Apple's "Sherlocking" Sparks Antitrust Concerns
Apple's appropriation of features from third-party apps into its own iOS and Mac systems, commonly known as "sherlocking," is drawing heightened attention. The term originates from Apple's inclusion of features from a third-party app, Watson, into its Sherlock app during the 1990s. This year, Apple has set its sights on various app categories such as password managers, call recording, custom emoji creators, and AI-powered writing tools.
A report by Appfigures indicates that apps affected by this practice have collectively generated approximately $393 million in revenue and amassed 58 million downloads in the past year. Some apps, including AllTrails, which was named Apple's "App of the Year" in 2023, have emerged as top revenue earners raking in $307 million. Other categories such as grammar helpers, math solvers, and password managers have also witnessed substantial earnings.
The repercussions of Apple's actions have evoked concerns about fair competition and the implications of proprietary data usage. Certain apps, particularly those offering parental controls, have encountered closures by Apple due to alleged noncompliance with its policies, prompting antitrust investigations.
Despite the obstacles, apps that continually innovate and capitalize on new platforms such as Apple's enhanced Siri could still thrive. Nevertheless, average users might gravitate towards Apple's inbuilt features, potentially constraining the growth of these third-party apps.
Key Takeaways
- Apple's "sherlocking" of third-party apps impacts an estimated $393 million in annual revenue.
- Features previously exclusive to third-party apps are now integrated into iOS 18 beta.
- Trail apps, notably AllTrails, lead in "sherlocked" revenue, with an estimated $307 million annually.
- Apple's integration of popular features raises antitrust concerns regarding fair competition.
- Third-party app growth might be hindered by Apple's readily available alternatives.
Analysis
Apple's "sherlocking" significantly affects third-party developers, particularly in lucrative categories like trail apps and password managers, imperiling an estimated $393 million in earnings. This practice, driven by Apple's pursuit of platform dominance and data control, has triggered antitrust scrutiny. In the short term, affected apps face revenue decline and potential closures; in the long run, innovation and adaptation to Apple's evolving ecosystem are imperative for survival. Antitrust risks could influence financial markets and consequently impact Apple's stock performance.
Did You Know?
- Sherlocking:
- Definition: Where Apple incorporates features from third-party apps into its own software, often leading to a decline in the third-party app's popularity and revenue.
- Origin: The term originated from Apple's assimilation of Watson app's features into its Sherlock app during the 1990s.
- Impact: This strategy has influenced various app categories, raising concerns about fair competition and antitrust issues.
- Antitrust Investigations:
- Definition: Legal inquiries into whether a company is leveraging its market power to the detriment of competitors and consumers, often resulting in regulatory scrutiny and potential penalties.
- Context: Apple's "sherlocking" practices have elicited worries about fair competition, prompting antitrust investigations.
- Potential Consequences: These investigations might lead to regulatory alterations, fines, or directives to amend business practices.
- Third-Party App Growth Hindered by Apple's Built-In Alternatives:
- Explanation: Apple's integration of popular features into its software might constrain the growth of third-party apps by offering those features to users without the need for additional apps.
- Market Impact: This could stifle innovation and competition as third-party developers may struggle to attract users who prefer the convenience of integrated features.
- Strategic Response: Developers might need to emphasize unique, innovative features or exploit new platforms to maintain competitiveness.