Apple Must Let Dating Apps Offer Alternative Payment Methods in App Store, Dutch Regulator Says

[AppliedMicro]

Apple doesn't disclose the specifics so you cannot say with any authority that the costs are "small" compared to the revenue generated.

Yes, we can. We can infer that from their overall margin and their even (much) higher margins in thei „services“ segment, that are considerably higher than theirs on hardware products. And no, that huge „services“ volume is not due to Music or AppleCare. It has, historically also largely grown with app-store purchases and downloads. I’m not aware of any analyst in their right mind that would doubt that.

Perhaps Apple should charge more for iOS devices so that the costs of the operating system can be recouped?

They do already. Much more than the competition.

As a consumer I truly appreciate the one stop shop aspect of the Apple app store. If I have any problems I call Apple, when I have to pay, I only pay Apple, not some two-bit, no name processor chosen by a dev to save a couple of $$.

Did anybody say you‘d have to give that up, even if alternative payments options are allowed?

Just for fun, what do you feel Apple should charge? Do you have an educated opinion on this or are you just one of the many repeating that 30% is just too high without knowing anything about the costs of operating an app store on the scale of Apple's

I‘m not advocating for any specific commission rate.

But I can imagine a 15% commission rate would be largely „non-contentious“.

It would still be somewhat higher than other digital commerce payment processors but then, they‘re operating a premium experience, aren‘t they? They‘ve already introduced a 15% rate for certain types of subscriptions and recently for small developers. Even Netflix has brought in-app purchase recently (and they‘re one of the few that have some market power on their own to leverage against Apple).

Unsurprisingly, Google swiftly followed suit, with Apple‘s and Googles pricing almost mirroring each other. As I said, it‘s an oligopolistic market.

Where they seem unwilling to budge are major developers‘ accounts (large part of their revenue probably coming from to in-app gaming purchases) - some of which do have pockets and willingness to tackle Apple legally, at their 30% rate.

 

[icanhazmac]

Did anybody say you‘d have to give that up, even if alternative payments options are allowed?

Yes, this is the world I live in with my Macbook, apps exist exclusively outside the Mac app store so if I want/need them I am forced to provide all my info and financials to god knows what crappy processor and crappy customer service.

 

[123]

I am forced to provide all my info and financials to god knows what crappy processor and crappy customer service

What kind of info? Payment processing is highly regulated and audited.

 

[Sophisticatednut]

Apple IMHO offers just that, a great (not good), cost efficient in-app payment system with fair and competitive pricing. Most other digital stores are at 30% so why not Apple?

Apple and others would honestly need to provide evidence for that. Because others do it isn’t an argument to continue.

My issue with some comments on this topic is that people want to say that CC processing at retail varies from 3-5% or so, so Apple charging 30% is outrageous.

Well cc companies also pays for fraud, development costs and network upkeep etc. the outrageous part is apple forces you to ether use their IP or ban you from referring to their homepage such as Netflix

Apple charges the 30% to cover:

• the payment processing
• the development/upkeep/upgrades of the App Store (employing devs)
• all of the customer service for the App Store (paying salaries)

Seems fair to cover.

• all of the development tools that devs use to write apps (employing ore devs)

Apple could just take payment for Xcode and allow third party suites as they do now. You only need Xcode to sign your game made in Unity or UE5 or any other coding suit. In 2010 apple actually allowed third party programs to sign it without Xcode.

• marketing of the app store (paying more salaries)

Sounds doubtful

• developing hardware that attracts a large audience for the devs

That has nothing to do with the App Store. You can’t argue that iPhone and MacBooks should be payed by the App Store fees

All of that costs money, with apps being sold usually for $0 exactly where should Apple recoup the costs listed above? The $99 dev fee, that is a joke.

Same place as before, subsidizing the cost with hardware sales when the store wasn’t profitable

Keeping initial costs for devs low and charging a commission IMHO allows for true indie's to emerge. If dev costs go up to cover the "store" then the little guy gets squeezed out.

How about lowering the fee for the little guy to at cost with a let’s say 5% fee that then goes to 15% when they earn 1 million etc

 

[Sophisticatednut]

Because they are reader apps?

That doesn’t mean anything, just an arbitrary distinction apple recently made. Netflix still had to remove all references to their website to signup to circumvent apples fees. Apple might even be forced to remove fees for competing apps such as mail, Streaming music, tv etc

In the US it hasn't been overturned.

