David Heinemeier Hansson

December 14, 2022

Apple's big monopoly loss comes curtesy of the EU

After being involved with the tech monopoly fight on several fronts in the last few years, I must admit I got a bit jaded after a while. In all the US state actions, for example, it seemed the basic political corruption available to any trillion-dollar company willing to buy all the lobbyists in the land, connecting that to campaign contributions, and propping up puppet industry groups was an effective strategy. Same too with individual countries, like South Korea and The Netherlands, who let their enforcement flounder on otherwise promising judgements. The result was little relief for the millions of developers being shaken down for billions of dollars by Apple and Google for passage to users' phones.

But now it appears as if Apple and Google has finally met a leviathan they cannot buy, cajole, or threaten: The EU. At first, I was skeptical that the Digital Markets Act, which passed earlier this year but doesn't come into full effect until 2024, would actually deliver. Bitten by disappointment a few too many times before, I thought, Apple and Google would probably just find a way to defy the law, delay the law, or simply ignore the law, and again, app developers would be left with no relief.

I clearly shouldn't have been so dour about the prospects, though, because here comes the reports that Apple are preparing to comply. With alternative app stores, with side loading, with letting app developers use their own payment processing (without the ludicrous penalty rates!), with opening up the NFC chip to competitors, with alternate browser engines. It's basically the most ambitious wishlist everyone could present to Santa Antitrust, and Apple is reportedly working – however begrudgingly – to comply with it all!

As Mark Gurman reports for Bloomberg, the reality of why is sheer market power. Europe accounts for $95 billion in sales for Apple. It's the second biggest market after the Americas. Bigger than China. Too big for Apple to lose. And the EU has put their full weight behind getting compliance with the DMA. Repeat offenders are liable for up to 20% of global revenues. It simply isn't viable for Apple (or Google) to refuse to comply now that it really does appear that the EU is serious about tackling these mobile monopolists.

Hallelujah! This is frankly the most exciting development in the tech world since I don't know when. As dazzled as I am by ChatGPT and Stable Diffusion, I'm even more excited about the notion of setting the phones free. Free for all the business models that couldn't work with a 30% haircut, free from the gatekeeper nonsense keeping developers from releasing software, and freedom for users to install the apps they damn well please. Just like they've done for decades on their computers!

I also think, ironically, that this is good for Apple. Their monopolistic bullying, their shakedown tactics, and their sense of entitlement to a cut of all the economic activity happening on their computers has done more to damage the relationship with developers than even that ghastly five year nightmare of the butterfly keyboards! Apple used to be an aspirational company for most developers, but then it turned out to just as bad of a boss as the last big boss (Microsoft), although somehow worse.

The DMA holds the promise to return Apple to an earlier age without these gluttonous service and tax aspirations driving seemingly every major decision at the company. The EU just might make Apple lovable again by outlawing their monopolistic excesses. What a twist.

Yes, that'll cost them billions in missed toll fees in the short run, but ultimately offer a path to better long-term stability. It's lucrative to be the greedy king hiking taxes on whims and leisure, but eventually you'll foment enough ill will to risk that head beneath the crown ends up on a pike. Take a little less, keep the peons content, and rule with merit and magnanimity instead.

About David Heinemeier Hansson

Creator of Ruby on Rails, co-owner & CTO of 37signals (Basecamp & HEY), best-selling author (REWORK, It Doesn't Have to Be Crazy at Work, REMOTE), Le Mans class-winning racing driver, antitrust advocate, investor in Danish startups, frequent podcast guest, and family man.