577: Colorful Criticism

40:34What the what? Well, Apple gets on the horn with 9to5 Mac and says, oh, we're going to backport that. So Apple's confirmed to 9to5 Mac that a software update for the 14-inch MacBook Pro will gain the ability to drive two external displays with lid closed. This feature will work identically to how it works with the new M3 MacBook Air. We don't know yet which software update. Of course, that's also an M3. So the question remains, will it be backported to M2? And even if Apple sort of gets it for free because it's like a shared firmware base or whatever, it kind of strikes me as one of those cases where Apple would be like, you know what, it's a good differentiator for the M3 models to be able to do this and the M2 not.

41:10People who bought the M2 bought them without an expectation that they would have this feature. Even if it's technically possible it i do wonder if apple's going to bother backporting it so i'm glad the m3s are all getting it i'm glad they essentially backported it to an m3 product that existed before the m3 macbook air i think this is a good compromise i do continue to hope that in the m 7 or whatever the hell timeline allows them to make changes based on feedback they will say you know what two display controllers in the m3 line might be limiting not for desktops but for the laptops because i mean i we'll see we'll see how people like the m3 like people are annoyed like when i when i dock my laptop at work i can't use my two monitors well now you can are you happy now are you still annoyed that you can't also have your lid open and use the built-in display um and you know as we pointed out when we looked at this uh we were originally discussing this why it is why did they not make the changes in the m3 the display controllers take up space on the die they cost money uh this is the lowest end m chip how do you want to spend the money in that space in that power budget or whatever.

42:13It still might be the right thing for Apple to do on its lowest end laptops to only support two. But at a certain point, as transistors shrink, I think they should spend some of that bounty of additional transistors to put maybe another display controller on there. Indeed. So some of the features that are a little bit different for audio, voice isolation and wide spectrum microphone modes and enhanced voice clarity in audio and video calls. Do you think that is? Do you think that's just like software using the M3's better neural engine? That doesn't strike me as hardware differences. Yeah, that sounds a lot like, because they've done similar tricks in the past where they're like, the webcam got better, and it's like the same component just with better software and image processing, so it's probably the same thing.

42:54And why would it be M3 as opposed to M2? Like, the M3 does have a better neural engine, you know, like, I don't know. But anyway, there's not a lot of differences, so we're reading you all of them. indeed uh connectivity moves from wi-fi 6 to wi-fi 6e and with regard to the environment the new macbook air is the first apple product to be made with 50 recycled content including 100 recycled aluminum in the enclosure 100 recycled rare earth elements and all magnets and in another first for apple 100 recycled copper in the main logic board macbook air meets apple's high standards for energy efficiency and is free of mercury brominated flame retardants and pvc the packaging is 99 % fiber-based, bringing Apple closer to its goal to remove plastic from all packaging by 2025.

43:35Well done. Every product they come out with, it's nice to see they get new stuff to brag about to show that they're making incremental progress towards their goals, which is nice. There's one more important feature that the M3 MacBook Airs has. It is, according to Apple's documentation, available in midnight, which features a breakthrough anodization seal to reduce fingerprints. Remember that coating that the black one, the black MacBook Pro has got? this makes me think that the midnight one is getting that coating too which will really help because the midnight one looked awful when anybody touched it the m2 not the m3 but the m2 13 inch macbook air is still for sale starting at a thousand bucks this is in comparison to 1100 for the m3 the m1 macbook air is no longer for sale brand new sad sad the m1 macbook air uh is gone because you know basically m2 uh replaces it in the line at the same price point i'll miss the wedge i think there was a verge story about specifically missing the wedge but i think we've all mourned this when you know when they knew when the macbook air was redesigned but i still think that m1 macbook air is so great uh obviously it would have been better if it had mag safe but you can't have everything yeah this honestly i yeah it had a great run the m1 is pretty old now it was time to let it go out of the lineup i've bidded a fond farewell i love that computer it was extremely important and amazing but yeah it's it's old now so it was time to to bit of farewell and honestly for i was you know consulting with some people about like should i buy this you know someone was asking like i want to buy a cheap laptop what should i get and i said well you should get an m2 macbook air but the m3 is going to come out soon and this was like weeks ago lo and behold the m3 did come out but what i said was like look the m3 is going to come out but it it's not better in any ways that you care about probably so wait for the m3 to come out and then get the m2 cheaper and you can do that right now like i don't know how long they're going to sell the m2 maybe you know just like they did the m1 for the entire duration but you you know you can configure an m2 for up to like several hundred dollars cheaper than you used to be able to configure it a couple days before and are you going to notice the m3 differences maybe the dual display thing if they don't backport it if that's important to you but the speed difference or anything like that in this class of machine is not going to be impactful to you the the battery life apple's rating them exactly the same this is a good time to get a cheap m2 maybe towards the end of this year, then the M2 will be a little bit longer in the tooth.

45:54But right now, you can get a good deal on an M2 MacBook Air, and that's a good machine. And if you swapped out someone's M3 MacBook Air with an M2 one, and they didn't use two external displays, how long would it take them to notice? Well, it depends on whether they got the navy blue model or not. They'll notice that one pretty quickly. The fingerprints would show up. Yeah. No, but that's, and that's, that's great. Because again, like the MacBook Air, it's so important to hit low price points with that computer. You know, the M2 version has all the modern stuff. It has the MagSafe, it has the new design.

46:20It has the new finishes, like all the stuff that the M1 version didn't have. And now it's that low priced option. That is fantastic. I love the MacBook Air line. It is just a delightful computer to use. It's amazing to pick up and hold and bring places. It is a great all around computer and it is by far the default choice for almost any needs. If somebody says I want a computer, you can just say get the MacBook Air. Unless you know specifically that they have some really good reason why they can't get their words on a macbook air that's the default for everybody and it's great that it got better and the low-end model got better and it's just great news all around yeah speaking of great news no actually what's the opposite of that uh speaking of i guess this is like a a category that's been a category in this show and a category in the news for it seems like years now i guess we would call it apple versus the world seriously all right so So Apple was fined approximately$2 billion U.S.

47:18dollars. That's billion with a B. Billion dollars by the EU for App Store practices. This is covered in The Verge. From The Verge's summary, Apple's been hit with a fine of 1.84 billion euros, or about 2 billion bucks, by the European Union antitrust regulators over its App Store rules, and has been told it cannot stop music services from advertising cheaper subscription deals outside of Apple's store. Apple issued a scathing response to the ruling, which I'm sure we'll talk about, saying the commission failed to, quote, uncover any credible evidence, quote, of consumer harm or anti-competitive behavior.

47:48The company also says that Spotify wants to, quote, rewrite the rules of the App Store, quote, to gain competitive advantages while paying nothing to Apple, despite Apple claiming the App Store was crucial to Spotify's current market domination. Apple says it will appeal the decision. I think, maybe I'm reading this wrong, but the thing that struck me so funny about, about, I think it was from The Verge, the summary from The Verge, but the way they wrote it, just stuck out to me. The quote is, this decision sent a powerful message. No company, not even a monopoly like Apple, can wield power abusively to control how other companies interact with their customers.

48:25And this is so funny to me because this is an example of Apple's perspective leaking into The Verge's coverage of it. Well, who do you think there refers to, though? It's not clear. Well, that's the thing. That's why I said maybe I'm misreading it. But I read that as, this is Apple yet again saying these are our customers. They're not Marco's customers, your customers, or my customers. for, you know, CallSheet and Overcast and whatnot. It's Apple's customers. Yeah, I think your read is right for looking at the sentence again. That's gross, man. That's so gross. Well, I mean, that's the way Apple always frames it.

