Apple Faces New EU Antitrust Complaint Over 30% App Store Commission Rate

[pasamio]

Me: I want to sell my stuff in your building and pay rent.

Apple: Sure. Only rent's a percentage, not a flat monthly fee. Also we're opening a new store in the same building that sells the same stuff you do but doesn't have the rent overhead 'cause we own the building so we can undercut the **** out of your business.

Me: wait

The rent argument doesn't make any sense. Malls charge all their storefronts rent. Malls do not also open up their own stalls with the same product as their stores after noticing how successful those stores are. Apple does this regularly. They definitely have a case for a very flagrant conflict of interests here.

You're right the comparison to rent is wrong, it's more like a store (maybe an...App Store?) where a portion of the payments made have the vendor take a cut.

If we go down one step further, the stores in those malls will quite often take a cut of the merchandise they are selling (their markup) and many stores will sell not just products from others but also will sell their own in house developed merchandise. These same stores may also refuse to carry my merchandise if they don't think it's going to sell either. You can pick plenty of examples such as grocery stores that offer their own branded products along side product they sell manufactured by others.

If you don't want Apple to take a cut, don't sell in their marketplace.

 

[mtrm]

I can see the point of Kobo here. We are not talking about Apple’s cut on an App sale. We are talking about a user purchasing something that is stored on a 3rd party server, created and published by 3rd party and that in no way takes any resources from Apple. I’d understand a small percentage (say 5%) to cover payment processing fees, but other than that is just unfair.
if we were talking about the cut on the sale of paid apps, then Apple is entitled to charge whatever % they want, since it’s their store and they are free to set their own rules.

Really, basic payment management thats all you think Apple provides for the 30%? How about the hundreds of terabytes per day in bandwidth for pushing those app downloads and updates?

You think thats free? It costs an insane amount of money to provide that.

If I published a free app without any in app purchases, it was downloaded by millions of users and I updated it frequently, Apple would have all the costs inherent to have the app available on the App Store (server storage and bandwidth to push the updates), and all they’d get from it would be the developer fee paid yearly, no? Can’t see why it should be different for any other app in which it’s content takes absolutely no resources from Apple (apart from the payment processing fees). It would be akin to Amazon charging Valve 30% for every purchase on Steam made on computers bought off Amazon. It makes absolutely no sense.

just my 0.02

 

[Glideslope]

Here in the EU we need to refill our popcorn buckets watching the cold civil war taking place in the US between level headed, science/fact driven folks and red hatted, fact free nuts while you let a pandemic and (valid) protests spread...

You do realize even original US anti-trust/monopoly laws like the Sherman act were intended to stop behavior like Apple's... too much domination and concentration makes not only an anti-competitive market, but a less innovative one in the long run. The US just re-interpreted the meaning of the Sherman act in the 80s.

Thanks for the update.

 

[jlc1978]

The reason is that Apple don't have a store that competes with amazon.

Any digital service Apple want to compete with has a fee to steal their profits. Clear evidence of anti-competitive behaviour. Businesses should survive on their own merit, not the merit of other departments.

If Apple set up Apple Music as another company, and charged them the same fees as anyone else, with a different board of directors, it might be OK.

Huh? companies often have internal structures that are their own P&L and make transfer payments for services they receive.
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Here in the EU we need to refill our popcorn buckets watching the cold civil war taking place in the US between level headed, science/fact driven folks and red hatted, fact free nuts while you let a pandemic and (valid) protests spread...

You do realize even original US anti-trust/monopoly laws like the Sherman act were intended to stop behavior like Apple's... too much domination and concentration makes not only an anti-competitive market, but a less innovative one in the long run. The US just re-interpreted the meaning of the Sherman act in the 80s.

However, you must look at the entire market, not just one sliver of it. Apple does not have a dominate marketshare in the smartphone app market.

