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The App Store is a monopoly: Here’s why the EU is correct to investigate Apple

Last week, the European Commission announced, in response to a complaint filed by Spotify, that it would be opening an investigation into Apple’s App Store practices, which potentially constitutes an illegal breach of EU competition laws. At Proton, we applaud this decision, and also Spotify’s bravery in bringing this complaint in the first place. 

Following years of advertising itself as a company that puts users first, Apple has increasingly aligned itself with oppressive governments and curtailed digital freedom. There was a time when Apple portrayed itself as a rebellious alternative to giants like Microsoft. Today, Apple has become a monopoly, crushing potential competitors with exploitative fees and conducting censorship on behalf of dictators.

Latest: Four misleading claims Big Tech CEOs told Congress

American tech giants have long engaged in abusive behavior which is designed to stifle dissent and competition, and perpetuate their market dominance. We know this because we have quietly tolerated this exploitation for years. And like many others, we have long hesitated to speak out for fear that these tech giants may abuse their market dominance to destroy all who dare to stand up against them. 

However, we believe we can no longer in good conscience stay silent, and the recent and ongoing antitrust investigations against Apple in the United States and Europe help to validate our position. We have come to believe Apple has created a dangerous new normal allowing it to abuse its monopoly power through punitive fees and censorship that stifles technological progress, creative freedom, and human rights. Even worse, it has created a precedent that encourages other tech monopolies to engage in the same abuses. 

Apple is using its monopoly to hold all of us hostage

Apple’s iOS controls 25% of the global smartphone market (the other 75%, is largely controlled by Google’s Android). This means that for over a billion people (particularly in the US where their market share approaches 50%), the only way to install apps is through the App Store. This gives Apple enormous influence over the way software is created and consumed around the world.

Perhaps the most harmful expression of this power is Apple’s exorbitant 30% tax on developers, which is now the subject of antitrust investigations in both the United States and the European Union. To be clear, this is an enormous fee and would be intolerable in normal market conditions, but it’s particularly damaging if you offer a product that competes with Apple. It is hard to stay competitive if you are forced to pay your competitor 30% of all of your earnings. 

Apple attempts to justify these fees by arguing that the App Store is no different from a mall, where companies seeking to offer their products must pay rent to the owner of the mall (in this case, Apple). This argument conveniently ignores the fact that there is just a single mall when it comes to iOS and no possibility of a competing mall to rent space from. It is not illegal for Apple to own a mall and rent space, nor is it illegal for Apple to own the only mall. What is illegal, is exploiting the fact that it owns the only mall to charge excessively high pricing which harms competitors. 

This is virtually indistinguishable from a protection racket: It is a fee that developers must pay if they want to stay in business. And it is a fee which ultimately harms consumers because these fees are indirectly passed on to users, either through higher prices, or through fewer competing products in the marketplace. 

After the European Commission launched its investigation on June 16, Apple released a statement saying “the European Commission is advancing baseless complaints from a handful of companies who simply want a free ride.”

This comment reveals the callousness with which Apple has hijacked and strangled the creativity that once flourished on the Internet. If only a handful of the most powerful companies have complained (such as Spotify), it is because Apple’s market dominance leaves small developers powerless to object: Either fall in line or be removed from the App Store, with no possibility to appeal. 

Apple has now even gone so far as to ban apps from the App Store if they refuse to offer in-app purchases for paid features that are available for purchase elsewhere. In other words, Apple wants a nearly one-third cut of your sales, regardless of whether you want to sell on their platform or not. This was precisely what happened with Proton.

As we know from any mafia trial, the absence of witnesses willing to take the stand does not imply there was no crime, it only serves to highlight the power of the accused. By taking the stand today, we want to clearly refute Apple’s claim that only a “handful of companies” are objecting to these practices.

Apple helps propagate authoritarian laws globally

While it is improper (and illegal) to leverage market dominance for anti-competitive purposes, leveraging this power to suppress digital freedom is simply unethical, and it is long overdue that somebody called out Apple for this behavior. As first-hand witnesses to this behavior, we can share our story. 

