Microsoft’s Satya Nadella wants to wrest competition from the clutches of antitrust

Microsoft’s Satya Nadella wants to wrest competition from the clutches of antitrust

I sense a real opportunity, because in some sense what has happened is the other two ecosystems that are at scale, for their own internally consistent set of reasons, have conflated — at least in my mind — what is the platform and the aggregation layer with one set of rules. There’s no reason why there should be one set of rules. They can be dis-aggregated. Windows 11 will demonstrate that “disaggregation” in at least two big ways. First, where Apple and Google insist on developers forking over up to 30 percent of their revenue and using proprietary payment processing (unless you’ve quietly secured an exemption), the Windows 11 app store will now let non-game developers roll their own payments and keep every penny they make.

So it’s a wild time for Microsoft to be pitching the tech industry on a new-and-improved app store, too. Remember, this is the company that famously got sued in the ‘90s for bundling Internet Explorer with its operating system, dominating the nascent web browser market, Some might say it’s up to its old tricks with the new Windows 11 — which similarly bundles the company’s Microsoft Teams video chat and collaboration software at the potential expense of rivals like Slack and Zoom. (More on that in a bit.) But on today’s episode of The Verge’s Decoder podcast, Microsoft chairman and CEO Satya Nadella suggests there’s a fundamental difference between his vision and what Apple and Google are doing. He argues they’ve entangled their operating system and app stores to the point that they’re doing developers a disservice. That’s where Microsoft can step in, he says: “We’ll welcome any other app store”

Second, Microsoft will explicitly let companies build entire app stores within Microsoft’s app store — starting with the Amazon Appstore, which Microsoft claims will bring Android apps to Windows that can run natively there. “We’ll welcome any other app store,” says Nadella, up to and including Google should it be interested. Windows chief Panos Panay is also open to Steam and the Epic Games Store being part of Microsoft’s app store. More:

I want us to do a great job of being a platform. That means all the things platforms do. We’ll have a store. We’ll have our own defaults. We will curate stuff. But if somebody else can come in and create lots of value on our platform, and use it at, just, I’ll call it the base infrastructure, OS level, so be it, including a store. Apple in particular has long railed against the idea of allowing any competing app store into its platform. Top Apple executives like App Store boss Phil Schiller repeatedly used the “store within a store” excuse as sufficient reason to reject an app, according to internal Apple emails unearthed during the Epic v. Apple trial. (Part of Apple’s reasoning is that the company wouldn’t be able to ensure the quality of those apps, though it’s easy to point out Apple doesn’t police each Netflix or YouTube video, Spotify song, or Roblox “experience.”) How many pieces of the process should a platform provider own?

It’s become clear over the past two days that Nadella is a student of Ben Thompson, with Nadella’s nod to “sovereign” creators in the stinging critique of Apple he delivered yesterday at the Windows 11 event and his discussion of aggregation theory today, but it reminds me most of Thompson’s Epic v. Apple essay from August 2020. That’s the one about how Apple bit off more than it should really chew by attempting to own the customer relationship and payment processing on top of the core security, stability, and other abilities of its operating system, angering developers in the process. This is where Apple has repeatedly taken flak in recent months, as critics argue that the App Store doesn’t actually provide meaningful amounts of curation or a high enough bar for quality in exchange for its 30 percent tax. They point to the egregious scams sitting in plain sight that Apple didn’t catch, or Apple employees’ seeming admission that it’s the core operating system, not anything an App Store employee does, that makes the iPhone a relatively secure place to work — and Apple already gets rewarded for that with its hardware profits, some argue. Critics also point to the far smaller fees that credit card companies charge for payment processing, typically just a couple percent plus a handful of cents per transaction. Even those can impact some small businesses, as you’ll know if you’ve ever wandered into a mom-and-pop shop that asks for a minimum purchase of $10.

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