Apple changes its tune

Apple have changed their mind and will not be imposing a ‘most favoured customer clause’ on app publishers. This rule prevented publishers from surcharging subscriptions sold through Apple relative to their own sites. It was very similar to the ‘no surcharge rule’ in credit card associations — something Stephen blogged about yesterday. I had written elsewhere that I didn’t think that Apple’s rule would impose antitrust issues due to Apple’s lack of market power. However, I wonder if their reversal of course had to do with regulatory issues. It may also have had to do with push back from publishers — but that only reinforces my market power point.

Nonetheless, others — notably Amazon — still impose these rules. My latest research shows that these rules can be important in markets where platform access is sold through devices as platform providers will be vulnerable to escalating prices from app publishers as the popularity of their platform grows. Of course, Apple may well be more than happy with non-app driven iPad sales as well as its overall market share and so may have assessed that it would not need restrictions on publishers to prevent escalating prices. Amazon does not have the same luxury as Kindles have no non-book related sales.