Elon Musk opened fire on Apple (AAPL) on Twitter, in the first salvo of what may become a much more prolonged war. On Monday, Musk took to Twitter to accuse the iPhone maker of being opposed to free speech, as he noted they have pulled almost all advertising from Twitter. He also called attention to the fact they charge developers a fee to use their App Store platform, which amounts to a secret 30% tax on a product.
Musk also noted Apple was threatening to ban Twitter from its App Store, without giving him any specific violations which were triggering the ban. Rather the company was demanding he engage in censorship of his users.
Musk also directed comments at Apple CEO Tim Cook, as he called attention to another app developer who had his app censored by Apple. The developer detailed how Apple had demanded he censor various keywords so users could not access data on such subjects as the Covid-19 virus or vaccines, before banning his app because a user uploaded a video with a cartoon frog it deemed offensive.
If, as Musk alleges, Apple has pulled back its Twitter advertising, it would not be alone. GM, Volkswagen, General Mills, and Eli Lilly have all chosen to either reduce or pause advertising on the platform, as the current drama over content moderation plays out.
Musk went on to Tweet that Apple has a “secret 30% tax” it levies on purchasers. Apple imposes a 30% fee on all apps sold through the store, although if a developer can show they make less than $1 million through the App Store, it will reduce the fee to 15%. In 2021, Epic filed an antitrust lawsuit over the fee.
Musk’s concern over the App Store fee is well grounded, given his strategy for the company. He is hoping to transition Twitter to a subscription-based model, where users will pay an $8 monthly fee to join the Twitter Blue service and get a Twitter-verified checkmark, which will make their account’s replies gain more visibility.
However that may end up running head-first into Apple’s 30% fee. Every subscription purchase made through Apple’s App Store would take 30% of the fee for Apple’s revenue. That could significantly undercut Twitter’s revenue and profits from subscriptions. And as its advertising revenue plummets, Twitter needs those fees.
Musk has also threatened Apple and Google more directly, threatening to take on their iPhone and Android-based smartphones with a model of his own making. A user of Twitter tweeted, “If Apple & Google boot Twitter from their app stores, @elonmusk should produce his own smartphone. Half the country would happily ditch the biased, snooping iPhone & Android. The man builds rockets to Mars, a silly little smartphone should be easy, right?”
Musk replied, “I certainly hope it does not come to that, but, yes, if there is no other choice, I will make an alternative phone”
Musk may not have been entirely honest, however. For years now Tesla has reportedly been developing a competitor to iPhone and Android smartphone devices, which he has named the Pi phone.
It is rumored the phone will have a suite of features and specifications which will make it competitive with or superior to the iPhone 14 Pro and the Samsung Galaxy S22 Ultra. One report said it is believed he intends for the phone to also have the ability to access the internet through Musk’s Starlink satellite service, which would remove the need for the phone to be within range of cell towers for internet service, and maybe for VOIP service as well.
Although there has been no official release date announced, rumored release dates had previously been in the April 2023 range. However the most recent report indicates Musk may have moved that up to December 2022.
If so, the current fight he is creating with Apple might be part of a marketing ploy, which will spread to Google/Alphabet, and it would not be surprising if Tesla or Twitter were to enter the app-store space as well, following the release of the Pi phone.
However analysts note it is a risky play, as Apple currently holds a significant portion of the smartphone market, and if Apple bans Twitter from its App Store, his social media company will lose access to all of those potential users.
On the other hand, would Apple users who are enamored of his free speech position, chose to abandon Apple entirely, and not only purchase his Twitter service, but also purchase his phone and its monthly Starlink service, given it will function anywhere in the world, and willmake dropped service a thing of the past?
Clearly the future not just of Twitter, but Tesla as well, could rest on how this fight plays out. And the battle with Elon could well prove a double edged sword as well, for Apple, and Google parent Alphabet.
