Investigating Apple

Investigating Apple

Word is the US federal government, and the always eager European Union, are looking into Apple's new in-app subscription service. Last year, following complaints from Adobe, they looked into Apple's ban on cross-compilers for iOS and policies on competing advertisers like Google's AdMob. Apple ultimately reversed their decision on cross-compilers and Apple may well alter their in-app subscription plans as well but here's the thing -- why is the government looking into Apple?

Most cable companies are monopolies that can package channels in a way that force consumers to pay more than they would if they had a-la-carte alternatives. They can sell cable boxes that haven't evolved in 10 years while making sure cablecards are difficult to obtain. They can use and abuse copy protection and can lock down your cable box to the extent that you can't even watch previously recorded programs in your own home on your own TVs. They can set bandwidth caps low enough to dissuade users from Netflix, iTunes, and other competitive services and, apparently, can even buy their own TV networks. They have a complete lock in. Likewise PayPal can freeze your account with little in the way of recourse or accountability, pretty much doing what they want with potentially vast amounts of your money. They have total power over your cash. Verizon can lock down GPS, forcibly put un-removable Bing and crapware on their phones, and get Google to agree to horribly backwards net neutrality concessions. They own your telephonics.

How about the US and EU look into them. How about they fix them. How about they protect consumers money and public airwaves and critical infrastructure elements before they worry so much about our toys. Not to get all Aaron Sorkin on them but just because Apple is a sexy headline and trendy target doesn't mean every time a huge mega-corporation gets upset with Cupertino the regulators need to rev up their anti-trust PR reps.

If Apple steps out of bounds, if they're anti-competitive or by abusing monopoly position or illegally restrain trade by all means, investigate them and take action. But investigate cable and carriers first. Investigate defacto banks that act with impunity and first.

Protect us first.

Have something to say about this story? Leave a comment! Need help with something else? Ask in our forums!

Rene Ritchie

EiC of iMore, EP of Mobile Nations, Apple analyst, co-host of Debug, Iterate, Vector, Review, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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Reader comments

Investigating Apple


so true. the networks have been screwing the customers for much too long with unfair an rediculous rules and way too high prices.

Rene, i think you are really off on this issue.
The very specific problem with what Apple is doing is that they are attempting to force publishers to change their prices elsewhere in order to have access to the iPhone platform.
The specific issue here is not Apple asking for a 30% cut of sales made through their services, but that they are forcing price parity outside their app. Apple trying to leverage their market position in order to disrupt the entire market by forcing companies to increase their prices outside of the iTunes ecosystem.
This would be bad enough in and of itself, but the clincher is that it would give iBooks a 30% price advantage over all competitors .. an advantage not based on quality or efficiency or innovation, but through leveraging their market position. Monopoly or not, Apple is still attempting to manipulate the market through non-competitive means.
To summarize, this is not about what Apple decides to do on its own platform and ecosystem, but the market wide effects of the clause where Apple attempts to dictate pricing outside the platform/ecosystem for the benefit of iBooks' position in the overall market.
If Apple didn't have a competing publishing system [iBooks] that they are putting at an advantage, and wasn't trying to dictate outside pricing, this wouldn't be a regulatory issue. But they are, so it may be.

Microsoft is no longer the digital great Satan. Funny thing is, the government doesn't seem to care much about the much bigger monopolies that now exist. Chock it up to high level buy offs. Politics in the US are getting as crooked as third world dictatorships.

What are you guys understanding here? Apple, for the sake [excuse] of user experience, is trying to force their way into the pockets of all subscription services. That's idiotic.
There is no way you would even come close to defending this if it were Google and Android. Shoe meet other foot then try again.

...and yes, for the record, they should look into all the other garbage from other companies/industries. I just don't like the posts attempt to redirect attention from Apple doing dumb stuff.
Stop making excuses for them or coddling them. Out of line is out of line...whoever is doing it.

There's a difference between Apple doing something stupid that the market will correct by reducing content available on their devices, reducing developer interest in their platform, and reducing consumer good-will towards their brand -- leading either to their losing money or correcting course, and the government intervening to protect big media companies angry about the cut Apple wants (small media companies are likely happy with this decision -- traditional publishers take 90% at the least, never mind 30% at most).
Cable companies are monopolies, carriers are oligopolies, PayPal has very little (almost no) competition in online payments. Given that there are limited resources it makes very little sense -- other than headlines -- that the government keeps looking into Apple and ignoring far more egregious and appropriate targets given their mandate.
That's not making excuses for Apple, that's perspective taking for the industry.

