AAI’s Moss Tells Law360 Apple’s Study of App Store Commission Rates Misses the Mark

In Law360’s July 28 article “Apple Defends App Practices, But Lawmaker Scrutiny Builds,” AAI President Diana Moss said Apple’s recently released study of its own business model misses the mark.

From the article:

The commission rates charged by digital marketplaces most similar to the App Store, such as other app stores and video game digital marketplaces, are generally around 30%, according to the study, dated July 22.

Apple’s study of its own business model faced pushback from some tech and antitrust experts, who said that by defending the commission, Apple was missing a larger issue.

“The study ignores the ‘elephant in the room.’ Namely, much of the suspect conduct that raises antitrust concerns occurs in the back room, where Apple dictates terms to developers,” Diana Moss, president of the American Antitrust Institute, told Law360 in an email.

Moss pointed to an example that was detailed in a recent congressional hearing, where a developer, Basecamp, was forced into offering in-app subscriptions rather than just distribution of its app. “Looking at the conduct that feeds into commission pricing is a major way that the exercise of market power is revealed,” she said. “This study misses this step, of course, since only an antitrust investigation can bring these practices to light.”

American Antitrust Institute’s Moss also criticized Apple’s comparisons to other vendors, which she said are “dissimilar to app stores and encompass services that have wildly differing consumer demand.”

“Even so, if you do look at the comparisons, they show that vendors with more market power (e.g., TicketMaster, DoorDash, Apple App Store), charge some of the highest commission rates. This analysis therefore doesn’t support Apple’s case,” she said.

Moss said there is wide variability on commission pricing and terms, but that Apple and Google, both of which have the greatest market power, price similarly. “The rest have a combination of lower pricing, negotiated pricing, etc.,” she said. “This pricing flexibility signals less market power, or pricing geared toward maximizing on one particular segment (e.g., games). This analysis doesn’t support Apple’s case either.”