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Apple Lobbying Against Arizona Bill That Would Let Developers Use Third-Party Payment Options
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I may not understand (or care) what Apple provides that Epic doesn't, but I do understand context.
Maybe you should have read for context. My comment had nothing to do with anything you're soapboxing. If a dev wanted to go 3rd party they would have to evaluate the value of doing so. If they want to stay with Apple's processing the same calculus would be in play. It would be a matter of choice. Regardless, none of the things claimed in that comment by ruka.snow would be true... which is what my comment is about.
I must admit I'm surprised it's lasted this long.
The model of locking down software to the devices and demanding 30% or whatever of all money that moves always seemed like something that wouldn't last. Still it's been around for a dozen years and all parties involved have a lot at stake so I don't imagine it'll wrap up any time soon, but we are seeing more and more push back against the model so I'd say long term it's probably got a limited shelf life.
It's best for consumers to have competition, but it's also hard to argue with the security advancements that have come with the walled garden... it'll be interesting to see how this plays out. Ultimately it'll be a game of and for lawyers and billionaires, not the common phone user anyway. Whoever get's our dollars, I doubt we'll be spending less of them
The model of locking down software to the devices and demanding 30% or whatever of all money that moves always seemed like something that wouldn't last. Still it's been around for a dozen years and all parties involved have a lot at stake so I don't imagine it'll wrap up any time soon, but we are seeing more and more push back against the model so I'd say long term it's probably got a limited shelf life.
It's best for consumers to have competition, but it's also hard to argue with the security advancements that have come with the walled garden... it'll be interesting to see how this plays out. Ultimately it'll be a game of and for lawyers and billionaires, not the common phone user anyway. Whoever get's our dollars, I doubt we'll be spending less of them
I may not understand (or care) what Apple provides that Epic doesn't, but I do understand context.
I agree with you that ruck.snow's comment is a bit over the top. But speaking about context, "more choice" does not necessarily translate to "better". Let's leave Apple's interests (which are obviously getting more profit) aside for a second and focus on the consumers and the developers.
This is the summary of the current Apple rules:
- The consumer benefits from having one central account and one central payment processor, a third party cannot trace the payment data and often doesn't have access to personal data. This results in better security and data protection. At the same time, the consumer is forced to create an Apple account to use the system, which can be seen as a drawback.
- The small-time developer benefits from the Apple fee structure, as giving away 15% of the revenue is ultimately cheaper than doing your own hosting, distribution, accounting, cloud storage and other things. On the other hand, large developers could probably do many of these things cheaper, so they feel like they are paying Apple too much. In a certain way, App Store is based on the solidarity principle: the few successful app developers are funding the infrastructure that is used by everyone. This is one of the reasons why App Store and the iPhone has been so tremendously successful — it offers very low cost of entry for the developer and it has strict regulations that maintain software quality.
Now, what would happen if alternative payments were allowed:
- If popular apps were to move to a third-party payment system, the consumer would need to maintain multiple payment accounts and monitor multiple payments. Financial data tracking would become available to a third party. All this has major security and data protection implications. On the other side, some apps might become slightly cheaper. Overall, I would classify this as a big loss for the customer.
- For the developer, this basically means that the larger devs will have their profits increased, while the smaller dev won't see much change. At the same time, this would allow the big dev to put pressure at the small dev, since bigger companies could offer slightly better prices and of course, they won't need to contribute tot he App Store economy anymore. Again, the only winner here is the big company. Everybody else is a loser.
Bottomline: the right to choose a payment system on App Store benefits only the large developer and data trackers. It does not benefit the customer (ease of use, privacy, security), it does not benefit the small developer (access to the infrastructure funded by more successful developers, simplified processing). I suppose a political argument can be made that "successful devs are not supposed to pay for failing/poor devs", but I believe that argument is extremely silly. This is not a democracy, this is a "dictatorship". Just because someone as a person believes in a particular economical model, it does not meet that a private company — Apple — should be required to implement that model in the platform they have built up.
