Apple-Commissioned Study Finds App Store Fees in Line With Those at Other Digital Marketplaces

[jonblatho]

Wrong. Apple provides many free services to developers that are critical to their apps as well as their users. One example: maps. Google Maps is EXTREMELY expensive to developers (and is one of Google's main revenue streams). Apple provides Apple Maps for free. Developers like Yelp switching to Apple Maps save them hundreds of thousands of dollars per year alone.

I'm just going to address the most disingenuous parts of this absolute stemwinder of a reply, but users pay for Maps with their device purchase. What, do you think Apple’s a charity, too?

One example: they have a Maps team, and then there's a MapKit team.

Phew, hope you don’t get into trouble for revealing that highly sensitive top-secret information. (An idiot who watches a few WWDC sessions could piece that together, setting aside that it’s just common sense at Apple’s scale.)

Now talk about how many features the MapKit team works on at the behest of other Apple teams, including but certainly not limited to the Maps team, which is the point I was making. You can draw a straight line from most publicly available API to features that Apple would soon implement in their own apps if they hadn’t already when it was made public. And even where that’s not the case, there’s usually a straightforward business justification for doing so.

Using your Maps example, they’ve added features in MapKit that they themselves may not actively need just to compete with the Google Maps SDK. It allows them to crow about how many requests Apple Maps gets including those for things that aren’t actually in Maps, instead of a developer being forced to use another mapping service for a specific feature not available in MapKit.

You're not thinking from the user perspective. If I made my users login to PayPal every time they want to do an IAP purchase, it would scare many users away from ever attempting an in app purchase. Just yesterday I downloaded Tastetea app and it asked me to type in my credit card number to order a drink from them. I deleted the app immediately after and just went to Starbucks. If this was a general experience by most apps, it would put users on alert before they even tap the "checkout" button which would lower the total amount of money spent inside an app in general.

The fact that Apple made it incredibly easy and made this process consistent across the platform plays a huge role in driving more revenue to developers and Apple. Would you want 100% of a small pie or 70% of a much bigger pie? You failed to take this into account.

No one’s saying that developers have to no longer use IAP; there are certainly strong arguments for it and against it. That’s why a developer should be able to make a choice as to what works best — or works at all — for their business. Besides, they could even use Apple Pay; it’s an easy, fast, and secure experience for the user. However, unfortunately, nanny Apple says no. Apple claims Apple Pay is reserved for physical goods and services, but spoiler alert, Apple themselves don’t neatly follow this rule.

Spinning up an EC2 server or enabling Cloudfront on AWS isn't what I call building a CDN. You do know that there's more to that right?

Huh. Guess the times that the App Store wouldn’t work or was unusably slow when AWS was having trouble were just wacky coincidences, then. (You know what I meant, and I won’t address this further.)

If Apple charged free app developers extra for hosting free apps, there would be far less free apps on the App Store.

Fewer free apps? Tragic! Whatever would we do without low-effort soundboard apps and those flashlight apps that haven’t been updated since iOS 6?

Besides, if a free app can’t support itself with nominal fees for hosting and bandwidth usage, maybe they should just change their business model. That’s what Apple’s policies can force paid/IAP developers to do, so why are they special?

 

[Unregistered 4U]

Alternative take by an app developer who feels the 30% cut is fair.

I have to say, of all of the different problems in the world that I could have, I would actually not mind having the “problem“ of needing to pay Apple $700,000!

 

[jlc1978]

Uhm? That's not my experience, but maybe we are dealing with different apps. Do you have any actual statistics or you are basing your statement on anecdotal experience?

A quick google shows a somewhat old article claiming that "Direct sales are notably less expensive, typically in the 8% to 15% range" but not providing any source for those figures.

I did a spot check of some apps to compare prices and found them the same; a proper anti-trust study would look at a large enough sample to reach a statistically valid conclusion.

 

[bsolar]

I did a spot check of some apps to compare prices and found them the same; a proper anti-trust study would look at a large enough sample to reach a statistically valid conclusion.

The apps I checked are cheaper when bought directly but it's definitely anecdotal evidence totally unsuitable to make broader reasonings.

It would be interesting to have proper statistics: sadly I found nothing online except unconfirmed ballpark numbers which I suspect were pulled out of thin air.

 

[farewelwilliams]

I'm just going to address the most disingenuous parts of this absolute stemwinder of a reply, but users pay for Maps with their device purchase. What, do you think Apple’s a charity, too?

The 30% cut pays for the majority of the third party usage of Apple Maps, if it wasn't obvious.

