Apple: Its Control over the iPhone and The Internet

Chapter 1: The Creation of Today’s Internet and Tomorrow’s Needs

One of the most fascinating things about the internet, is its creators, why they created it, and how they did it.

From the 1960s through the 1990s, the internet’s foundation was created by a variety informal and formal working groups made up of researchers from government labs, universities, and technologists. These not-for profit groups were often focused on creating common standards to allow them to share information between servers (e.g. messages and files) and make it easier for others to collaborate on future technologies and projects.

Many of the internet’s best attributes are due to its quirky origins. Everyone can now create content online, everyone can access all the web pages without needing to switch browsers, devices, or clients. This interoperability, flexibility and universality are not granted by law – there is no Head of Internet that grants permission to create, host, or connect to any website.

This is an outcome of the internet’s open standard programming, markup languages, and programming. These standards ensure that users don’t have to pay to download a web browser, load a website or pay for the code. Zoom works because it leverages standards that are openly maintained and can be used by any device. These standards must be supported by every device manufacturer to ensure happy customers. We are all now hesitant about aggressive data collection, tracking and ad insertions, but that is partly because we don’t have to give them up. Browser extensions can block tracking or ads thanks to the use of standards such as HTML. Although we may be open to giving up data in exchange for free services, the Internet’s design means that we don’t have.

These are some of the most important benefits. Imagine, for instance, what the internet would look like if it was created by multinational media conglomerates to sell products, serve ads, harvest data for profits or control your end to end experience (something AT&T as well as AOL tried but failed to achieve). A.JPG can be expensive, while a.PNG is half the price. A portal or app from a broadband operator might be required to use teleconferencing software (e.g. Your Xfinity Browser ™, click this for Xfinitybook ™, or XfinityCalls ™, powered by Zoom(tm). Websites may not work in Internet Explorer and Chrome. To get this privilege, you will need to pay an annual fee. Users might have to pay extra fees to their broadband provider to access certain programming languages and use a particular web technology (“This site requires Xfinity Premium 3D rendering”). Microsoft was sued partly because it bundled Internet Explorer with Windows OS. Would a corporation have allowed other browsers to access the Internet if they had invented it? They would allow users to access and modify any sites they choose, as well as do everything they want on these browsers. It’s unlikely that internet penetration and usage would be lower regardless of differences.

The internet’s non-profit, cross-platform and standards-based origins are interrelated with its rapid growth and the billions of dollars of companies that have been established over the past 30 year. These companies also have a positive social impact (e.g. A drop in cost and an increase in quality of communications, the decrease in gatekeeper power, lowered transaction costs, etc. These are some of the benefits.

The internet’s conglomerated giants are conscious of the fact that open APIs and common standards can help to grow internet technology acceptance. These companies care less about how the market grows than they are about their share and control over this growth. Nearly by definition, technology companies prefer to see the market grow on top of them or through them, rather than new entrants competing with or around them. These principles are often rejected by companies that have emerged from openness, as they could be detrimental to their strategic position.

Although this is not a rare disposition in a for-profit business, the implications of it are especially powerful in digital markets. Free market economics in the offline world allows for robust competition, which typically delivers the highest quality products, variety, and prices to consumers. It also moderates the power and influence of the largest market players (even if this is due to scale diseconomies). Online, incredibly powerful network effects and zero-cost marginal revenues/distribution has enabled dominant platforms to push back against the open nature of the internet, forcing consumers and creators to use them as universal intermediaries, and subduing standard market forces.

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We are at the edge of the next internet right now. It is important to understand that the terms you use for this future are not necessarily synonymous with your beliefs. The technologies that enable, support and design the best version of this future are just as far away from our capabilities today as the 1990s Internet was from us. What matters is that we will spend more time in virtual spaces and with virtual goods, for education, work, and leisure. These goods and spaces will sometimes be virtual. Other times, they may be virtual twins of real ones. Sometimes, it might even be augmented reality. As such, a growing portion of our income will go to virtual assets, goods, and experiences. Many of these we’ll be in a position to trade, share with others, use, or improve. These opportunities will be made possible by the emergence of new markets, resources, and industries. There will also be new types of labor, skills and professions.

This future is not possible, as it was with the original internet. The US government and its public research institutions were the ones who developed the information superhighway. This was partly because few private companies understood the potential commercial value of the World Wide Web and also because they were the only ones with the computational resources, talent and ambitions necessary to make it a reality. All of the mega-tech companies today believe in the future internet and are therefore best placed (via talent and resources) to create it.

Apple is today’s greatest obstacle. Apple is the biggest impediment today. Although it has done more for the internet over the past 15 years, its policies do not make the ecosystem the most successful and will not provide the foundation for the future Internet. Apple, instead, is preventing this future Internet. It does this by using tolls and controls and technologies that not just deny the power of the open internet but also stop competition and prioritise Apple’s profits.

Chapter 2: Apple is first, then GAFM

Apple’s negative effects are caused by three interconnected, increasingly powerful elements.

Apple thinks it knows more than the consumers, developers, and the entire market. This includes the decision on which technologies should be adopted in the internet community, the role and extent of user agency (and whether users are capable and able to give informed consent), as well as common business practices regarding user data, privacy, and security.

Apple decided to limit the market role on itsdevice, something it did not do with the Mac. Apple specifically mandates this on its devices.

  1. All apps must be distributed by Apple App Store and cannot be downloaded directly from an app maker or third-party app store.
  2. Apple would have to approve all applications that are distributed through the App Store. Approval would be subject to a long list of requirements and policies.
  3. All Apple App Store applications would have to comply with the App Store’s billing policies. This meant that Apple was typically the only in-app payer for iOS apps.

Technically, these three layers are not the same. The ability to use an operating-system driver does not affect the ability of an app to be distributed to consumers or to charge them for specific content or functions. Apple’s iOS devices made them all work together. Developers need native drivers to create apps. Developers need native drivers to make their apps available to the App Store. They must also adhere to Apple’s policies if they wish to use the App store. This includes using Apple’s billing system.

Apple’s integration and control allowed it to provide a best-in class mobile experience, which helped repel the worst aspects of the internet world. It also enabled it to onboard and engage users who are less tech-savvy and create a richly monetized ecosystem. This led to unparalleled success. The iPhone currently holds 66% of the US market, 75% U.S. App Store revenue, and more than 80% of the time spent on the mobile web. (The iPhone’s share of physical transactions in e-commerce is likely to be somewhere in the middle). This dominance is growing. Eighty percent American teenagers own an iPhone, and 90% of all smartphone activations occurred in the week following Christmas 2020.


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