Re:Apple releases study defending App Store's 30% cut ahead ...
by AnthonyMouse on Wednesday July 22, 2020 @05:27PM
(#23921802)
The obvious fallacy in the comparison to carriers is that they were extracting monopoly rents too, and (counter-intuitively) they charged more because they had less of a monopoly than Apple does.
A monopolist wants to maximize profits, so they choose the maximal trade off between margins and volumes. If they charged 100%, nobody would make apps and they would get 100% of nothing. For the carriers, if they charged 30%, more people would make apps than if they charged 70%, but then the competing carriers would benefit from that as much as they do even if they're still charging 70% (which they still can because they each have a monopoly over their own users), so they all charge 70%. Apple gets 100% of the increase in app production rather than ~25%, so their profit-maximizing monopoly rent is a lower percentage (but a much larger absolute dollar amount).
But that 30% is still dramatically more than the ~5% it would take to cover their costs and provide a reasonable profit in a competitive distribution market. Which is what Microsoft now charges in their store, for example.
A monopolist wants to maximize profits, so they choose the maximal trade off between margins and volumes. If they charged 100%, nobody would make apps and they would get 100% of nothing. For the carriers, if they charged 30%, more people would make apps than if they charged 70%, but then the competing carriers would benefit from that as much as they do even if they're still charging 70% (which they still can because they each have a monopoly over their own users), so they all charge 70%. Apple gets 100% of the increase in app production rather than ~25%, so their profit-maximizing monopoly rent is a lower percentage (but a much larger absolute dollar amount).
But that 30% is still dramatically more than the ~5% it would take to cover their costs and provide a reasonable profit in a competitive distribution market. Which is what Microsoft now charges in their store, for example.