I hear you Rene but it is deflecting. It is like saying "Why stop me for going 90 when there are drug dealers out there?" It matters not if there are other're still wrong.
Why even deflect the issue here. Call a spade a spade.

I'm not deflecting, again the question isn't whether what Apple is doing is nice or stinky, it's whether the government should get involved or the market should be left to decide. I've worked in publishing for 15 years and while there are certainly bad aspects to Apple's subscription service, it's one of the best deals when you compare it to what's come before. Amazon only makes 30% off eBooks because iBooks came out and made them reduce their cut. (How's that for irony).
Before you accuse me of deflecting, make your case. How is Apple doing something illegal (as opposed to just bad for business) here.

Dude...I hear you but it matters not how egregious other companies actions are. You are attempting to persuade us to question the governments involvement here purely because other major companies are doing worse. My speeding analogy still stands.
Bottom haven't made a case; therefore, there is no need for me to make a case to prove a non-existent one wrong. You're skipping over Apple's "wrong" and deflecting our attention to bigger issues, in your opinion. are attempting to deflect our attention [or at a minimum persuading us to question the gov].
In your eyes [from my perspective]:
Gov - Apple, you're being greedy.
Apple - Wait...look...there is a company doing worse.
Gov - [runs off hunting the more "egregious" offender]
Makes. No. Sense!
Question: Did you feel this way when Microsoft went through the monopoly gauntlet or was that OK because they were "evil" at the time?

In my view you have it backwards -- there's no government case to be made against Apple. How they deal with other companies definitely plays into that otherwise it's unequal protection/biased prosecution.
What's you legal case against Apple? (Or I'm not the one deflecting ;) )
Not liking a policy does not make it illegal.

As I have posted numerous times in other threads, the case against Apple is a simple violation of e Essential Facilities doctrine...Apple controls a choke point onto a significant market, and is using it to shut out competition. The only questions are
A) is the market big enough to warrant government intervention, and
B) Can Apple's actions be reasonably constituted as unfair?
I dont know the answers, but If a) is true, the government has an interest in investigating b)
Andif had you taken the time to research the law in question, you would have seen that Verizon was hauled up on Essential Facilities violations in 2005 (pretty sure that was the date) when some of their actions crossed the line. So even your "they never look at the other guy" argument does not hold water.

I didn't realize you meant the legal case. I'm no lawyer so can't go there but I would say Copy of Dev touches on my thoughts.
Apple owns the app market and are throwing their weight around to their own developers. That, IMO, is monopolistic and should be stopped. I'm fine w/ 70/30 for apps and 70/30 for in-app purchases but not taking a piece of a companies external business for the ske of an in-app registration process.

Wait, question: How is a company that controls how their subscription services work wrong? As stated, it's how ALL cable, Internet and satellite providers work. I completely disagree with the notion of "other companies are doing worse things" (although they are) but the iPhone itself is NOT a monopoly in the cell phone arena. There are literally hundreds of choices of cell phones to choose from in the market but only a handful of carriers.
But let me get to the reaL point I think rene was trying to address: the beef with Apple in this particular instance is not on the consumers behalf, it's on GREEDY rich peoples behalf. Apple's subscription service is GREAT for consumers, I know I've personally been waiting since I purchased my first iPad issue of GQ because I knew the price point was ridiculous when I could subscribe to the actual magazine (that costs far more to make) for a cheaper price. How is that not great for consumers?
Now, it may suck for GQ and Vanity Fair and Conde Nast or whomever has to fork over the 30% but as a consumer, I win!!! Isn't that what it's supposed to be? These companies are supposed to compete for our business not the other way around.
So from a consumer perspective, I completely see rene's POV, go chase after Comcast for delivering me subpar Internet services or Bank Of America for kicking my grandma out her house that's she been in for 27 years because some predator convinced her to do some type of assbackwards loan modification.
That's the point here, protect the consumers, not the fat cats.

