The heat has been on Apple in the recent past even as its stock has soared greater heights, its CEO become a billionaire, and its business seemingly motors along like well-oiled machine even in the post COVID world. But there are problems as crystallised by the recent US House Representatives Committee hearing around antitrust practices of the big four — Apple, Google, Amazon and Facebook. Tim Cook’s presence at that explosive grilling from the US senate outlined the issues. While there is an argument to be made for the economic value Apple’s App Store has added and the type of innovation it has fostered. At the same time, some of Apple’s rules are going out of control.
I am perhaps, in the minority, which believes that Apple’s rules of 30% commission in the first year and 15% second year onwards is a pretty fair one. They created the platform. They don’t have a monopolistic share of the smartphone market and they do care quite a bit about user privacy and security. But now some of these arguments are starting to hit a brick wall — and are just not hostile towards the developer, but also its own users and in the long run, perhaps its own ambitions.
I’m alluding to the restrictions the App Store is placing on cloud game streaming services like Microsoft’s xCloud, Google’s Stadia, GeForce Now, and whatever props up on the horizon. It is a user-hostile move which comes with the most cockeyed illogical argument.
“The App Store was created to be a safe and trusted place for customers to discover and download apps, and a great business opportunity for developers. Before they go on our store, all apps are reviewed against the same set of guidelines that are intended to protect customers and provide a fair and level playing field, “ Apple told Business Insider in a statement defending its rules.
“Our customers enjoy great apps and games from millions of developers, and gaming services can absolutely launch on the App Store as long as they follow the same set of guidelines applicable to all developers, including submitting games individually for review, and appearing in charts and search,” it added insinuating that any cloud gaming service would have to get each and every app approved on its platform.
Apple also added that developers could reach their customers also via the web which is also a hollow argument.
Generally, Apple’s argument for the App Store not allowing cloud gaming services is highly problematic which shows a two-faced attitude towards gaming as opposed to streaming of video, music, ride-sharing services or any kind of e-commerce for that matter.
So why is Apple not allowing these apps strategically
So here’s what I think is happening. Apple is deliberately blocking cloud-based game streaming services. There are reasons, some are straightforward and some complex. But this looks like a strategic ploy.
- Apple Arcade was launched last year. It is Apple’s game subscription service which works across all of its gadgets – iPhone, iPad, MacBooks, iMac, Apple TV and even iPod Touch. The games on Apple Arcade are exclusive mostly to Apple. These games are also highlighted on the App Store, in a dedicated section for Apple Arcade. So, these games don’t reflect in the main storefront, but Apple has created a new section for these games. Everything has been done in such a way, that it abides by Apple’s rules for the App Store. Obviously, Apple wants its own service to outshine and do better than third-party platforms that are running on top of its gadgets. Services revenue is a huge deal for Apple’s stock and Tim Cook. Apple Arcade is one the big cogs in the grand-plan to transform Apple from being a predominately iPhone dependent company to something that has a virtuous cycle of revenue through services. Apple is also very territorial about its App Store cut which also adds to its services revenue.
- Apple usually is a very confident company. But with gaming, it is not. Apple’s platforms have never really been conducive to gaming. That only started to change with the App Store and the iPhone and iPad. The App Store gave rise to a new breed of snackable games in the late 2000s a far cry away from the triple AAA titles Microsoft and Sony were focusing on with their consoles. This turned into a highly lucrative business. On the flip side, Apple started flexing its muscles with the graphical and processing prowess of the iPhone and iPad thanks to the custom chips Johny Srouji’s team were making. Apple’s inherent on-device processing and graphical advantage gets bypassed in the paradigm of 5G and cloud streaming. On services like xCloud or Google, Stadia users can play console grade games with close enough graphics over the cloud, anywhere on any device. Apple can’t compete here.
