Advertisement
U.S. markets closed
  • S&P Futures

    5,210.00
    -4.75 (-0.09%)
     
  • Dow Futures

    39,211.00
    -12.00 (-0.03%)
     
  • Nasdaq Futures

    18,197.25
    -34.25 (-0.19%)
     
  • Russell 2000 Futures

    2,048.40
    -1.40 (-0.07%)
     
  • Crude Oil

    82.61
    -0.11 (-0.13%)
     
  • Gold

    2,164.20
    -0.10 (-0.00%)
     
  • Silver

    25.32
    +0.06 (+0.22%)
     
  • EUR/USD

    1.0879
    +0.0002 (+0.02%)
     
  • 10-Yr Bond

    4.3400
    +0.0360 (+0.84%)
     
  • Vix

    14.33
    -0.08 (-0.56%)
     
  • GBP/USD

    1.2729
    0.0000 (-0.00%)
     
  • USD/JPY

    149.2840
    +0.1860 (+0.12%)
     
  • Bitcoin USD

    65,681.96
    -2,278.48 (-3.35%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,722.55
    -4.87 (-0.06%)
     
  • Nikkei 225

    39,596.29
    -144.15 (-0.36%)
     

Musk is biting the hand that feeds Twitter

This article was first featured in Yahoo Finance Tech, a weekly newsletter highlighting our original content on the industry. Get it sent directly to your inbox every Wednesday by 4 p.m. ET. Subscribe

Wednesday, Nov. 30, 2022

Musk is taking on Apple. It might not end well.

Elon Musk has a new nemesis, and it might be one that’s too big even for him. On Monday the Tesla (TSLA) CEO and Twitter owner fired off a series of tweets criticizing Apple (AAPL) for pulling advertisements from the social media platform and claiming that the company threatened to remove Twitter from the App Store.

Musk is no stranger to picking fights from his keyboard. He’s famously tussled with everyone from members of Congress and the Securities and Exchange Commission to fellow billionaire Jeff Bezos. And while some have resulted in blow back, and lawsuits, Musk’s newest dust-up could cost his latest venture where it matters most: it’s bottom line.

“This is very much a one-way relationship, and Twitter is exceptionally dependent on Apple,” Forrester VP and research director Mike Proulx told Yahoo Finance. “For Apple, advertising on Twitter is at best nice to have. The Apple brand is incredibly strong and will continue to flourish without advertising on Twitter. But the same cannot be said in the opposite direction.”

Musk didn’t just stop at calling out Apple for cutting back on its ads on Twitter and threatening to delist the app from the App Store. He also chastised the company for charging developers a 30% fee on sales they make through the App Store. In another tweet he accused Apple of secretly suppressing free speech, and specifically called out CEO Tim Cook.

Archivo - Elon Musk habla en la Conferencia y Exhibición SATELLITE el 9 de marzo de 2020, en Washington. (AP Foto/Susan Walsh, Archivo)
Tesla CEO and Twitter owner Elon Musk is taking on Apple. (AP Foto/Susan Walsh, Archivo) (ASSOCIATED PRESS)

Musk’s gambit could be one of reasonable business concerns that have been echoed by firms ranging from Spotify (SPOT) to Microsoft (MSFT) mixed with his own usual online antics. But going after Apple could also backfire tremendously for the CEO. Especially if Apple were to remove Twitter from the App Store and its 1 billion users.

Apple could pull Twitter, but it’d be risky

Musk’s assertion that Apple has threatened to take Twitter out of the App Store would represent a major escalation between the companies. (Apple didn’t respond to Musk's tweets publicly or to Yahoo Finance's request for comment.) But it wouldn’t be the first time Apple scrubbed an app from its software portal.

In the wake of the Capitol riot in Jan. 2021, Apple pulled Parler from its App Store, because it was reportedly hosting content including threats of violence and illegal activity. And since consumers can only download apps to their iPhones from the App Store, Apple effectively cut Parler off from iOS users. Sure, they could access the service via their web browsers, but doing so is often clunky.

Apple eventually restored Parler after the app agreed to moderate content on iOS.