48:56Oh, I know it is. I know it is. I forgot to give my framing of this. I got too distracted by Apple versus the world. I do want to talk about, just to summarize, this is a specific ruling and Apple's going to appeal and blah, blah, blah. And the news here is like the fine is bigger than they thought it was going to be because there was a leak that it was going to be like 500 million. turns out it's 2 billion and we'll talk more about that in a second but i i do want to sort of give the overview of this because i think it is it is instructive and kind of sort of defines sketches the outline of this whole debate in a way that is easy to miss because of all the details that we're going to get into uh this is the european union uh we've said this before but we reiterate deciding that there's insufficient competition uh in certain markets and they want to increase the competition and i know this sounds stupid but bear with me in the u.s people are in the u.s we're familiar with you you know study history or social studies class or whatever the sherman antitrust act the idea that there's like say only one company in the united states that can sell cars that's bad for consumers because if you don't like the cars from that one company uh you don't have a choice where to buy to buy something else and you're like well someone will just start a competing car company that's capitalism but then if you try to start a competing car company and of course car companies get all their parts from this part supplier network and you're like i'm gonna buy uh you know you start a new car company and you go try to get buy tires from the tire company and the one big car company says hey if you sell tires to that startup we're not going to buy any of your tires anymore and you're going to go out of business that would be an example of abusing monopoly power right and we have laws against that that's what the sherman antitrust act is about in this country to say if there is what we call it a monopoly one big giant company that controls too much stuff it's bad for consumers uh for exactly that reason it's not illegal to be a monopoly but it is illegal to say to the tire manufacturer if you sell tires to any of those startups that are trying to compete with us we will cut you off and you will go out of business that's abusing monopoly power the eu says there's insufficient competition in you know smartphones or whatever like whatever whatever however they define the market there but in the eu they don't have the same rules as we do about like there needs to be one big giant company that is overall dominant.

51:03They've decided that Apple and Android as sort of a duopoly with two companies more or less dividing up the entire market for like smartphones, for example, it doesn't matter that, you know, neither one of them is the only game in town. It's like, well, if you don't like Apple, you can go to Android. And if you don't like Android, you can go to Apple. See competition. The EU has decided that's not enough competition. So everything they're doing is based on that theory that there's not enough competition. And when there's not enough competition, it's not good for consumers more specifically there happens to be a few important companies in europe like say spotify that obviously lobby them and have a vested interest in saying you know apple is being real unfair to us on their platform and we don't like this and so on and so forth that's kind of details though i just want the big picture is in theory not enough competition according to the eu and their rules are different than ours and they want to find a way to make more competition with varying degrees of success i think keeping that in mind helps to frame this not as like who's the good guy who's the bad guy who's right who's wrong apple should be able to do this why can't apple do what it wants with its customers is the eu being mean is the eu being good like you can have your opinions about it but what the eu is trying to do makes sense if you understand their worldview from a u.s perspective it doesn't make like you just read in that thing like that apple uh was this was this quote from the verge no company not even a monopoly like apple the thing that you just read i'm pretty sure it was from the verge yeah a monopoly like apple american reads that and says apple's not a monopoly like in the smartphone in in no market is apple a monopoly like they don't have like 99 smartphone share they don't have 99 share of like Even AirPods, they're not a monopoly.

52:55And it's like, the EU doesn't care that they don't dominate. The EU cares that they're too big. There's no percentage market share, percentage profits, or whatever. They said it doesn't matter that they're not the only game in town. There's too few games in town. There's not enough competition. And we read that and saying, that's unfair. I've said this in the past trying to say, according to US laws or whatever, it's like saying Honda has a monopoly on Honda cars. I mean, they do. It's kind of tautological, right? But it's like, but there are other car makers. And the EU has said there's not, essentially, there's not enough.

53:29There's not enough competition. And so we need to make this playing field more level. Gruber had a post about some of the things we're going to talk about today as well, saying like, well, what is the EU saying? Who should decide who gets to like do things on Apple's platform? Shouldn't Apple get to decide that? Is the EU saying they should get to decide it? And my answer to that is, yeah, that's what they're saying. They're saying, you, Apple, because you're too big and Android and whatever, we are going to impose rules on you. Even though you made the platform, it's your company, you do the thing.

53:59And in your American sensibilities and your American concept of monopoly, you say, I should be able to do whatever the hell I want. I'm a private company. Who is the government to tell me who I can and can't allow on the App Store? If I say Spotify, I can't put a link to alternate payment methods. It's my platform. If they don't like it, they can go somewhere else. The EU is saying, that would be fine if there was more competition. But there's not. And so we've decided we're going to imply impose rules on you. And that, I think, gets lost in a lot of this discussion. I mean, I feel almost like it kind of got lost in Gruber's thing of like him not not even understanding what they're saying.

54:31It's like, yeah, that's 100 % what they're saying. That's their whole point. Not enough competition. Government steps into, in theory, restore competition for the good of consumers. Now, are they successful at that? Like the DMA? We don't know how it's going to work. We talked about it in many past shows, but we have some questions and same thing here. But I do want to just put this long-winded framing up front to put everyone in the right mindset of like what's happening in the EU and why. We've talked about this so much, and I don't know that there's much more. Well, of course, there's much more to say because the three of us, but I'm trying not to go down the rabbit hole that we find ourselves in so much about Apple's attitudes towards third party developers.

55:11But, I mean, I'm not upset by this, to be honest with you. Like, I feel like the more I read about it, the more maybe it's a little more narrow than I want it to be. So let me read some excerpts from the EU's actual press release about it, which, to the best of my knowledge, is the only real documentation we have so far. But the EU press release reads, in part, Apple is currently the sole provider of an app store where developers can distribute their apps to iOS users. This is them essentially saying Honda has a monopoly on Honda cars. Yeah. The commission's investigation found that Apple bans music streaming app developers from fully informing iOS users about alternative and cheaper music subscription services available outside of the app and from providing any instructions about how to subscribe to such offers.

55:53These anti-steering provisions are neither necessary nor proportionate for the protection of Apple's commercial interests in relation to the App Store on Apple's smart mobile devices and negatively affect the interests of iOS users, who cannot make informed and effective decisions on where and how to purchase music streaming subscriptions for use on their device. this is them essentially like they're not saying this but the implication is that look users don't have a choice to go elsewhere if you assume users are stranded on ios like there's no real choice for them to go elsewhere which we know is not true they can go to android but they're basically saying like there's not enough choice so that your normal answer of saying hey whatever we do on our platform man they don't like it they can leave the the premise of this is that they can't make effective decisions on how to purchase streaming music or whatever yeah they can't do that on ios because of apple's rules but why do they have to be on ios and the eu is like it's too much man like there's only two companies and they both do very similar things and so the out is not for apple or android to say if they don't like it they can go to our one competitor the eu says just assume they're stranded given that they're stranded given that like they have no choice like like it's like the public airwaves like there's only one set of public airwaves or whatever there's only you know air pollution there's only one atmosphere for all of us right there's only one ios for all of us at android and ios and we all have to be there to live our lives this is why the eu has decided there's insufficient competition on these two important platforms they're dispensing with the notion that there is any real competition and that people can make choice and they're saying given that people are essentially trapped again i know they're not but that's what given the people are where they are and realistically there's nowhere else for them to go we have to make sure that this place where they're effectively trapped is fairer than it is and that i think is really interesting because again when apple looks at this they're like what the hell man it's our platform we should be able to do what they want and the eu's like well given that people are stuck on your platform i was like well how are they stuck on our platform they can just go to android and android does the same thing about apple and like honestly it's not the way we do things in the u.s but i see their point of view and i also see how a duopoly is especially with respect to the sherman antitrust act and our monopoly laws having a duopoly like android and ios is a very convenient like kind of get out of jail free card according to u.s laws if it's like we're not a monopoly and never will be so now if we and android more or less do kind of similar things that's competition right and we all know like we all have to have mobile phones and there's like there's no place for us to go except for the other company that does exactly the same thing so i kind of i kind of do feel that there's insufficient competition in this market Yeah.

58:29And just to quickly reiterate and recap, the issue, or at least the way I understand the issue, is that Apple forbids, generally speaking, forbids people from saying, hey, if you don't want to buy our thing on the App Store using an app purchase or whatever, go to www.spotifyischeaperontheweb.com and we'll sell it to you there for less money because the implied thing there is we're not paying 30 % to Apple. And Apple has made it very plain since I can remember that that is forbidden. That's the anti-steering thing. You are not allowed to steer your customers, not Apple's customers, your customers to your own website in order to establish a relationship with them.

