[ckcheng]

So you’re saying Apple IAP as merchant of record forcing use of Apple Pay is ok (?) but Apple App Store forcing use of Apple IAP as the only merchant of record is not?

(You were clarifying the difference between these things elsewhere so hoping you could clarify this, thanks.)

(And I want to see more Costco v Apple comparisons!)

[lxgr]

No, I’m not trying to argue that at all! I consider forced in-app purchases very problematic.

I’m just saying these are structurally very different scenarios and I don’t think they can be used as an analogy.

The core issue is that in the case of Costco, there’s only two immediate actors: Costco and its customers. For Apple in-app purchases, there’s three: Apple, app vendors, and Apple users. The argument is leveraging that Apple is unfairly monetizing its captive user base through app vendors.

Now Costco is also leveraging its captive user base, but they are doing so against card issuers, which can be seen as somewhat affiliated with cardholders (and thus by extension Costco consumers) – because they pay them kickbacks in exchange for preferring using one card over the other!

Both fascinating case studies in economics, but structurally distinct.

[ckcheng]

I’m trying to understand the structure, is this about right?

Costco Warehouse = Apple App Store.

Dyson (vacuum vendor) = WidgetApp (digital goods vendor).

Dyson sold in the Costco Warehouse must use Costco as the merchant. WidgetApp sold in the Apple App Store must use iOS IAP merchant of record solution (??).

Costco Warehouse forces use of Visa (or Mastercard - depends on country). Apple iOS IAP does NOT require Apple Pay.

Of course Apple doesn’t buy goods from suppliers before selling them to customers, unlike Costco. And Costco Warehouse is members only, unlike Apple (unless you squint and view iPhone ownership as a membership).

[lxgr]

Kind of, but the analogy does break down since there isn't only one store that Dyson can sell you vacuums at. There is some level of stickiness since Costco requires an upfront membership, but it's really not as pervasive.

Imagine people living in houses or apartments with a proprietary kind of power outlet, and the patent owner/real estate developer is willing to grant you, an appliance manufacturer, a license for power plugs compatible with that outlet – under the condition that you exclusively sell them in their storefronts, for a 30% cut.

[ckcheng]

I feel the analogy actually holds up well since brands often create retailer exclusive versions of their products specifically for Costco or Walmart, etc.

Like you can buy Henckels knives anywhere, but you can only buy Henckels item 1374080 at Costco [1] - that Costco item number is printed right on the box.

I sympathize with the rent-seeking walled garden argument against Apple. But would it be ok for Apple to require iOS IAP if their cut was not 30% but was instead 25% (like Walmart’s gross margin), or was instead 14% (like Costco’s)? c.f. Apple’s App Store Small Business Program rate is 15%.

Is the percent cut that’s the problem regardless of structure, or is it the structure that’s bad?

[1] https://www.costco.com/henckels-modernist-20-piece-self-shar...