Irrelevant to EU

In the US apple's business model is not anti-competitive; so voting with your dollars is relevant.

Still irrelevant as this is EU.

 

[Sophisticatednut]

Yes, this is the world I live in with my Macbook, apps exist exclusively outside the Mac app store so if I want/need them I am forced to provide all my info and financials to god knows what crappy processor and crappy customer service.

Honestly that’s apple’s fault, because the Mac App Store is one of the worst stores in existence and illogical restrictions and massive fees. No wonder developers opt out when they have the chance as the store is not competitive.

Good idea, terrible experience

 

[Nuno Lopes]

Company management would have to be incompetent not to discuss how to gently get customers to buy their next product from the company.

Gently is indeed the keyword

No, it has been like that fee for decades when every store was a distribution site for software.

Warning … gaslight. Comparing physical retail to digital retail is like comparing Pages / Word with a Typewriter … Pages / Word is no Typewriter so shouldn’t be judged as sharing a baseline. Much less pricing models.

The fact is the pricing model of digital retail stores have been inspired by retail … like probably the first word processors ... naturally. The current situation might be an understandable phenomena … early ages of digital app retail … yet it needs to evolve has fast as profits. Because ones profit, is someone else loss, especially at a massive scale as it is happening.

If a business with 2M revenue a year had to pay 600k in “office”/hosting rent just would be moving offices pretty fast … unless there are very high lock in costs and …

By competitive market you mean Apple shouldn't control it's own app store?

Of course they should. But they should not be able to condition others to the point of indirect control. There should be regulations that keep balance in check for the sake of the general population ... in a capitalistic democracy I mean.

Who says? 30% is an industry standard, just not to your liking?

If such thing was standard it would be illegal … akin to price fixing. Now the reality is there are digital retail App stores that take as much as 5% .. or even less ... TODAY ... just not in iOS down to the policy maker. Oh, and that don’t charge date arrangements

It says there is no lock-in.

Maybe you aren’t familiar with the concept. But usually is applied when there is a no minor cost to change suppliers.

Let me try and make a drawing. If want to buy an apple (the fruit) you can get it from Joe in the corner, in the local market, supermarket, heck you can even to the producer tree and get one. Meaning the cost of changing suppliers if there is one is negligible. You don’t like one, change to another … and you still get the fruit you want .. no cost of change. So supplier compete for quality of service ... that includes pricing.

Now, if you move out of iOS to change App Stores … means selling all your devices, leaving your game / App licenses behind, … and many more losses. Meaning there are significant short term costs. This for customers. For digital suppliers means leaving 50% of their customers behind ready to be grabbed by competitors ... maybe even Apple

Hey, lock in is not illegal … in fact I don’t mind … successfull ecosystems naturally create gravity. It’s not particular to Apple / iOS … happens with Windows …

Just making sure you understand the term when used.

 

[Michael Scrip]

Warning… gaslight. Comparing physical retail to digital retail is like comparing Pages / Word with a Typewriter … Pages / Word is no Typewriter.

I think they were trying to say this:

In the old days when you sold a piece of software for $20... you didn't get to keep the full $20. There were fees, costs, etc.

And now when you sell an app in the App Store for $20... you don't get to keep the full $20 there either. Same reason.

Fees are inevitable. You're always gonna pay some kind of fee to someone. In any business.

We can argue about how much the fees should be... be it 10%, 15%, 30%, or whatever.

But the question: Fees YES/NO? is not up for debate.

There will always be fees.

 

[FlyingDutch]

These decision makers don't understand Apple's business model. They are applying old-world commerce thinking. Apple is GIVING so much to app developers, and then recovering that from purchases. So now they are expected to just give away the services and tools for free?

Yes, I think 30% was a tad too high. Apple's position on that is that it's a "standard retail markup", but that's in the brick-and-mortar marketplace, not the digital marketplace. Two totally different marketplaces.

If only Apple had started with a lower digital-friendly markup, would they be in this position?

30% was way too high... Twice the reasonable sum (15%). Rulers here in Europe don’t accept this kind of monopoly big Americans company are trying to enforce (see what is happening to Amazon and google too…).

 

[Darth Tulhu]

It‘s a two-way street. The app ecosystem and its „lock-in effect“ is the major reason why iPhone profits are so high.

