The Flea Market and the Retail Store

2021.05.24   prev     next

FROM the earliest days of consumer computers to the modern devices we use today, there have always been two basic models of how those devices operate as platforms for third-party software and its sale to end-users:

1. The Flea Market — The makers of this category of device simply want to get money by selling the device itself, and have little interest in regulating what goes on there. Want to write software for our device? Go ahead. Want to sell that software to users? That’s your business. You figure out how to do that, and how to get anyone to pay for it. And if you’re a user who wants to buy software for this device, it’s up to you to figure out what’s good to buy and what isn’t, and how to use it safely on the device. Good luck!

Devices in this category have traditionally been home/personal computers, such as the TRS-80, Commodore PET, Apple II, Atari 400/ 800, Commodore 64, IBM PC, MS-DOS PC, Apple Mac, Commodore Amiga, Atari ST, and Windows PC.

2. The Retail Store — The makers of this category seek to gain favor with end users by presenting a controlled, curated collection of third-party products. These platforms have traditionally been game consoles, such as the Atari 2600, Mattel Intellivision, Nintendo Entertainment System, Sony Playstation, Nintendo Wii, Microsoft Xbox, and Nintendo Switch, but also include some non-gaming devices, like the RIM BlackBerry, and perhaps the Palm Pilot, as well as online stores such as Amazon, Zappos, Steam, and Epic Games.

The retail model follows the pattern of a typical retail store, such as Macy’s or Kroger:

• arbitrary curation — The owner of the platform has total, arbitrary control over which (willing) third-party goods are sold there, and which are not.
• markup — The owner of the store takes a substantial cut (markup) of every sale. This cannot be bypassed by the makers of the products sold there. There may be exceptions to the markup, but such are entirely at the whim of the store owner, as is the amount (percentage) of the markup.
• controlled presentation — The store owner has final say about how products will be presented to the shopper (within the store).
• store-brand products — The store may also sell its own brand of products alongside third-party products. For those products, the store markup is meaningless, as the store owner keeps all the money (but must also provide the product, not just the store).

How do Apple’s iOS (iPhone and iPad) and Google’s Android fit into this picture?

iOS follows the Retail model, and has done so ever since it started supporting third-party software in early 2008, when iPhone itself was only nine months old, and iPad was two years from introduction. (Steve Jobs made the Retail model crystal-clear in a publicly viewable presentation.)

Android breaks new ground by straddling the fence — it adopts a hybrid of the Retail and Flea Market models. The Google Play store has all the Retail characteristics detailed above, but Android also allows users to sideload apps downloaded from non-Google sources, in a Flea Market model that leaves it up to the developer to figure out how to get paid, and up to the user to avoid junk and scams.

Google apparently thinks this is the best of both worlds — but many developers of Google Play apps have found to their dismay that their apps are casually pirated through the Flea Market sideloading feature, resulting in greatly reduced income on the Google Play store. Google has not figured out a way to keep these two models separate, and that may be a big part of the reason why Apple chose the pure Retail model.

Epic’s Suit

Epic Games — led by found­er/ CEO Tim Sweeney, an outspoken critic of Apple’s App Store and Google’s Google Play store — is currently engaged in a lawsuit to try to force Apple to abandon the Retail model and convert iOS either to the Flea Market model, or to an Android-style hybrid model. The apparent justification for the suit is simply to throw a bunch of criminal-sounding words in the air — “antitrust,” “anticompetitive,” “monopoly,” etc. — and hope that the judge will conclude that Apple has just become too powerful, and therefore needs to be forced to do what Epic wants.

Lost in this line of thinking are the answers to some really important questions, such as: Will only Apple be forced to abandon the Retail model? What about all the others who use it? Will this be a legal precedent that they can all be forced to become some sort of Flea Market, whether they want to or not? Will this extend to brick-and-mortar retailers (of which Apple is among the most successful, but which also includes Macy’s, Kroger, Best Buy, Micro Center, etc.)? Will this extend to online retailers like Amazon and Steam — and to Epic Games itself?

Pragmatism

Part of me has always wanted to believe that Vaughn Walker’s 1992 decision to throw out Apple’s victory in the Mac IP case was based not on some petty dislike of Apple — or worse, some sort of under-the-table corruption — but rather the idea of a pragmatic decision to avoid the market chaos and damage that would result from disrupting the already heavily market-established Windows platform.

If that is the way judges think (and perhaps they should), then with any luck at all, Apple will prevail in this case. I see nothing but chaos and damage ahead, if Epic is victorious.

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