Why Apple needs to face greater antitrust scrutiny | The DeanBeat

After watching Apple’s defiance of European antitrust regulators this week, I’ve come to the conclusion that the company needs to face greater antitrust scrutiny.

I believe the tech industry will thrive better under open standards and fair competition. The industry will innovate better when it can invest in new technologies, bringing about new versions of the internet, better AI tools, transparent tech like the blockchain and consumer gathering places like the metaverse.

But Apple stands in the way. It is the mother of all walled gardens. It is a vertically integrated company, meaning it relies on its own hardware, software, chips, physical and digital stores, data centers and more. This strategy has made it singularly successful, but it flies in the face of what made Silicon Valley so innovative in its past history. Apple, once the underdog, is now the monolithic empire. I don’t pretend this opinion column is fair, but I do challenge Apple to issue their own rebuttal to my stance. Apple gave part of its defense in the Spotify-inspired fine by the European Union here.

The horizontal rebel alliance

The greater “valley” had entities like Intel, Advanced Micro Devices, Nvidia, Microsoft, IBM, Google and more to build technologies like the PC and Android smartphones. There was no single point of control, and the innovation happened so fast that vertical companies like Digital Equipment and Nokia couldn’t keep up. In the years when it was most competitive, Apple outmaneuvered the “horizontal” companies and produce ingenious products like the iPod, the iPhone, the iPad, the reinvigorated Mac and now the Apple Vision Pro. Those products have solidified Apple’s walled garden.

But as we stand poised on new tech like the open metaverse, blockchain worlds, or even just better versions of today’s games, Apple is a barrier. Epic Games, maker of Fortnite, saw this and sued both Apple and Google. Yet the antitrust laws in the U.S. are antiquated and they don’t offer consumers or competitors sufficient competition.

“This is what happens when you have digital dictatorships,” said Yat Siu, chairman of Animoca Brands, in an interview with GamesBeat. “We know monopoly behavior is bad for innovation. It’s bad for the consumer. The consumer is robbed of choice.”

He said Apple’s policies are “the beginning of censorship, based on arbitrary rules.” It reminds him of the days years ago when Microsoft was using its Windows monopoly to exclude apps from competing with the Internet Explorer web browser. Siu’s an advocate for blockchain tech, which until recently was blocked from access to consumers on the app store. Apple has argued it is protecting consumers and it has gotten to this point through better designed products.

But Siu sees further examples of Apple’s view that no one can escape its 30% fee and arbitrary rules around who can get into the store and who can’t. Until recently, Apple had blocked uses of non-fungible tokens (NFTs) in games such as Mythical Games’ NFL Rivals, particularly if they circumvented Apple’s payment system.

“Getting here by being better does not entitle you to monopolistic power,” Siu said. “The NFT rules are arbitrary to me.”

Epic lost to Apple — except on the small point of Apple losing its right to prohibit Epic from steering consumers away from Apple to its cheaper prices in its web store. In the antitrust trial that Epic mostly lost, Apple CEO Tim Cook complained that allowing this would be like forcing Nordstrom to post signs saying you can buy cheaper items across the street.

Epic fared better against Google, which ironically lost because it wasn’t vertically integrated, and won a jury trial. But no antitrust laws in the U.S. have been changed to deal with the monolithic power of a company like Apple. Congress is asleep, and the U.S. Supreme Court let Apple’s victory stand under the country’s century-old antitrust laws.

Companies like Apple have monopoly power because they can “tie” products together. Apple can give away its App Store for free, but it can cut payment companies out of the picture by giving away its payment processing for free. Tying happens when one company requires consumers to use one product (like iPhones) to access another (like iCloud storage). Those who sell just one of those products can’t compete.

That’s fine if Apple’s products are better. But it’s a crime if better rivals can’t survive or if Apple favors one kind of competitor over another, as was evident in Apple’s antitrust trial. I would argue that we’ve reached the point where we can no longer tell if Apple wins because it is better or because it has monopolistic forces pushing it to success. Is Apple’s closed ecosystem better than the open ecosystem of rivals? I think we need to know the answer to this question as we head toward a universe of futures like the metaverse, or the next generation of the internet, or the successor to the smartphone, or the dominance of AI.

