Brazil tells Apple to open up; perhaps it’s time to move on?

When it comes to its App Store business model, Apple is losing ground one nation at a time. While there is merit in many of its arguments, perhaps it really is time the company bit the bullet and focused on protecting what it can?

The company’s latest setback comes from Brazil, where Apple has been given just 90 days to open up its App Store in a very similar way to how it is being forced to open up in Europe.

Brazil tells Apple to open the doors

According to local reports, Judge Pablo Zuniga was blunt: “The closed structure of iOS and the restrictions imposed on third-party app sales are precisely the factors that justify the preventive action of the antitrust authority, as maintaining them without any intervention may hinder the entry of new competitors and impede the restoration of competition in the sector.” 

Apple will have to permit app side-loading from third-party stores on iOS devices, which also means it must put an ecosystem in place to support that. The court decided to reinstate an injunction Apple had previously appealed successfully; the original case was led by Brazil’s antitrust regulator. That regulator also demands Apple permit use of alternative in-app payment systems.

Zuniga also noted that Apple did not experience significant damage to its economic model when it opened up the store to competitors in the EU. (It’s arguable we haven’t yet seen the full impact of that move, given ongoing litigation concerning Apple’s approach.)

The proverbial lady isn’t singing quite yet in Brazil. Apple continues to insist that opening the app economy in the way regulators demand will pose a significant challenge to maintaining customer security and privacy on its platforms. Apple says it will appeal Brazil’s decision.

If this story sounds familiar, it’s because it is. In defense of its App Store business model, Apple is defending, losing, appealing, and usually losing again in courts around the globe. It has failed to secure victory in Europe, and seems set on the same journey world-wide; so far, no court has ultimately chosen to support the company in its arguments.

Failure and success

Critics are quick to claim that Apple’s consistent pattern of failure shows the weaknesses of its argument. They may have a point, but as these battles intensify, it’s too easy to lose sight of the fact that at least some of Apple’s defenses have substance. Opening the platform to side-loading will make the platform less private and less secure, as not every app store or developer will be able to devote the same investment in security and privacy protection. That matters to people and to businesses, so it makes sense to ensure there is still a choice that lets customers opt for the fundamentally more secure walled garden Apple provides.

Apple even has a justifiable right to generate income from sales made using the ecosystem it has built, and the only question that really matters there is how substantial that fee should be. Is it 30%, which some App Store developers pay, or 15%, which most paid app developers provide? Or nothing, which is what free apps pay for distribution? Should the fee be the equivalent to that set by Epic, or similar to the slotting fees charged by major supermarkets for shelf space?

No court yet seems to have approached that question, presumably because the inherent nature of that matter would define what an acceptable profit margin is, which would be a hand grenade in the era of wealth accumulation. No wonder the courts don’t want to define that. Can you imagine the impact of such a definition? I expect the world’s billionaires probably can.

Eyes on the prize

Skating swiftly away from questions around structural wealth inequality, the problem Apple has is that as it raises its good arguments in defense of its App Store business, and then loses those arguments. It is also losing the argument around privacy and security. Given the global outcry about the UK government’s disgusting overreach around iCloud encryption, this is a good time to raise discussions around privacy and security again.

Apple has support for those values. But, as the decision in Brazil shows, it does not have support when it comes to App Store fees (as justified as I may think some of them are). As such, it makes a lot more sense for the company to free up valuable management time to focus on something else, given that it has become obvious it is going to be forced to open up the app store one nation at a time.

It’s time to move on, because we already know where this puck is going.

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