The App Store is far from a loss leader today - cause it is subsidised by high commissions on in-app purchases. These dating apps are basically charging money for a service and/or in-app „enhancements“. The cost for Apple to enable these in-app purchases is virtually negligible.

On the other hand, their 99$ developer fee surely is a loss leader at least when it comes to more prolific developers / major accounts. Big app developers submit dozens of app updates each year. Does 99$ cover Apple reviewing all those app updates, moderating user reviews, etc.? Don’t think so. Especially when they’re offered for free to end users.

If the App Store were operated in a cost-covering way, I am quite sure Apple would have
1. charge higher yearly developer membership fes
2. and/or fees on a per-submission and per-download basis

Apple has chosen not to do so.


Neither are having electricity, interstate phone calls or transportation.
Yet governments offer, subsidise and regulate them.

When our society is comprised of a territory taking up over 3.7 million square miles, over life threatening biomes and urban infrastructure, yes it is.

Now, having a Tesla for transportation, independent solar for electricity, or your own satcom for communications is not.

 

[Michael Scrip]

30% was way too high... twice the reasonable sum (15%). Rulers here in Europe don’t accept this kind of monopoly big Americans company are trying to enforce (see what is happening to Amazon and google too…).

God yes. I wish Apple would just lower the commission rate to 15% for everyone. Not just the small "under-a-million" developers... EVERYONE. Period.

Finally put this crap to bed.

Though I'm sure there will be some developers pushing for 10%

?

 

[chucker23n1]

Fees are inevitable. You're always gonna pay some kind of fee to someone. In any business.

We can argue about how much the fees should be... be it 10%, 15%, 30%, or whatever.

But the question: Fees YES/NO? is not up for debate.

There will always be fees.

Yes, but what antitrust agencies are increasingly objecting to is the foregone conclusion that Apple is the only one who gets to define and collect the fees. In a hypothetical scenario where Stripe, say, can be used as payment provider, they could offer lower fees than Apple does (of course, Apple doesn't currently really say what their payment-related fees are), and Apple would be forced to compete either on price or on value.

 

[Nuno Lopes]

But the question: Fees YES/NO? is not up for debate.

There will always be fees.

Maybe that kind of level of discussion is down peoples brain capacity of today. Who knows.

PS: I tend to think that the "dumber" a society is the more concentrated is power. The more sophisticated ... the more opportunities of growth are open as power gets more balanced between the little guy and the big guy. I'm not very optimistic over the path we are taking at many many levels. I believe that there is no coincidence between the emergence of Big Tech in the last 10 years and us reaching the point of a new Cold War as well as Climate disaster ... that is what happens when we "cowboys" leading economics and the environment. At one side we have one delivering Meta, the other thanking the world for building is space d... and than we have old Tim calling his dues a Miracle acting angelical.

Don't look up. Hehhehe amazing satire.

 

[Michael Scrip]

Yes, but what antitrust agencies are increasingly objecting to is the foregone conclusion that Apple is the only one who gets to define and collect the fees. In a hypothetical scenario where Stripe, say, can be used as payment provider, they could offer lower fees than Apple does (of course, Apple doesn't currently really say what their payment-related fees are), and Apple would be forced to compete either on price or on value.

Apple's fee isn't just for payment processing, though.

You can't say "Stripe charges 3%... I'm gonna use them instead of Apple getting 30%..."

Apple's fee is the "everything fee" and payments is just a part of it. The other part is their commission.

If Apple is to allow external payments... they'll likely do what Google is doing in other countries.

If Google Play Store handles the payment... Google's commission is 15%

But if Stripe or PayPal handles the payment... Google's commission drops to 11%

Notice how Google's commission didn't automatically get erased if an external payment system is used. Google will still get their commission.

So yeah... you can shop around and find a different payment processor... but that won't eliminate the platform commission.

 

[chucker23n1]

Apple's fee isn't just for payment processing, though.

It isn't, but the problem is that a company like Match Group is big enough that the other things Apple has to offer aren't very interesting for it. They weren't asking for someone else to help do the marketing, or the hosting.

If Apple is to allow external payments... they'll likely do what Google is doing in other countries.

If Google Play handles the payment... Google's commission is 15%

If Stripe or PayPal handles the payment... Google's commission drops to 11%

Yep. The jury's out on whether that's an approach antitrust is happy with in the long run, or whether they feel that Google followed the letter of the ruling, but not the intent.

