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Protocol | Policy

What the EU's crackdown on Apple means for Epic

Europe's definition of Apple's market could face skepticism in the U.S. courts.

App Store scales

How to define Apple's market could be key to Epic's case.

Image: Jernej Furman/Protocol

Apple for years has mostly been able to keep its head down and let antitrust complaints hit other big tech rivals, such as Google. That time, however, has ended.

The App Store is now the target of complaints worldwide: The European Commission filed antitrust charges today claiming Apple abuses its position in the market for music apps, after years of investigating a complaint by Spotify, which competes with Apple Music. The commission also promised to dig into other aspects of the App Store, all just a few days after the Australians worried aloud about the same thing, and a few days before Apple heads to trial with video game maker Epic over, yes, the App Store.

Epic might be launching into a victory dance over the complaint, but European regulators' conclusions would likely be more contentious in a U.S. court.

To begin with, antitrust scholars note that the European Commission found the Apple App Store doesn't routinely compete with Google's Play Store or other ways of distributing digital content — a contention courts in the U.S. likely won't accept blindly.

"It is much less likely that American courts would find that App Store apps do not compete with Google Play apps," said Chris Sagers, a professor at Cleveland State University's law school and the author of a book on Apple's prior antitrust woes. "It seems very significant" in the Epic case, he said.

Market is at the heart of many antitrust complaints, so if the App Store competes with Google, Apple's market share probably isn't big enough for it to get in trouble as a monopoly. Not surprisingly, Apple hammered this point in its filings in the Epic case.

U.S. courts are generally reluctant to say that a company has a monopoly in the market for its own product. It's not forbidden, though, and antitrust practitioners are increasingly asking whether the difficulty of switching to other goods and services mean digital markets are narrower than they might otherwise appear.

"Sometimes we have narrow market definitions because it's very difficult to find an alternative," said Charlotte Slaiman, competition policy director at Public Knowledge, which pushes for increased antitrust enforcement in tech. "That's valid."

Apple products integrate with one another more seamlessly than with other devices, and many users might want to maintain their existing app libraries, both of which may mean customers feel too locked in to switch even in pursuit of better options or cheaper prices, said Slaiman, also a former lawyer at the Federal Trade Commission.

"Owners of an Apple device are not likely to switch to another device with Google Play Store just because music streaming is more expensive on the Apple App Store," the commission's executive vice president, Margrethe Vestager, said in her statement.

Lock-in

Tech companies often say that users can choose alternative services as easily as they might shop from another shelf at a supermarket.

"At the core of this case is Spotify's demand they should be able to advertise alternative deals on their iOS app, a practice that no store in the world allows," Apple said in a statement responding to the commission. The company has also said the 30% commission it takes on many in-app purchases is an industry standard that allows it to ensure privacy and security in its App Store, which in turn helps millions of apps reach consumers.

Enforcers increasingly wonder if, instead, it's more like the alternatives are 10 feet up on a shelf in a dark store the next town over. If they are, then Apple is effectively controlling the market, and Epic, Spotify and a growing number of other developers say Apple is using that control to disadvantage rivals, extract its 30% fee in the process and cut off any app that tries to steer consumers to cheaper options.

"That just sort of reinforces the market power that Apple already has over a major form of distribution," said Diana Moss, president of the American Antitrust Institute.

The result, Epic and others say, is more expensive apps, fewer choices and more money going into the pockets of Apple than it should receive in a competitive market.

Of course, market definition is necessary, but not sufficient, to antitrust cases. Proving competitive foreclosure and harm to consumers are both key as well. The European "statement of objections" is also just one step in investigating potential violations, and Apple is expected to reply more formally.

"This is an early step," Slaiman noted. "I wouldn't say that this is an indication of how a U.S. case would turn out."

Protocol | Workplace

The Activision Blizzard lawsuit has opened the floodgates

An employee walkout, a tumbling stock price and damning new reports of misconduct.

Activision Blizzard is being sued for widespread sexism, harassment and discrimination.