In January 2020, ProtonVPN submitted an update of its iOS app description in the App Store. The new description highlighted ProtonVPN’s features, including the ability to “unblock censored websites” with the app. 

Even though ProtonVPN had been in the App Store since 2018 and the basic functionality of our VPN has not changed, Apple abruptly rejected the new app version and threatened to remove ProtonVPN entirely. They demanded that we remove this language around anti-censorship on the grounds that freedom of speech is severely limited in some countries. The options are comply or be removed from the App Store. What is most troubling is that Apple requested the removal of the language around censorship in ALL countries where our app is available, in effect doing the bidding of authoritarian governments even in countries where freedom of speech is protected.

It is true that in countries around the world, such as China, South Sudan, and Saudi Arabia, freedom of speech is indeed severely limited, and thousands of activists have been killed or imprisoned for expressing themselves. However, by conceding to tyrants and enforcing the lowest common denominator, Apple is ignoring internationally recognized human rights and forfeiting progress we all enjoy and which activists have paid for with their lives.

One of the biggest threats to democracy and freedom in the 21st century is Internet censorship, and in this regard VPNs are one of the best tools available to empower people with access to independent sources of accurate information. The free flow of ideas — along with the right to keep your ideas private — is one of the first principles of democracy. 

Related: Why antitrust is really about privacy

This is apparently a principle that Apple no longer believes in. For example, Apple willingly complies with Chinese laws that restrict users’ access to thousands of apps and that require foreign companies to store the data of its citizens within the country and make them available to authorities. Even Google has gone further to resist such Chinese pressure.

What we find unacceptable, however, is that Apple is using its market dominance to also force other companies which might otherwise be willing to make a stand to also be complicit in human rights abuses. This extends beyond limiting our ability to fight against censorship with our app. 

In China, Apple has censored news platforms such as The New York Times and Bloomberg News, while in Hong Kong it blocked the access to the HKMaps app that supported the local democracy protests. It has also agreed to delete dozens of apps, including podcasts, that China says violate local censorship laws. 

As part of Proton’s mission to make privacy and digital freedom universally accessible, we developed ProtonVPN, the world’s first free and unlimited VPN service that does not track or log users’ activity. We are on the front lines of the global fight for freedom and recently ranked third in the Hong Kong App Store during the Hong Kong freedom protests. By censoring ProtonVPN’s app description in order to comply with authoritarian government requests, Apple is making it incrementally more difficult for people to exercise their fundamental human rights and sending a clear signal that profits come before people. 

With great power (and profits) comes great responsibility

Despite its own portrayal as a paragon of human rights, the instances where Apple has proven itself as a defender of these rights have become rarer in recent years. The level of compromise it is willing to make on freedom of speech has startled even its own investors — the number of shareholders demanding the company uphold basic human rights has been increasing.

Last year, Apple reported record profits of $55 billion, making it the world’s most profitable tech company. We do not object to Apple making money, and they are entitled to try to make as much money as possible. However, like any company, Apple must also follow the law, including competition laws, and on this point, we strongly support and endorse the EU’s move to hold Apple accountable. 

We also believe that tech companies, particularly those with $55 billion in profits, have a minimum moral responsibility to uphold human rights, even if it is not legally enforceable. It is however, enforceable by us, as consumers. By choosing who we give money to, we signal what we consider to be an acceptable minimum moral responsibility.

We hope that by taking a stand today, we can also embolden others to speak out and work towards creating a more equitable, free, and just society. Are you also a victim of Apple’s abusive practices? Let us know at legal@protonmail.com.

Best Regards,

The Proton Team

You can get a free secure email account from ProtonMail here.

We also provide a free VPN service to protect your privacy.ProtonMail and ProtonVPN are funded by community contributions. If you would like to support our development efforts, you can upgrade to a paid plan. Thank you for your support.

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