Bloomberg's Mark Gurman authored some excellent analysis--published yesterday--of the potential for conflict between Twitter and the mobile platform duopolists. He separately pointed out that Apple's App Store chief (and previously long-time marketing chief) Phil Schiller deactivated his Twitter account that had about 200K followers:
While I expect lots of leeway, there is a real scenario in which Apple/Google remove Twitter because of content moderation issues or because Twitter decides to bypass the 15%-30% cuts. Notably, we appear to now know how Apple’s App Store chief feels about the new Twitter. https://t.co/PCjOEsWA1L pic.twitter.com/LWjFCgxINA
— Mark Gurman (@markgurman) November 20, 2022
Mr. Schiller's decision to quit Twitter may very well have to do with friction between Elon Musk and Apple over the latter's rules, though Tim Cook was still tweeting on Sunday. He has more than 13 million followers.
Elon Musk has repeatedly criticized mobile app stores fees as a "tax on the Internet." Most recently, on Saturday (in response to a Slashdot posting related to the latest revelation from Epic Games v. Google, which is that Google paid Activision Blizzard King $360 million to ensure its loyalty to the Google Play Store):
App store fees are obviously too high due to the iOS/Android duopoly.
— Elon Musk (@elonmusk) November 19, 2022
It is a hidden 30% tax on the Internet.
Resistance to Goopple's mobile app store tyranny usually goes through stages. Virtually every app developer would prefer competition among app stores (such as more than one iOS app store, and a level playing field for rival Android app stores). That would bring down fees, prevent the monopolists from complicating and taxing app discovery, allow a greater diversity of in-app revenue models, and such competitive constraint would also dissuade Apple and Google from imposing and arbitrarily enforcing content rules. But the fewest speak out publicly. I assume that practically every large company that is subjected to the app tax has asked Apple and Google for a more competitive deal, but those conversations are private. Some companies like Epic Games and Spotify started to speak out in public, and later brought antitrust complaints with regulatory authorities and/or (in Epic's case) private antitrust litigation.
Is Elon Musk also contemplating the next step--"a possible standoff with Apple Inc. and Alphabet Inc.’s Google over fees and content" as Bloomberg describes it? Looking at the examples of Epic and Spotify, there definitely is the potential. And Mr. Musk would actually have not only one or two but at least three reasons to challenge the monopolists:
The app tax complicates Twitter's shift toward a subscription model ($8 per month for Twitter Blue). It siphons off money that Twitter needs for its turnaround. While Fortnite Mobile would be profitable even if Epic had to pay the app tax (which by the way exceeds 30% in some markets), the app tax alone could make it impossible for Twitter to overcome its current financial crisis. And that would make Twitter a potentially perfect plaintiff.
Twitter could try to do what Spotify does, which is to take subscriptions only on its website and not in its mobile apps. That would adversely affect conversion rates--and Apple and Google might tell Twitter that it does not meet the criteria for a "reader" (content consumption) app.
Elon Musk's promise of free speech may be controversial, but it doesn't mean lawlessness. The key question is whether Apple and Google--the two tyrants--get to determine what social networks are allowed or required to do, or whether we leave that to governments. It's one thing for Thierry Breton, the EU internal market commissioner (and in some Brussels insider's opinion the most influential commissioner at the moment), to say that "in Europe, the bird will fly by [EU] rules" such as the Digital Services act. It's another for Apple and Google to exercise their gatekeeper power and elevate themselves to the ultimate censors. In the COVID tracking context, Apple and Google forced the world's governments to abide by their rules: democratically unaccountable corporations. There even were statistical indications that a number of COVID infections in the UK could have been avoided if Apple and Google had not abused their market power.
Tesla arguably has an even more fundamental problem with Apple and Google than Twitter ever did or ever will. It is the last (or at least the last important) company standing: as the "not a tesla app" website notes, Apple Car Play and Android Auto were released in 2014, but "eight years and countless requests later, Tesla still doesn't support CarPlay or Android Auto." The article attributes this primarily to the fact that "[t]he huge benefit that other manufacturers gain by integrating CarPlay just isn't as crucial in a Tesla, which already offers intuitive, responsive software with many features." And that "seamless experience" would not be possible if Car Play and Android Auto were integrated.
The not a tesla app article predicts that Tesla's "true competitors" will be "powerful tech companies such as Apple and Google" that "not only have strong design and AI foundations but also have access to a large user base and a dominant platform." The article concludes by note that companies like Tesla and Rivian "understand the future of the [electric vehicle], but at the same time, their users are demanding access to CarPlay and Android Auto."
When I bought my first electric car, I was considering a Tesla, but I'll be perfectly honest: even though I'm a vocal critic of the mobile app store monopolies, I want Android Auto. That was one of two key reasons (the other being availability) why I decided against buying a Tesla. I'm sure I'm not the only one to have made the availability of Android Auto a knockout criterion--and while we are a minority, our number will keep growing, especially with every release of Android Auto (or Car Play for Apple fans) that adds new features. Even though I know that it's bad for consumers if Apple and Google succeed with their digital "carjacking" strategy, I have to choose what suits my need as a customer.
The question is not whether Tesla will need Car Play and Android Auto at some point, but when and--even more so--on what terms. If the terms ensure that Apple and Google will not be able to use their mobile platform market power to tax Tesla's transactions or to dictate rules that break the Tesla experience or are just generally unfair, there is no reason why Tesla shouldn't provide greater interoperability with Android and iOS. That's what customers demand, and by now virtually every car maker can sell you an electric vehicle.
Tesla's strategic problem with the Android-iOS duopoly is even more fundamental than what Twitter has to deal with in the short term. I've previously written about car makers' incompetence in responding to the Android-iOS threat:
Both Tesla and Twitter should have filed amicus briefs in support of Epic Games against Apple. There will be future opportunities because no matter what the Ninth Circuit will decide after last week's hearing (I believe a partial reversal and remand is much more likely than wholesale affirmance), the fight will go on. The losing party will most likely request a rehearing en banc. In the meantime, Twitter may become the next major app store antitrust plaintiff, which would indirectly benefit Tesla.