59:10You're not allowed to steer them to your own website in order to sell at a cheaper rate than what you would sell on Apple's platforms. None of that is allowed. And that's the crux of the issue here. If Spotify doesn't like it, they can just get off the iOS platform, right? Isn't that a perfectly viable thing for Spotify to do? What's the problem? 100%. I don't know why they're whining. That's what you feel like. Maybe there's a better analogy. Instead of users being trapped, that's not an option for Spotify. Just stop selling to 50 % of the population. What's the big deal, Spotify? In setting the level of the fine, the commission took into account the duration and gravity of the infringement as well as Apple's total turnover and market capitalization.

59:47It also factored in that Apple submitted incorrect information in the framework of the administrative procedure. Womp womp. In addition, the commission decided to add to the basic amount of the fine an additional lump sum of 1.8 billion euros to ensure that the overall fine imposed on Apple is sufficiently deterrent. In addition, the fine must be sufficient to deter Apple from repeating the present or a similar infringement and to deter other companies of a smaller size and with similar resources from committing the same or a similar infringement. So interestingly, the EU didn't like Apple's behavior.

1:00:17Like, they didn't seem very cooperative or nice, and so they punished them for it. Keep this in mind for a future topic. the commission has also ordered apple to remove the anti-steering provisions and to refrain refrain from repeating the infringement or from adopting practices with an equivalent object or effect in the future dear apple get love the eu well i don't know if two billion dollars is a is a see i'll do it nicely is a get f to response because apple might be like this annoys us but we make two billion dollars in start the stopwatch like it's not nothing it's not nothing but apple makes a lot of money so i do like it's so hard to figure out what is a deterrent versus what is like you know what is the amount that makes apple leave the eu versus what is the amount that is too cheap for apple to notice i think this kind of hits the right level because apple seems pretty annoyed about it but i'm not sure it deters apple from anything i mean keep Keep in mind, though, like, you know, the amount the European Commission is is, you know, assigning as a fine seems arbitrary enough that if Apple does just blatantly say, all right, fine, we'll pay it and keep doing what we're doing.

1:01:21They can just then find them a lot more next time. Oh, yeah. No, I don't think they're going to keep doing it. I think they'll I mean, because a lot of the stuff this is part of the debate on this is this is this is a previous ruling that is superseded by the DMA, which doesn't allow it has disallows the anti steering thing anyway, which is part of Apple's response. and and i expect we're going to be debating and they're going to be going through court for years on whether their dma response is compliant with the dma or not i don't know if that's a court for years thing but we still haven't we still don't know the answer to that yeah and i think it's going to be you know i i assume epic's going to fight up with that in a bit we're going to i assume spotify might continue to kind of lobby against it in the background we'll get to that yeah no there have been many people filing filing briefs essentially saying hey we saw apple's response to the DMA and we, the company that's out here, thinks it's totally not compliant.

1:02:09Just for what that's worth. Go ahead, European Commission, and tell us whether it's really compliant. What hits home here for us is we have Apple continuing to tell this storyline to themselves and the press and the courts and the world that effectively says that developers bring nothing to the platform and that we owe Apple for all of our business and that we provide no value to the platform. Certainly, the iPhone doesn't need Spotify. Spotify needs the iPhone. The iPhone doesn't need any of our apps. The iPhone would sell itself without any apps whatsoever. We are just sucking on the value that they're providing and we owe them everything.

1:02:49I don't think Apple has ever said that. That's how you feel. And that's a lot of things that Apple says in that direction. But Apple has never, I'm going to be fair to Apple, they've never come straight out and said that. No, but that's basically their argument here. And in their response to this, they really lean on that pretty heavily. Agreed. And by the way, this response... Is something. First of all, yeah, it's terribly written. Like whoever wrote this, it had to be a very high up executive because whoever wrote it didn't get edited enough. And so it had to be somebody so high up that they couldn't get edited enough.

1:03:21Whoever wrote this should not be writing things for Apple's press releases. In a future topic, we have some things that Apple wrote that actually have names signed to them. So you can tell me if you think it sounds like the same person. It's poorly written. it sounds juvenile it sounds petty oh god yes and i wonder the whole time i'm reading this i'm wondering who is this for who are they writing this for is it for the public because it's not a good look is it for regulators because i don't think they need to write press releases to regulate is it to courts i doubt it that's not really the venue for that either like who is it for i think it's to the media did they think this would make them look good though it's the reason we have this link is because every single article that talked about this link to apple's response and quoted it.

1:04:02So that's what it's for. There's going to be stories on this fine, and Apple wants to have its say on those stories, and this is Apple's say. Apple should not have this say. It's for their own good. They should not be saying this in this way. I don't know how well he dropped it, but that's the target audience. I think you're both right. I think Marco is 100 % correct that this is extremely petty, extremely juvenile, extremely vindictive. Somebody in the chat room just said they're acting like a petulant child, couldn't agree more. But I also think that John is right. The purpose for this is to have some sort of official statement for the press.

1:04:33So let's read a few excerpts. Today, the European Commission announced a decision claiming the app store has been a barrier to competition in the digital music market. The decision was reached despite the commission's failure to uncover any credible evidence of consumer harm and ignores the realities of a market that is thriving, competitive and growing fast. Oh, and so on that, on the consumer harm, again, from an American perspective in the various laws and cases that have been on things like this, they're usually pretty well defined things that you have to show to be evidence of consumer harm.

1:05:05very often in U.S. law, it's fixated on prices. Has the price of X gone up or down over time? And if the price hasn't gone up, then where's the harm to consumers? Obviously, we know, and I think most people involved in these cases know, that consumer harm can take more forms than just high prices. Lack of choice, things that consumers never even get a choice to pay money for it because they're disallowed all that is harm that is not as simple as saying hey look at the price of this thing has gone up that's that would be such a ham-fisted way to do it like the amazon model like we'll put everyone else out of business and once we have a dominant market share then we'll just crank up the prices uh that that's like a you know evil pharmaceutical bro level of because that has happened to pharmaceuticals right but and it's it's like nakedly evil but like the smarter strategy is just to maintain your dominant position, reap your good margins and not, not kill the golden goose by suddenly jacking up the prices a thousand percent or whatever.

1:06:05So Apple saying there's no consumer harm. I think the whole EU thing says like, look, here's what we consider consumer harm. They don't have a choice. The Spotify can't explain a better deal to them. And yeah, like the prices may be the same or lower or flat or not, you know, not changing that much, but there are many other ways to judge harm. So this is a place where Apple and the EU essentially disagree or Apple is being disingenuous and saying, we don't see any consumer harm. Show us the consumer harm. The EU is like, we're trying to show you the consumer harm, but it's not as simple as, look how the price has gone up.

1:06:34If you took your fingers out of your ears, maybe we could talk to you about it. Anyway, going back to Apple's response, Spotify has a 56 % share of Europe's music streaming market, more than double their closest competitors. According to who, I wonder. But anyway, and Apple pays, and pays Apple nothing for the services that have helped make them one of the most recognizable brands in the world. A large part of their success is due to the App Store. Along with all the tools and technology that Spotify uses to build, update, and share their app with Apple users around the world. See, this is where I think Marco and I jump in and say, this is it.

1:07:03This is Apple saying we did all the work. Right, but they say a large part of their success is due to the App Store. They don't say all of their success, 100 % of their success. They say a large part. They don't even do a percentage. Come on. I don't think a lot of people are discovering Spotify through the App Store. I'm pretty sure people know about Spotify who want to search for it, and they just need to download the Spotify app i don't think the app store is really delivering a lot of value there apple is not saying that they're bringing no value to the plat that spotify brings no value to the ios platform or the iphone they're towing the line they're coming right up the line and saying okay i'm just saying like i it's i know it makes you feel that way and that is the emotional impact of it but they literally aren't saying that and as for the market share this is a great one because i believe that spotify has a free tier yes that's a huge part of their business and that's got to massively impact their market share how many people pay for spotify versus how many people pay for apple music what does that share break down to because you know spotify doesn't make money from free customers like it wants to convert them into paying customers but like it has to pay money for the for the music that the free customers stream they are negative right and so yes spotify that has a free tier has 56 market share that is actually damning for apples that said look your competitor has a free option and they're barely ahead of you or i don't know what Apple share is.