Finally, a big question is that of fairness and abuse. The only reasonable argument I have heard so far is that being the censor, executor and payment gateway gives Apple too much power. This is something I agree with. But this can be solved: by placing restrictions on how this power can be applied, maximal level of acceptable fees etc. IMO, this is where the discussion is needed. All the talk about "choice" is just a misdirection from a small group or ultra-successful devs who want to increase their profits. Companies like Epic are no friend to the customer or the developer, and their shady business practices have proven it over and over again.
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It will fundamentally alter the revenue dynamics and make Apple rethink fees across the board for the app store; which could result in higher fees or new fees for developers to replace those lost from IAP.
Exactly. Big developers could absorb fee hikes and new fees for things Apple currently provides as part of the $99 developer fee. Not only can they negotiate lower fees for purchases, but can better handle things like chargebacks that could break a small developer. For example, if Apple only hosts the app they have no way of knowing if a developer refunded or had a chargeback, so they would simply allow continued use and updating. There is no upside to them adding a mechanism for deauthorizing an app that was not purchased through them.
Exactly. I don't expect to see price drops if they could bypass IAP. they just want more of the money.
When do politicians really think about unintended consequences rather than blame someone else when things go south? Wasn't AZ the state that gave a large credit for converting cars to propane and discovered people would convert to dual fuel, collect the credit because it was greater than the conversion cost, and run on gas anyway?
The challenge is how will Apple redo their fee structure to recoup lost revenue if major developers use 3rd party payment processors? Big developers could absorb it but small ones are unlikely to be able to do that, or if they are high enough even develop for iOS.
Right now Apple bundles its services into one $99 fee and offers free development tools; knowing IAP will cover their costs as well and help make a profit. Take away IAP and Apple could unbundle the services and charge for them; raising the cost to developers as well as potentially making them pay upfront without any idea if the app will make money. Currently, a developer can launch an app for $99 plus whatever time they invest in it and make it free if they want; the dynamics change if that cost goes up significantly.
I've had some apps say they cannot be downloaded from a specific store, so while they don't geofence it appears apps are not universally available.
True, but that does not mean the manufacturer has to make it easy to so do.
This proposed law is problematic for a number of reasons. For one thing, it would mean that Apple and developers would have to agree on a way of tracking what was sold in-app so that Apple could make sure developers were paying the 30% or 15% that they owe Apple when they make certain in-app sales. As it is the payments go through Apple so it knows what's sold and can just keep its portion and remit the rest to developers. With this law developers would presumably get the money from such sales and then have to remit Apple's portion to Apple. The law as written wouldn't change the reality that, as a condition of licensing Apple's IP, developers owe that money to Apple.
That said, these proposed state laws are just for show. It's possible some might pass, but they're still just for show. Whether Apple can condition the licensing of its IP on licensees agreeing to use its payment systems when they monetize that IP in certain ways is a question of federal law. Federal law preempts state law in this area - i.e., when it comes to copyrights. States generally don't get to decide for themselves how federal copyright holders get to exercise their copyrights. If federal law - as interpreted by federal courts - allows copyright holders to place certain conditions on the use of their copyrighted material, then states don't get to prohibit those conditions.
That said, these proposed state laws are just for show. It's possible some might pass, but they're still just for show. Whether Apple can condition the licensing of its IP on licensees agreeing to use its payment systems when they monetize that IP in certain ways is a question of federal law. Federal law preempts state law in this area - i.e., when it comes to copyrights. States generally don't get to decide for themselves how federal copyright holders get to exercise their copyrights. If federal law - as interpreted by federal courts - allows copyright holders to place certain conditions on the use of their copyrighted material, then states don't get to prohibit those conditions.
Yea. Maybe the legislation should be amended so that any app using a 3rd party may not collect any information beyond email and CC number and only be able to use it for payments, unless the user specifically opts in to allowing it to be used for other pruposes. Let's see how fair the Fair is in the Coalition for App Fairnes...
There are copyright issues. We don't always get to use things we buy however we want; copyright holders can place conditions on the use of their copyrighted material.
That said, what you suggest might be true. But even if we have the right to use the things we buy - e.g., iPhones - however we want, that doesn't mean that the companies which make those things - e.g., Apple - have to build them to work however we want. Apple generally gets to, and should get to, decide how the devices it makes work. We get to decide, in light of how they work, whether or not to buy them. Once we do, we might have the right to try to change how they work. But that's quite different from Apple having to facilitate such changes. My right to modify a car I buy from Ford in certain ways doesn't, and shouldn't, oblige Ford to make its cars such that it's easier for me modify them in such ways.
