Web apps could de-monopolize mobile devices
Mobile tech is a duopoly run by two companies — Google and Apple — with a combined market cap of $3.5 trillion. Each company uses a combination of tech, law, contract and market power to force sellers to do commerce via an app, and each one extracts a massive commission on all in-app sales — 15–30%!
This is bad for users and workers. Many companies’ gross margins are less than 30%. In some categories, that means there’s no competition. Take audiobooks: publishers wholesale their audiobooks to retailers at a 20% discount, so a retailer that sells its audiobooks through an app, paying a 30% commission, will lose money through every sale.
This is why the only convenient mobile audiobook stores are Apple Books (a front-end for Amazon’s Audible) and Google Books: Apple doesn’t have to pay the Apple tax, and Google doesn’t have to pay the Google tax, and that means that Apple and Google can demand crippling discounts and preferential treatment from publishers and independent authors.
The app tax is a tax on the workers whose creative works are sold on mobile platforms, because creative workers have the least bargaining power in this monopolized supply-chain. Our publishers can squeeze us — and the editorial workers, narrators, and sound technicians who work on our books — to make up the difference.
Independent authors who sell directly on these platforms, meanwhile, have even less leverage and get even worse terms. Things aren’t much better at the other end of the supply-chain, either: while firms prefer to wring concessions out of their workers and suppliers, they’re not averse to raising prices on customers, providing that all the competitors do so as well.
Since every competitor is also selling through an app store and either paying a direct app tax or ceding margin to the mobile duopoly as a condition of selling in their in-house, pre-installed stores, they all have the same incentive to raise prices.
Economists call this the monopsony problem (or, since we’re talking about two companies, a duopsony or oligopsony problem). That’s an unwieldy and esoteric term, so Rebecca Giblin and I coined a much better one, and…