I don't see how you can think that the consumer wins. Your subscription will likely become 30% more expensive because the publishers want to recoup the charge Apple levies on them (not just in-app, but also on their own platforms since they are not allowed to sell cheaper outside the app). That is, if they don't pull their apps and go to Google/Android, which has fast rising market share in smart phones and tablets and only asks for 10%, or stick to their own platforms. Both publishers and consumers lose, having to shell out 30% more. The only winner is Apple who rake in 30% more than they did up to now.

Hold on, you're talking about physical magazine subscriptions, not electronic subscriptions, right? Then I'm sorry, I do see your point. But what if the publishers decide to also increase the cost of paper subscriptions to soften the blow they will be taking on electronic subscriptions? Companies whose earnings are under pressure are not necessarily going to be positive for consumers.

As has been stated on virtually every thread by myself and others, monopoly power is not a requirement for a violation of Essential Facilities.

So the cops should focus all their attention on speeders and take a blind eye to drug dealers. Horrible analogy. You are right though, there are different levels of crime. Why not hit the harder offenders harder?? No you want to focus on the speeders

I say go ahead and investigate Apple... waste our tax $ and find out they aren't doing anything wrong. Worst case for Apple they are forced to tweak something, but by then they will be rolling out the subscriptions and WE USERS will benefit greatly, as will the many companies that jump on board (including small startups)
Yea, thats bad for our economy and bad for users.
I say Rene is on to something here... but we all know Apple haters are loud whiners...

For the record JD, I own 6 Apple products and only 1 is unused [iPhone 3G].
I'm hoping that "whiner" label wasn't directed at me. I just call spades spades.

There are good reasons why they dont investigate some of the ones you have just mentioned. They ARE looking into the bandwidth issue with net neutrality, so no point there. The gps issue is one I agree with. I just dont thunk enough people have complained. The blistered on phones is there ecause the software is not owned by the consumer, the hardware is, which is an argument that apple has taken in the past about jailbreak and other things. People buy the iPhone, not iOS. Same thing with other operating systems.
I agree with the protection of the consumer, but the only reason you are writing about this is because it's apple. If google was doing this, if nokia was, if RIM was, if any other company was, you would write about the opposite.
The guy above with the speeding ticket example is completely right also. It just doesn't work that way. Also notice that apple has much more leverage and influence in the market than do many other companies. They need to be watched very closely.

I don't think the EU has any business forcing Microsoft to put browser ballets into Windows anymore, so please don't assume you know my position on things :)
Google has a huge percentage of search share and there have been all sorts of allegations of Google gaming the results recently. How many FTC investigations?

You're right I should not assume. But look, point is that I would rather apple be watched in this matter than companies that can be brought down by heavy competition. Apple has so much market share that they really have monopoly status in many things. Are they an actual monopoly? No. But their subscription service will work for them because companies can't really fight apple unless They have a very large scale.

This is a blog focusing on Apple's products. Of course Rene writes posts regarding Apple and not so much about other device and platform manufacturers. The reason I read this blog - and do think many others do too - is because it's all about the iphone, the ipad, the ipod, the iOS >>> Apple. So why on earth should Rene write thesr kind of posts if the situation would concern some other company, device or a platform?

You think the requirement that the vendors are not allowed to have better offers outside of the Appstore is acceptable?

Not acceptable != illegal, right? Just because we don't like something doesn't mean the government gets to investigate it. Or does America stop being America where Apple is concerned?
NB: Apple isn't the only marketplace with that requirement. Just because it's Apple doesn't suddenly make it evil. Plenty of contracts contain very similar pricing clauses. Has the government ever looked into Amazon's cut of sales or their pricing requirements?

I can understand your pain .. thanks for the US government Americans are far better than users in Canada :)

For those who think this is trying to justify Apple's decision, you need a lesson in reading comprehension. It's calling out priorities of the governments in question, not the actual practice of Apple trying to force subscription fees down everyone's throat.
Also, if you think Google won't eventually try similar tactics with Android, I have a bridge in Brooklyn to sell you.

