Option A: a digital market with only one payment processor and means to pay (Apple iOS)
Option B: a digital market where any merchant can build a preferred payment processor (what a new US bill wants).
A new US bill wants to break the duopoly of the Google Android store and Apple iOS store. Among others, it wants to give people the opportunity to setup their own payment systems within these ecosystems: “The legislation applies to companies that own or control an App Store with more than 50 million users, and it would prohibit Apple from forcing developers to use its own in-app purchase system, allowing developers to distribute apps through alternative app stores.”
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On Wednesday, a new bipartisan antitrust legislation that targets Apple’s App Store and Google’s Play Store was introduced by three U.S. Congress members, in a first attempt to change how app stores are dominated by Google and Apple operate.
US Senators Richard Blumenthal (D-Conn.), Marsha Blackburn (R-Tenn.), and Amy Klobuchar (D-Minn.) introduced their Open App Markets Act.
“Google and Apple have gatekeeper control of the two dominant mobile operating systems and their app stores that allow them to exclusively dictate the terms of the app market, inhibiting competition and restricting consumer choice,” the lawmakers said.
I have checked Google and Apple stocks and the bill did not influence markets. In other words, investors did not see the new rules as a threat. If you force Apple to provide access, it can do so if that becomes the law but it can put a notice “this seller processes payments outside Apple” – a critical warning that may even affect the reputation of the merchant within the ecosystem.
This is not new. Amazon lists items after search and tells you the items which are fulfilled by Amazon. Typically, if prices are relatively the same, many buy from the items which are under the control of Amazon, instead of dealing with merchants they do not know. If Apple does not provide the confidence on the payment system, many will stop spending.
Yet, there needs to be a balance on the fees but Congress must be very careful not to legislate out what makes people use these apps – security of payment in trusted platforms- in the age when cyber related issues have ballooned.
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Trust is very difficult to acquire, and it’s not something you can really legislate on. If Apple tells a buyer that this particular transaction is outside its control, it’s enough red flag for most people to withdraw their interest, the big guys are smarter than those working to break them.
It’s like stopping big companies from acquiring start-ups, when most entrepreneurs build with the mindset to sell? Put all the legislations, they will circumvent them, because both the buyer and seller are eager to transact, while you think the seller is being forced to sell…
Some people don’t even pick any phone number that is not in their contacts, and you think once you put your own payment processor on Apple store, they will opt for it? It is not those struggling to eat that buy stuff on Apple store, which makes the impact of such legislation very marginal. Apple products are expensive, yet people are paying, in their millions.
A more viable argument could be whether to cut the commissions Apple and Google take to 10%, and not asking everyone to come up with payment processor, which the behemoths can still ‘discriminate’, without showing their hands.
Huawai’s OS, how many people have been shopping for it? Samsung even has a store, but Samsung users rarely remember that it exists, they know about Google Playstore instead.
This thing called reputation, until you acquire it, nobody cares how great you are.