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Policy

Our content, their rules: What U.S. v Apple means for media companies

April 24, 2024 Adriana Santoni Vicens, Associate – DGA

When the U.S. Department of Justice (DOJ) filed its lawsuit against Apple in March of 2024, it marked a fitting conclusion for a Q1 that brought some of the most notable technological reckonings seen since the advent of social media. More importantly, it signaled the possible beginning of a period of meaningful technological regulation, following years of legislative and regulatory stalemates that have allowed Big Tech companies to tighten their grip on society.

About a month ago, the DOJ filed a suit against Apple for violating antitrust laws. The outcome of the lawsuit could have wide-ranging implications for the mobile app ecosystem and consumer experience. It is also poised to have a significant impact on the media industry.

The DOJ’s monopoly argument

In its complaint, the DOJ argues that Apple maintains its monopoly by imposing hurdles and restrictions on app developers and third parties, effectively building and expanding a moat around its ever-growing monopoly. In its antitrust arguments, the DOJ cites Apple’s blocking of super apps and cloud streaming apps as well as its undermining of cross-platform messaging, smartwatches, and digital wallets.

These actions have resulted in higher fees, decreased innovation, and a less secure and effective user experience. And this despite the fact that Apple has continuously utilized privacy and security concerns to justify its actions, which are cited in the DOJ’s arguments.

However, the DOJ also sets the stage for the broader societal implications of Apple’s monopoly, which include deep repercussions for the digital publishing industry. In its arguments, the DOJ states that Apple’s actions reverberate across related industries, including news media, entertainment, social media, gaming, fitness, and financial services. The DOJ also cites Apple’s foray into content creation and entertainment as a troubling piece in its anticompetitive puzzle that seeks to “get people hooked on the ecosystem.”

Apple’s ecosystem stronghold

According to the DOJ’s antitrust complaint, a key factor in Apple’s preservation of this ecosystem is its selective enforcement of contractual restrictions for app developers through its app review process. Another factor is its denial of access to Application Programing Interfaces (APIs), which connect apps with a smartphone’s operating system.

These actions downgrade the user experience universally. In particular, they downgrade cross-platform experiences, effectively increasing switching costs for users. Furthermore, Apple “inflates the price for buying and using iPhones” while providing consumers with a limited user experience.

Apple also prohibits the creation of alternative app stores, even though these app stores would cater to a consumer’s unique needs and preferences. Despite denying this service to American consumers, Apple offers governments and even certain companies access to different versions of its app store. Following the implementation of the European Union’s “Digital Markets Act,” Apple is now required to offer EU consumers the ability to access alternative app stores.

Due to this arbitrary and flexible enforcement of internal regulations (purportedly in place to protect consumer privacy and security), the DOJ argues that “Apple deploys privacy and security justifications as an elastic shield that can stretch or contract to serve Apple’s financial and business interests.”

The effects of Apple’s anticompetitive behavior

In its complaint, the DOJ identifies “protecting competition and the innovation that competition inevitably ushers in for consumers, developers, publishers, content creators, and device manufacturers” as the reason for bringing this lawsuit. Undoubtedly, the allegedly anticompetitive practices Apple employs in the smartphone market bear effect on digital publishers.

Apple’s practice of “sell[ing] keyword searches for an app to someone other than the owner of the app” could allow competitors of a digital publisher to limit consumer’s access to a publisher’s content or extract data from consumers. Even more troublesome is the possibility of nefarious actors relying on consumer trust of legacy publishers to misdirect them towards malicious apps. Reports indicate that an unidentified threat actor has targeted human rights activists in Western Sahara by deploying malware disguised as a news app run by the Sahara Press Service.

Meanwhile, Apple blocks the use of digital wallets. This denies publishers the ability to enhance the consumer experience through the use of “rewards points in purchasing, digital receipts, returns, loyalty programs, and digital coupons for purchases of relevant subscriptions and digital goods.” This is particularly impactful as publishers attempt to reinvent and redesign their offerings in the face of industry headwinds.

Apple’s anticompetitive effect on discourse and democracy

There is, however, an even more troubling dimension to the arguments presented by the DOJ that affects digital publishers. In an ever-increasing digital world, smartphones aren’t just a means of communication, they are conduits of vital information that connect us to our community and the world. What the DOJ has attempted to demonstrate in its complaint is that these devices, which have become inextricably linked with every aspect of daily life, are controlled by their manufactures to a detrimental and preoccupying extent.

The DOJ alleges that Apple “frequently uses App Store rules and restrictions to penalize and restrict developers that take advantage of technologies that threaten to disrupt, disintermediate, compete with, or erode Apple’s monopoly power.” If television manufacturers arbitrarily decided to limit access to certain news channels, consumers and regulators would be rightfully outraged. And yet, the DOJ argues that Apple not only holds this power, but consciously exercises it in a bid to maintain its monopoly power.