I'm sorry, I didn't realize that I stumbled on to a washington insider site... wait, nope, still TiPb. Context matters, so yes, when I read an article about the gov't looking into an Apple practice on a blog that related Apple news, and what follows is editorializing about gov't priorities, it certainly reads like, "But it was Johnny's idea and he threw the biggest rock."
Rene seems to know a hell of a lot more about the subject matter than I do, which is why we visit, but I would have rather seem some of those industry facts, etc than the rant.
BTW, I do like the rant, and any time Rene wants to put up an article solely about what a ripoff cable is and ask us all demand that it be looked into, yay, I'll happily read, but it just looks like a lame defense for a questionable Apple policy in this context.

Everybody fears the man in power! I actually see what you're saying Rene and agree with your point. I think what a lot of us fail to realize is that these Govts are commodities. They all sell bonds to avid investors, and so naturally these Govts want to ride the trends to boost their ability to make money. Why else would the Govt orgs care so much?? For our well-being?! ha not in the least.

Rene, I'm with you. To me it appears that the government is going after headlines and NOT consumer protection. Your two examples are perfect for this augment. I've had issues with PayPal and a simple Google search showed I was far from alone but you NEVER hear anything about them. Why? PayPal is not sexy or anywhere near as big as Apple and have nothing close to their total worth or market capitalization.
One thing is for sure, that when a company gets large (i.e. Microsoft in the 90s), unless they sell oil, the U.S. Government will gets heavily involved in their business and tries to knock them down every chance they get.

just to use your words, "if they’re anti-competitive or abusing monopoly position or illegally restraining trade by all means, investigate them" - Apple's policy and market share dominance means that they can have a far more immediate and profound effect than all the other cable companies, paypals, and cell phone carriers out there. dont like your cable company? well there's many options out there. are there other issues out there that could be considered more of a priority for government to look into before dealing with Apple, sure. but remember that Apple is a global company whose reach effects more than just the US, and this policy has a far greater effect, from Amazon down to independant ebook resellers to the viability of the emerging market of music streaming, than any decision that Verizon makes...

What market do they dominate? Is their share of the iOS market greater than Amazon's share of the Kindle market or Nintendo's of the Wii market?
My publishers used to take 90% and there were very few distributors and agents could blackball you. Were they investigated?
No, the market evolved and now that model may be forced to change.

can the books that are sold through Amazon be sold for a cheaper price elsewhere? or the games for the Wii? Apple's subscription model effectively forbids a way for suppliers to recoup the 30% cut.
do publishers take 90% now? and do you have many options, enough to ensure that you wont get screwed now?

Normally you and I see eye to eye, and while the Govt should definitely take a look at the cable & banking industries, their pocketbooks are lined far too heavily by those industries for anything to happen there anytime soon. The tech sector has always been on the forefront for being watched and investigated by the big eye in the sky. Remember MS back in the late 90s? Monopoly, anti-trust, etc etc.
I think the govt moves as "quickly" as it does with the tech sector as it is usually a catalyst for a certain practice propagating throughout other sectors. If the govt finds something fishy here, they hit it early so it doesn't spread.
Your comparison to the Kindle market is not valid. Why? Those same books can be offered on other websites for lower prices if so desired. Apple says the offering in the app store has to be the same or better than that offered anywhere else.
Cable companies still deal with content providers and sign contracts that are re-negotiated every X years. There's no negotiation here with the Apple & the App store, it's Apples way or the high way. I <3 my iPhone but I don't like the direction they are taking with the people providing content to those that use their devices. My next phone may not be an iPhone.

Rene your not gonna get sympathy for your point here even if you may have some valid points. The truth of the matter here is this move hurts us customers , I pay 47$ a year for slacker radio so I can cache it on my iphone and I dumped my sirius subscription because of it. If apple went through with this slacker would have to raise their prices and I would pay more and that's what it comes down to, US paying more!! True the market may correct it self but I would rather an investigation stop apple from doing this than have to decide wither or not I should ditch my iphone for android and weither or not I should start streaming my netflix from my xbox instead of my apple tv because it's cheaper. As an apple stockholder and customer I think this move is terrible and misguided and playing chicken with the market is never a smart move.

Given the vast amount of people with iOS devices... Apple's subscription model endangers the current print (big) business model. Unfortunately, it also endangers many jobs associated with print media. I believe that preventing an industry from needing a lot less human capital takes precedent over trying to forcibly change old habits. One takes much longer, one is less of a resource hole. Sure there are a lot of questionable practices that need to be looked at... but they have to start somewhere, and it is completely logical to stop something before it becomes an issue.

