Alex Balgavy

Facebook Says Apple is Too Powerful. They’re Right.

In December, 2020, Apple…changed how iOS, their mobile operating system, handled users’ privacy preferences, so that owners of iPhones and other iOS devices could indicate that they don’t want to be tracked by any of the apps on their devices.

Without that tracking, Facebook could no longer build the nonconsensual behavioral dossiers that are its stock-in-trade. According to Facebook, empowering Apple’s users to opt out of tracking cost the company $10,000,000,000 in the first year.

The company bombarded its users with messages begging them to turn tracking back on. It threatened an antitrust suit against Apple. It got small businesses to defend user-tracking, claiming that when a giant corporation spies on billions of people, that’s a form of small business development.

Facebook laments Apple’s ability to override its customers’ choices about which apps they want to run. iOS devices like the iPhone use technological countermeasures to block “sideloading” (installing an app directly, without downloading it from Apple’s App Store) and to prevent third parties from offering alternative app stores.

In the USA, The Open App Markets Act would force Apple to get out of the way of customers who want to use third party app stores and apps; in the EU, the Digital Markets Act contains similar provisions.

Fights over what goes in the App Store usually focus on the commissions that Apple extracts from its software vendors - historically, these were 30 percent. For example, the retail discount for sellers of wholesale audiobooks - which compete with Apple’s iBooks platform - is 20 percent. That means that selling audiobooks on Apple’s platform is a money-losing proposition unless you’re Apple or its preferred partner, the market-dominating Amazon subsidiary Audible. That means that Apple doesn’t just control which apps its mobile customers can use; it also has near-total control over which literary works they can listen to.

When Apple’s customers express interest in using rival app stores, Apple goes to extraordinary technical and legal lengths to prevent them from doing so.

Facebook’s charges that these two factors combine to impose high “switching costs” on Apple’s customers. In the case of iOS, switching to a rival mobile device doesn’t just entail the cost of buying a new phone, but also buying new apps Apple’s restrictions on third-party browsers, and the limitations it puts on Safari/WebKit (its own browser tools) have hobbled “web apps,” which run seamlessly inside a browser. This means that app makers can’t deliver a single, browser-based app that works on all tablets and phones - they have to pay to develop separate apps for each mobile platform.

Facebook has devoted substantial engineering effort to keeping its switching costs as high as possible. Facebook is fully committed to ensuring that deleting your account means leaving behind the friends, family, communities and customers who stay.  So when Facebook points out that Apple is using switching costs to take its users hostage, they know what they’re talking about. 

Facebook’s argument is that when Apple’s users disagree with Apple, user choice should trump corporate preference. If users want to use an app that Apple dislikes, they should be able to choose that app. If users want to leave Apple behind and go to a rival, Apple shouldn’t be allowed to lock them in with high switching costs.  The problem with iOS isn’t that Apple operates an App Store - it’s that Apple prevents others from offering competing app stores. The inability of iOS users to switch to a rival app store means that Apple has more leeway to take down apps its users like without losing customers over it.