Photo: Bloomberg/Getty Images

Activision Blizzard is in crisis mode. The World of Warcraft publisher was the subject of a shocking lawsuit filed by California's Department of Fair Employment and Housing last week over claims of widespread sexism, harassment and discrimination against female employees. The resulting fallout has only intensified by the day, culminating in a 500-person walkout at the headquarters of Blizzard Entertainment in Irvine on Wednesday.

The company's stock price has tumbled nearly 10% this week, and CEO Bobby Kotick acknowledged in a message to employees Tuesday that Activision Blizzard's initial response was "tone deaf." Meanwhile, there has been a continuous stream of new reports unearthing horrendous misconduct as more and more former and current employees speak out about the working conditions and alleged rampant misogyny at one of the video game industry's largest and most powerful employers.

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Nick Statt
Nick Statt is Protocol's video game reporter. Prior to joining Protocol, he was news editor at The Verge covering the gaming industry, mobile apps and antitrust out of San Francisco, in addition to managing coverage of Silicon Valley tech giants and startups. He now resides in Rochester, New York, home of the garbage plate and, completely coincidentally, the World Video Game Hall of Fame. He can be reached at nstatt@protocol.com.

Over the last year, financial institutions have experienced unprecedented demand from their customers for exposure to cryptocurrency, and we've seen an inflow of institutional dollars driving bitcoin and other cryptocurrencies to record prices. Some banks have already launched cryptocurrency programs, but many more are evaluating the market.

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Protocol | Workplace

Founder sues the company that acquired her startup

Knoq founder Kendall Hope Tucker is suing the company that acquired her startup for discrimination, retaliation and fraud.

Kendall Hope Tucker, founder of Knoq, is suing Ad Practitioners, which acquired her company last year.

Photo: Kendall Hope Tucker

Kendall Hope Tucker felt excited when she sold her startup last December. Tucker, the founder of Knoq, was sad to "give up control of a company [she] had poured five years of [her] heart, soul and energy into building," she told Protocol, but ultimately felt hopeful that selling it to digital media company Ad Practitioners was the best financial outcome for her, her team and her investors. Now, seven months later, Tucker is suing Ad Practitioners alleging discrimination, retaliation and fraud.

Knoq found success selling its door-to-door sales and analytics services to companies such as Google Fiber, Inspire Energy, Fluent Home and others. Knoq representatives would walk around neighborhoods, knocking on doors to market its customers' products and services. The pandemic, however, threw a wrench in its business. Prior to the acquisition, Knoq says it raised $6.5 million from Initialized Capital, Haystack.vc, Techstars and others.

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Megan Rose Dickey
Megan Rose Dickey is a senior reporter at Protocol covering labor and diversity in tech. Prior to joining Protocol, she was a senior reporter at TechCrunch and a reporter at Business Insider.
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Protocol | Workplace

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Cisco's EVP and chief people, policy & purpose officer shares how the company is creating a more conscious and hybrid work culture.

Like many large organizations, the leaders at Cisco spent much of the past year working to ensure their employees had an inclusive and flexible workplace while everyone worked from home during the pandemic. In doing so, they brought a new role into the mix. In March 2021 Francine Katsoudas transitioned from EVP and chief people officer to chief people, policy & purpose Officer.

For many, the role of a purpose officer is new. Purpose officers hold their companies accountable to their mission and the people who work for them. In a conversation with Protocol, Katsoudas shared how she is thinking about the expanded role and the future of hybrid work at Cisco.

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Amber Burton

Amber Burton (@amberbburton) is a reporter at Protocol. Previously, she covered personal finance and diversity in business at The Wall Street Journal. She earned an M.S. in Strategic Communications from Columbia University and B.A. in English and Journalism from Wake Forest University. She lives in North Carolina.

Protocol | Fintech

The digital dollar is coming. The payments industry is worried.

Jodie Kelley heads the Electronic Transactions Association. The trade group's members, who process $7 trillion a year in payments, want a say in the digital currency.

Jodie Kelley is CEO of the Electronic Transactions Association.

Photo: Electronic Transactions Association

The Electronic Transactions Association launched in 1990 just as new technologies, led by the World Wide Web, began upending the world of commerce and finance.

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Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Signal at (510)731-8429.

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