 

[pasamio]

If I published a free app without any in app purchases, it was downloaded by millions of users and I updated it frequently, Apple would have all the costs inherent to have the app available on the App Store (server storage and bandwidth to push the updates), and all they’d get from it would be the developer fee paid yearly, no? Can’t see why it should be different for any other app in which it’s content takes absolutely no resources from Apple (apart from the payment processing fees). It would be akin to Amazon charging Valve 30% for every purchase on Steam made on computers bought off Amazon. It makes absolutely no sense.

just my 0.02

Your original post mentioned "It would be akin to Amazon charging Sony 30% for every purchase on PSN made on PlayStations bought off Amazon." which I have to believe you edited because of the reality Amazon selling PSN access through their store and likely bought off Amazon. However even with the examples of Amazon, Steam and Sony it's not a reasonable comparison.

In this case it would be akin to Sony charging 30% for every purchase made on devices bought off Sony, which is how that works. On a Playstation I can't buy anything on that device outside of the Playstation store either, just like an Apple device. Beyond the basic development tools to build for the Playstation, Sony don't inherently help you build your game for the Playstation, you have to do all of that yourself. You're paying to be a part of that ecosystem.

If Amazon made the device, made the operating system and made the store then there is our comparison and we have that in the Kindle devices. Amazon sell books as well and their eBook royalty options require you jump through a bunch of hoops. Their "70% royalty" (or 30% cut for Amazon) has to be "at least 20% below list price on Amazon for the physical book". You can't buy from a different book shop on the Kindle devices, to the best of my knowledge, which also means you're locked into their ecosystem and their costs. Amazon certainly doesn't provide any value add either beyond making it available to it's marketplace and consumers, you're paying to be a part of Amazon's marketplace.

The app developer has the option of not making an app, nobody forces them to make it. They could build a web app and put in what ever they wanted with whatever purchasing process they wanted and that could be put on any Apple device without approval.

Now the book example is one step further, they're a marketplace looking to put themselves on another marketplace (the iOS ecosystem) which also is a competitor for their own primary marketplace (books). Since Apple doesn't have a monopoly on mobile devices or book stores, there isn't an anticompetitive aspect there (the existence of Android and Amazon speak to that). The question then becomes is it reasonable for Apple to require that vendors selling digital products on Apple developed hardware using Apple developed SDK's delivered by Apple hosted stores a 30% charge for that? Personally I'd argue there isn't anything inherently anti-competitive about that.

Now if Apple required that the only way to get said content onto the device was to force people to buy it through Apple then I think it's a much stronger argument however the reality is that you can buy it elsewhere and load it onto your device. The comparison before the edit was to the Playstation which doesn't let you load untrusted content any more and even if you buy a physical copy of the game, the developer is giving Playstation a licensing fee there as well.

 

[dogslobber]

If you don’t like it get an android. It’s that simple.

This is the fallacy saying "if you don't like it then you can lump it". It's a lazy response.

 

[willentrekin]

Ironically, I believe 30% is what Kobo takes from authors who distribute their books directly via their platform. (I could be wrong on this, but 30% is fairly standard across the indie platforms like Kobo, Kindle, and Apple Books.) This is also why you can't purchase new books through Kindle's iOS app; you have to use either a Kindle or the Safari app to buy the book that then shows up in the app.

 

[macfacts]

I want to sell my stuff in your store without paying rent.

That's also one of the complaints, they are forced to use the apple app store, thus inserting apple as a middleman.

 

[Pixelsage]

30% is probably fair.

Labeling the fee as remittance for "basic payment management" is extremely ignorant of the work that's gone into making the app store as successful as it is today.

Apple has built a massive user base. How? By building best-of-class products, pouring tons of money into marketing, investing heavily into R&D, taking risks that paid off, developing quality software that they practically give away with their hardware, fighting wallet-piercing legal battles, caring for the unloved, empowering developers with tons of tools, and so forth. As a result, iOS users spend 70% more than Android users on average.

This is all part of what makes the app store successful. They don't do these things perfectly (far from it), but from a bird's eye view they tackle the whole package pretty well.

Complain about the 30% cut if you want. I've done it, too. But don't pretend to have an understanding of the business decision behind it if you're going to call it a "basic payment management."

 

[DeepIn2U]

App Store curation sucks. There's nothing I've found in the App Store that I didn't find elsewhere first.

Curators let through numerous scam apps, numerous apps that are straight knockoffs of existing apps with names changed, apps with malware… but if you used a round rect icon that looked like an iPhone for one of your buttons they'll make sure to reject your app lest your violate their trademark iPhone shape (which could be any round rect).