Apple’s “Apple News” service has the power to “increase [Apple’s] power over content creators and newspapers, among others, by exerting control over how audiences access their work, decreasing traffic to their websites and apps.” While the anti-competitive implications of this are obvious, it also means that Apple has the ability decrease or even impede traffic to authors and publishers because they present a possible liability for the company. Jon Stewart’s allegation that in 2021, Apple asked him not to interview FTC Chair Lina Khan for his podcast (which was produced by the company) proves that such a possibility is not farfetched.

Apple’s arbitrary app review process exacerbates the issue. It allows the company to deny access to a publication’s content not just to subscribers of its “Apple News” service, but to the over 250 million users of iPhones and other Apple products in the United States.

At a time during which media companies have to navigate the rough waters of all-time-high political polarization, at what point does it become easier for these companies to simply cease consumer access to “controversial” content altogether? What happens when a corporation decides that an op-ed, a journalist, or even an entire publication is not worth the corporate risk? The answers to these questions are unclear, and in this ambiguity lies the importance of this case on the digital publishing industry and a society that depends on it to conduct a well-informed life.

Perspectives

Apple’s Growing Power in Mobile News

June 18, 2015 Mark Glaser, Founder and Publisher – MediaShift

For most of its life, Apple was about hardware: computers, then iPods, iPhones, iPads and the Watch. But along the way, Apple also delved into software but mainly tried to be a platform for content (think iTunes). Now it’s moving in a new direction, putting more emphasis on news curation with its coming News app and offering up mobile ad-blocking in Safari—two moves that have publishers scratching their heads.

The News app, similar to Flipboard, operates as a reader where users can choose from more than 50 publishers they’d like to follow (including the New York Times, Conde Nast and Bloomberg, with more coming). Plus, people can receive customized content that will become more personalized with time as the app gets to know their preferences. The News app will replace Newsstand, the original news app on iOS where news unfortunately ended up, well, dying. But the News app won’t just be an aggregation via algorithm–Apple will also depend on old-fashioned human editors.

The positive buzz surrounding News has less to do with originality and more to do with Apple’s gargantuan reach, as the app is bound to make a splash when it debuts on hundreds of millions of devices this fall. It may come as a pleasant surprise for consumers who aren’t already tapped into some kind of newsfeed–but the reality is that a growing number of young people get their news via social media and not specialized apps.

Losing Control?
However, it’s not easy to tell what the News app and other updates with the new iOS might mean for publishers–both in terms of advertising and editorial control.

The Wall Street Journal calls the News app an addition to the “distribution shift” for publishers with offerings such as Facebook’s Instant Articles or Snapchat’s Discover, both of which offer streams of content within their platforms. Individual news apps aren’t the primary contact with news anymore; they feed into these broader platforms.

“In partnering with outside parties, publishers tap into huge audiences, but also inherently relinquish some control,” the Journal’s Lukas Alpert and Jeffrey Trachtenberg wrote.

Editorial control is one thing, but financial control is another, and not just on the apps-as-readers. Apple has said that publishers can keep 100 percent of the revenue from the ads they sell themselves, and 70 percent of the revenue Apple’s iAd advertising platform generates. That mirrors exactly the deal that Facebook is offering with Instant Articles.

Ad Blocking Coming
But when it comes to ads outside of the News app, an update that wasn’t announced publicly but only revealed in Apple’s developer documentation is perhaps more important to publishers right now: “AdBlocking is coming to the iPhone with iOS 9.”

Blocking the annoying little ads that pop up on browsers has almost become routine among users, and if that trend picks up on mobile, it doesn’t fare well for publishers. They already don’t generate a lot of revenue on mobile–take the New York Times, which earns only 10 percent of its digital advertising revenue on mobile. So the pressure is on for those numbers to become higher if mobile continues to become the preferred entry point for content consumption. As Joshua Benton wrote in Nieman Lab, “If iOS users–the majority of mobile web users in the U.S., and disproportionately appealing demographically–can suddenly block all your ads with a simple free download, where is the growth going to come from?”

One idea, from TechCrunch’s Danny Crichton, is for publishers to copy a model not too different from cable channels, and “get together and create a basic subscription package that would offer a completely ad-free and tracker-free viewing experience.” Another way, he argues, is to “radically rethink” how to do advertising on the Internet, perhaps with a more simple ad model.

No easy answer exists, obviously. Letting go of editorial control is one thing, but not having financial control is a whole other battle. Most of all, it sounds as if Apple would like to get on the “friend or foe?” list for publishers alongside so many other social platforms.