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SAN FRANCISCO -- Apple’s push into subscription services could raise new competition concerns, antitrust experts tell me.
Apple’s App Store has long been the means for news, video and gaming companies to deliver their content to iPhones and other Apple devices around the world. But now that Apple just announced paid subscription services in these industries, antitrust experts are wary of the possibility the tech giant could use its position undercut other businesses that are new rivals.
Sally Hubbard, a director of enforcement strategy at the Open Markets Institute, said she’s concerned about how the company could abuse its perch as operator of the App Store to prioritize its own new services over its competitors.
“My concern is that it can be the gatekeeper to those industries,” Hubbard said. “It can pull little levers and be able to advantage themselves.”
“When you have the actual platform beginning to compete with companies that depend on the platform you have an inherent conflict of interest,” she said. “It’s not a level playing field for competition.”
So far, most of Washington's focus has been on Facebook, Google and Amazon as a broader conversation about whether current antitrust law needs to be changed to address Silicon Valley's power heats up in Washington. Now Apple could find itself drawn deeper into that debate.
And depending on how Apple approaches the rollout of its new services, its latest moves could raise some of the same questions regulators in Europe have about Amazon's products, Hubbard said.
The European Union currently has a preliminary investigation in "quite advanced" stages into whether the e-commerce giant is using the data it collects from businesses on its platform to inform its own product sales and undercut rivals.
Apple declined to comment for this article.
But it's already on defense against an antitrust complaint in Europe -- where music streaming service Spotify is accusing the company of abusing its power over the App Store. In a press release announcing the complaint, Spotify chief executive Daniel Ek accused the company of playing the role as both "player and referee to deliberately disadvantage other app developers." Apple then accused Spotify of trying to reap the benefits of the App Store ecosystem without making any contributions to it.
"We want more app businesses to thrive — including the ones that compete with some aspect of our business, because they drive us to be better," the company said in a statement.
And antitrust concerns about Apple could gain more prominence in the political arena heading into the 2020 presidential election in the U.S.
One candidate, Sen. Elizabeth Warren, is increasingly scrutinizing technology companies that act both as the platform that other businesses rely on to deliver their services and also a competitor to those businesses. Though Apple was not one of the three companies Warren singled out in her initial proposal to break up Big Tech, she did tell me in a recent interview Apple should "be on the list."
"Apple can run the platform or they can sell the apps," she told me. "But they can't compete with other individuals on selling the apps at the same time that they're running the platform and sucking all the information off the platform and making decisions about whose apps are going to be at the top of the platform and who's going to be way in the back where you never find them."
To be sure, Warren’s plan to break up Big Tech would require changes to antitrust law, and the senator has not yet introduced any legislation to that effect.
Apple’s own history also raises competition concerns as it pushes into new services, experts tell me. Generally, a company’s entrance to new areas of business results in more competition in the marketplace, said Chris Sagers, a professor of law at Cleveland State University. But there can be problems when a company does things to “ease its entry that restrain existing competition.”
“In fact, Apple has built up a bit of a record of conduct showing that Apple’s entry is not always good,” Sagers told me.
Sagers pointed to Apple’s approach to e-books as an example of this anti-competitive behavior. The U.S. Department of Justice brought a suit against Apple in 2012 for conspiring with publishers to raise the price of e-books. After the Supreme Court declined to review an appeals’ court decision in 2016, Apple had to pay a $450 million settlement.
BITS: Apple put privacy front and center as it rolled out services ranging from a credit card to a gaming subscription service, Buzzfeed's Katie Notopoulos writes. The repeated theme underscored how the iPhone maker was trying to differentiate itself from other technology giants.
"Apple didn’t mention Facebook or Google during the event, but its digs at those companies' privacy and user data practices were clear," Notopoulos wrote.
The company emphasized that its News subscription service won't share your data with advertisers, or that its Apple Pay-connected credit card won't track data about your transactions. But the companies' new services will accumulate data.
"So today the company was all about reassuring people: Don’t worry, we’re still the good guy," writes Notopoulos. "Apple has long taken a protective stance on privacy, but it’s now using its approach to user data as a powerful marketing tool to sell more of its laptops, phones, news subscriptions, and entertainment services."
NIBBLES: Australian Prime Minister Scott Morrison said his government is working on new legislation that would penalize social media companies that "undermine public safety," reports Bloomberg's Jason Scott.
Morrison is meeting with representatives from the social media companies on Tuesday following the attacks in Christchurch, New Zealand, which left 50 people dead.
The legislation will “seek to apply criminal penalties to companies that don’t act in the interests of the safety of Australians,” Scott reported that Morrison told reporters. “What I’m looking for is for these companies to come to the table as responsible corporate citizens and make sure their products are safe here in Australia.”
Facebook and other technology companies face increased scrutiny of their efforts to stamp out violence on their platforms after the shooter live-streamed the attack on Facebook. Copies of the video proliferated on Facebook and other platforms like YouTube for days after the attack.
BYTES: Facebook announced today it removed accounts linked to Iran, Russia, Macedonia and Kosovo, citing coordinated inauthentic behavior. Facebook pulled down 2,632 Groups, Pages and accounts, according to a company blog post.
Facebook did not find links between these sets of activity, but it did say “they used similar tactics by creating networks of accounts to mislead others about who they were and what they were doing.”
513 of the accounts were tied to Iran, while 1,907 were linked to Russia, Facebook said.
Facebook has been increasingly cracking down on such behavior as it faces increased scrutiny for how foreign powers tried to influence its platform in the 2016 elections.
"While we are making progress rooting out this abuse, as we’ve said before, it’s an ongoing challenge because the people responsible are determined and well-funded," Nathaniel Gleicher, Facebook Head of Cybersecurity Policy, wrote in the blog post. "We constantly have to improve to stay ahead."
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