1:08:22Maybe it's not the other remaining 44 % or whatever. There's other players, but Apple's a pretty big one. But yeah, citing this market share, and by the way, market share is not the be-all and all, but citing this market share when Spotify has a free tier is really not particularly convincing. Continuing, we're proud to play a key role supporting Spotify's success a key role in supporting Spotify's success as we have for developers of all sizes from the App Store's earliest days. The European Commission is issuing this decision just before their new regulation, the digital markets act comes into force apple is set to comply with dma in days and our plans include changes to the rules challenged here what's clear is that this decision is not grounded in existing competition law it's an effort by the commission to enforce the dma before the dma becomes law they say look you already you already scolded us for this and we're changing it and we're totally compliant aren't we uh so i don't know what you're doing this fine for and it's like apple you got in trouble for this before the dma like you have to sort of like i know things take a long time and they overlap with each other but like it's a timeline of events it's like you did this bad thing and then we passed the dma and now you have to comply with that but just because like you already passed the law that's making me fix this you still get punished for doing it i mean i'm again i don't necessarily agree with like you can say that you shouldn't it's like if you want to sell things in the eu you got to deal with the the eu and their rules and this is how their system works and you don't get to erase your pass fine because now you're doing something that makes the bad thing you did impossible anyway as far as you're concerned again assuming you comply so not a strong response but i think it could have been worse and i do think that apple is trying to thread the needle uh they even had a thing the one thing i think you can really call them on it's not quoted here also i'll try to do it from memory but at one point they said you know app store is great uh it's a level playing field for everybody like this is not the exact language but today developers compete on a level playing field on the app store apps are reviewed according to a comprehensive set of rules which are designed to protect our users and meeting those rules means developer developers of all sizes can reach more than a billion devices around the world all right so that's that that's their level playing field argument and they've said that before or whatever and then in the same document i believe they say hey we flew apple engineers out to spotify to help them with their app that's not a level playing field how many apple engineers has apple flown out to you casey to help you with your i'm not saying this is wrong i say it makes perfect sense but like apple can't do both arguments in the same document and say it's a totally level playing field everybody gets the same shot but we flew engineers to spotify just don't say it's level playing field it's not and also why might it have been valuable to fly engineers to spotify right right yeah why does spotify get but get different treatment i mean maybe it's because an iphone that didn't have a spotify app would be less valuable to iphone customers hmm yep what a concept yeah i mean and again i've said for since the first time we discussed it years ago apple should do that big customers and the good customers that's one of my complaints about the app store that being a quote-unquote good developer that makes quality apps doesn't get you enough privileges in apple's book right agreed agreed so but all i'm saying is that in this in the same document they also want to say it's a level playing field and it's obviously not nor should it be in this way obviously the eu wants to make there be more competition and the main playing field they're trying to level is not between different companies in the app store it is always between all the EU stuff is between all the companies in the app store and the person who owns the app store, the company that owns the app store.

1:11:45It's always between Apple and N developers. It's not between like Spotify and title that the EU is not trying to level the playing field between Spotify and title because they think Spotify is getting unfair preferential treatment from Apple. That could be a thing that they could complain about, but I, but that's not what they're complaining. They're complaining that Apple who owns the platform and doesn't pay itself 30 % has a huge advantage over Spotify. We've even flown our engineers to Stockholm to help Spotify's teams in person. And the result is that when a user opens the Spotify app, listens to music on their commuter, asks Siri to play a song from their library, everything just works.

1:12:17And again, Spotify pays Apple nothing. Those engineers that they fly out there, they should have them work on Apple Music because sometimes it doesn't just work there. For real. Also, just a bit earlier in the same document, our app review team has reviewed and approved 421 versions of the Spotify app, usually with same-day turnaround, and frequently expedites reviews at Spotify's request. but yes all of us are equal yeah must be friggin nice well in all fairness app review has been a lot faster recently for everybody it has been you're right you're right it is but yeah but they're they're getting they're getting nice treatment and again i think they should but like that's you know it's it's just weird for them to say in the same document level playing field are all developers treated the same well and the thing is and i think apple actually they do make some good points in this document which is why like i see what they were going for they do have some good points one of the one of the best points they make is that spotify for some reason does not use the reader app exception we should explain real quick what it what it is so reader apps which is a very poor name but it's the name that apple landed on are apps like ebook apps netflix things where basically you're getting new content regularly and and certain apps fall into this category like you know netflix and spotify where they can apply for and get an exception to this anti-steering thing and that only has happened in the last few years i think i don't remember exactly when it was yeah i think it was a year and a half ago or so and it's it specifically it isn't just apps that have new content it's apps where like the primary purpose of the app is to access media that you have purchased on their website or have a streaming subscription or something and so like netflix the kindle like stuff like that that is the main purpose of the app is to consume certain predefined types of content audio video books and this allows them to link out to their website by putting up first putting up a scare sheet that using apple sdk saying you're about to leave the web you're about to leave this app and apple can't protect you from the scary scammy website stuff's gonna get stolen but it but you can you can get an exception you can have a single fixed link that your app can link out to with certain design requirements around what the link has to look like that basically says you can create an account on netflix.com and then net netflix.com can be an underlined blue label that you can click on and it will show the scare sheet and then kick you out to netflix through in the web browser and they are allowed to then have you purchase things there without paying apple any commission with no that's it apple's out of the game no requirements after that it is like the one major exception to the app store like you know no no external payment kind of integration at all it's the one big exception apple made this exception for this one category of apps the reader quote category and spotify qualifies and for some reason they don't do it i think i can understand why they don't because it's so limiting like they want more essentially like you know they want freedom to basically be able to have a big flashing banner that says say 30 lower price dollar sign And it's like all the rules that Apple has about that link are so incredibly restrictive.

1:15:23That's true. Spotify, I think, strategically decided that, like, look, let's continue to lobby the EU regulation body to say, we're a European company. We're getting screwed by Apple. We want you to fix things. And it makes their case stronger to say, look at the state of our app. We don't even have a way to let people go over there. Like, maybe if they had done this, then Apple would say, look, they're already linking to us. There's no problem to be solved. And I don't know if it makes their case stronger or weaker. But either way, I don't think Spotify is satisfied with the reader exception.

1:15:51And so their argument now has clarity of saying, look, here's the app. We can't link out to our things. We should be able to. We should be able to without draconian restrictions about it. Yeah. And because the main restrictions on it are, first of all, the link you link out to has to be like a statically defined URL. So you cannot have like a user ID appended to the end of it or something. And so to use it to actually like bump someone out of the app, buy something on your website and then kick back into your app can be very cumbersome for the user and would have a low conversion rate as a result.

1:16:24And Apple knows that. That's one of the reasons why they require it to be a fixed URL with no parameters. So that's one reason. But also they have actually rules against like you can't say around the link in your UI, this is cheaper on our website. Go get it here for only$10 instead of$13 or whatever. Yeah, let alone by how much cheaper it is. Like you can't, you can't do like basic marketing of like this. You will save this amount of money by clicking here. Yeah. You can't even say you will save money by clicking here. Like you can, you can say nothing about it. You can, you can simply say in neutral language, like you can create an account on our website here.

1:16:54You can create an account on our website. You can attend a lab, but don't say anything else about it. And then also if you use the external payment reader app exemption, that app is not allowed to also use an app purchase. So Apple's saying, fine, you know what? You're, you're going to have competition with our system. You don't get, you don't get our system at all. And so for some apps, they would rather offer both because then they can get the higher conversion rates of people who will only use an app purchase. Then they get them as well. But Apple says, nope, if you apply for this exemption, you are not allowed to use our system at all.

