Apple’s Strategy Bends the World
Apple’s Strategy Bends the World
I’m going to put Apple and other technology giants on the therapist’s couch: To understand their motivations and actions, it’s helpful to examine their vulnerabilities.
I’ve been surprised this year that Apple mostly hasn’t budged as regulators and some app companies complain loudly about the downsides of the app system that Apple created more than a decade ago. The gripe essentially is that Apple abuses its control over iPhone apps to impose unfair fees and complexities on app developers. That’s the claim in a lawsuit that Epic Games, the maker of the Fortnite video game, has pending against Apple.
Apple says that it is right to exercise control over apps and collect commissions for some things that we do on our phones. But there’s also something else at work: fear.
Connecting the dots between Apple’s business predicaments and its choices helps us understand why the company does what it does — and by extension how those actions affect everyone, whether we own an Apple device or not. Apple’s strategy bends the world.
Why should Apple be worried? It is wildly successful and has so much cash that … well, corporate employees sit in desk chairs that might cost more than your sofa. Or your car.
But the reality is that sales of smartphones will probably never again have a growth spurt like the one in the 2010s that made Apple a superstar. Smartphones have become a necessity of modern life in many countries, like refrigerators, but there are fewer potential first-time smartphone buyers every year, and people are waiting longer to replace phones they already own.
(I’ll acknowledge that Apple has sold a bunch more iPhones and other devices recently. We’ll see if that’s lasting, or a pandemic-related blip.)
Apple and lots of people who keep tabs on the company don’t think it’s a problem if Apple has a harder time selling more iPhones each year. Instead, the company has shifted its strategy to make more money from the gadgets that we have in our homes and pockets — in the form of app downloads, subscriptions like Apple Music, AirPods headphones and other Apple products or services connected to company devices.
It’s a smart strategy that’s working very well, but also one born of necessity now that the peak smartphone era seems to be over.
There’s also a long shadow cast by Apple’s need to become more than the iPhone company. Would Apple, for example, be more willing to reconsider aspects of the app store if it weren’t so reliant on generating money from sources other than iPhone sales? And how much are Apple’s tactics changing all of the technology that we use?
The Vox writer Peter Kafka recently wrote that Facebook decided to start newsletters that people read outside of Facebook’s apps in part to avoid paying the fees that Apple demands from digital subscriptions sold inside its iPhone apps. The billions of people who use Facebook are affected by Apple’s strategy to squeeze more cash from apps.
Companies have also said that they felt forced to charge people money in their iPhone apps because of Apple’s rules. In short, those apps might be worse for users, because of Apple’s strategy shift.
It’s not unusual for the world around us to be shaped by companies’ business models and finances. And sometimes it works in our favor. Microsoft is giving Windows PC users access to more kinds of apps partly because it — unlike Apple — doesn’t need to make money from app fees, and Microsoft wants to thumb its nose at Apple.
We aren’t completely at the whims of big companies’ tactics to make money. But I find it useful to examine the ways that our technology choices are not accidents, nor are they purely driven by what we want.
Before we go …
A win for Facebook in a likely long war: A federal judge said that a Federal Trade Commission lawsuit that wants to break up Facebook lacked too many essential facts to move ahead. The judge told the government to try providing evidence that Facebook meets the legal definition of a monopoly, Cecilia Kang reported. DealBook has an analysis of the opinion from the judge, who also said that more than 40 states had waited too long to bring their own antitrust case.
Related: All of the antitrust investigations and lawsuits against Big Tech companies are terrific for lawyers, Cecilia and David McCabe write. One example: 51 lawyers from 21 law firms have appeared in court related to antitrust cases against Google.
Life is just fodder for online posts: Residents in a rural county in China dress up as old-style farmers and fishermen to stage scenes of a bygone China for local and foreign tourists to photograph and post online, my colleague Vivian Wang writes. The setups are elaborate, including burning straw to simulate mist.
Robot pets are meh but also promising: “They could become sophisticated enough to become their own category of thing — not a living pet necessarily, but not a glorified toaster either,” says a writer for Gizmodo.
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