US senator Elizabeth Warren announced a radical plan today to ‘break up big tech’. As a candidate for the 2020 presidential race, Warren proposes new restrictions on how much freedom tech firms have to control proprietary platforms.
She wants to stop companies, including Apple, from taking advantage of the monopolistic power granted by app stores to levy fees on other developers whilst promoting their own services above others.
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The blog post focuses on Amazon, but CNBC confirmed that Warren has her sights on Apple as well. A ‘platform utility’ would be defined as any company with annual revenue in excess of $25 billion. Apple easily meets that goal post.
Under Warren’s vision, Apple would not be permitted to both offer its own apps and run the locked-down App Store.
This builds on an undercurrent of industry complaints that it is competitively unfair that Apple can offer Apple Music on the iPhone as a stock app, and also run a walled-garden App Store where it requires music services to hand over 30% of any in-app purchase revenue to Apple.
In the blog post, this rule is described as prohibiting companies from owning both the platform utility and any participants on the platform.
These companies would be prohibited from owning both the platform utility and any participants on that platform. Platform utilities would be required to meet a standard of fair, reasonable, and nondiscriminatory dealing with users. Platform utilities would not be allowed to transfer or share data with third parties.
In the example of Amazon, Warren says that Amazon Marketplace and the Amazon Basics product range would have to be split up into separate companies. Similarly, Google’s ad offerings would become independent of Google Search. See 9to5Google’s coverage for a deeper dive into the potential impact of the policies on Alphabet’s operations.
Extending that to be Apple-specific, the App Store would have to be run as a separate company and ‘iPhone maker Apple’ would be forced to allow competing app stores onto its hardware, levelling the playing field between Apple’s App Store and competitors.
Even if Warren took office, who knows how much these plans would have to be diluted and changed in order to be passed into law. Nevertheless, it poses a meaningful threat to Apple’s Services revenue, a business segment that Apple is leaning heavily on for its growth potential.
Other political leaders are also expected to weigh tougher regulations on tech firms, with some coining the term ‘Silicon Valley abusers’ to describe the likes of Amazon, Apple, Facebook, and Google.