Phew, hope you don’t get into trouble for revealing that highly sensitive top-secret information. (An idiot who watches a few WWDC sessions could piece that together, setting aside that it’s just common sense at Apple’s scale.)

Well then, if MapKit employs engineers, it doesn't "cost nothing for them to open up the work" as you said. I think you just proved yourself wrong here.

Now talk about how many features the MapKit team works on at the behest of other Apple teams, including but certainly not limited to the Maps team, which is the point I was making. You can draw a straight line from most publicly available API to features that Apple would soon implement in their own apps if they hadn’t already when it was made public. And even where that’s not the case, there’s usually a straightforward business justification for doing so.

Using your Maps example, they’ve added features in MapKit that they themselves may not actively need just to compete with the Google Maps SDK. It allows them to crow about how many requests Apple Maps gets including those for things that aren’t actually in Maps, instead of a developer being forced to use another mapping service for a specific feature not available in MapKit.

Plenty of critical MapKit functions were written specifically for third party apps that Apple would never use. For example: MKLocalSearch. Back in 2012, Apple wrote this function specifically for third party developers as a "dumbed down" version of their actual Maps search. This is to prevent developers from easily scraping all of their Maps data and it's to prevent third party app developers from creating a better Apple Maps (with better UI) while using Apple's Mapping service. So if you typed "tokyo japan" into a third party map search, it'll only show results within the map view *or* nearby the user's location even if the map has been panned away from the user's location. It wouldn't make the map jump to Japan.

Another great example of this is UIWebView. Apple has never used UIWebView for *any* of their apps. It was specifically built for third party app developers for many reasons (one of them being security).

So no, your assumption is again 100% wrong. It absolutely doesn't "cost nothing" for Apple to open up the work as many APIs were specifically built for the sole purpose of third party app developer usage and never used internally.

No one’s saying that developers have to no longer use IAP; there are certainly strong arguments for it and against it. That’s why a developer should be able to make a choice as to what works best — or works at all — for their business. Besides, they could even use Apple Pay; it’s an easy, fast, and secure experience for the user. However, unfortunately, nanny Apple says no. Apple claims Apple Pay is reserved for physical goods and services, but spoiler alert, Apple themselves don’t neatly follow this rule.

You're not getting it. If a user is constantly being asked to put in credit card info because businesses want the 100% cut, users will generally feel less compelled to tap on the "buy it now" in the app or even worse, feel less compelled to download a free app because they will be swayed away at any potential credit card info screens that no one wants to tap in (even if the app uses Apple's IAP method).

If Apple Pay was used as an alternative to IAP to bypass the 30% cut, then ALL apps offering IAP would be doing this since it's the same experience for the user, minimal work, but the developers get 100%. The App Store business would be a net loss for Apple and guaranteed they'll invest less in developers. So no, that won't work.

Physical goods and services (like Amazon and Uber) have always been allowed on the App Store using any standard form of payment where the developer gets 100%. Why you're making that about Apple Pay specifically in that context is beyond me.

Huh. Guess the times that the App Store wouldn’t work or was unusably slow when AWS was having trouble were just wacky coincidences, then. (You know what I meant, and I won’t address this further.)

You're simply proving the point that Apple being on AWS has very little to do of what it means to build out a CDN. Thanks.

Fewer free apps? Tragic! Whatever would we do without low-effort soundboard apps and those flashlight apps that haven’t been updated since iOS 6?

Besides, if a free app can’t support itself with nominal fees for hosting and bandwidth usage, maybe they should just change their business model. That’s what Apple’s policies can force paid/IAP developers to do, so why are they special?

Instagram...Snapchat...Waze...you know, apps that a lot of people use that are now billion dollar businesses. Also if each app ran their own updater service, guaranteed people would be finding apps to delete to improve performance of their device which would make the app less sticky. Far better to have one service that updates all apps, one service that provides push notifications for all apps, etc... Combine that with Apple footing the hosting bill of their app (as well as providing device specific app binaries to reduce the size of the app so it *can* be downloaded over cellular) only reduces the burn rate for startups which is extremely critical.

And it's interesting you simply skipped over the whole China problem (you know, the worlds #1 smartphone market today).


It doesn't sound like you're a developer or have used any of Apple's APIs. So until you do, I don't see any point in continuing this conversation further as I rather have this discussion with developers that have skin in the game. Feel free to reply but I won't be reading anymore from you.

 

[tehabe]

so now we think the legislature has users best interest in mind? a group that sets their own salary, their own benefits, and what Laws apply to them? heck They even give their own bribery a friendly name. Lobbying, which is usually what brings about these hearings, lawsuits, etc.

