Apple Is The Gatekeeper to Subscription Revenue for Big Tech

Now that Elon Musk has proclaimed that its new subscription business is the company's future, Apple is strategically positioned in the catbird seat.?

Its steep 30% fee for sales through the app store ensures it participates in Twitter’s success. On the other hand, If it fails, it loses nothing.?

This resembles a one-sided strategic alliance where Apple has rigged the game to capture Twitter’s upside with zero risk. Apple's App Store had over 2 million apps and games in 2022, representing a 21.4% increase from the previous year.?

That means that even if the initiative is a flop, it can’t lose. This has got to be one of the most brilliant business models ever invented. Apple has attracted hundreds of thousands of “partners” to its platform without any skin in the game.?

Selling Pick Axes To The Gold Miners

Companies attempting to disintermediate Apple by doing business directly with its massive customer base are banned. With over 1.5 billion active iPhone users worldwide as of 2023, the company is under attack for antitrust violations.?

Unsurprisingly, the United States Justice Department is ramping up its antitrust investigation into Apple, with regulators focused on whether Apple, the company's App Store, and iOS rules are anti-competitive and stifle competition.?

The Internet’s Kingpin Has No Mercy

It argues that the 30% fee is beyond egregious and is essentially extortion. If a bank or private money lender charged 30% interest, it would violate fair lending laws.?

Over 2.24 billion iPhone units have been sold to date. 153 million iPhone units were sold in the first three quarters of 2022.?

The $12 million a year that Twitter collects from Apple for advertising is a rounding error. Apple will capture 30% of Twitter’s $10 billion in annual revenue if its subscription business is a hit.?

To put Apple’s business model in perspective, consider that 97% of developers distribute their apps and take advantage of all Google Play offers at no charge.?

Of those developers that are subject to a service fee, 99% are eligible for a fee of 15% or less by participating in different programs offered by Google Play.

And it’s not like Google is an also-ran imitator. In 2021, Google Play users worldwide downloaded 111.3 billion mobile apps, up from 76 billion apps in 2018.?

Why Is Apple’s Audience More Valuable than Google's?

Apple's market cap reached over $2.3 trillion. That's more than Amazon, Alphabet (Google's parent company), and Meta (Facebook, Instagram, and WhatsApp's parent company) combined.

It’s difficult for third-party app developers to bet against a juggernaut that is situated smack dab in the middle of big tech’s ecosystem. Even if its audience isn’t more valuable than other platforms.?

If It Walks Like A Duck and Quacks Like A Duck, It’s A Duck

And if you think that Apple isn’t exploiting its insurmountable competitive edge, look no further than what it did to Coinbase, the largest U.S.-based cryptocurrency exchange, when Apple blocked its latest app release over a feature that Google claimed violated the 30% fee policy.?

Coinbase had no choice but to cave, kill the feature and complain about it on Twitter which is in the same boat. If this doesn’t demonstrate Apple’s anti-competitive behavior as an unapologetic monopolist, what does??

Subscription Business Models Play Right Into Apple’s Strategy

As more Internet giants move to diversify their revenue streams beyond volatile and fickle advertising and pivot to subscription models, Apple doesn’t need to lift a finger to court them. All its executives have to do is wait for the phone to ring.?

Andrew Ellenberg is the President & Managing Partner Of Rise Integrated, an innovative studio that creates, produces, and distributes original multimedia content across digital touchpoints. If you want to submit story ideas or ask about custom multimedia publishing, please call 816-506-1257. Read more of his work in Forbes.