While there is hunger or poverty in the world, agencies muesn't investigate anything. Priorities are priorities.

I am amazed how many actually support Apple's policy. Because it is not good for us consumers. By all means, investigate cable companies for unfair practices, but do not deflect a scrutiny of Apple's practices. It is possible to keep several balls in the air at the same time.
The EU and the US federal commissions are not evil socialists who try to stop legitimate business. But unfair practices need to be stopped. In the end, they are on the consumers' side.

I'm not saying the policy is good. It could be terrible. The App Store policy in general could be terrible. I'm not arguing against any of that, I'm just wondering why people who usually value free enterprise are so quick to want Apple (and not similar companies) regulated.

Sorry Rene,
Couple of key points critically wrong with your argument.
1) There is free over the air television, and there's significant competition for cable in pay tv with satellite, and even more so with fiber operators like Verizon, U-Verse, and Surewest.
2) How would anyone know what a la carte TV would really cost? We know how much networks charge cable companies per subscriber, but is anyone seriously thinking they would pay $15-$25 for 5 channels they really want to watch?
3) Apple has created a monopoly of iOS devices, by restricting storefront competition. Why not allow Cydia and other appstores on iOS devices, and allow others to choose how and where they sell to iOS users. Just because Apple created the OS and the related IP doesn't give them the right to do however they please, reference Microsoft and the stupid problem a browser caused.
4) Most of your points were "these companies could" to my knowledge I don't know of bandwith caps by cable companies that stifle Netflix, or Paypal aggregiously shutting off accounts, and even as bad as bing is, I still have the option to use Google for search.

You know what you should do? Read the article again but this time sing/whistle the theme song from Terminator. (dadum dadum....dadum

I completely agree with you about the cable companies, Rene.
You've been very argumentative lately, it's like seeing a whole new you. Haha

If Apple steps out of bounds, if they’re anti-competitive or abusing monopoly position or illegally restraining trade by all means, investigate them and take action. But investigate cable and carriers first. Investigate defacto banks that act with impunity and first.
This should be
If Cable companies steps out of bounds, if they’re anti-competitive or abusing monopoly position or illegally restraining trade by all means, investigate them and take action. But investigate Apple and carriers first. Investigate defacto banks that act with impunity and first.

My cabLe is much lower than la-cart would ever be and cable us not a monopoly there are so may cable networks I hate cable for many of the same reasons listed above but the government tries to do something about it but they can't forces things and with the Amrican mind set that government is bad the government is going to have the hardest time to do anything at all.
"Verizon can lock down GPS, forcibly put un-removable Bing and crapware on their phones" of corces they can do block GPS because there is no laws to prevent it secondly Bing Verizon/Samsung can do what they want with the phone and that goes with any other phone out there it is their phone dont buy phones with careware buy iPhones or Nexus phones or unlocked phones ect.
Apple is abusing monopoly position / ussing unfair trade practices
Apple does have a monopoly over mobile apps
It is toaltaly unfair that Apple can tell Knindle and Nook that they have to pay 30% to Apple witch 30% is the total vaule of the publishers
revanue doing this is in hopes that the Nook publisher will leave B&N and come to Apple iBooks and witch clearly has the smallest amount of Books and that would be market gain only because the size of there app store actting like a monopoly / unfair business actions
PS my cable bill is about $60 for cable and superfast Internet and I
alone watch over 20 TV shows 20x22(per episode)=440 even a $1 for each show would be way to much even if I could buy the channels that I watch that is about 6 so there is no way the price can come down that much for la-cart TV. The only reason people cable bila are so high is because they pay fir the stopied cable DVRs just get a Windows Media Center Box it is so much better. Franky I don't have a DVR because A if I don't see it live then don't need to watch that show and B everything is online for free and most of it is legal why the heck would I pay for a stopied DVR.

Why should the EU care about US cable companies and mobile carriers? Compare the European market to the US one in both areas and you will see the good government intervention has had. I secod every previous poster who has pointed out the many flawed arguments in this editorial. Journalism is more than blindly defending a company, whoever they are. I am more and more inclined to just ignore whatever articles Rene authors for this very reason.