It might not be perfect but it is still better than some commercial company is making their own rules w/o telling anyone or even forbidding you to talk about it. Especially you don't even now what bribery is being done behind the scenes.

 

[slamuelrock]

Apple's study shows that Apple's prices are fine. Next, Coke studies show that cola is a healthy beverage and Big Tobacco studies show that smoking is harmless.

The report literally says "
The conclusions and opinions expressed are exclusively those of the authors". This means Apple had no influence on the conclusions and opinions.

 

[chrono1081]

No, I am not saying they are fake. But neither am I saying that they can be trusted. An independent study would be more believable. I just don't have faith in studies put out by a non-neutral party. Too much opportunity for bias to be a factor.

So you're saying they're fake. Here's a way to do an independent study, go to each store and look for yourself. I already have because I use these stores to deploy apps. This isn't some secret knowledge kept to only developers, you can literally go to each store and look.

 

[MacBH928]

I am interested on how all of them tend to agree on the 30%, how did they get this number?

 

[tehabe]

I am interested on how all of them tend to agree on the 30%, how did they get this number?

The 30% are completely arbitrary. In some areas the platform wished to keep 30% of its revenue, I think Spotify pays ~80% of its revenue for the music rights.

 

[MOFS]

The 30% are completely arbitrary. In some areas the platform wished to keep 30% of its revenue, I think Spotify pays ~80% of its revenue for the music rights.

I am interested on how all of them tend to agree on the 30%, how did they get this number?

I’d have thought more likely all of them are looking at each other [read: Apple] to see what their competition is doing. I can’t see Google going cheaper than Apple anytime soon as developers would be unlikely to abandon the iPhone as it’s the one they’re mostly aiming for so undercutting Apple would only eat into Google’s profits.

 

[chrisbru]

PlayStation, Xbox, and Nintendo subsidize hardware from their commission. This is a well known model (since the NES) and why game developers don't have an issue with that, but have an issue with Steam.

I don't see how this is really a strong argument. Just because the intent is to subsidize their hardware doesn't make it any more valid of a reason than Apple doing the same. PS/XBox/Nintendo can do it because they have a captive audience and control the store, just like Apple.

 

[konqerror]

I don't see how this is really a strong argument. Just because the intent is to subsidize their hardware doesn't make it any more valid of a reason than Apple doing the same. PS/XBox/Nintendo can do it because they have a captive audience and control the store, just like Apple.

The fact that Apple charges the same rate for a similar service, but provides less services (i.e. hardware subsidization) is a sign of market distortion. In a competitive market, lower costs to the vendor = lower costs to the customer.

Apple's whole point is that they charge the same as everybody else, including PS/Xbox/Nintendo stores. What their obviously biased study fails to note is that they provide less than these stores.

This is also why when a monopoly is unavoidable, like utilities, they are forced into cost-plus pricing.

 

[Unregistered 4U]

Apple removed an application from the store because it didn't auto-renew the subscription

I’ve been trying to find this removal reported and haven’t been able to. Without details on the specific incident, there’s no way to know what was the cause for the removal.

In a competitive market, lower costs to the vendor = lower costs to the customer.

The market is “smartphones” and Android offers many inexpensive models that provide lower costs to the customer.

 

[chrisbru]

The fact that Apple charges the same rate for a similar service, but provides less services (i.e. hardware subsidization) is a sign of market distortion. In a competitive market, lower costs to the vendor = lower costs to the customer.

Apple's whole point is that they charge the same as everybody else, including PS/Xbox/Nintendo stores. What their obviously biased study fails to note is that they provide less than these stores.

This is also why when a monopoly is unavoidable, like utilities, they are forced into cost-plus pricing.

I mean, they provide the iPhone userbase, just like PS provides the PS userbase. PS doesn't lower the developers' costs anymore than Apple does with Swift and XCode. iPhone has a MUCH higher userbase than any of those platforms.

It would be incredibly hard to make a legal argument that Apple has an app store monopoly. Use a different phone if you want a different option. In that sense, it's no different than Playstation 5's digital only edition coming this fall. If you buy it, you know you're going to be locked into Playstation's digital store.

 

[tehabe]

I’ve been trying to find this removal reported and haven’t been able to. Without details on the specific incident, there’s no way to know what was the cause for the removal.

I can't find it either, the search results are about everything but the case I was reading about. Very annoying. Edit: Found it:

https://twitter.com/x/status/1278048862746234883

The market is “smartphones” and Android offers many inexpensive models that provide lower costs to the customer.

We are not talking about the smartphone market but the app market on iOS! And switching platforms can be expensive as well.