The App Store really is basic payment management with extras I don't want or need. For a 30% cut, devs can't even refund their users. And building for the app store after distributing direct is stage 4 CANCER and sucks the fun out of dev life.

Don't even get me started on the utterly retarded certificate management, which every dev loses hours on at least once a year (before they give in and wipe and re-roll everything because Apple's cert management doesn't work correctly 10 years in).

list for me, please, where one website distribution for an app was more successful?
WindowsCE
Windows PPC / PPC-PE
Series60 1st/2nd/3rd edition
(Go ahead list the Ngage here and you’ll fail as all games were pirated)
UIQ

these platforms existed long before iOS and App Store and Nokia tried their OVI App Store which failed miserably even though it looked promising did NOT have merely half the components of Apples App Store nor Google Play’s Store.

so go ahead show me a mobile device app where direct distribution outside an internal corporation was more successful than the App Store. I’ll wait.

 

[DeepIn2U]

Before Apple Music and Books it was fine to take 30% but if Apple takes a 30% of it’s own app sales it still goes to Apple 😂 it’s anticompetitive

that's funny as Apple Music streaming’s fees matched Spotify’s until Spotify charged more. It wasn’t forced to do so, they chose to and pointed to Apple for this.

I hope light about how many of Spotify’s PAID subscribers are on iOS vs Android. Also the speed of uptake quarter after quarter since launch on each platform.

as that stands between these two services and apps, Spotify is more successful. No much of an argument there. Lastly who’s paying artists

 

[Naaaaak]

list for me, please, where one website distribution for an app was more successful?
WindowsCE
Windows PPC / PPC-PE
Series60 1st/2nd/3rd edition
(Go ahead list the Ngage here and you’ll fail as all games were pirated)
UIQ

these platforms existed long before iOS and App Store and Nokia tried their OVI App Store which failed miserably even though it looked promising did NOT have merely half the components of Apples App Store nor Google Play’s Store.

so go ahead show me a mobile device app where direct distribution outside an internal corporation was more successful than the App Store. I’ll wait.

Every mobile distribution mechanism including the Crap Store sucks. Except the Crap Store is required for iToy devices, charges you 30% for sucking, and makes dev life hell.

Most-everything mobile is just a crappier version of what was mastered on desktop decades ago. MacUpdate and Versiontracker (back in the day) were much better for app discovery in days of Classic and early macOS than the Crap Store has ever been. Distribution was: link to your website. Couldn't get simpler.

 

[Tech198]

EU again?

 

[jlc1978]

This is the fallacy saying "if you don't like it then you can lump it". It's a lazy response.

Perhaps, but the truth of the matter is:
1. As a consumer, you have to decide if the limitationms of the Apple ecosystem is acceptable and their devices meet you rneeds. If the answer is no, you need to find another solution
2. As a developer, you have to decide if Apple's cut is worth the potential sales to Apple's user base.If you can do better elsewhere then do so.
3. As a content provider, the situation is a bit more complicated, as you can create a free app and sell subscriptions separately outside of the app store. There, the decision is will Apple bring in enough additional subscribers to justify a 30% cut, and what percentage can I convert to direct subscriptions?

In the end, it is a simple matter of weighing the pros and cons and making a choice.
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Ironically, I believe 30% is what Kobo takes from authors who distribute their books directly via their platform. (I could be wrong on this, but 30% is fairly standard across the indie platforms like Kobo, Kindle, and Apple Books.) This is also why you can't purchase new books through Kindle's iOS app; you have to use either a Kindle or the Safari app to buy the book that then shows up in the app.

OMG!!! EU should investigate Kobi for taking such a large cut and anti-competitive behavior.

I would hope Apple points out that to the EU in response to Kobi's complaint, arguing it is an industry standard cut.

Karma would be an EU rule limiting the cut for any electronic distribution, books, content, music to say 10% or 15% and see Kobi's response. They'd be hoisted by their own petard.

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That's also one of the complaints, they are forced to use the apple app store, thus inserting apple as a middleman.

