Thread by @doctorow

Apple is a true business innovator: For more than a decade, they have been steadily perfecting an obscure anticompetitive tactic, turning a petty grift invented by console games companies into a global, cross-industry mechanism for extracting rents and centralizing control.

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I'm speaking of App Stores, of course, and not just any app store, but one that's illegal to compete with or switch away from. This started with console companies, who used technical tricks to ensure that they could skim a rake from every program you bought for your system.

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Consoles used proprietary hardware or media formats to ensure that software vendors couldn't sell directly to you, that every sale would be forced through their storefronts or licensing systems.

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These tactics acquired the force of law in 1998 after Bill Clinton signed the Digital Millennium Copyright Act (DMCA), whose Section 1201 made it a felony to traffick in "circumvention devices" that bypassed "access controls" for copyrighted works.

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Broadly, that meant that you could go to prison (for five years!) for making anti-DRM tools. What's more, DMCA 1201's drafters rejected tying the law to acts of copyright infringement, making it illegal to remove DRM, even if you did so for a perfectly legal reason.

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For example, if your games console had some code that ensured that the software you were running had been taxed by the manufacturer, then removing that code could become a criminal act - even though that has nothing to do with copyright infringement.

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To make that concrete: copyright is supposed to help creators and audiences transact with one another. If you own a console and I wrote some software for it, then copyright should facilitate you paying me money for it and then running it on your console.

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But if the console's manufacturer had designed its product so that it got to impose a tax on transactions like this, then I can't sell you my copyrighted work anymore unless I pay the tax. Doing so is a felony, but not because it infringes copyright.

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No, it's a felony because it's bad for the manufacturer's shareholders. It's what @saurik calls "Felony Contempt of Business Model."

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Now, the defenders of this practice say it's not anticompetitive because I can invent and manufacture a different, competing console, sell it to you, and then sell you my code without paying tax.

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But this isn't how competition works. Companies don't get to say, "You can compete with me, but only on the terms I set, and in the domains where I think I have an advantage." Excluding competition in "complimentary goods" (like apps) is 100% anticompetitive.

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For several years after the passage of the DMCA, the abuse of Sec 1201 to create "Felony Contempt of Business Model" stuck mostly within the realm of games consoles, with the exception of mixed results in the printer ink market.

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Then along came the App Store for Apple's Ios devices: these were designed to be locked to a single app store, so that people who made copyrighted works (apps) and people who wanted to buy them (Ipod/pad/phone owners) couldn't transact without going through Apple.

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Apple's paternalistic pitch was that it would only use this power to benefit its customers. The press LOVED this story, because Steve Jobs posed himself as a daddy-figure who would use apps to get us all to pay for media again.

memex.craphound.com/2010/04/01/why…

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The consensus that Apple should be able to decide how other companies could compete with it was advanced by its most loyal customers, who'd long considered themselves to be a kind of oppressed religious minority.

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They insisted that there was no reason to allow a third-party app store because everyone who owned an Ios device loved using Apple's App Store.

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But when anyone pointed out that if this was true, then there would be no reason to ban third-party stores (because they'd fail), they'd switch tactics, saying that any Ios user who switched stores was Doing It Wrong.

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This is the Apple fanboy No True Scotsman argument: "Everyone loves the limitations of Apple's walled gardens, and if they don't, they're not really Apple customers. If they didn't want to be locked into the walled garden, they should have bought a different device."

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To understand how weird this is, consider the inverse: we live in a market society based on property rights. Once I buy an Ios device, I get to decide which programs I run on it and who I buy them from. If Apple didn't like that deal, it shouldn't have sold me an Ios device.

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This belief-system is intrinsically conservative, in the sense articulated by Frank Wilhoit: "There must be in-groups whom the law protectes but does not bind, alongside out-groups whom the law binds but does not protect."

crookedtimber.org/2018/03/21/lib…

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How else to explain the indifference of Apple trufans for the company's decision to reverse-engineer all of Microsoft Office's file formats and make compatible players for them, and their defense of Apple's strict prohibition on doing this to Ios?

eff.org/deeplinks/2019…

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But even if you think Apple will never abuse the power to decide who can compete with it to make complimentary products that interoperate with its own devices, the norms, laws and precedents backstopping Apple's business-model innovations can by used by anyone.