 

[konqerror]

I mean, they provide the iPhone userbase, just like PS provides the PS userbase. PS doesn't lower the developers' costs anymore than Apple does with Swift and XCode. iPhone has a MUCH higher userbase than any of those platforms.

It would be incredibly hard to make a legal argument that Apple has an app store monopoly. Use a different phone if you want a different option. In that sense, it's no different than Playstation 5's digital only edition coming this fall. If you buy it, you know you're going to be locked into Playstation's digital store.

You're missing what I am saying. User bases are not the same and they don't depend pure user counts. They're different, and it costs different amounts to reach them.

Console hardware subsidies enables developers to reach a different userbase than PCs. The console userbase is a lower-income, less hardcore gamer than PC gaming. It costs real money to subsidize hardware, and that's what developers are paying for.

If developers didn't agree with this model, they simply wouldn't publish on console.

It is true that Apple reaches a generally wealthier userbase than Android and one can argue that's worth more and incurs more costs for e.g. quality, much like a Toyota vs a Lexus. However, that doesn't explain why Google and Android are charging the exact same, yet another sign of market distortion.

 

[Unregistered 4U]

I can't find it either, the search results are about everything but the case I was reading about. Very annoying. Edit: Found it:

I found the follow up post.

https://twitter.com/x/status/1278727791266025472

I’d guess it was more about not using App Store Connect. For me personally, I like being able to see all my subscriptions in one place, but some folks find that confusing. Maybe the group of people that do yoga and know how to cancel subscriptions in iOS don’t overlay by much?

 

[tehabe]

I’d guess it was more about not using App Store Connect. For me personally, I like being able to see all my subscriptions in one place, but some folks find that confusing. Maybe the group of people that do yoga and know how to cancel subscriptions in iOS don’t overlay by much?

I guess you haven't read the initial issue, Apple Store Connect says the trial period must result in a paid subscription and the customer must cancel this 24 hours before. They didn't want that, they wanted that the trial period runs out w/o the subscription going forward. Because it is a bad experience for their customers. Also the source for a lot of issues with traps and fraud.

 

[Abazigal]

It would be incredibly hard to make a legal argument that Apple has an app store monopoly. Use a different phone if you want a different option. In that sense, it's no different than Playstation 5's digital only edition coming this fall. If you buy it, you know you're going to be locked into Playstation's digital store.

My understanding of US law is that US. antitrust law is focused on ensuring that consumers are not harmed by monopolistic behavior.

Apple probably has a very strong case if they were to argue about how the actions they have taken with the App Store have benefited, not harmed, customers. That is a logical strategy when considering Apple’s audience - the U.S. government. For example, their stringent screening and approval process means better security, privacy, trust, and convenience for the end user, while iTunes protects my payment information.

That developers feel they are getting the short end of the stick is irrelevant here because they are not the end user in this context. Which probably explains why this part of the argument is getting more traction in the EU, where the laws tend to favour protecting small businesses compared to the US.

Apple should probably have little problem winning over the US courts.

 

[Unregistered 4U]

Because it is a bad experience for their customers.

The fact that they say Apple “backed down” indicates that this wasn’t a “do it this way or you’ll not be allowed in the store” but more of a “Hey, looks like you forgot to utilize App Store Connect”. They don’t have to use App Store Connect (if they did, they wouldn’t be in the store). It’s just that Apple knows a lot of customers that use the App Store like to sign up IN the store, I’m one of those. Very likely, another “Hey” situation where the goal was for more people to know about their app. Which, I guess kinda worked because I didn’t even know about them before this.

For their sake, I hope they’re keeping really tight control on all of the payment information they’re receiving. They’re just one employee having a bad day (see: Twitter) from having all that information exposed. And SOME would say, that would be a pretty bad experience for their customers, too!

 

[Abazigal]

The fact that Apple charges the same rate for a similar service, but provides less services (i.e. hardware subsidization) is a sign of market distortion. In a competitive market, lower costs to the vendor = lower costs to the customer.

Apple's whole point is that they charge the same as everybody else, including PS/Xbox/Nintendo stores. What their obviously biased study fails to note is that they provide less than these stores.

This is also why when a monopoly is unavoidable, like utilities, they are forced into cost-plus pricing.

Let's raise a hypothetical scenario.

Say a future lawsuit forces Apple to reveal their App Store earnings, and it's discovered that the App Store is actually not as lucrative as the critics would have you believe. That while Apple takes in a lot of money from their 30% of paying apps, they also incur very high costs. The end result is that while there may be room to reduce the 30% cut, it can't be brought below a certain threshold (say 20 or 25% for argument's sake) without the App Store effectively being run at a loss.