Do what you want with your iPhone. And let Apple build its iPhones to work how it wants them to.
Here’s something Apple could do: allow all non-game apps to offer their own IAP alongside Apple’s. Then the customer can choose if they want to pay 15% or 30% more or not. Many may choose Apple’s IAP because they think it’s more secure or they like the way Apple handles subscriptions and want all their subscriptions/App Store payments in one place. But it would be the customers choice. I still think this would be better than alternate app stores or side loading.
Apple also needs to revisit what qualifies for their cut. I‘m sorry but if I can buy physical goods via an app using the payment info I have on file with that company I should be able to buy digital goods there too without Apple needing to take a cut. Why does Apple deserve 30% of Kindle book sales? Kindle books would exist whether iOS did or not. Having to go outside the Kindle app to buy books to read in the Kindle app is just a poor user experience.
Apple also needs to revisit what qualifies for their cut. I‘m sorry but if I can buy physical goods via an app using the payment info I have on file with that company I should be able to buy digital goods there too without Apple needing to take a cut. Why does Apple deserve 30% of Kindle book sales? Kindle books would exist whether iOS did or not. Having to go outside the Kindle app to buy books to read in the Kindle app is just a poor user experience.
Let’s not forget when the App Store was first announced Steve Jobs said Apple wasn’t looking to make a profit with it. Of course once Apple realized how profitable it could be (and once hardware sales growth started declining) then it was a huge goal to grow App Store revenues/profits. Apple could offer non-game apps the ability to use their own IAP and the App Store would still do very well.
This is a time honored wedge strategy, try to get a win in 1 out of 52 attempts, then work the appeals process to federal court and get a blanket ruling. Though I do wonder why Epic is OK with paying a 30% cut to MS and Sony, but not Apple and Google. Guess they don't want to take everyone all at once.
Perhaps the issue is the agency model. It didn't sit too well with ebooks either. Perhaps it's time to force a wholesale business model. Apple negotiates a per-download wholesale price and purchases an inventory of digital downloads from the dev. Then Apple can mark up the price, sell at a loss, or give the app away for free. Or even move the entire store to a subscription model and let customers download whatever they want for a monthly or annual fee. Then switch Xcode to a subscription model like MSDN. Of course, that will mean trimming the inventory in the store, no more free-for-all. Other app stores or direct downloads can be allowed, but with the understanding that Apple can not be held at all liable for any side effects from outside apps that haven't been reviewed and vetted by Apple.
This way Apple can decide which developers' apps to carry in the store. It can simply stop purchasing and selling apps it doesn't want anymore - no justifications needed.
Perhaps the issue is the agency model. It didn't sit too well with ebooks either. Perhaps it's time to force a wholesale business model. Apple negotiates a per-download wholesale price and purchases an inventory of digital downloads from the dev. Then Apple can mark up the price, sell at a loss, or give the app away for free. Or even move the entire store to a subscription model and let customers download whatever they want for a monthly or annual fee. Then switch Xcode to a subscription model like MSDN. Of course, that will mean trimming the inventory in the store, no more free-for-all. Other app stores or direct downloads can be allowed, but with the understanding that Apple can not be held at all liable for any side effects from outside apps that haven't been reviewed and vetted by Apple.
This way Apple can decide which developers' apps to carry in the store. It can simply stop purchasing and selling apps it doesn't want anymore - no justifications needed.
Just a random question... but why would many of you wish for a third party app store, instead of wishing to download the app straight from the developer? Why wish for another middle-man?
Who is most people? Most people, imo, who are ordinary consumers don't care about this.
People want to use their phones in an effective manner that will keep them safe. The people who seem to be sick of it, are Apple observers with no skin in the game, no stock, no products, no services (at least from what I can gather) They just want Apple to be regulated and burdened.
I'm not really sure how "better" became part of the conversation because nothing in my comment implies I think having a choice is better. Better would be determined by an evaluation of the services by the dev. Really really not sure how we got to consumers, but hey, I'll adjust. I take issue with almost all of your arguments because the assumptions you've made don't stand scrutiny.