1) That's analogous to their being Android, webOS, BlackBerry etc. so no reason to complain about iOS
2) We have a-la-carte cable in Canada, where the cable industry is not regulated for consumer protection, and we still pay only $20 for 20 channels. Bundling is often scrutinized for a reason.
3) You can't have a monopoly of iOS devices. Does Nintendo have a monopoly of Wii devices? Does McDonald's have a monopoly of Big Macs? Does Levi's have a monopoly on 401s? Doesn't work that way.
4) There are examples of all of those things.

How is apple a monopoly ? If you don't a iPhone don't buy it? But if you want cable in NYC you most times have to buy Time Warner or Cablevision. Who charge about 160 a month after taxes and fees for your triple play w/o and premium channels and they raise thier rates every year with no competition in the majority of NYC . That's a monoopoly that should be delt with before apple's so called on. Monopoly means you have no other choice. I'm pretty sure the iPhone is not the only smartphone in the world. Like one of the commentes earlier said earlier, our gov't is as corrupt as many 3rd world countries I agree. Most politicans get paid to have a opinion on a certain subject. That's how they make soo much money. so please tell me how apple charging 30% hurts the consumer? Does it hurt the book industy? Yes, but in it's current form it's dying anyways.

Apple fanboyism confuses me honestly. You say you want the same standard for Microsoft, but Microsoft's been a government whipping boy for years. They've been dying to dig up dirt on them. I like Apple's products when they work well for me. But when they start to be an evil company, just as evil as their competitors, I DO NOT believe they are any better than them. I give them the same treatment as I would MS or Google. It's simple. I don't defend them, nor do I single them out. Just because the company makes a products you like doesn't mean you stupidly and mindlessly back them up when they start doing the wrong thing, or like everything they make without even thinking it over like a Ch... sheep.

Canadians don't mind lack of enterprise. Many of them believe in the concept of "benevolent non-competitiveness"

It's easier to investigate a company that localized in one place as all it's assets are located in one place. If they were to investigate a cable company or Verizon they'd have to check every state, county, city and probably every house or device to see what they're doing and hire a bunch of tech experts to investigate and pouring tons of money and resources into it. It's easier and cheaper to send one of their already working bureaucrats instead of a team of people to one place to just read over the policy that Apple is making.

I kinda agree with you on this one. I do think what apple is doing is wrong, not illegal, but wrong. I think that in the long run it is NOT good for the consumer though.
Stay classy Rene!

Simple: Apple doesn't feed as much money into the pockets of our insanely corrupt government officials like Comcast does. Thats why the government looks away. Apple are the good guys who are being mistreated by the big bully government.

There's a difference between Apple and the cable companies. The practice you described about the cable company is a relationship between the cable company and the consumer. The Apple one is between Apple and the content provider. Many content providers adopted Apple's platforms with certain expectations and did so, boosting Apple's platform, which ultimately lead to more consumers of those products. Now that Apple is the more or less the de facto standard, they have decided to change the rules in a way that screws over content provider and eventually consumers....this is kind of a bait & switch tactic. I bought my iPhone 4, and a 2yr contract, with the expectation that would be able to readily use services like Pandora, Rhapsody, etc....but because of Apple, those services are in danger and thus my expectations of what the device can do are now in jeopardy. Basically Apple is blocking my means of continuing to do business with another company due to their policies.

Is that different than what Twitter and Facebook have been doing to their ecosystems? Bringing revenue streams in-house is an ages-old business practice.
Publishers can hurt Apple through the market. They can also hurt consumers. Saying Apple is forcing publishers to hurt consumers is a tad insincere. They've never needed Apple's help before.
And again, check into how Amazon and Walmart write their contracts about pricing.
You or I may not like it, but again that doesn't make it illegal.
(And I'm not defending Apple, if Apple gets investigated for this, whose next?)

Please note: I currently think Apple is wrong about how they're handling subscriptions and think it might come back to bite them in the butt. That doesn't mean I think it's right for the government to legislate Apple's business, especially not in the US. The laws don't suddenly stop applying just because you or I are upset with Apple. To have integrity means to apply laws especially when you disagree.
But there's no easy answer here. As Chad said last night, if Apple makes subscriptions 5%, every app in the store will switch from in-app purchase to in-app subscription. Think Capcom wouldn't rather only give Apple a 5% cut of Smurfberry subscriptions? Every app that could would go free and offer subscriptions. Then Apple would have to pay the server, transaction, etc. costs some other way. There's no free lunch on someone else's dime and there are very few easy answers in new business.
Be angry at Apple. I'm angry at Apple on a daily basis. Just be ready to say what you would do as an alternative.

