Antitrust Committee Chairman Calls App Store Fees 'Highway Robbery'

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Apple's App Store fees are akin to "highway robbery," Representative David Cicilline told The Verge in the latest Vergecast episode.


Cicilline, who is the Chairman of the U.S. House Subcommittee on Antitrust looking into the App Store agreements that Apple has with developers, spoke to The Verge alongside Basecamp CTO David Heinemeier Hansson, developer of the "Hey" app that Apple rejected for failing to offer in-app subscription options.

According to Cicilline, Apple's market power allows it to charge "exorbitant rents" that crush small developers. The antitrust committee has heard from "many people" afraid of economic retaliation.
"Because of the market power that Apple has, it is charging exorbitant rents -- highway robbery, basically -- bullying people to pay 30 percent or denying access to their market. It's crushing small developers who simply can't survive with those kinds of payments. If there were real competition in this marketplace, this wouldn't happen."

"Many people have come forward to share their experiences, who are terrified of economic retaliation, who are afraid they can't survive the economic retaliation that these large platforms can impose because of the power that they have, and we intend to pursue those allegations very seriously. This is a real problem in the marketplace. This is a direct consequence of enormous market power, the fact that Apple is the gatekeeper for these developers, and we have heard many, many examples."
The antitrust subcommittee began soliciting opinions from developers back in November, speaking with those who had been impacted by some of Apple's App Store decisions. Developers of parental control apps impacted last year by Apple's limitations on the use of Mobile Device Management capabilities were among those contacted, for example. Heinemeier Hansson, whose email app "Hey" is in the news this week, also testified in January.

Heinemeier Hansson has been vocal about Hey's rejection from the App Store. After approving the app earlier this week, Apple rejected two updates and told the Hey team that it needs to provide an option to subscribe in the app, which would give Apple a 30 percent cut of the subscription fee.

Hey attempted to skirt Apple's rules around subscriptions by not offering a subscription in the app while also not linking to an outside subscription offering, something that Netflix and Spotify also do. Apple said that Hey isn't classified as a "Reader" app and isn't allowed to operate in that manner, a confusing stance that blindsided the Hey team.

Heinemeier Hansson in the podcast again explains the series of rejections, and shares his opinions on Apple's App Store policies.
So if we had the power, if we have the choice to distribute software to the iPhone without going through the App Store, we would. We would just have a link on our website that said, "Here you go. That's how you download the app for the iPhone," and we'd be fine.

The problem with the iPhone is that Apple sits as a gatekeeper. It blew my mind when the EU announced their investigation because they were literally going through the points that we were having: the only way to get on the iPhone is through Apple. Apple is a gatekeeper. Apple shakes down businesses for these 30 percent, and no one has a choice.
Amid the antitrust investigation, Apple this week highlighted a study that said the App Store ecosystem supported $519 billion in billings and sales worldwide in 2019. Apple often promotes how much developers earn from the App Store, a number that has reached over $155 billion.

Apple created the hardware and the platform that allows developers to distribute apps, but Cicilline doesn't believe that entitles the company to collect such high fees. "You cannot simply allow someone merely because they invented a system or a product to continue to enjoy that kind of monopoly power," Cicilline said. "It's contrary to our laws. It's unfair to new developers, new startups, and it hurts consumers."

Cicilline says that the antitrust investigation is "nearing completion" and that a final hearing will take place in July. The committee has been aiming to get major tech CEOs, including Tim Cook, to testify. Cook has so far declined, but Cicilline says that he expects when the hearing happens, "all four CEOs" will be there. Amazon CEO Jeff Bezos, Facebook CEO Mark Zuckerberg, and Alphabet CEO Sundar Pichai have agreed to participate.

At the end of the investigation, the group will generate a report on the status of competition in the digital market, which will feature "recommendations with respect to legislative action." Cicilline believes a solution to the App Store problems will require "regulatory action and statutory changes" and that it's something that "Congress has a responsibility to fix."

The full Vergecast interview with Rep. David Cicilline and David Heinemeier Hansson can be accessed on The Verge's website.

