Apple Discussed 'Punitive Measures' Against Netflix for Dropping In-App Purchases

[deevey]

I would argue they didn’t necessarily generate anything. I pretty much never ‘shop’ the App Store - I go in already knowing what I want.

I don't often go shopping on the store either. I and if a cheaper outside subscription model exists, I'll research and go that route instead (Spotify/Netflix). It's on the customer to find deals if they exist, not for Apple to point them in the direction of cheaper options.

But IF a customer discovers an app via the shopping route e.g. Spotify, and subscribes due to the ease of IAP's as an impulse purchase rather than finding out about it though other sources of marketing, that new subscriber is 100% a sale generated via the Apple ecosystem, and a sale deserves a cut.

Taking Netflix as an example, Apple doesn’t host their content and the only reason they host their app is Apple designed that to be the only viable option. They don’t deserve a cut for a monthly subscription that they have no part in supporting themselves.

That being the case, the company does not need to provide IAP's in the first place or pay the 30% (as is the case with Netflix).

 

[cyb3rdud3]

Someone will have to explain this to me like I am 5 years ago.

Netflix is saying you have to pay somewhere else to join/renew (I assume) and then you could use the app. Because apparently you can't use the app to purchase a membership or renew, correct?

Doesn't Walmart and Amazon have app's in the Apple App Store? I don't use those app's personally, but don't people buy stuff all the time using those particular app's? Why is app purchases allowed in one place and not another?

Netflix doesn’t want the in app payment because their customer churn is too high as it is too easy for their customers to cancel as well. It is their choice.

 

[AppliedMicro]

You want the government to tell a private business how they run their business

In limited circumstances, yes.

That’s not regulation, that’s Nationalization

No, it's not. Nationalisation is when the government takes control of business to own it.

Apple is a private (though publicly traded) company that is not owned (substantially) by governments. Regulating certain prices or access to some services (such as the App Store) doesn't change that and doesn't make Apple nationalised.

Regulation is “don’t hire anyone under 18 years old” or “please don’t use this substance we’ve determined is harmful to your health in your pre-packaged potato salad”. Nationalization is “The government will determine how much of a profit you make and will determine who you do business with, EVEN when there’s no national security risk because that other business is based in the US.”

Yes, these are examples of regulation.

Regulation of prices and/or access is another one. If limited pricing regulation is imposed on private companies, that, yes, that does restrict the free market a bit. But no, it's not nationalisation.

However, subtract “mobile” and you get banking, public transport and payments which are all handled perfectly well without a phone

No, they are not handled "perfectly well" without a phone. My credit card requires a smartphone app. So do some of my bank accounts. Some of them can't be opened without a smartphone. Other services are impractical or much more expensive to use without a smartphone.

To reiterate, it's not required to own a smartphone - it's just increasingly getting unpractical.

The vast majority of Americans never have to deal with customs declaration or visa applications, so including those are fairly questionable at best. It’s like they were added to pad the list because you thought it would have been too short otherwise

I didn't limit the examples to the US. Frankly, I'm not American, I don't live in the US and drew my examples from a range of countries.

 

[Unregistered 4U]

Apple is a private (though publicly traded) company that is not owned (substantially) by governments. Regulating certain prices or access to some services (such as the App Store) doesn't change that and doesn't make Apple nationalised.

I say nationalization because no US company is going to agree to the severe punitive ”regulation” examples you’ve provided. And, the only way to force them to happen anyway (for US companies, at least) is for the government to take over the company. Unfortunately, as it’s a US company, that may end up locking out all the non-US countries.

For example, depending specifically on what you’re asking for (say, Apple takes 0% cut on AppStore charging?), that is defining a condition where Apple could argue that they wouldn’t be able to continue to operate. They could also charge that it’s curiously specifically punitive considering other AppStores exist, but the same “regulation” isn’t required of them. Of course, it’s possible that there is a government in the world that knows more about running an AppStore than Apple and knows that 0% is very possible, but I would highly doubt it.

SO, that and several other “regulations” (like being forced to do business with an entity where there’s no business or financial benefit) would all be non-starters. They just wouldn’t happen in the US, legally. If the US government forces the point, they’d either end up spending huge subsidies on Apple to prop up the now “free” AppStore, or, if Apple’s smartphones and AppStores are defined as something VITALLY important by the US Government, just take over Apple.

One of the side effects of that is that now foreign companies might not want to do business with a Government owned Apple, so iPhones and the AppStore would just be banned in your country. Fortunately, there’s Android… unless the government takes over their AppStore, too. Now that I’m thinking this, why don’t governments who think this is critically important just create their own Android branch? There’s MILLIONS of phones out there where the government’s branch can be sideloaded and the government could even create their own AppStores making it easy to get access to critical government apps plus any other app the government feels is important?