I have my alternative. After this new in-app subscription model was announced last week I went and bought a WP7 phone and absolutely love it. I won't give money to a company that wants other companies to have to raise their prices just so Apple can make an extra 30%. I just hope that this won't affect me even though I am out of the Apple ecosystem.
Now I just need to get the damn DRM off of my iTunes music.
I found out I can also make calls now without having dropped calls every few minutes. Nice benefit of switching!!

After the Readability rejection, I must reconsider my stance. It is, quite simply, a horrid stance to demand 30% from software as a service and then chop off services from the ecosystem that do not obey that. To claim that 5% would cause all apps to switch to subscription, as Chad Garrett claimed, is not only an exaggerated stance, but just blatantly false. No way any company would ever charge 5%, and most people think a reasonable cut is between 10% and 20%. The truly asinine element is the attempt to control software as a service, where margins are not even close to the older model of publishing. In Readability's case, it defeats their entire alternative model. Demanding that all software as a service complies to 30% just ignores the reality of that medium.
All that Apple does here is invite regulation, chase really engaging software as a service models away to competitors like Android, RIM, and WP7, and ultimately cause Apple to lose out in this very critical part of the ecosystem.

What I would question instead is why did Obama meet with Jobs the same week his administration is looking into investigating Apple? If that happened on a local level, someone would end up resigning or getting arrested.

Interesting discussion. As an aside, one of the reasons that I come to this site is because the comments tend toward the informative rather than the inflammatory. Tend. On this post, comments seem a bit more vitriolic than the norm. And, it also seems that the ad hominem attacks (agains Ritchie and some commenters) are a bit much and, as always, counterproductive.
I suspect that underneath all the frustration and anger, there are both good an important points on both sides. I confess that I do not know enough about Apple's shifting business model to form a judgment, though I will suggest a few things we might consider and look for as this develops.
But first it seems worth clarifying our terms--if for no other reason than to avoid talking past one another. Ritchie's point about the role of government involvement/investigation (at least where US standards are concerned) is virtually unassailable. I'm reminded here of Carrie Prejean's (and Sarah Palin’s and sundry Tea Party folks’) insistence that their First Amendment rights have been violated when JimBob, or CBS, or ____ denies them their say. These folks might indeed be right that they were silenced by someone/thing else. They might have had deeply important, earth-shaking things to contribute. But the simple fact is that a US citizen's constitutional protections are protections from government power, gov interference. Period. It is not some god-given right to babble that is at issue. It is about restricting the reach of gov power. Similarly--though not about constitutionality--legitimate government reach is not established or determined according to the good that it will bring, the evil it will eliminate, or any other such noble objective. The role of the gov is that of establishing security, which requires a certain amount of order and regulation--all with an eye to limiting encroachments on individual liberties as much as possible.
So whether Apple is evil, mean, selfish, likely to induce the end of days or any other such thing is beside the point. Advancing moral goodness and peace on earth is not within the preview of the gov. Rather as an exception--because there seems no more serviceable alternative--the gov must ensure that monopolies cannot exist unchecked. This is not a gesture to the underdog (however much we might root for him). It's simply untenable to duplicate infrastructure, like gas lines, phone, pipes, towers, and so forth. Someone owns them, sure. But to grant that owner unlimited control of that--which ordinarily is a very reasonable impulse, to suppose that you get to call the shots where what you've legitimately acquired/built is concerned--would, in these cases, not conduce to the order and security societies need to persist. It is the gov's role to safeguard these services and infrastructure items. It is not the gov's job to make owners or business people play nice. It’s not even in any straightforward way about ensuring that business play fair, except where bush league strategies threaten to stifle the very competition that keeps the infrastructure healthy and stable.
Thus Ritchie's rhetorical question is apt: what essential piece of (US) infrastructure has Apple commandeered? And why is the self-correction of the marketplace--that same marketplace that Americans, as a rule and often without reflection, taut as the very jewel in the crown of civilization--not adequate, even appropriate, here? If Apple pisses you off with their bullying (supposing that's what they are doing) and you go elsewhere with your money and brand loyalty, then isn’t that perfect capitalist justice? If their cut-throat business practices (assuming that's so) drive other businesses under, isn't that precisely the darwinian outcome that fans of the free market claim as the latter's greatest virtue? The strong survive. Suppose that GQ (or whatever) can't compete with these price points. Doesn't it follow that their business model wasn't as good as those of business that did survive? Don't get me wrong--I'm not at all sure that this IS the best setup possible. What I am arguing is that people can't have it both ways. We can't demand an open market, free as much as possible of gov rigging and interference, and then demand that Uncle Sam spank Big Bag Business X for throwing its weight around.
What I would like to know--and hopefully someone here can sort me--is what justification Apple offers for these moves. Suppose that the print industry was, just post the 2008 collapse especially, about to fold. Suppose that the iPad (and associated apps) created an opening for revamping what the print industry was into something sustainable. How much of the subsequent (really, consequent) profit does Apple deserve? Publishing--no offense intended to particular persons, just the industry--is rapacious. The amount of money going to the creators (authors, graphic designers, layout artists, marketing folks, etc.) is stunningly small. Always has been. Many of the same criticisms apply to the music industry. Now, if under this new model--and, again, I'm not saying that this is so--the shakeup results in consumers paying less, while the creators pull in more, why think that's bad? I'm tempted to describe that as trimming the fat.
There are, it seems to me, a number of professions and industries in which the distribution of profit is not what those on the outside would expect. Why if the car accident ruptures three of your disks should the attorney get 1/3 of your settlement? That's fairly standard, and the argument is that were it not for his legal expertise--what he brings to the situation--you would have received nothing. Is this the form of argument offered by Apple? Even if it is, I'm not sure what to make of it. Except that it is far from unprecedented. And, that iOS devices are importantly different from cell towers, gas lines, and the coaxial cables running through town. If you refuse to get into bed with Apple on principle, that is your choice (possible a noble and inspiring one). But it hardly throws the quality of your life among the rest of us back into the dark ages. If you refuse to get into bed with Central Hudson Water, Gas, & Electric--the only people who can supply those products to your home if you live in this region--then I'm not so sure. In fact, local law bans living without water and electric. THIS makes you a captive consumer. And that fact (alone, I'm tempted to say) means that the gov owes you some consumer protection since that very gov (a) insists that you have running water and electricity and (b) knows that only one company can provide it. I fail to see how any of this is true of Apple.