I don't agree with this whole "forced" argument. Companies decide if they want to tap into the Apple user base, and can decide not to if they think it is a btter move. It's like the Snapper CEO years ago who turned down Walmart when they wanted to sell Snapper mowers. He famously said “I could go to my grave, and my tombstone could say, ‘Here lies the dumbest CEO ever to live. He chose not to sell to Wal-Mart.’ “


Content providers have options other than the app store. Every streaming service I have runs on iOS/TVOS/iPAADOS/OS X and none of the subscriptions are via an app store.

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30% is probably fair.
As a result, iOS users spend 70% more than Android users on average.

Which is why developers and others are on iOS.

 

[T-R-S]

I was getting paid $0.00 for my work before the App Store. I can live off what I make from Apple but I sure do enjoy the extra income. 30% is totally reasonable when you consider the cost of and mark up of brick and motor retail store - you are going to be paying them far more that 30%

 

[dogslobber]

Perhaps, but the truth of the matter is:
1. As a consumer, you have to decide if the limitationms of the Apple ecosystem is acceptable and their devices meet you rneeds. If the answer is no, you need to find another solution
2. As a developer, you have to decide if Apple's cut is worth the potential sales to Apple's user base.If you can do better elsewhere then do so.
3. As a content provider, the situation is a bit more complicated, as you can create a free app and sell subscriptions separately outside of the app store. There, the decision is will Apple bring in enough additional subscribers to justify a 30% cut, and what percentage can I convert to direct subscriptions?

Go study ECON 101 to understand markets and market governance.

 

[jlc1978]

Go study ECON 101 to understand markets and market governance.

Heh. Econ 101, better know as Econ for Poets. Ok Here's a bit about markets and regulation. There are a number of things to consider if a company is a monopoly. The first is market power. Apple does not set prices and that the force others to follow. There are plenty of competitors who sell products for far less than Apple. Another is market size, and Apple does not have anywhere near a dominant market share. Of course, that gets to the question of what is a market, and in Apple's case it's not just the App store. That's like saying BMQW is a monopoly because they are the only one selling M cars.

Or, in Econ 101 terms, it's simple supply and demand - there is enough demand at Apple's price for them to provide the service and it be worth it to the developers and others on the app store..

Ulttimately, it comes down to what Merton Miller said: "The main question is "Is the consuumer hurt by the behavior." In this case, the consumer suffers no real harm as their are plenty pf comppetive choices should they not like Apple's approach. If anything, they are better of then when products are sold in boxes since the distributor, store, etc. all take a significant slice, raising proces and leaving developers with a much smaller cut as well.

Developers, hpowever, like it that iOS users spend more on average than Android users.

 

[DeepIn2U]

Every mobile distribution mechanism including the Crap Store sucks. Except the Crap Store is required for iToy devices, charges you 30% for sucking, and makes dev life hell.

Most-everything mobile is just a crappier version of what was mastered on desktop decades ago. MacUpdate and Versiontracker (back in the day) were much better for app discovery in days of Classic and early macOS than the Crap Store has ever been. Distribution was: link to your website. Couldn't get simpler.

ok you’ve a right to your opinion, and I can respect that. You haven’t answered my question though. There are plenty of apps in the App Store for iOS that have been horrible or never existed in desktop class regardless of platform; ever. Many apps just was not thought up before for a desktop OS and thus was not created before. Many are better refined and the kicker is it’s available to you 24/7 in just about any environment.

the argument for web delivered apps has been a very long timeput forth yet even Googles Chrome browser doesn’t fully deliver what we’re/we’ve seen for apps in mobile or desktop for decades now, not even since BBS era of connected networks.

downloading software or media has been around since 1986 that I recall (BBS) yet im sure you’d agree that even with high speed internet we have today web browser downloads doesn’t really compete well with BitTorrent (regardless of legal/illegal debate there) since it’s more efficient. many across the globe use both for various needs. Many use (S)FTP.

You never before could take good pictures from your desktop/laptop before. Not without a connection to your camera or smartphone beyond a selfie.

there are very great apps and a great ecosystem céntreles around mobile apps in an App Store.

the reason I mentioned those mobile platforms above was to highlight:

1. confusion of location of hosted apps on a website. I saw this heavily in Nokia S60, Pocket PC (PPC), and PocketPC Phone Edition (PPC-PE) for years. AltaVista, Yahoo, and Google searches would also point to various sources for an app. This leads to others making profits off the developers app which the developer would NEVER see.

