Pluralistic: To save the news, repeal the app tax (07 June 2023)


Today's links



EFF's banner for the save news series; the word 'NEWS' appears in pixelated, gothic script in the style of a newspaper masthead. Beneath it in four entwined circles are logos for breaking up ad-tech, ending surveillance ads, opening app stores, and end-to-end delivery. All the icons except for 'open app stores' are greyed out.

To save the news, repeal the app tax (permalink)

Big Tech steals from the news, but what it steals is money, not content. Talking about the news, excerpting it, linking to it, quoting it – these are all beneficial, normal news activities. If you can't talk about the news, it's not news – it's a secret.

But tech does steal from news. A variety of monopolistic tricks allows tech to interpose itself between reporters, publishers and outlets, and the audiences they serve. By creating chokepoints between the news and its audience, tech can extract gigantic sums from the news.

And because the news itself is dominated by the same kinds of extractive, vicious, gigantic corporations, the shit flows downhill: the first victims of attacks on news profitability are news workers – reporters, technical staff, illustrators, photographers. A news outlet has to be really starving before it turns to the money claimed by vulture capitalists who buy distressed debt, or hedge funds who roll up papers, or wealthy owners.

Anything that can't go on forever eventually stops. Tech's ripoffs have reached a breaking point, and there's a broad coalition of journalists, media companies, audiences and politicians ready to do something about this. Now the question is: what should we do?

Whatever we do it should:

  • Maintain broad access to the news;

  • Make it easier for new news outlets to pop up;

  • Make it easier for new tech outlets that carry the news to pop up, too.

It shouldn't simply transfer funds to bond holders who own newspaper debt, or shareholders of media companies, or billionaire dilettante news proprietors. It shouldn't make the news and tech into "partners": we want the press to hold tech to account, not join forces with it.

A month ago, EFF and I started publishing a five-part series of policy prescriptions "saving the news from tech." Part one was the "curtain raiser," setting up the whole program:

https://www.eff.org/deeplinks/2023/04/saving-news-big-tech

Each week since, I've published a specific policy recommendation. The first one was breaking up the ad-tech industry, on the lines suggested by Senator Mike Lee's AMERICA Act:

https://www.eff.org/deeplinks/2023/05/save-news-we-must-shatter-ad-tech

Next was passing comprehensive privacy law, which would kill off surveillance ads and force a switch to "contextual ads" (ads based on what you're looking at, not who you are):

https://www.eff.org/deeplinks/2023/05/save-news-we-must-ban-surveillance-advertising

Both of these proposals are aimed at reducing the share of ad money claimed by tech, especially the ad-tech duopoly of Google/Meta. Ad-tech claims more than 50% of every ad dollar spent, thanks to their chokepoint on ads. The ad-tech market is a cesspool of fraud, abuse and creepy practices. Fixing ads would make everyone better off, by freeing us all from ubiquitous commercial surveillance, and it would make the news better off, letting the news claim a much larger share of ad revenues, whether they are large media brands or independent reporters covering a niche subject in depth.

This week's installment turns to subscription revenues. When Steve Jobs launched the Ipad in 2010, he set himself up as a daddy figure for the traumataized press, promising them a return to subscription-based business, with seamless payment processing through the apps in his walled garden:

https://memex.craphound.com/2010/04/01/why-i-wont-buy-an-ipad-and-think-you-shouldnt-either/

But since then, the mobile duopoly of Apple/Google has simply recapitulated the abusive extraction of the ad-tech industry, but for apps. Both companies charge a whopping 30% to process in-app payments, and both companies have strict rules banning app makers from evading this 30% app tax by steering customers to the web to complete payments:

https://www.eff.org/deeplinks/2023/06/save-news-we-must-open-app-stores

The companies – nominally bitter competitors – have nevertheless converged on this 30% vig, allegedly without any anticompetitive collusion. Apple uses Digital Rights Management (DRM) to lock people into using its App Store, threatening anyone who reverse-engineers its devices to add competing stores with five year prison sentences under Section 1201 of the Digital Millennium Copyright Act (DMCA).

Google's Android does have a facility for "side-loading" apps that aren't in its app store, but the company uses a web of commercial requirements and technological tricks to prevent a competitor from emerging:

https://theplatformlaw.blog/2023/05/24/why-the-proposed-commitments-offered-by-google-to-the-uk-competition-authority-regarding-in-app-purchases-are-wrong-and-will-make-the-situation-of-app-developers-worse/

The result is a massive transfer from the news to tech: payment processing normally costs 2-3%, but these companies manage to take a 30% bite out of every subscription dollar collected in-app. Some very large outlets like the NY Times can drive readers to sign up on the web and escape the app tax, but the additional friction costs even these large publishers a fortune in lost subscribers – and smaller outlets have even less leverage over readers and are corralled into paying the app tax, making it a regressive tax indeed.

Unrigging the mobile payments market would produce good results far beyond the news, of course. Games publishers, independent creators, and office and productivity app makers would all benefit from no longer having to pay the app tax. And so would their users: these app makers are passing on most of those payment costs to us, and we end up paying them, because there are only two major mobile platforms and they both charge the same app tax.

In the EU, the Digital Markets Act (DMA) will force app stores to open up, paving the way for alternative app stores:

https://www.theverge.com/2022/3/25/22996248/apple-sideloading-apps-store-third-party-eu-dma-requirement

In the US, there's proposed laws like the Open Apps Markets Act, which is likely to be reintroduced in this legislative session:

https://www.blumenthal.senate.gov/newsroom/press/release/blumenthal-blackburn-and-klobuchar-introduce-bipartisan-antitrust-legislation-to-promote-app-store-competition

The mobile duopoly hate this, of course, and claim that forcing them to permit rival app stores would put users' security at risk. It's true that this could happen, but it doesn't need to: security and openness are compatible:

https://www.schneier.com/essays/archives/2022/01/letter-to-the-us-senate-judiciary-committee-on-app-stores.html

Next week, I'll conclude the series with a post on applying the end-to-end principle to social media, to prevent platforms from holding a publication's subscribers hostage in order to extract "boosting" fees from media. Once that's out, we're going to gather all these posts into a single, downloadable PDF, suitable for sharing with the news junkies in your life, your friends in the media business, and your elected reps.

(Image: EFF, CC BY 3.0)


Hey look at this (permalink)



A Wayback Machine banner.

This day in history (permalink)

#10yrsago UK spies have access to NSA Prism, which has “direct access” to world’s largest Internet companies’ servers https://www.theguardian.com/technology/2013/jun/07/uk-gathering-secret-intelligence-nsa-prism

#10yrsago Leaked NSA slide-deck claims that NSA has “direct access” to servers at Google, Apple, Facebook, Skype, Yahoo, and many others https://www.theguardian.com/world/2013/jun/06/us-tech-giants-nsa-data

#10yrsago New NSA logo https://memex.craphound.com/2013/06/07/new-nsa-logo/

#10yrsago Schneier: what we need the whistleblowers to tell us about America’s surveillance apparatus https://www.theatlantic.com/politics/archive/2013/06/what-we-dont-know-about-spying-on-citizens-scarier-than-what-we-know/276607/

#1yrago Fake Christian health insurance and other big cons https://pluralistic.net/2022/06/07/more-than-human/#big-store

#1yrago James Bridle's "Ways of Being" https://pluralistic.net/2022/06/07/more-than-human/#umwelt



Colophon (permalink)

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