Musk, for his part, has maintained that Twitter will be a free speech paradise, and recently restored 62,000 previously suspended accounts, as well as former President Trump’s account. What’s more, on Nov. 23, Musk moved to deprioritize marking COVID misinformation on Twitter as phony. If Musk does allow Twitter to become a kind of new Parler, Apple might be forced to remove the app. Still, the chances of the company doing so are slim at this point.

FILE - This April 3, 2017, file photo shows U.S. President Donald Trump's Twitter feed on a computer screen in Washington. President Donald Trump is claiming that Twitter has removed “many people” from his account. But he appears to have actually gained followers since the beginning of October.According to the Internet Archive’s Wayback Machine, which collects snapshots of web pages over time, Trump had 54.8 million followers on Oct. 1. He had 55.3 million as of Friday, Oct. 26, 2018. (AP Photo/J. David Ake, File)
Musk restored Trump's Twitter account, but the former president hasn't rejoined the platform. (AP Photo/J. David Ake, File) (ASSOCIATED PRESS)

“It would just be too huge of a thing at this stage to delist Twitter even though Twitter seems to be imploding and … Musk is taking some shots at Apple and Tim Cook,” University of Buffalo Law School professor Mark Bartholomew told Yahoo Finance.

“It would just create too much negative attention for Apple if they actually tried to not make Twitter available in the App Store,” he added.

If Apple moved to pull Twitter, it would likely draw the ire of Republican members of Congress who have lined up to back Musk’s so-called free speech efforts. And for a company that tries to court relationships with members of both sides of the political spectrum, and is already facing antitrust scrutiny, that could be especially dangerous for Apple.

Musk’s biggest gripe is an old one

While pulling Twitter from the App Store could prove to be an existential threat to the social network, it’s Apple’s 30% App Store fee that would be truly problematic for Musk’s site. Apple traditionally charges app developers 30% of each purchase users make via apps that use Apple’s App Store payment service. And since apps in the App Store are required to use Apple’s payment service, developers have no real way to escape the fee.

Subscription services catch a break when users reup for another year, with the fee dropping to 15% after the first year, and some reader apps like Netflix aren’t required to pay up. But for other developers the App Store’s fees are a certainty.

Musk isn’t the only one who’s called out Apple’s control over the App Store, either. Microsoft President Brad Smith and Meta CEO Mark Zuckerberg have both criticized Apple’s App Store policies. Heck, it was at the center of Epic’s antitrust lawsuit against Apple.

NEW YORK, NY - AUGUST 9: Daniel Ek, chief executive officer of Spotify, speaks about a partnership between Samsung and Spotify during a product launch event at the Barclays Center, August 9, 2018 in the Brooklyn borough of New York City. The new Galaxy Note 9 smartphone will go on sale on August 24. (Photo by Drew Angerer/Getty Images)
Spotify's Daniel Ek is a longtime critic of Apple's App Store policies. (Photo by Drew Angerer/Getty Images) (Drew Angerer via Getty Images)

And with Musk planning to pivot Twitter from an advertising-based revenue model to a subscription service, those fees could eat into the company’s bottom line. Musk already launched a subscription for Twitter Blue that allowed users to buy verification badges but was forced to yank it back after trolls bought subscriptions to add badges to accounts masquerading as profiles for everything from Lebron James to Lockheed Martin.

Still, Musk plans to bring the service back in the near future. And when he does, he’ll need to surrender 30% of each sale made through Twitter’s iOS app to Apple. But if Musk thinks that a few tweets about Apple’s fees are going to get the company to curtail the practice, he’s out of luck.

Apple has fought for years to keep its App Store fees in place both in the U.S. and abroad, and Musk’s comments are unlikely to change the company’s stance.

As for his attempts to paint Apple as an anti-free speech company, that could all be smoke and mirrors.

“Musk has been the subject of a pretty steady flow of negative stories. I think he'd like to have that attention diverted somewhere else for a while,” explained Professor Erik Gordon of the University of Michigan's Ross School of Business.

“When he sees that doesn't work, I think he will get back to trying to lure advertisers back, running Tesla, doing his two or three day jobs, which don't include throwing rocks at Apple.”

By Daniel Howley, tech editor at Yahoo Finance. Follow him @DanielHowley

Read the latest financial and business news from Yahoo Finance

Follow Yahoo Finance on Twitter, Instagram, YouTube, Facebook, Flipboard, and LinkedIn

Advertisement