1:17:25We're going to take our ball and go home, which honestly, I think that's their prerogative to do. But at that point, it's not fair because it's like, oh, so we can make our own system that looks as nice and works as well as an app purchase? Like, no, you're literally not allowed to. Not that you're not technically capable of it. you're literally not allowed to make something that's as nice as an app purchase and that purchase can show you the prices it can send information and loop you back through like you don't lose any like it's just they they are disallowed technically they're by by rules not allowed to make something that actually is competitive with an app purchase and that's ridiculous but that being said like i think the reader app exemption is by far the the biggest hole apple has opened up in their tight grip on iap spotify qualifies to use it and they don't use it i see why they wanted what you were just saying like strategically they want to be able to go to regulators and say we're not going to do this this you know highly restrictive half-baked solution because this is not what we want but i think it leaves apple a huge counter-argument to then say look we gave them this door and they're willingly not taking it i'm not sure that's much of a counter-argument though given who they're arguing to which is the european commission and spotify is the european company and like i just when you're not in something there's not like legal precedent or whatever because these are government bodies made like it's the difference when we talk talk about these things in the u.s and we'll talk about epic in a second but like when there's court cases and there's law and there's precedent and there's rules of evidence it's different than like a lot of those court cases what they say is like look if you don't like the decision then you know congress should pass a law that changes this and in the eu it's not a court case where they're trying to interpret current law and say whether you're violated the eu is basically just saying like look we are we're making a bunch of rules the dma is a bunch of new rules there that is the equivalent of like here are some new rules that you have to follow if you want to be here in the us we just accept the fact that congress can't actually pass any laws uh but in the eu they can make up new regulations apparently with reasonable efficiency are those regulations good or well written no but they make them and so it's not like oh they have a good have a strong argument here because the eu will say yeah no we decided we we don't buy that that's why we made these new rules so do it i get the argument that apple makes that look they put in a lot of money and a lot of time and a lot of effort making this platform that we are all as developers and as users eager to use and they deserve to be compensated in some way shape or form for that effort and so far so far i think i'm with them but it's what marco said right first of all they're pretty handsomely compensated.

1:19:55And second of all, I don't feel like I am getting 30 % of value from what they give me. And that's, I think, the disconnect is if they were doing a whole bunch more, and maybe, you know, sometime we can argue about what that would look like, but if they were doing a whole bunch more for me, maybe I wouldn't grumble so much about 15 to 30%. But I feel like I'm getting very little from the App Store. And I feel like I'm getting poked in the eye from Apple on a regular basis with regard to all these policies. Well, maybe not me. I shouldn't say that. I'm not personally getting poked in the eye, but I'm seeing all of these other developers getting poked in the eye.

1:20:34And it kind of makes you wonder, all right, when is it my turn? And it's tough because it's hard for me trying to take myself out of this situation as much as possible and trying to be a neutral third party. I get Apple's point. They made the platform. They want to be compensated for it. I get that. But I think that they've really lost sight of, and we said this a while ago, they've lost sight of the fact that that platform would be a piece of if it wasn't for all of these third party apps, right? I don't think they've really embraced or understood this. And I don't know that they ever will, short of all of us unifying and deciding to pull our apps from the app store for a few days, which will never freaking work anyway.

1:21:11But I just don't think they'll ever get it. And it's that like, like entitled attitude that i just it just makes my skin crawl and that's what i find so upsetting and so when something like this happens i'm like yeah all right cool i'm here for it yeah and and again like and it hurts them in so many other areas like again look at vision pro here's a brand new platform desperately needs software and no one's there for it yeah i don't know if we want to over index on that i know i know we said that and it's a narrative that makes sense but like also they haven't sold a lot of them and it's expensive and i think a lot of the people who i think it's part of the reason developers sat out as sort of a protest but honestly they're going to come they're going to make apps for it if the platform is successful like that's in the end that is how these things usually work like maybe they'll make them grudgingly and maybe they won't be great and it won't be as popular as the iphone platform or whatever but i suspect that if if they sell many millions more vision pros all those companies that sat out will suddenly be like i guess we have to make an app for this thing too.

1:22:11But to your point, it's not going to be the vibrant developer ecosystem where everyone is anxious to hop on board like the iPhone was in the early days. It just continues kind of the sour attitude that Apple keeps creating among developers and, you know, small and large. You know, obviously the large companies are not huge fans of Apple right now and have not been for a while because of all this stuff. And, you know, they've also now, They keep souring the small developers with their attitude too. And I think it's going to be difficult for them to keep drumming up developer interest in ways that will benefit their platforms tremendously.

1:22:48And it is, I think, a long-term strategic error, as I've said before, that they don't loosen up any further. And it causes all these problems that will potentially affect their platforms in much larger ways. You know, whatever profit they're making on the difference between what they make now from the app store and what they would make if they if they loosen the grip a little bit, that's nothing compared to what they make from a new platform's hardware sales like the iPhone, like the Apple Watch, like the iPad. They have these platforms that need good app ecosystems. They need people to want to develop apps for them.

1:23:27They need new apps that are coming on the market to be developed for them first or only. And right now, the customer volume on mostly the iPhone is really the main driving factor there. They're really losing a lot of the developer goodwill. They've burned it all over the course of the last 15 years or so. They've lost so much of it. Developers used to be willing to make a lot of apps for platforms that didn't have massive numbers of users. Like, historically, almost everything Apple's ever made. and now that attitude has been severely eroded by the tim cook era of like squeezing every single penny out of developers and then as you start seeing you know some of the hardware products mature and the growth slow down you start scrounging around the couch cushions hey where can we squeeze next and you start doing really ridiculous things like some of the net purchase rules and you know starting to eye companies and saying hey you're making money how can we get a piece of that.

1:24:25And I mean, it does make the money in the short term, but I think that is very much being counter thinking and missing the big picture of what is this doing to the long term health of our platforms and specifically our hardware platforms where we make way more money than this little piddly, you know, app store tax. Yeah. Let's hear from one small developer who's happy about Apple. Oh, but only because of the rules that they just had to comply with. exactly so uh rally tested who runs alt store which is a kind of side loading marketplace sort of thing that was using like it was using like enterprise certificates or some other technical test flight stuff i don't recall exactly how it works i thought you had to do something with the developer account yeah did that start in the jailbreak era yeah it's what it sounds like alternative store was a place where you could go to install apps onto your phone that's not the app store and you're like wait a second i thought that was impossible well they were using every possible trick in the book to try to use apple's supported schemes like enterprise certificates or test i don't actually know what they use but like it was never a mainstream thing because it was always on the fringes of allowability so as you can imagine with the with the digital marketplace act and apple's in theory compliance with it now apple supports third-party marketplaces and you would imagine that alt store would be first in line and setting aside how the hell they got a 1 million euro.

1:25:47Oh, they don't have to. Did you not see that? Apple has changed the rules. Oh, no, I didn't see that. Please tell me then. Yeah, it was like yesterday, I think, that came out. Too much news, man. It really is. I know, it's a big week. Suffice to say, it might have even been on Apple's developer site. Again, I don't know if we'll be able to put my finger on a link for you. This should have been a follow-up. I'm sorry. If I had seen this, I would have put it there. Nevertheless, they made a few small tweaks to their rules and procedures and policies with regard to the DMA stuff. And one of them was, and I can't remember the specifics, but basically you don't always or perhaps don't ever need a line of credit or whatever that term is.

1:26:23Letter of credit, yeah. But basically they said it isn't always, always, always required as they had previously said. So anyway, the story is AltStore got its Marketplace Kit entitlement, which in developer speak means they got the thing from Apple that says you are now allowed to use the framework that you have to use. to make a third-party marketplace. So Alt Store is going to make a third-party marketplace. If you're wondering whoever under these rules is actually going to make a third-party marketplace, now that they don't have to have a million euros in the bank, the answer is, for one, Alt Store.

