Apple’s Edge in the App Store, Big Tech, and Antitrust
Apple’s proprietary apps in the App Store it owns routinely rank higher than relevant apps from competitors in consumer searches, a competitive advantage that is earning Apple antitrust scrutiny in Europe and now increasingly in the United States. Apple’s own apps ranked first for more than 700 different searches in the last six years, the New York Times reported in a profound look into the company’s App Store dominance.
Apple execs told the Times that the company’s apps show up so frequently in searches not because it tips the scales but because its apps are already very popular and are designed to please consumers. But that logic is in itself concerning: A company with nearly unparalleled power and insight into what consumers are looking for in terms of apps uses its understanding of consumer desire and vast resources to create apps that will defeat rivals (especially startups or young companies) in the App Store it owns. Even if there is no foul algorithmic play, the competitive advantage is clear. The question is whether it’s enough for antitrust action.
In that regard, Apple’s App Store advantage looks a lot like Amazon’s competitive edge in selling its own brands on its e-commerce platform. Amazon takes advantage of its supreme understanding of consumer habits and desires to create the best products in various categories. It then provides those products at lower prices than those of competitors because its business is buttressed by Wall Street’s generosity (no profits necessary) and cash-cow side hustles, including Amazon Web Services and its growing media business—on that same platform. Who can compete?
Does any of this harm consumers? Perhaps not directly in the way jacked-up oil prices keep us all aware of anticompetitive conditions. But as Mike Blumenthal and David Mihm have argued in these (web) pages in the case of Google, anticompetitive conditions can inure big companies to market pressures that keep their products great. So, when reviews of local businesses are flooded with fraud, leading consumers to invalid or even dangerous services and putting small businesses playing by the rules at a disadvantage, nothing happens to Google, because consumers are not going to use the second- or third-best search engine, and local businesses still need to play on Google’s increasingly large layer of the Internet to capture customers. Google wins with increasingly lower standards; we, consumers and smaller business operators, lose.
Apple got out ahead on privacy, successfully branding itself as the consumer’s advocate at a time when the Internet is dragging the companies that created it. If it wants to do the same on antitrust, it may need to think different.