A small $1.9 billion fine

The European Union, on the other hand, acted. It fined Apple $1.9 billion this week in a music antitrust case, where Spotify complained that Apple had suppressed competition in this space. Spotify has to compete against Apple Music, which doesn’t have to pay a percentage of in-app purchases to Apple, unlike Spotify. Apple had also restricted Spotify from informing consumers of lower prices outside the Apple App Store. In every transaction, Apple gets a 30% royalty, and it won’t let devs go around it.

But while Apple complained of Spotify’s undue influence on the EU — Spotify met with regulators in Europe a total of 65 times — it doesn’t care about the fine. Apple’s cash hoard (in the form of current assets) is worth $143 billion. The company itself is valued at $2.61 trillion.

The “gatekeeper” control of Apple and Google prompted the EU to enact the Digital Markets Act, which took effect on March 6. That prohibits companies from raising their walled gardens higher, or tilting the playing field against competitors. But in what Epic Games CEO Tim Sweeney called “malicious compliance,” Apple still found a way to impose a 27% royalty on transactions outside the app store. To me, this seems like a holding action by Apple — a way to delay enforcement of fair regulation.

Too powerful, too brazen

And when Sweeney complained again about this anticompetitive behavior, Apple brazenly terminated Epic’s access to App Store development tools. Without this, Epic presumably won’t be able to get Fortnite — which lost a ton of revenue when Fortnite was removed from the app stores during antitrust litigation — back into the Apple App Store. This was like chopping off Epic’s arm in the daylight as we all watched.

“We recently announced that Apple approved our Epic Games Sweden AB developer account,” Epic Games said in a statement. “We intended to use that account to bring the Epic Games Store and Fortnite to iOS devices in Europe thanks to the Digital Markets Act (DMA). To our surprise, Apple has terminated that account and now we cannot develop the Epic Games Store for iOS. This is a serious violation of the DMA and shows Apple has no intention of allowing true competition on iOS devices.”

[Update: Epic just said “Apple has told us and committed to the European Commission that they will reinstate our developer account. This sends a strong signal to developers that the European Commission will act swiftly to enforce the Digital Markets Act and hold gatekeepers accountable. We are moving forward as planned to launch the Epic Games Store and bring Fortnite back to iOS in Europe.”]

Still, despite the reinstatement coming, the harm is pretty damaging. Epic Games was one of the leaders on metaverse technology in recent years. But Apple’s retaliation against Epic — cutting off Fortnite mobile revenues, leaving Epic to compete on just PC and console revenues, which are now a smaller part of the overall games market than mobile — hurt Epic as it was defying Apple. Epic had to raise a new round of funding from Disney, raising $1.5 billion in February to help build a gaming universe for Disney’s properties.

While this seems like a victory for Epic in its quest to build the open metaverse, the Information pointed out it was a down round. When Epic raised money from Sony in 2022, Epic was valued at $31.5 billion. In 2024, Epic was valued at just $22.5 billion. Taking on Apple took its toll on Epic. On top of that, the entire mobile games industry — hobbled in part by Apple’s focus on user privacy over targeted ads — was hobbled by Apple’s restrictions on user-acquisition.

Gaming has flatlined just as it needs to invest in the next-generation metaverse technologies. And author Matthew Ball argued in his insightful book, The Metaverse, that the open metaverse won’t happen so long as Apple and other gatekeeper platforms extract a 30% tax on the companies that need to make metaverse investments. Siu believes the metaverse can still happen with “sideloading,” which has until recently in places like the EU been prohibited on Apple’s mobile platform.

Epic Games was one of the strongest companies in gaming thanks to Fortnite. It was able to force the game platforms — Sony, Microsoft and Nintendo — to play nice with consumers by enabling crossplay for Fortnite players. But Epic Games has met its match in its fight against Apple. No single company is big enough to take on this burden. Apple is big enough to hold other, more open tech giants at bay. It’s clearly not the only company we need to worry about, but it’s just too big for our own collective good.

I have oversimplified many things in the complicated world markets of technology and games, and the state of competition among all of the tech giants and the developers of the world. But I have also tried to crystallize why I think underdog is now the oppressor, and why Apple is no longer our friend. We have to ask tough questions about Apple’s impact on competition, consumer choices and tech innovation. We can’t make tiny attacks against Apple’s walled garden as it plays a bigger and bigger role in our digital lives. The concentration of wealth in Apple’s hands will ultimately be a threat to all consumers.