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In 2015, I wrote a @guardiantech microfiction that exposed the perils of allowing companies to choose their competitors. It was called "If Dishwashers Were Iphones."

theguardian.com/technology/201…

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It was a letter from the CEO of an "innovative" dishwasher company explaining why his customers were wrong to try to wash third-party dishes in his products.

The comments swiftly filled up with Apple defenders who decried it as an absurd, over-the-top analogy.

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To those people, I say, behold, the Bob Dishwasher! It's a cute, countertop dishwasher aimed at single-person households, and it uses a proprietary cartridge for detergent dispensing, at about $0.67/wash - about $242/year.



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The company makes a lot of familiar, paternalistic claims to justify selling a non-refillable, single-use electronics package that becomes immortal e-waste once you've used it up and replaced it: the precision electronics and proprietary detergent ensure optimal performance.

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dekuNukem bought a Bob and decided that he - and not the manufacturer - should decide whether the "advantages" of throwing out the cassette and buying a new one were worth it. He reverse-engineered it and made a defeat device he calls a "rewinder."

github.com/dekuNukem/bob_…

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The tale of how he did this makes for a fascinating read, especially the analog sleuthing he did using product safety labels to reverse-engineer the "proprietary" composition of the detergent and rinse-aid, which turn out to be commodity products marked up by 7700%!

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Extraordinarily, he's actually selling the Rewinder, for $30. This shouldn't be extraordinary, but it is, thanks to the penalties under DMCA 1201 (and the UK equivalent law, derived from Article 6 of 2001's EU Copyright Directive).

tindie.com/products/dekuN…

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It's not just dishwashers, either. Would-be digital rentiers have figured out that they can turn their shareholders' preferences into legal obligations to their customers by engineering their products so they have to be used in specific ways...or else.

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For example, KLIM makes a motorcyclist's airbag vest that deactivates itself if you stop making subscription payments (of course, this means that anyone who exploits a defect in KLIM's IT can shut off all its airbag vests, everywhere).



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If that sounds extreme to you, it's really not. Tesla has many safety features that are marketed as downloadable content, which it remotely deactivates when a car changes hands through a private sale:

theverge.com/2020/2/6/21127…

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If you find yourself scrambling for reasons that it's OK for Tesla to do this with its cars, but not for KLIM to do it with its airbag vests, allow me to gently remind you that Tesla owners are not an oppressed religious minority, either.

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This kind of rent-seeking is just getting started. As I tried to illustrate in my novella UNAUTHORIZED BREAD (part of my 2019 book RADICALIZED), there are limitless ways for Apple's pioneering business innovation to destroy our lives:

arstechnica.com/gaming/2020/01…

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And as I wrote in my story "Sole and Despotic Dominion," this is a frontal assault on the idea of personal property - it creates a world where property is the exclusive purview of remorseless, transhuman colony organisms (AKA corporations).

reason.com/2018/11/17/sol…

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However, that future is anything but assured. Apple is being sued by Epic for antitrust violations over its Felony Contempt of Business-Model system:

nytimes.com/2021/05/02/tec…

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And European competition regulators have opened an enforcement action against the company on the same basis:

cnbc.com/2021/04/30/eu-…

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Meanwhile, copycats who created their own Felony Contempt of Business Model walled gardens, like Valve did with Steam, are facing their own lawsuits, courtesy of @wolfire:

arstechnica.com/gaming/2021/04…

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We've come a long way in a decade, and the No True Scotsman defense of the right of a dominant corporation to interpose itself between buyers and sellers, to control its customers' choices after a sale, is finally facing a real challenge.

locusmag.com/2021/03/cory-d…

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The idea that the whole world will be swallowed by the printer-ink business-model is not inevitable. Indeed, it may be that even printer manufacturers will lose that one:

pluralistic.net/2021/04/27/bru…

eof/