Apple News & The Power of Defaults

The Power of Defaults

Making an option the default choice increases the likelihood that it is selected. For example, Defaults and Donation Decisions, a study on how framing a question influences outcomes, found that:

Source: Defaults and Donation Decisions, Transplantation, Vol. 78, №12, pp. 1713–1716, Eric J. Johnson and Daniel G. Goldstein, January 2009.
Source: Richard Thaler, Improving Retirement Saving Using Behavioral Economics.

Location, Location, Location

Now back to Apple — the company provides an example of using defaults to influence app usage. Apple has a monopoly on what apps come pre-installed on iPhones and iPads. Consequently, iPhones come loaded with a kitchen sink of its own apps including Maps, Music, and News. This means that Apple’s apps end up in the pockets of hundreds of millions of people:

Source: Apple Support.

Home Field Advantage

The most valuable real estate on a smartphone is the homescreen. For iPhones, Apple controls the homescreen and because of this home field advantage, it has a leg up in distribution and discovery, two of the most challenging aspects of scaling an internet business. While a company like Spotify needs to build an app that’s great to get noticed, Apple’s apps get noticed by default. A corollary here is that while third-parties need to build great apps, Apple can skate by with good enough products. See: the early years of Apple Maps.

Source: Photo by William Hook on Unsplash.

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Kevin LaBuz

Kevin LaBuz

Head of IR & Corporate Development at 1stDibs. Previously finance at Etsy, Indeed, and internet equity research at Deutsche Bank. Find me on Twitter @kjlabuz.