1:26:55So I guess good for them, assuming that what Apple has done is compliant with the DMA, which we still don't know the answer to. But hey, everyone's making app stores, and you know who else is excited to make an alternate marketplace for iOS? Before you get there, real-time follow-up. So from a different page linked from that newsroom post or that developer newsroom post, blah, blah, blah, blah, blah, blah, blah. You can do either of the following. Number one, provide Apple with a standby letter of credit in the amount of 1 million euros from a financial institution that's at least A-rated or equivalent by S &P, Fitch, or Moody's, and maintain that standby letter of credit as long as your alternative app marketplace is in or operation.

1:27:31or, and I think this is the new thing, be a member of good standing in the Apple developer program for two continuous years or more and have an app that had more than 1 million first annual installs on iOS in the EU in the prior calendar year. What a weird set of requirements. I mean, yeah, I guess so. That is so weird. So I guess if your junk is popular and you're going to owe us the, whatever it is, the fee, the core technology fee. There was also, like I said, the charity and nonprofit exceptions in there, but I guess that doesn't apply to Altstar. I don't think so. but who knows anyway uh that that's that's apparently the breaking news so yeah so one of the bits of news that we didn't get too many weeks ago was that epic uh the game company that's been in big fights with apple uh had said we're totally going to have our own alternative marketplace for ios in the eu and you'd be like epic how can you do that you don't even have a developer account it's like no we got one we we made a new developer account in like sweden or something and apple gave it to us and that was a story several weeks back we didn't get to because we have too much content but basically epic got a apple developer account for like some other subsidiary name thing or whatever like it's not their old account back it's like a new account and now epic's like we're going to use this one to make a third-party store and they were super excited about it until like yesterday or today i guess yeah well because what changed yeah so on the verge uh epic says that its ios game store plans are stalled because why because apple has banned its developer account.

1:28:58No, not that one. The new one. Yeah, exactly. The new one. So, from The Verge, Epic's plans to release its own third-party app store on iOS and EU could be in trouble. Could be in trouble after Apple terminated the developer account it planned to use. In a blog post published today, the company shared a letter sent by Apple's lawyers which called Epic, quote, verifiably untrustworthy. Quote, Apple does not believe that Epic will comply with its contractual commitments under its developer agreement. yeah so all right so let me let me just frame this so epic we only have epic side of this which is always suspect because you know there's a lot of bad blood there or whatever epic posted a bunch of images of text because they're dumb um of email exchanges like the emails between them and apple i'm sure this is not an exhaustive list of email so it's not every back and forth it's the back and forth epic wanted us to see but just in those back and forth there's lots of juicy stuff i don't know like apple did approve this account like they had to go through talks with apple and say hey you know we know we're like we're epic and we would like to make a new account because we're going to make a third-party store is that cool like we didn't see that exchange but that obviously happened like apple didn't accidentally i don't know that it did because why it's all automated like if i wanted to create a new store account right now no no i'm pretty sure epic even said hey we work with apple to get our developer account it's not like apple just noticed it appeared apple allowed this account to exist and then i think through some ill-advised exchanges like epic epic was complaining to apple that they didn't get access to something and they thought it should be treated well like well did you see the verge had the emails like the verge posted the emails for between epics people and phil schiller but again we don't know if it's all the emails but what i'm saying is how did epic begin conversing in an adversarial way that eventually led to him we're going to get to exactly how because it's funny led to their banning was this it's kind of like you had the account if you had just kept your mouth shut and not antagonized apple and gotten into a fight maybe you'd still have your developer account because the reason their account was rejected again it's not because apple didn't know they created one and was surprised to see it and said oh we totally need to ban that apple allowed it to be created no knew it had been created but then essentially i think epic basically like made a poor choice to get in a fight with apple and so let's let's just go through the the broad strokes of that fight uh like you can you can you see the emails we'll link to them you can look at the stupid images or whatever but here here's what it boils down to you should read read phil schiller basically explaining why apple has decided to ban this account after allowing it to be created in the past epic has entered into agreements with apple and then broken them for example you testified that epic games inc entered into the developer program with full understanding of its terms and then chose to intentionally breach the agreement with apple and by the way You as this is Epic.

1:31:44He's talking to Tim Sweeney and Epic. You also testified that Epic deliberately violated Apple's rules to make a point and for financial gain. More recently, you have described our DMA compliance plan as, quote, hot garbage, quote, a, quote, horror show, quote, and a, quote, devious new instance of malicious compliance, quote. And you have complained about what you called, quote, junk fees, quote, and, quote, Apple taxes, quote. Your colorful criticism of our DMA compliance plan, coupled with Epic's past practice of intentionally violating contractual provisions with which it disagrees, strongly suggests that Epic Sweden does not intend to follow the rules.

1:32:18Another intentional breach could threaten the integrity of the iOS platform as well as the security and privacy of users. You have stated that allowing enrollment of Epic Gabe Sweden in the developer program is a good faith move by Apple. quote, we invite you to provide us with written assurance that you are also acting in good faith and that Epic Games Sweden will, despite your public actions and rhetoric, honor all of its commitments. In plain and qualified terms, please tell us why we should trust Epic this time. So this is Phil Schiller, a named person, in an actual email to Epic saying, hey, you burned us before.

1:32:50Remember that time where you intentionally broke the rules and we had a lawsuit and we won and we kicked you out of the store? Do you remember that? And now we let you have this, you know, Epic Games Sweden thing and you're telling us you want an alternative app store. Tell us you're going to be good. Provide us with written assurance that you're acting in good faith. Tell us that you're going to follow the rules. So here's Tim Sweeney, CEO of Epic. Here's Tim Sweeney's reply. Thanks for reaching out. Epic and its subsidiaries are acting in good faith and will comply with all terms of current and future agreements with Apple and will be glad to provide Apple with any specific further assurances on the topic that you'd like.

1:33:25that's the entire email by the way that's it so phil schiller says epic you've been bad are you going to be good tell us in writing you're going to be good tim sweeney says in a very very short paragraph we're totally going to be good we will comply with all your terms current and future if there's anything specific you want us any specific assurances if you want us to say specifically we won't like tp your house like we'll say it just let us know so i saw this exchange and i'm like all right well so phil schiller is basically saying look we don't like you you're bad you're saying mean things about us seems like you're going to break the rules tell us you're not going to break them tim sweeney says we totally not going to break the rules here's apple's response mr sweeney's response to that request was wholly insufficient and not credible he's the ceo how is that not credible anyway it boiled down to an unsupported trust us i mean well yeah What could be in that document in written form that would not be trusted?

1:34:24Is there some kind of blockchain-derived trusted intermediate? He needs it notarized. You ask for written assurances. You got written assurances, and it's like, yeah. Eh, not enough. They were wholly insufficient. Was there not enough groveling? Did he not apologize for the hot garbage? i have to assume there's a lot more going on here that was not part of the correspondence yeah like is this this is not all the emails maybe there has to be more to this than this i mean because first of all i mean look this this is really stupid that this even happened it's like a flame war on us that it totally is it is and and i understand if apple really wants to still stick their finger in epic's eye but then why let them create the second account in the first place Yeah, it's almost like they changed their mind.

1:35:14Anyway, finish reading Apple's response or the part that we've excerpted from it. All right. So again, Apple's response. Mr. Sweeney's response to that request was wholly insufficient and not credible. It boiled down to an unsupported trust us. History shows, however, that Epic is verifiably untrustworthy. Hence the request for meaningful commitments and the minimal assurances in Mr. Sweeney's curt response. not enough groveling swiftly undercut by a litany of public attacks on apple's policies compliance plan and business model they provide an example tweet well okay so now i think we have to as as a since we've made this running joke for like years and years now we have to now say this is a legit example where running to the press did not help because they're like you're still being mean to us in tweets basically they're saying uh you're you are unverifiably untrustworthy So, like, why ask for assurances from somebody who, no matter what you say, you're not going to trust them?