2. security & trust of an app from the perspective of the end user. In situation #1 above many apps for those platforms were pirated, taken apart and new code added without you ever knowing. Al old site Symbian Freak would have a few before it was shut down in 2020.

3. loss of revenue and profits. Again with internet website hosted apps, means once downloaded it could be reverse engineered by code.Just ask Nokia how much money they lost, EA Games and many developers for the N-Gage & N-Gage QD! Both devices used MMC cards and once games were purchased at retail store rogue developers uploaded to sites like Symbian-Freak, All About Symbian, etc. What Nokia didn’t realize is the same chips in the each phone worked on 6600 (N-Gage) & Nokia 6620/6630 (N-GageQD) and newer services respectively. Huge revenues in the era of Nintendo GameBoy and GameBoy Advance (gen 1/2) was lost. Many of those companies never survived after. An App Store heavily protects against that and allows assurance your app is secure from piracy and ability to be destributed amongst a wide range of devices sold and supported by Apple. No messing about with new drivers like the desktop to support new video cards and codecs.

so there’s a lot, and more going on where an App Store helps. Microsoft and Apple both see a good use for having each on the desktop and I’m sure in 10yrs maybe the only way for all of us to download apps yet if that occurs restrictions we’re used to will need to change for the desktop.

 

[I7guy]

That's also one of the complaints, they are forced to use the apple app store, thus inserting apple as a middleman.

Nobody is forcing anybody to do anything. Consumers decide if they like the Apple ecosystem and if so buy the product. Devs decide if they want to develop for the Apple ecosystem and if so, use the mechanism that is in place. Where is this forced coercion everybody is talking about?

Net, net. Consumers get a better experience with some oversight. Devs get management tools to manage their portfolios. Is it perfect...not really. But not being perfect doesn't mean it's anything close to a disaster as has been promulgated by some.

 

[Chips Stephens]

Apples overall profits are the tell...
If you own apple stock, I get it , you don’t care.
Consumer, coders, and the like loose.
Apple wins.

What if this was an oil company?

Funny how the status quo works.....
Just saying.

 

[DeepIn2U]

Nobody is forcing anybody to do anything. Consumers decide if they like the Apple ecosystem and if so buy the product. Devs decide if they want to develop for the Apple ecosystem and if so, use the mechanism that is in place. Where is this forced coercion everybody is talking about?

Net, net. Consumers get a better experience with some oversight. Devs get management tools to manage their portfolios. Is it perfect...not really. But not being perfect doesn't mean it's anything close to a disaster as has been promulgated by some.

Awesome ... I've learned a new word today

well stated.

 

[Kyanar]

You're right the comparison to rent is wrong, it's more like a store (maybe an...App Store?) where a portion of the payments made have the vendor take a cut.

If we go down one step further, the stores in those malls will quite often take a cut of the merchandise they are selling (their markup) and many stores will sell not just products from others but also will sell their own in house developed merchandise. These same stores may also refuse to carry my merchandise if they don't think it's going to sell either. You can pick plenty of examples such as grocery stores that offer their own branded products along side product they sell manufactured by others.

Terrible example. It's more like a municipal authority saying that if you want to sell to anyone in their city, you're only allowed to do it in a single mall owned by them and must give them 30% of every sale, and 30% of subscription payments made for everything that you deliver to their house and you aren't allowed to tell the customers that they can buy the product outside the city.

Basically, Apple is acting like they have an entitlement to levy a tax on any product delivered through an Apple device, and that's wrong.

If you don't want Apple to take a cut, don't sell in their marketplace.

Except you can't.

 

[Baymowe335]

Good, topple that monopoly, where Apple gets a 30% cut for providing nothing other than basic payment management (compared to apps that are generally free) for the sale of services it does not render.
Or, if trying to be consistent, charge Amazon 30% for material goods sold through their app as well.

Ah yes, another person who doesn’t understand the value Apple brings.

 

[Kyanar]

Ah yes, another person who doesn’t understand the value Apple brings.

Standing at the door preventing you from accessing the customer is negative value. I'm happy to remove value subtraction.

 

[macfacts]

Ah yes, another person who doesn’t understand the value Apple brings.

Apple is taking 50% from newspapers. What value has apple provided?