A US Senator proposes to break Apple in two and separate the App Store

In recent years, a legislative storm has been brewing in the United States that threatens its technology sector. This storm has several open fronts around privacy, threats to democracy and monopolies. The third of these is the one that attracted all the attention last week following an article published by the Democratic Senator and possible candidate for the presidency in 2020, Elizabeth Warren, where she proposed splitting the big technology companies in two.

Although he doesn’t mention Apple once in his article in Medium and he does with Facebook, Google and Amazon , he does mention Cupertino’s company in an interview published in The Verge. This is why we move on to analyze the important assertions made by the senator, focusing on Apple.

Warren’s two main arguments: acquisitions and marketplaces

A US Senator proposes to break Apple in two and separate the App Store
A US Senator proposes to break Apple in two and separate the App Store

Elizabeth Warren believes that the large technology companies have limited competition and the emergence of better alternatives in the market. According to the senator, the antitrust laws that regulate these situations have proven insufficient since these companies “have reached their level of dominance partly based on two strategies”:

  1. The use of acquisitions to limit competition. He gives examples of WhatsApp and Instagram purchases by Facebook, diapers.com by Amazon as well as Waze and DoubleClick by Google.
  2. The use of proprietary marketplaces to limit competition A marketplace is a place where buyers and sellers conduct their transactions. For Warren, having Amazon sell its own products in his store and having Google prioritize the results of its services is a conflict of interest.

Senator Warren wants to declare as “public service platforms” those companies that have a turnover of more than $25 billion globally and have their own platform

As a result, Warren is proposing legislation whereby any technology company with global revenues in excess of $25 billion and which has one of these marketplaces , exchanges or platforms will be considered “public service platforms”. These “public service platforms” may not own the platform at the same time as they own one of the participants in that platform.

In the next point of his article, Warren specifies how several of the most important acquisitions made by Amazon, Facebook and Google should also be undone. He specifically mentions all of these:

  • Amazon: Whole Foods (supermarket) and Zappos (shoes).
  • Facebook: WhatsApp (messaging, social network) and Instagram (photo social network).
  • Google: Waze (map), Nest (home automation) and DoubleClick (ads).

If Warren were to become president of the United States and execute his legislative plan, assuming that overcomes the numerous technical problems involved that could alter the spirit of this law, it would be a real blow to these companies. At this point, one might ask how this affects Apple.

Apple’s acquisitions elude Warren

There is a reason why Apple is not mentioned once in Elizabeth Warren’s original article. Although this company is well above the world income level to be covered by the law proposed by the senator, the truth is that only enters into one of the two problems exposed . Perhaps that’s why she decided to leave the company out of her initial argument.

Apple has its own marketplace in the form of the App Store , which Warren considers to be a problem. But since Cupertino they don’t comply with that acquisition strategy that limits competition. Apple has always focused its efforts on buying small businesses because of their technology, patents or talent. Small companies like PullString, Lighthouse IA, Silk Labs or PrimeSense.

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Perhaps the purchases that might most raise Warren’s suspicions are Beats and Shazam . Beats was purchased in 2014 for 3,000 for its streaming music service and headphone range. At that time, Beats had about 111,000 subscribers compared to the millions from Spotify, Pandora, Deezer or iHeartRadio so the acquisition could hardly have hurt the competition. As for Shazam, it was finally acquired in September 2018, after EU approval.

It is difficult to see how the Democratic Senator can argue that any of these acquisitions have been detrimental to competition. Another situation would be if Apple had followed the advice of so many who encouraged it to buy Spotify and Netflix instead of getting caught up in the plans it ended up executing.

So, let’s move on to the next argument.

Warren wants to split Apple from his App Store

It is at least striking that Warren mentioned Facebook, Google and Amazon numerous times in his proposal and that Apple was left out when in his opinion, it also fits. It seems that the idea of adding Apple happened on the fly. But let’s leave this detail aside.

Later in the interview, Elizabeth Warren makes clear what the problem is for her between Apple and the App Store:

Reading this, it is inevitable to think that if the problem for Warren is that some Apple apps are still distributed through the App Store (for example, Technical Support or Shazam), the solution is obvious: that those apps become standard in all his devices. This has already happened with the iWork suite (Pages, Numbers and Keynote) and with the iLife suite (Garage Band and iMovie), although the truth is that there are few that do not come as standard.

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The truth is that this proposal does not make much sense to apply it with Apple . It’s not a company that devours data at the level that Facebook, Google or Amazon do. It has not led to the dissemination of fake news made by a rival foreign power in order to allegedly influence democratic elections. Nor has it acquired significant competitors to knock the rest out.

Edward Kimmel y Marc Nozell.

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Senator Warren’s proposal sounds good in theory (improve competition and ensure the same opportunities for companies), but as soon as you descend to its practical application in the case of Apple complications and contradictions appear . And the result of your application is far from positive for the end user or the competition itself.

This whole debate is different from the one being held about Apple’s commissions on its App Store. Amounts that some competitors like Spotify consider excessive. That’s where Cupertino faces a lawsuit in a case known as Apple Inc. v. Pepper.

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