1:36:09And then saying, and also, you keep being mean to us. And why, again, like, whenever they gave them that new account, like, two weeks ago, whenever that was, like, what changed between the lawsuit a few years ago and that that then changed back? I think Apple thought they were, like, the reason I refer to this as, like, a flame war, like, an argument online is, like, this is no longer company versus company. it's so nakedly person versus person like i don't like you and i don't like your face and you're not being sufficiently deferential and i don't trust you and i asked for assurances but you weren't nice enough and you're making mean tweets about us so yeah and again i'm not saying whether this is right or wrong legally legal or whatever i'm just characterizing what we're seeing here and in the end a lot of these corporate things do boil down to that because corporations are run by individuals and individuals have feelings and emotions and do stuff like this but you almost never especially when it comes to apple get to see this personal indignity and uh and this final one by this apple we say apple response i think they had they went through their law firm to do it or whatever but it still reads like it's phil it still reads like it's phil schiller saying it personally yeah so continuing moreover a recent submission in the australian litigation suggests that epic games sweden ab is part of a global effort to undermine or evade apple's rules it's The Grand Insidious Conspiracy.

1:37:28Apple is rightly concerned that Epic Games Sweden AB does not intend to adhere to its contractual commitments to Apple and is in fact a vehicle to manipulate proceedings in other jurisdictions. And by the way, Epic Games Sweden AB, that's the account that they got to make their App Store. Given the past and current conduct of Epic, Apple cannot allow Epic Games Sweden AB to be part of its ecosystem. Please be advised that Apple has effectively immediately terminated the developer program membership of Epic Games Sweden AB. As you know, in addition to the concerns we have outlined above, the u.s judgment expressly provides that quote apple has the contractual right to terminate its dpla with any or all and then i lost the rest of the quote yeah sorry the last time does cut off but what they're basically saying is hey remember that court case we won against in the u.s part of the judgment was we can totally deny you for any reason and guess what we're gonna um um we're gonna deny you and we don't need to tell you why but they did they said we you're mean to us and we don't like you and we don't trust you and even though you said you're gonna follow the rules we don't think you are in fact we think this company is part of this wider effort to undermine us in other jurisdictions and you know the apple epic uh won a court case against apple in the u.s not in the eu and the epic versus you know the what the eu if is going to say about apple versus epic if anything will be interesting to see but this is just like i'm gonna say it's unseemly it's unseemly for all parties but epic like i feel like tim sweeney has always just been out there as a personality and he's he is who he is and especially in the gaming world this is unfortunately not as uh uncommon as you might think where there are big personalities trash talking each other in the press or whatever but that's not how apple usually works and this is not like discovery in a court case because we saw so many good things in the epic trial for example this is apple emailing with a big company and the big company doing one of the rudest things you can do as an individual is like i'm just going to post all our private emails that we've back and forth because they show you to be a jerk that's right up their alley right and by the way did epic show all the emails is epic you know like well we'll see that's apple's mo is usually not to say hey you didn't post all the emails but it's more like to you know give responses through their lawyers um this is this is mostly i know this just seems like it's a silly thing and honestly it is i just thought it was super entertaining i don't think there's any big news here other than uh apple's DMA compliance and third-party marketplaces, that whole thing, even if it is compliant, it's not going great for anybody.

1:39:52I mean, Alt Store got their marketplace kit thing, but they are a small player in the grand scheme of things. Epic, it seemed like Apple and Epic were patching things up. But somehow Epic got re-entangled and pissed off Apple again and got booted out again. And it's just who's where are all these third party marketplaces giving increased competition to the people in the EU? We talked about it when we talked about the DMA compliance. Is this actually is DMA actually achieving the ends that the EU wants it to achieve? I'm going to say the answer remains no. It's not. It's not working well. It's because because the Apple's compliance with the DMA is incredibly restrictive.

1:40:32because Apple is still wielding sort of personally vindictive power against the people it doesn't want to have stores and the number of people who would even, like Epic is one of the few people who would want to have a store because they'd want to have it out of spite, essentially. Like even if it costs them money, they just want to have it and be in there. And everyone else is like, these terms don't look great. So things are not going well. I don't know if they're not going well for the EU. They're not going well for Apple. I say both. They're not going well for either party in this whole thing.

1:41:00and apple we didn't even have time to put this in the notes but apple just released ios 17.4 which has all their supposed dma compliance and all the scare screens and all the pick your default browser and all that stuff and people who are looking in that are saying this i mean the choice is good and you know making apple comply and giving people browser choice is good or whatever but the user experience is worsened because of the kind of passive aggressive way that apple has implemented all this so and here we are in the u.s where we don't get any of this which is both a blessing and a curse uh but we do get to watch it play out i think part of the problem is that the eu regulations seem to be written i mean look this is all maybe above our heads but it seems from the outside that they are written with a certain degree of optimism about how they will be followed and over and over again we see apple dodge and weave and and find new ways to be prickly and stingy it seems like no matter what regulation has in mind for how things quote should be in in the regular in the regulator's mind apple finds ways around it very easily and very deftly and and then the whole thing is kind of a joke and doesn't really achieve what they wanted to achieve I don't know why anyone thinks it's going to be different, you know, with different attempts at the same thing.

1:42:25Well, if they say Apple's DMA compliance is, in fact, not compliant, then Apple would have to go back and change things to make it more compliant. And I don't know how long that can go back and forth, but I think the teeth that the EU put on the DMA are bigger than the we'll just fine you. It's like some percentage or something. It's some number that would be monstrous for Apple. so somehow apple and the eu are going to have to work this out at this point i really hope the eu doesn't say we looked at apple's response and we have determined that it is compliant because that's basically them admitting we screwed up when we wrote our regulation right because if this is compliant you screwed up if they say it isn't compliant then how does that resolve itself what is that what do you want apple to change how do they have to and they do that back and forth and it's not this is not great like this is one of the benefits of the uh the more uh the system that people in America are more used to is like, oh, it's competition between companies and they all work in their best interest and the marketplace sorts it out.

1:43:23But all these things that we're talking about here is like, well, when that stops working, when there's too little competition, how do you solve that? It's like, well, that's when the government has to step in. That's why we have antitrust laws. And doing that, essentially taking a competitive marketplace that has become insufficiently competitive, of your opinion, and putting the competition back in, not by adding new competitors but by essentially making the players who are dominating it now saying there's certain things that they can't do it's really hard because it's like the government saying be less successful companies and that's not a thing that companies like and that's also kind of a form of impairing competition so trying to restore competition through regulation is actually really really hard it's an important thing and it's the role of government to do that They shouldn't shirk that because it's hard.

1:44:14But I do want to acknowledge that it is hard because a lot of things that you can do either don't work or make things worse. Thanks to our sponsors this week, Squarespace and Trade. And thanks to our members who support us directly. You can join us at atp.fm slash join. And we will talk to you next week.

1:44:34Now the show is over. They didn't even mean to begin. Because it was accidental. Accidental. It was accidental. Accidental. John didn't do any research. Marco and Casey wouldn't let him. Because it was accidental. Accidental. It was accidental. Accidental. And you can find the show notes at atp.fm. And if you're into Twitter, you can follow them at C-A-S-E-Y-L-I-S-S. So that's Casey Liss, M-A-R-C-O. a-r-m-n-t marco armen s-i-r-a-c-u-s-a syracuse it's accidental they didn't mean to

1:45:31so we didn't have time for ask atp this week but we have one relevant ask atp topic that we thought maybe we could bump into the after show. Mark Robinson writes, if you were Apple CEO for a day and only had enough time to resolve just one of Apple's many legal problems, which problem would you resolve and how? Very good question. John, can we get all your whining and moaning about the parameters of the question out of the way real quick so we can then answer it? Yeah, my main whine is, what defines a single legal problem? Of course. Because like, take the EU for example. The anti-steering thing.

