigate the company over anticompetitive practices and specifically to consider the relationship between Apple and Spotify (and by association any app maker) in terms of whether it is really providing a level playing field, specifically in the context of building and expanding Apple Music, its own product that competes directly with Spotify on the platform that Apple owns.

In fact, Apple doesn’t mention the European Commission, nor the suit, even once in its 1,100+ word statement. Here is what it does cover:

App Store updates. Spotify has accused Apple of dragging its feet on updates to its apps and deliberately doing to so impacts its ability to distribute its service effectively. The company made 173 updates to its apps on iOS, and while Apple doesn’t speak to any transparency on just how long it takes to approve changes, it notes that Spotify has had more than 300 million downloads of its app, and “the only time we have requested adjustments is when Spotify has tried to sidestep the same rules that every other app follows.” 

It also says it’s worked with Spotify to bring it to more platforms and devices. It did not address one of Spotify’s specific claims, that Apple’s HomePod is the only home speaker where Spotify is currently not available, but it did note that it can be listened to via AirPlay with limited controls. For example, you can control the volume, or ask questions about a track respectively via Siri and Musicologist, Apple services built into the device, even if you cannot search the catalogue or playlists.

— App store pricing. The crux of Apple’s belief is that Spotify wants to use the benefits of being a revenue-generating app on the store, without paying any dues to be there, living rent-free, as it were.

Apple points out that 84 percent of apps on the App Store are actually free to use (many of them will be ad-supported) and in those cases, they really do not pay anything to Apple. But it believes that if you are going to use its platform to make money, Apple should get a cut. The question has always been just how much of a cut Apple should get.

The company’s development of payments has been a tricky one for Apple. In some regards that is a blessing. It centralises your billing details in one trusted place, which ultimately makes for a secure experience. In others it’s a curse: it imposes a particularly strict set of rules and commissions that everyone must follow and doesn’t give developers or customers any choice for how to take and make payments within apps.

Apple notes that in the case of Spotify, the company is misrepresenting App Store commissions on a number of counts. For one, right now, Apple takes a 30 percent cut on subscriptions in the first year, but after that it brings that down to 15 percent. Spotify failed to mention that commission change, focusing only on the 30 percent figure that makes Apple look especially greedy. (Indeed, I’d say that both sides are fairly disingenuous in their public arguments so far.)

It also notes that a lot of Spotify’s customers are using the free version of the product, not paying for any subscriptions. And given that Spotify has tried to shift more of its billing to its site instead of within the app, claims of losing out money over Apple’s terms and a lack of choice for how to pay within it — you have to use Apple’s in-app payments to pay for subscriptions and other goods in apps — are not valid:

“Even now, only a tiny fraction of their subscriptions fall under Apple’s revenue-sharing model. Spotify is asking for that number to be zero,” it notes.

There is an argument to be made, nevertheless, for the convenience of giving users the option of paying in app. For exaple, it would allow Spotify to quickly upgrade free users to Premium tiers, and it reduces the risk of shopping cart abandonment. Spotify identifies a number of other apps that are given provisions to enable payments that do not run through Apple’s billing system. These essentially relate to physical goods — such as sales through Amazon — or other non-digital goods, such as rides through Uber. Spotify calls out these exceptions in-app payments to describe it as a “discriminatory tax.” In that regard, Apple believes that if they are consumed on the phone, they are fair game and taxable.

Apple Music versus Spotify. The suit filed with the European Commission and antitrust accusations are not the only two things that Apple does not cover in its response. It also fails to give even one mention of its own music product, Apple Music, which competes directly with Spotify. At the end of the day, this is likely Spotify’s biggest threat and its strongest card in a case it might try to make for anticompetitive behavior.

Apple does say that “We share Spotify’s love of music and their vision of sharing it with the world,” and instead goes directly after Spotify in the jugular: the music streaming service’s own issues with how it controls those wanting to do business on its own platform.

“Spotify’s aim is to make more money off others’ work. And it’s not just the App Store that they’re trying to squeeze — it’s also artists, musicians and songwriters,” it notes, pointing to a recent suit against music creators filed by Spotify after the US Copyright Royalty Board required Spotify to increase its royalty payments. “This isn’t just wrong, it represents a real, meaningful and damaging step backwards for the music industry,” Apple notes.

Trust in antitrust

Indeed, while the case is in progress and remains sealed, Spotify has summed up many of its key points in a site that it is promoting called Time to Play Fair. But to be very clear, some of us might be hard pressed to call Spotify exactly an underdog.

Apple is one of the biggest and most profitable companies in the world, and Spotify is still scrambling to prove out the long-term financial viability of music streaming as a business model. But Spotify is also the world’s biggest music streaming company, and in reality both have had their fair share of accusations related to how they leverage control over those using their platforms — app publishers for Apple; musicians and those in related fields for Spotify — for their better financial gain.

“Every monopolist will suggest they have done nothing wrong and will argue that they have the best interests of competitors and consumers at heart. In that way, Apple’s response to our complaint before the European Commission is not new and is entirely in line with our expectations,” Spotify said today in response to Apple’s statement. “We filed our complaint because Apple’s actions hurt competition and consumers, and are in clear violation of the law. This is evident in Apple’s belief that Spotify’s users on iOS are Apple customers and not Spotify customers, which goes to the very heart of the issue with Apple. We respect the process the European Commission must now undertake to conduct its review. Please visit www.TimetoPlayFair.com for the facts of our case.”

Spotify’s best approach, in my opinion, would be to keep this debate and make its case to the European Commission at as high a level as possible.

There have been a number of examples already of how regulators in Europe have broken up companies or business models, enforcing different practices in the name of promoting better competition: telecoms, internet access, computer and mobile operating systems, advertising and television are among the areas where it’s already proven that it will champion first not the platform, but those who are trying to use it, especially in cases where the platform companies also happen to directly compete with their customers: where those who own the playing field are forced to provide terms to visiting athletes that ensure they get the same treatment as the home team.

This case would be the first time that app stores are considered on the same terms, a mark of just how ubiquitous they have become.

In that regard, by going through some of Spotify’s claims to provide its own rebuttals, Apple seems to be trying to paint a very specific picture to the public — one that we imagine will also play out as it presents its case to regulators: Spotify is not exactly a small company and it has most definitely benefitted, not failed, by virtue of being in the Apple App Store. That’s a key image that — if successful — will help Apple deflect from being viewed as a monopoly, and subsequently forced to change its practices.

Updated with statement from Spotify, and more clarification on how non-digital goods are exempt from Apple’s in-app payment requirements.

Read more: https://techcrunch.com/2019/03/15/apple-addresses-spotifys-claims-but-not-its-demands/