Musk’s Apple fight could be his Twitter legacy

Customers visit an Apple store in Taipei, Taiwan, November 7, 2022. REUTERS/Ann Wang

NEW YORK, Nov 29 (Reuters Breakingviews) - Elon Musk doesn’t just want to force changes at Twitter. The social network’s new owner is now targeting Apple (AAPL.O), the smartphone giant he has vowed to eclipse in market value. Musk isn’t the first to complain that Apple acts as a gatekeeper for companies distributing apps through its platforms. But his social-media megaphone makes him a powerful foe. Putting pressure on Apple’s business model could be the most durable outcome of his $44 billion foray.

A flurry of tweets from Musk on Monday brought two specific concerns. First, he criticized Apple’s fee of up to 30% on transactions through its App Store. Musk will have to turbocharge Twitter’s profitability to service its crushing buyout debt, and high-margin subscriptions are one promising avenue. Losing a chunk of every $8 that a user pays to become a Twitter Blue subscriber makes that harder.

Companies from Netflix (NFLX.O) to Spotify Technology (SPOT.N) have battled the iPhone-making California goliath over this issue, leading to heated negotiations and special carve-outs. Governments, too, have taken a swing: South Korea legislated that Apple must allow alternative payment processing options. It led to little change – Apple’s alternative in the country still carries a 26% fee.

Second, Musk attacked Apple’s policy of asking developers to moderate content in apps sold through its App Store. The iPhone maker bars alternatives to its own store on the iPhone, which is how it mediates access to its users. Whatever the pretext for current complaints, that restriction could stymie Musk’s own opposition to moderation, and moreover his ambitions to build Twitter into a platform-like “super-app” that potentially usurps Apple’s storefront. Videogame developer Epic Games sued Apple in part over this very issue, a fight Apple won.

Apple boss Tim Cook could respond to all this in two ways. He could toss Musk a sweetheart deal, finding a way to fit Twitter into an exempted category that allows it to escape the usual 30% commission. Or he could ignore the billionaire, which could incentivize Musk to go all-in. That’s the riskier path, given Musk’s ownership of America’s pre-eminent soapbox, and one used liberally as a platform by politicians of all stripes. Already, Musk has asked whether Apple might “hate free speech.”

It’s one thing for Apple to contend with lawmakers in peripheral markets like South Korea and the Netherlands, where Cook has allowed some limited changes to the App Store. But if Musk turns up the heat on its business model in what is still the iPhone’s most important market, he could wreak major changes on the technology world – whether he makes a success out of Twitter or not.

Follow @JMAGuilford on Twitter

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)


Twitter Chief Executive Elon Musk asked in a post on Nov. 28 whether technology giant Apple, which has reduced its advertising on the social network, hates “free speech in America.” In subsequent posts, Musk criticized Apple’s 30% fee on transactions on its App Store platform.

Editing by John Foley and Amanda Gomez

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