1:46:09is that one legal problem or can you combine that with the dma or are those two separate legal problems and you have to pick which one you want to resolve yeah is it one court case anyway difficult i know what they're getting at though i understand the spirit of the question if the letter of it is very difficult to define also we're gonna we're gonna breeze right over the fact that it's pretty much impossible to solve anything in one day yes we are no but it's it's the i think it's like a magic wand like you have you have a you know a magic wand that can do yeah Yeah, solve one legal problem-ish somehow.

1:46:36Yeah, we're not saying how to solve it. I'm going to say it's the magic wand thing because otherwise it's like, well, how do you solve it? If there was an easy solution, Apple would have done it by now. Or, well, not really. Anyway, magic wand. Magic wand is in play. Right, magic wand is in play. So I'm going to pull a top four and deviate from the purpose of the question and answer a slightly different question entirely. If I were Apple CEO for a day and I only had enough time to resolve one problem that maybe is legal but maybe isn't, I would get the heck out of China. know like as best as i can and i think that includes you know having handed over uh icloud is that a legal problem it just i i already said i'm i'm taking a turn all right you're bad at influence marco yeah i know it's it's true it's the devil on my shoulder um no i think i would i i it makes me feel really gross what they've done with you know handing over or having all their software running on on china controlled servers for icloud or i forget the details i might have that slightly wrong, but you get the point I'm driving at.

1:47:32I don't love that. I don't love that all the manufacturing is there. I get why. I get why they did the iCloud thing. I get why the manufacturing is there. But I would divest from China, using my magic wand, I would divest from China as quickly and as effectively as I possibly could. Because to me, I think that is the number one thing that should keep Apple up at night. And I don't know that it is. It might be. But that's the thing that scares me the most. And that's what I would do, which I know is not. In two ways. So I I think that in one way, that's a good use of a magic wand because that is like incredibly hard to do.

1:48:02I believe Apple is doing it, but it's going to take like just so many years and so difficult to do. But on the other hand, it is the worst thing to use a magic wand on, because if you did have that magic wand and you used it, that that would invoke maximum retaliation from China. Essentially, Apple would be out of China, which is a huge market, which part of the reason Apple is doing things the way they are and slowly kind of trying to disentangle from China real slow, but real slow. is because they want to continue to sell products to the billions of people in china oh yeah no i get it you were to magic wand your way out of china to china would be like sorry you're gone kind of like facebook right it's like no no no more china for you i hope you're happy with what you've done by magic wanding a gigantic supply chain into existence and presumably magic wanding millions of people to work that supply chain this is definitely not a legal problem that you can solve and it's really stretching the magic wand because replacing china manufacturing is such a gargantuan problem that it's like multi-decade thing that only apple could possibly even have a chance of of doing and i still don't know if they're going to be successful but i i like your uh i like your chutzpah even though you can't read the question it didn't solve a legal problem right all right so marco since i i'm hoping that you will also take a left turn or perhaps a right turn to my left turn.

1:49:20What is your answer? I'm going to continue on the theme of the episode a little bit. And I want to, my modification would be, or my action would be to try to diffuse the tension around App Store payments in a way that is most likely to actually be somewhat palatable to Apple and least likely to disrupt their precious services revenue while also providing the maximum amount of like relief on the pressure around this. And so my proposal here is, remember that reader rule we were talking about earlier, the reader exception, where quote reader apps that have like, you know, AV services or books or whatever can link out to external payments after showing a scare sheet with a whole bunch of, you know, qualifications and restrictions on what the URL can be and how it's displayed.

1:50:09But once you're linked out to Safari for the payments, you owe Apple no commissions. You have to track nothing. You have to have them audit your books. Never. There's no other restrictions on it. But right now, it's only for those reader apps. My proposal would be allow all apps except games to use that exception with a few modifications. So you would still have the ability to link out, just like the current system. You would have to apply and get that entitlement so Apple can track it and look at it and make sure it works the way they want it to. It would still show the scare sheet first to warn people you're going out to a website.

1:50:50This is not going to be through Apple, etc. You still pay Apple no commissions on those sales. What I would modify besides what apps are allowed to use it would be remove the restrictions on the URL being a single URL. Let it have a query parameter. I don't care. Remove the restrictions on the language around the UI of the URL. Let people say, create an account on our website and save money. Whatever. They already can't use IAP. I would retain, though, the one rule that requires part of the reader exception rule now is you are required to use the store kit API to check to see if purchases are enabled on the device.

1:51:28Because there are situations, like if you have a device for a young kid, where a lot of times parents will use the parental controls to disable in-app purchase for that device entirely just to keep the kid from getting in trouble so that is one one feature that makes sense other than that remove all the restrictions on how it needs to be designed all the you the you know not being able to tell people you can go make a purchase here just let all apps choose if they want to to link out using the scare sheet and using this framework and they would still have the trade-off of then not supporting apple's in-app purchase system because that wouldn't be allowed anymore but fine if apps want to choose that that's fine and by not letting games do it by letting all other apps do it except games you remove a huge amount of anti-competitive accusations and and regulatory pressure from them because most types of businesses that are being worst affected by apples and at purchase policies and taxes would then have this major relief valve to get out if they want to and then by not letting games do it you keep the vast majority of your services revenue because it turns out as we've learned from various court cases and disclosures it turns out that the huge vast majority i think it was like 87 according to a court case like a year or two ago the vast majority of apple's in-app purchase tax revenue is from games it's so it's not like the netflix's of the world because most of them don't use in-app purchase anymore anyway they wouldn't even lose that much from this because the actual revenue they make is mostly game-based.

1:52:59If you did this and let all apps use this if they wanted to with those trade-offs, I think you really lift a lot of the pressure off Apple in terms of all the scrutiny of this, and you give up almost no revenue. That's also a very, very good answer. I dig that. That's not very magic wandy, and I'm not sure which legal problem it's solving. You could say it's solving the anti-steering thing, but in a different way, but Apple would say they already solved the anti-steering thing. but only apple believes that yeah so so i'm going to use that same loophole to say that the one legal problem i would solve is the dma and you would say well apple already solved that but we don't have a ruling on that yet apple thinks they solved it jury's still out but it's not a jury anyway so i'm going to pick the dma and i would magic wand that one and the reason i would is because i think that is the the most comprehensive legal challenge they face because it gets at the as i said before it gets at the heart of the issue which is like there's not enough competition and this is trying to restore that competition and that is a legal problem for apple because apple doesn't want to do that uh that's the one i would magic wand how i would magic wand it to since both of you offered solutions especially marco with more details i would say um essentially realign incentives within apple to make your digital marketplace the app store compete based on the quality of the marketplace as opposed to competing because it's you know because you make rules that make it so that you always win or that you have an advantage and all that other stuff whatever so open the marketplace up run your own app store not at break even but do the marco thing of like almost no commissions for anybody except for games because they can tolerate it and compete based on what you have going for you it's i mean including some of the things that only the app store can do but mostly do it based on like look you're not going to go to another store because your commissions are low we basically do it at cost we just charge for that you know our payment processing things 30 how about three percent for everybody except for you games um in-app purchase is a good system no restrictions on what you can do you can make your own awesome system you can link out whatever but we think you'll use ours because it's good oh you don't uh you want some features from that purchase you want better features on app store connect we'll compete based on that compete like i think apple would still win that competition A, because they have such a huge head start with historical, like the historical momentum of what people expect from that platform that they could coast on not only being a little bit better for years, but B, realign your incentives.

1:55:23Everyone working on the app store should have third-party app stores that they look at and say, we need to make our store better than those stores for consumers and developers by doing things that people like. Not by applying rules to them to tell them they can't do things that developers like. They can't do things that customers like because we won't let them. How about we do things that developers and customers like to keep the 100 % market fair we currently have? and yes some of the market share would bleed out or whatever but like that's that's the legal problem that i would solve and i would solve it by like it sounds from apple today's apple perspective they say what do you mean give up i'm like if that's how you have to say it to yourself yeah but basically like you know i'm not saying run the app store at break even like you can still get your money from games because i think they will tolerate that but make your app store your purchase your payment processing your stuff win because they are the best for consumers and developers not because you forbid anyone else from doing anything better than you