Article Link: Antitrust Committee Chairman Calls App Store Fees 'Highway Robbery'
 

aakshey

macrumors 68020
Jun 13, 2016
2,218
902
IMO Apple should be allowed to charge whatever they want through the App Store.

However, they should be forced for apps to be allowed to be downloaded outside the App Store. Apple will still need to sign them and host them on AWS and bill developers AWS fees for these apps. This ensures safety. And also ensures developers don’t pay insane fees if they don’t want to be on the App Store.
 

Cosmosent

macrumors 65816
Apr 20, 2016
1,177
1,259
La Jolla, CA
I believe transparency is key !

Would love to see AAPL release specific, per-Category, per-Qtr, Financial Numbers for both the iOS App Store & the Mac App Store !!

Specifically, how much Revenue per-Qtr, per-Category in both App Stores !

If AAPL were to Release that data covering the past ten years, that would help App Devs ALOT !

It would ALSO force AAPL to do a much better job OUTSIDE of Game & Streaming Media sub apps, which probably accounts for 85% OR more of the iOS App Store Revenue !
 

Martius

macrumors 6502
Jul 12, 2008
421
1,314
Prague, CZ
I disagree, charging 30% for all the work Apple has done for developers to provide an amazing ecosystem is completely fine. I'm a developer (not iOS) and all the marketplaces for web templates, plugins etc. are charging similar fees. It's a part of the game. You feel you should earn more? Make better app!
 

NoImDirtyDan

macrumors newbie
Jun 18, 2020
16
64
Why don't they just do a bracket system where the more you sell the less of a % is taken...

Example:
$0 - $10,000 30%
$10,001 - $100,000 - 25%
$100,001 - $1,000,000 -20%

ETC...

IMO this would be fair and create incentive to grow...
 

Rogifan

macrumors Core
Nov 14, 2011
21,354
26,270
Ben Thompson also said he heard from a number of developers who were too fearful to go on the record. This is terrible timing for this Hey thing to flare up. I would not be surprised if there are some App Store changes announced this coming Monday. I don‘t think Apple will ever allow side loading of apps but I think they will make changes on either the percentage they take or what is required to offer IAP.
 

TiggrToo

macrumors 68000
Aug 24, 2017
1,969
4,464
Out there...way out there
IMO Apple should be allowed to charge whatever they want through the App Store.

However, they should be forced for apps to be allowed to be downloaded outside the App Store. Apple will still need to sign them and host them on AWS and bill developers AWS fees for these apps. This ensures safety. And also ensures developers don’t pay insane fees if they don’t want to be on the App Store.
AWS? Why on earth would they publicly push AWS?
 

PickUrPoison

macrumors 604
Sep 12, 2017
6,800
8,345
Sunnyvale, CA
IMO Apple should be allowed to charge whatever they want through the App Store.

However, they should be forced for apps to be allowed to be downloaded outside the App Store. Apple will still need to sign them and host them on AWS and bill developers AWS fees for these apps. This ensures safety. And also ensures developers don’t pay insane fees if they don’t want to be on the App Store.
30% isn’t insane. Tens of millions of iOS developers willingly to pay that fee 🤷‍♂️
 

gaximus

macrumors 65816
Oct 11, 2011
1,018
1,377
Apple should let them have their apps listed for only %5, but they won't ever show up in AppStore by search. You'll have to link directly to the app in the AppStore. The app binary would have to be hosted elsewhere, but it would still install through the AppStore. 5% would be enough for Apple to cover the review process (since free apps still get reviewed).
 

aakshey

macrumors 68020
Jun 13, 2016
2,218
902
30% isn’t insane. Tens of millions of iOS developers willingly to pay that fee 🤷‍♂️
And that’s what I said. They should be allowed to charge whatever. But they need to allow non App Store apps too. Give people a choice. If the 30% isn’t insane, people will stay.
- - Post merged: - -

Apple should let them have their apps listed for only %5, but they won't ever show up in AppStore by search. You'll have to link directly to the app in the AppStore. The app binary would have to be hosted elsewhere, but it would still install through the AppStore. 5% would be enough for Apple to cover the review process (since free apps still get reviewed).
Great idea.
- - Post merged: - -

AWS? Why on earth would they publicly push AWS?
So the fees is public and not insane. People pay based on hosting usage by their app.
 