Consumers - Here you conflate consumer payments and vendor payment processing into a single entity: one central account/one central payment processor. This is flawed for a number of reasons. Primarily because those two things are not even remotely related contextually. Consumer payments aren't often one central account either. There can be multiple credit/debit/gift cards associated with a consumer's account. Also, your wrong about 3rd party access to payment data. The 3rd parties the consumer uses to make the payment (banks, credit unions, card companies) have access to that info, as well as access to personal data. Whether or not the payment processor is Apple or another company doesn't change that. Contrary to your claim, consumers would not need to monitor and maintain multiple accounts. Backend processing is not a consumer facing process. It's invisible to them. Consumer would simply continue doing as they always have. Payment process is a vendor/developer facing process.
Developer - Your assumption that 15% to Apple is cheaper than using 3rd party processor is based on what? Certainly not factual info because there isn't any right now. We 100% agree a large dev could probably process payments cheaper than Apple currently does. Where we disagree is on the assumption that 3rd party processing would have to be more expensive for the small dev. Why assume that? Wouldn't a more likely scenario exist where the 3rd party processor offers cheaper rates than Apple to entice devs to use their payment systems? Your argument about who benefits falls apart if 3rd party processors charge all devs less. Would using an alternative processor be more complicated? Maybe, maybe not. Depends almost entirely on the robustness of the system being offered. That goes back to the dev to make an evaluation of the value in switching payment processors.
Until we get more info, none of the things you postulated can really be considered a valid argument since they're all based of facts not in evidence.
What?
Most people based on...what data?
I didn't say Apple is going broke, where did I say that? Apple is in it to make money, and if the App Store brings in a small profit, it's not worth it for Apple to run it.
Talk about illogical hysteria...
Honestly I don't know what the hell you are talking about.
Out of all the apps I use only two of them are games. The rest I "discovered" all on my own by searching the App Store.
I may not understand (or care) what Apple provides that Epic doesn't, but I do understand context.
See? That's just the thing. I read your comment, and nothing he said was wrong or all over the place. Yours was though.
Stating "Big companies would use cheap payment providers, but these providers would be simultaneously too expensive for small devs? Huh? Disregarding the illogic, the small devs could continue using the cheaper 1st party solution" -- to which I gave you prime examples of why those are expensive to smaller companies with lower volumes.
Who is saying that the same $99 charge per year would continue without the critical mass they have today? I gave you a short list of 4 very costly things they provide for that fee and a 15-30% cut. Do you think that infrastructure is going to be economical to provide at that nominal cost with less using it? Because that is what is truly illogical to assume.
You fail to note that Epic is in this only for money. It isn't that they don't want to pay 30% of the cut... you can see that in the fact they dropped the price of what was $10 down to $8. A 20% cut. They now have to pay all associated merchant processing fees themselves, so the real number they're clearing is likely very close to what they had previously. What they want is for others to pay them those same fees, which while on paper lower, are far more costly to a small company.
To be fair, P&G would be paying the the $99 per year slotting fee. That is really what people arguing for this are saying. "I'm big enough that I don't need you to ring up my product. I can handle the payment. But I will pay you a whole $99 per year and that will cover all I owe to your store to put my product on your shelf so MY customers can find (discover), pick up off the shelf (download), and pay me directly (third-party payment options)."
Free apps = free to the user. Meaning you set the price to download to $0.00. You pay the $99 to have your app on the store. Since we are talking free apps there are no "cut of [your] profits."
Obviously, Apple is hosting, but the point holds. Are you trying to be purposely obtuse, or just pedantic?
That has been in Apple's terms and conditions for many, many years. In-app purchases through Apple for anything that ends up on your phone. No in-app purchases allowed for any physical goods, like transport, buying food in a supermarket, Amazon delivering physical books, CDs and DVDs (but not ebooks or audiobooks, and downloadable music).
And there is the fact that Apple provides services for free apps for free and paid apps pay for the services for everyone. Which seems fair. There's no reason why Uber should contribute to the cost of distributing a free app, but a paid for app should.