Apple Once Innovated, but Apple TV+ Shows It Just Leverages Its Existing Power
The company’s offer of a year’s free subscription to its new premium TV services comes with hidden costs for users and the industry
Among the slew of new services and products Apple unveiled at its event this week was a deceptively tiny announcement: For anyone buying a new iPhone or iPad, Apple will throw in a year of free Apple TV+, its forthcoming subscription TV service.
I like free things, and part of me was elated by this news. But at the same time, Apple’s plan to bundle a trial of its television service with its hardware heightened a fear that has been bothering me for a while: Could Apple’s power be dangerous for the tech and media industries?
By offering a year-long free trial of its television service to device buyers, Apple is using its position of power to throw itself ahead of the competition, which has traditionally offered 30 day trials. The move feels eerily similar to Microsoft’s decision in the 1990s to make Internet Explorer the default browser on its Windows operating system — a decision that led to fines, government oversight, and new rules against such practices after a multibillion-dollar antitrust investigation into the company.
Apple does not have nearly the market share that Microsoft did when regulators intervened. It owns 46% of the U.S. smartphone market, compared to the more than 85% of personal computers that ran Windows in 1995. But it is still by far the dominant player in the U.S.,enough so that if it wants to enter a new market, it’s able to force success by simply flipping a switch — throwing its subscription TV service into the hands of hundreds of millions of people, available by default, with a deal too good for consumers to refuse.
Apple TV+ competitors — Netflix, Hulu, and even Disney — are at an inherent disadvantage. Unlike the Apple TV app, which is pre-installed on every iOS device sold, each of these services must convince their users to download their apps before even trying to sign them up. And even if they succeed in that, they are then forced to accept the App Store’s 30% per-transaction cost. Since Apple doesn’t need to pay this fee, it can offer lower prices than the competition, as well as better integrating its apps into iPhone functions like Siri.
Netflix, balking at Apple’s fees and rules against sending customers from its app to its own website, removed the ability to subscribe in-app last year. Instead, customers must deduce on their own that they need to pay on Netflix’s website — Apple’s rules bar Netflix from directing users there.
Apple isn’t competing on the basis of having the best service with these sorts of rules; rather, its success with TV depends largely on leveraging the success it has already had with smartphones.
Apple controls the largest, highest-grossing software platform in history, with the ability to single-handedly reach more than 1 billion devices — and competes with companies in that same marketplace.
Every time I write about this, Apple fans chime in and say that that Apple’s fees are simply the cost of selling on the iOS platform because Apple did invent and scale the iPhone, after all. But, it’s quickly becoming a clear pattern of power abuse. The Apple TV+ free trial is the most egregious example, but Apple has made other steps in this direction.
When the company debuted Apple Music in 2016, it pushed the service heavily to users of its existing platforms, putting it on the homescreen of the iPhone and even sending aggressive push notifications about trial offers, a practice against the company’s own App Store rules.
In the three years since its launch, Apple Music has grown to more than 28 million paid customers, according to Reuters. Would it have grown so fast if it weren’t included by default, aggressively luring customers in? It’s hard to be sure, but Spotify, which also pulled its in-app payments in protest, alleged Apple has been using dirty tactics for years to place its music service at a disadvantage.
Other tactics have been more subtle. The New York Times reported this week that Apple routinely ranks its own apps far above those of its competitors on the App Store, to the point of absurdity. A search for “podcast” showed an ad, then Apple’s own app, a slew of unrelated apps made by Apple, and in 14th place, a competitor.
When pushed on the question, Apple told the Times there was “nothing underhanded” about the practice, but was unable to provide historic search results to prove otherwise.
All of these factors paint a problematic picture: Apple controls the largest, highest-grossing software platform in history, with the ability to single-handedly reach more than 1 billion devices,and competes with companies in that same marketplace, breaking its own rules to establish success. The company receives incredibly little oversight from governments around the world into how that operates.
This isn’t just bad for the Netflixs and Hulus of the world, but all of us. If Apple were forced to compete on an even playing field, it might drive prices down across the board, or force it to build a more extensive catalogue before taking on the competition. Instead, it’s able to essentially guarantee its own success, rather than compete on actual merit.
Apple TV+ may very well feature great content that is worth subscribing to — the launch lineup certainly looks promising. But if it were truly worth its price, it should stand on its own, rather than try to force success. A year-long free trial is unprecedented, and a signal that Apple wants to cement its service’s success immediately with an offer too good to refuse.
While regulators have indicated interest in addressing monopolistic behavior by technology giants, there has been little action to rein in Apple. The company continues to test the boundaries of antitrust regulation and get away with it. And with so much customer reach and a war chest of hundreds of billions to spend, there’s no reason not to.
If regulators were to intervene, the fix would likely be to divorce Apple’s hardware business from the App Store, running the latter independently, which would force Apple to pay the same fees as everyone else it competes with. In the case of Microsoft’s antitrust settlement, regulators in Europe required the company to provide an even playing field, which led to a browser choice pop-up appearing after installing the Window operating system in certain countries.
The Microsoft browser choice window wasn’t the perfect solution, but it represented an important step in forcing companies like Microsoft to be careful they weren’t abusing their positions in the industry to intentionally disadvantage competition.
A tidier, quicker fix in the case of Apple may be to force the company to waive the App Store’s 30% fee on any vertical the company competes in. That would level the playing field while acknowledging the success the company has had building its platform by allowing it to still bundle software with its devices.
Eleven years on from the launch of the iPhone, Apple’s plan to move beyond the iPhone is becoming an impressive, clear strategy: an array of subscription services that supplement slowly contracting sales of its hardware.
The plan doesn’t rely on innovation, however, but simply using its previous success to ensure future success. It’s important we decide how far is too far before it’s too late to stop.