My credit card requires a smartphone app. So do some of my bank accounts. Some of them can't be opened without a smartphone. Other services are impractical or much more expensive to use without a smartphone.

Oh, if you’re not American, I TOTALLY understand why your credit card and your bank accounts require smartphones. I wouldn’t use a card that requires a smartphone. But, then again, that’s only because I have the option. I still find it amazing that so many countries have decided that “WeChat is the only way we do official business”.

 

[TarJac333]

What do you mean?

bruh dont you know about San Francisco?

 

[AppliedMicro]

They just wouldn’t happen in the US, legally

They do happen. Though relatively rarely, compared to other countries.

I say nationalization because no US company is going to agree to the severe punitive ”regulation” examples you’ve provided. And, the only way to force them to happen anyway (for US companies, at least) is for the government to take over the company.

It still doesn't need to be nationalised. Antitrust rulings or legislation is is enough.

Standard Oil was broken up without the government nationalising the businesses. So was the Bell System. Intercarrier rates have been regulated by the FCC without nationalising the Telcos. The state of California regulates private companies' electricity rates through it Public Utilities Commission (yeah... that didn't always seem to work so well for the state and its electricity grid, did it?).

One thing we can definitely agree on: The company isn't going to take accept any such measure without doing their utmost in fighting it. Also, discoupling the App Store from the hardware manufacturing may be "difficult" (but then, maybe desirable for other government "agencies").

For example, depending specifically on what you’re asking for (say, Apple takes 0% cut on AppStore charging?), that is defining a condition where Apple could argue that they wouldn’t be able to continue to operate

I'm not advocating for anything specific. And a 0% cut would would obviously make them lose money on operation of the App Store itself. But would they shout it down? Unlikely, considering they're making huge money from hardware sales.

On the other hand, the App Store itself technically very little "service" for subscription-based services like Netflix. Especially compared to the 15% or 30% tax of all subscription revenue. Apple doesn't do much more than hosting a few MB to distribute an App downloads. All the heavy lifting of the streaming is done on Netflix's servers.

Does Apple provide developer tools? They do. Though you could argue that do the same for any developer that wants to distribute his app for free - and they recuperate their investments from hardware sales.

I TOTALLY understand why your credit card and your bank accounts require smartphones

So I've opened a couple of bank accounts online, do the ID check through an app. In some cases this was the only way to do it.

What's preventing Apple from charging 15% or 30% of my monthly bank account fees - going by the same or very similar logic they've tried to apply to gaming or streaming services?

I signed up into the banking service through an app from the App Store. And the bank is making money of my "subscription" to such services.


In the end, I believe, there's almost a de facto duopoly (in the US) for mobile app download platforms.
With estimated (though disputed) operating margins above 70% and indications for Apple leveraging their market power, they will be increasingly scrutinised by governments and regulators.

They better manage a fine line operating as a neutral platform provider charging "reasonable" fees - or shouldn't wonder if they get sanctioned.

 

[sidewinder3000]

"We do not retaliate or bully people. It’s strongly against our company culture.” - Tim Cook.
So that was a lie under oath.

This is the type of pretzel logic that has our country tied in knots.

How was it a lie? Apple clearly worked hard to try to make Netflix happy and did nothing to retaliate. There was no bullying present in the case at all. Your post was the lie.

 

[sidewinder3000]

The “churn rate” is exactly why users should have the option to pay via the App Store. There is more churn because users are more aware of their spending and can easily start or end a subscription.

One of the great advantages of the App Store is for a user to be able to see all their subscriptions in one place. This gives the user more control over their spending and finances, which is ultimately a win for consumers. For this reason, I wish that Apple was able to force companies like Netflix into providing an option to pay through the App Store.

 

[Unregistered 4U]

In “General purpose computing” news, we have the release of a calculator app for the Switch. I’m sure it ranks up there with the other AAA games. Since the Switch only plays games, you see.

Calculator for Nintendo Switch - Nintendo Official Site

Buy Calculator and shop other great Nintendo products online at the official My Nintendo Store.

www.nintendo.com

 

[Okta]

The “churn rate” is exactly why users should have the option to pay via the App Store. There is more churn because users are more aware of their spending and can easily start or end a subscription.

One of the great advantages of the App Store is for a user to be able to see all their subscriptions in one place. This gives the user more control over their spending and finances, which is ultimately a win for consumers. For this reason, I wish that Apple was able to force companies like Netflix into providing an option to pay through the App Store.

Yup. It's also a source of marketing for those Apps, not to say anyone who hasn't been living under a rock hasn't heard of Netflix by now but people discover those services in the App store and Apple deserves to be compensated for that.