- So Apple is the richest company on the planet but it can’t compete? Yes, they cannot compete with the likes of Microsoft, Google, Nvidia and Amazon on cloud gaming. The reason for that is that they are not a cloud infrastructure company. More than half of the web is powered by Amazon We Service (AWS) and they even own Twitch. Microsoft’s lineage with Xbox and Windows plus the fact that Microsoft Azure is the second-biggest cloud computing player makes it arguably the most powerful company in gaming. Its cloud is even powering Sony’s game streaming service. Google, like Microsoft and Amazon, is number 3 in cloud computing. Google’s services and AI power so much of what we do on the smartphone while it is one of the pioneers in the cloud game streaming concept. Lastly, Nvidia is the world’s biggest semiconductor maker alongside having longstanding excellence and heritage in gaming. Add Apple’s absence in the cloud computing scene, its stance on privacy which is a blockade for it to make great services and a late entry to 5G all combine to form a strong argument to why Apple might have a vested interest in these cloud gaming services not succeeding especially on its platform.
But I think Apple is making a grave mistake
Apple has got this one wrong. Apple is very tunnel-visioned about this and it is missing the long term impact of this. Generally, a lot of the moves that Tim Cook and his team are making will be detrimental for Apple’s platforms for gaming.
- Apple first needs to understand, it is not even competing with Microsoft or Google or Nvidia for the same type of gamer. With Apple Arcade, they are targeting a more casual gamer who would perhaps look towards a Nintendo Switch. Apple’s problem here is a different one. And certainly is not Microsoft or Google. It is the fact that it is up against Nintendo, a company as iconic as Apple which is the parent behind franchises like Mario and Zelda. Apple needs to buy studios and not just depend on upcoming indie developers by dangling a carrot. It needs to go all-in just like the way it did with Apple Music and now is starting to show signs with Apple TV+. Without studios that are developing or have developed or own franchises that matter, Apple Arcade will be nowhere. It will be relegated to a nice add-on but not a reason to own an Apple product.
- Apple has built massive equity in the gaming space. It has mostly happened on the bedrock of iOS and Apple’s hardware. Apple has also added support for the Xbox and PlayStation controllers. Apple is about to embark upon this massive journey with its own chipsets on its Macs later this year. And all of this work will be undone if people feel they can play games they want to play on Android and Windows but not on Apple’s iOS and macOS. macOS is already considered a Blacksheep in the gaming community but it has the potential to turn the tables because of Apple silicon leveraging iOS equity. But if iOS gets a bad name because of App Store policies then all of this hard work goes to dust. Apple will also struggle to get game developers on board because of this attitude.
- Apple is already in a ton of hot water with regulators across the world. This will not help as Facebook, Microsoft, Google and Nvidia all will gang up on Apple against its App Store policies. They already are. Microsoft had held back Office 365 for the longest time from iOS because of the cut it had to pay Apple. Amazon has had issues with Apple over the Kindle and Prime Video until they had their agreement recently. Google and Facebook wouldn’t be too happy about this as their services are cordoned off while Apple takes the high and righteous road of calling it privacy-focused and user-centric as it also takes swipes at the data-centric business models of its rivals. There is a huge antitrust case to be made here, considering Apple’s ownership of Apple Arcade.
- Apple’s hypocrisy and double standards on this are far beyond any semblance of logic. Not only, it is illogical to allow other entertainment services like movies and music and having different rules for games as fundamentally, but games also come under the same bucket. Games are entertainment, in fact, the most lucrative form of entertainment on the planet. Recently, what we have seen with Netflix movies like Bandersnatch include gamification and dynamic storylines while games are becoming more cinematic and immersive. The lines are blurring. And Apple’s point of view on this isn’t just hypocritical, but draconian and behind the puck.
- There is also the little case of security and privacy that Apple tom-toms, well all these games have been rated by the ESRB. The entertainment software rating board (ESRB) has been there since 1994. It was formed after the release of Mortal Kombat in 1993. They have done a great job and they have more experience than Apple certifying these games. So, all the games on these cloud streaming services have been approved by the ESRB so Apple just doesn’t get to play judge, jury and executioner.
- Apple’s arguments around developers having the option to use the web browser to deploy their services is questionable. Especially on iOS devices. Why? Because Apple doesn’t let third-party browsers like Chrome run their own engine. They have heavy-duty privacy restrictions and even in the case, enterprise versions of web apps like GSuite can’t even be run within the browser. Here we are talking about cinematic games streamed from god knows where. This is not a solution, but more of a middle finger.