Macropanda

macrumors newbie
Oct 21, 2014
14
38
About time. Apple deserves what’s coming. Hopefully they force Apple to allow loading apps outside the App Store.
Why would you want that? Downloading through the App Store gives you peace of mind the app has been checked and is safe. The odd one will always slip through but that’s much much better than having all sorts of apps doing things in your phone you don’t know about.
 

TVOR

macrumors regular
May 6, 2019
176
247
"It's crushing small developers who simply can't survive with those kinds of payments."

I have never heard such crap in my life!! People voluntarily start a business (developing for iOS) knowing what the commission rates are (whether they are high or not) and then say they can't survive with those commissions! Ummm...did you not figure that out before you started?! It's like me looking to start up a retail business (let's say...I dunno...shoes...) and finding out that the product I wanted to sell would cost me $100 but I would only be able to sell it for $105...and then my research telling me that I would probably sell 500 per month (so $2500 in profit) and then me figuring out my costs (rent etc.) as being $2000 per month...so I make $500. And KNOWING that, I open the store...and then complain later that I am not making enough money and saying that my supplier should offer me more of a discount because I'm not making enough money!

Run the numbers people!! If you're profit margins are that tight that you "can't survive" with terms that you knew about before you started then maybe you're in the wrong business! Or maybe your product just isn't selling that much because it's not great. Sorry...
 

aakshey

macrumors 68020
Jun 13, 2016
2,218
902
Why don't they just do a bracket system where the more you sell the less of a % is taken...

Example:
$0 - $10,000 30%
$10,001 - $100,000 - 25%
$100,001 - $1,000,000 -20%

ETC...

IMO this would be fair and create incentive to grow...
This doesn’t help Apple. It’s unfair to them.
 

JimmyBanks6

macrumors 6502
Oct 4, 2017
275
1,213
30% isn’t insane. Tens of millions of iOS developers willingly to pay that fee 🤷‍♂️
Why was 30% arbitrarily decided upon and why isn't it insane? Is 50% insane? Maybe 75% isn't insane?

The market has no say in what is and isn't 'sane'.

Unlike the credit card analogy another person posted, storefronts can decide not to accept credit cards, and do so when rates get too high. Ever been to a take out restaurant that only accepts debit and cash? That's precisely why. This ability for the market to correct itself isn't possible when Apple is the only gatekeeper.
 

darkpaw

macrumors 6502
Sep 13, 2007
325
279
London, England
I'd like to sell a book on a Kindle. How do I do that? Ah, I go to Amazon - and only Amazon - and I use their Amazon Kindle Direct Publishing system. How much do they charge? Oh, it turns out I can:

Make more money. Earn up to 70% royalty on sales to customers in the US, Canada, UK, Germany, India, France, Italy, Spain, Japan, Brazil, Mexico, Australia and more. Enroll in KDP Select and earn more money through Kindle Unlimited and the Kindle Owners' Lending Library.
Ah, okay, so I can earn UP TO 70%, whereas selling an app on the App Store gets me a definite 70%.

Got it.

So, will Representative David Cicilline be in touch with Amazon about their fees?

How about eBay forcing me to use PayPal to receive money? PayPal charge a stupid amount of money for the service they provide.

What about eBay's listing fees? I put an iPad Pro on there today, and if I wanted a reserve price, the listing fee went from £0.00 to £34.97. Just for a little bit of code written decades ago that checks whether salePrice >= reservePrice?!
 

CTHarrryH

macrumors 68020
Jul 4, 2012
2,214
856
And government and what they spend and waste isn't worse. You get access to millions and millions of devices etc. and you don't want to pay for it.
If they allowed apps not from their store where they test for security etc. then someone would accuse them of allowing insecure apps and thus give up privacy.
Just shut up and leave Apple alone. They could probably cut the cost and % significantly if all the lawsuits against Apple stopped
 
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