May I ask why my comment was removed? It was objective, fairly stated, relevant to the reason for all the banter happening in response to this article. I read and am a big supporter of the Smart Phone Experts' blogs, but this is just disheartening.

But can't a TV show broadcasting from said "evil cable company" provide the viewer with an onscreen webpage that could lead to the viewers buying or subscribing to the TV show's service? Correct me if I am wrong but I believe Apple is saying that an app CAN'T provide a link for out of app subscriptions.
If a TV viewer subscribes to a food network magazine they saw on tv, does Comcast get 30% of that?
Riddle me this one gents...

Regardless of the circumstance this move is only going to help small businesses. The large media conglomerates are in for a rude awakening but seriously folks, what's wrong with Apple's ecosystem being pro-small business?? This will make way for some new innovative subscriptions from competitive small business firms. The prices will stay low b/c the competition is insane right now at that level.

stop pointing the finger. as long as the wrong is being righted whatʻs the big deal? If Apple is practicing foul play then they deserve investigation. This situation is likened to toddlers being disciplined. Sibling get scolded by their parents, but one child is always pointing the finger at the other child. The parent believes in a just and honest course of action and if so then all wrong deeds will eventually be brought to light. Stop pointing the finger, TIPB, and let Apple be disciplined in areas where discipline is needed.

I see nothing wrong with what Apple is doing. They are a business and their first priority is making money, that's capitalism. The average user will not care about this at all and will probably love the policy because it makes there lives easier even if it's more expensive.
There is more importnant stuff to worry about then how Apple is running their business. There are plenty of other platforms to develop on. Apple just so happens to make the one where you will actually earn money. 83% of all profits from every app store combined are earned from apple's app store.

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