Would people still insist on Apple lowering the 30% further and expecting Apple to effectively subsidise the App Store via hardware profits? The other option would be to increase the annual developer fee, but that would end up penalising the developers of free apps, which again, make up the bulk of them.

I agree that there will never be a 1-size-fits-all pricing policy which is going to make everybody happy, but what Apple essentially seems to be doing here is taxing the larger developers more, which they then use to subsidise the free apps that bring them no revenue, while still costing them money to vet and host. I can imagine why someone like DHH would baulk at the idea of forking over $30 of his $100/year email app service to Apple just like that, but I can also see why Apple is doing this.

I mean, ask any developer whether they are okay with paying Apple 30% and even if they were, who is going to say no to being able to earn more money? Ask the consumer and I am not really sure what the benefit to me is. Apps tend to be priced based on value, not cost, so a lower cut is not going to lower the price of the app in any meaningful way. I still see the value in all apps being forced to go through the App Store, where they are at least subject to some degree of policing and scrutiny by Apple (even if it's not perfect), rather than have to go through third party app stores. iTunes is still a very convenient way of monitoring app subscriptions and managing app updates.

Everyone is just looking out for their own interests here, and I am not so convinced that developers are the aggrieved "David" to Apple's "Goliath" they are painting themselves out to be here.

 

[tehabe]

The fact that they say Apple “backed down” indicates that this wasn’t a “do it this way or you’ll not be allowed in the store” but more of a “Hey, looks like you forgot to utilize App Store Connect”. They don’t have to use App Store Connect (if they did, they wouldn’t be in the store). It’s just that Apple knows a lot of customers that use the App Store like to sign up IN the store, I’m one of those. Very likely, another “Hey” situation where the goal was for more people to know about their app. Which, I guess kinda worked because I didn’t even know about them before this.

For their sake, I hope they’re keeping really tight control on all of the payment information they’re receiving. They’re just one employee having a bad day (see: Twitter) from having all that information exposed. And SOME would say, that would be a pretty bad experience for their customers, too!

I just wish you would read, what the actual issue was and not discuss an unimportant strawman which is rather pointless. The issue was, that people subscribed and were charged when the trial period was over. The developers thought this was a very awful consumer experience and didn't want their customers go through with this.

And honestly, I think those subscribtion trial periods should end automatically not re-new. It would make the the experience much better and it would also end a lot of fraud schemes, which also happened in Apple's App Store.

 

[jlc1978]

The apps I checked are cheaper when bought directly but it's definitely anecdotal evidence totally unsuitable to make broader reasonings.

It would be interesting to have proper statistics: sadly I found nothing online except unconfirmed ballpark numbers which I suspect were pulled out of thin air.

Same here. Would be nice if it were possible to get a proper sample. My guess, and it's just a gut feel, if there was enough evidence to support lower prices when the model is App Store / Web options lead to lower prices on the web someone would have already included that in a complaint to regulators with the data to show that.
[automerge]1595588451[/automerge]

I just wish you would read, what the actual issue was and not discuss an unimportant strawman which is rather pointless. The issue was, that people subscribed and were charged when the trial period was over. The developers thought this was a very awful consumer experience and didn't want their customers go through with this.

And honestly, I think those subscribtion trial periods should end automatically not re-new. It would make the the experience much better and it would also end a lot of fraud schemes, which also happened in Apple's App Store.

I would be suprised if a significant percent of those selling subscriptions would prfer a must renew after trial to auto-renew. That would result in fluctuations in revenue as people forget to renew, etc. The wholoe subscription model is based on obtaining and keeping subscribers, the easiset way to do that is auto renewal.

A better model would be advance warnin of renewal so those that want to cancel can.

 

[tehabe]

The wholoe subscription model is based on obtaining and keeping subscribers, the easiset way to do that is auto renewal.

I agree with that but it is not my concern. My concern are the customers who might not find where they can cancel the subscription. For example my Microsoft 365 subscription is currently going through the Mac App Store. And I was able to find where I could manage it but I'm not sure right now. And on Twitter it says they are in the iCloud settings, which is weird.

And not all auto-renews are created equal. I already pay for Microsoft 365 and I'm fine with that but that the trial period goes directly into the payment is not customer friendly, it can lead to abuses. Also it is completely fine, if you launch the app after the period is over and you get a window explaining that the trial period is over and you can subscribe to the app now for x euros …

And if a customer forgets to renew the subscription because he forget the app, than the app didn't have any value for them anyway. So it is essentially way too expensive for them anyway.

Apple should have introduced paid upgrades instead with caveat that older versions should be supported for a while after a release of a new version. Would also have avoided that there is "1Password 7" now …