 

[Michael Scrip]

Maybe that is down to the American brain capacity of today. But I think most people in the world understand that for any given provided service, paying a fee is pretty much a given. A value transaction.

Maybe I made a mistake by thinking that the the exchange of opinions was more sophisticated than that

I know Apple offers value.

But you'd be surprised at the number of people who think they should be allowed to pay just $99/year and make hundreds of millions of dollars from the App Store. And tie up Apple employees with app review, server bandwidth, payment processing, ID services, etc.

 

[Michael Scrip]

It isn't, but the problem is that a company like Match Group is big enough that the other things Apple has to offer aren't very interesting for it. They weren't asking for someone else to help do the marketing, or the hosting.

True... but that's what the App Store is. It's an all-in-one marketplace, store, review center, payment processor, etc. Take it or leave it.

It sounds like some developers want Apple to burn the App Store to the ground and totally rebuild it in their image. To suit them.

Good luck Match Group, Epic, Spotify...

Yep. The jury's out on whether that's an approach antitrust is happy with in the long run, or whether they feel that Google followed the letter of the ruling, but not the intent.

So wait... do you think the antitrust legislators will try to say Google's 11% is still too much?

Good god... they already went from 30% to 15%... and now 11% if you use another payment processor.

When will it be enough?!?!?

 

[chucker23n1]

I know Apple offers value.

But you'd be surprised at the number of people who think they should be allowed to pay just $99/year and make hundreds of millions of dollars from the App Store. And tie up Apple employees with app review, server bandwidth, payment processing, ID services, etc.

I'll gladly pay $499/yr instead to have no app review, host the app myself, and deal with payment processing and ID services myself. And I bet Match Group would, too.

Now, there are reasons Apple doesn't offer that, and not all of them are financial. But it's nonetheless disingenuous to imply that it's a great deal — it's the only deal being offered.

Good luck Match Group, Epic, Spotify...

At this point, the tide is shifting towards "good luck, Apple", because Apple hasn't offered much in the way of appeasement.

So wait... do you think the antitrust legislators will try to say Google's 11% is still too much?

Yes, I think that's quite plausible.

 

[Michael Scrip]

I'll gladly pay $499/yr instead to have no app review, host the app myself, and deal with payment processing and ID services myself. And I bet Match Group would, too.

Yep... like a "self host" option.

Reminds me of Wordpress. You can pay Wordpress.com $25/month and they handle EVERYTHING. It's a complete turnkey solution.

Or you can download it from Wordpress.org and install it on your own server. And YOU are responsible for everything.

Now, there are reasons Apple doesn't offer that, and not all of them are financial. But it's nonetheless disingenuous to imply that it's a great deal — it's the only deal being offered.

Yeah you're right. It's the only option.

But should governments force companies to change their entire business model?

 

[Nuno Lopes]

I know Apple offers value.

But you'd be surprised at the number of people who think they should be allowed to pay just $99/year and make hundreds of millions of dollars from the App Store. And tie up Apple employees with app review, server bandwidth, payment processing, ID services, etc.

I know. I redacted my post. It was an unfair rhetoric.

On your point, yes indeed ... silly. But it is also silly that this site pays a fraction those 30% and probably a quick browse we download / and they distribute as much as an app. It looks silly that Facebook actually pays as much as $99 for hosting and distributing their app. Hey ... crazy values ... no wonder people get confused in the middle of the digital gaslight ... meta.

It's incredible that MS as reduced Office fees to a point of $15 a year per person down from hundreds, yet MS Office biz has never been so profitable. A great move, sometimes less is much more in the long run ... in the digital space. SJ understood that ... don't think Tim and co understand the concept ... but hey ... got a get to a trillion fast as possible ... Tim's legacy ... so different from SJ.

 

[Michael Scrip]

At this point, the tide is shifting towards "good luck, Apple", because Apple hasn't offered much in the way of appeasement.

Wait... didn't Apple finally backtrack and will allow one sentence and one link to a website to sign-up externally?

Progress!

?

 

[Sophisticatednut]

True... but that's what the App Store is. It's an all-in-one marketplace, store, review center, payment processor, etc. Take it or leave it.

It sounds like some developers want Apple to burn the App Store to the ground and totally rebuild it in their image. To suit them.

Good luck Match Group, Epic, Spotify...



So wait... do you think the antitrust legislators will try to say Google's 11% is still too much?

Good god... they already went from 30% to 15%... and now 11% if you use another payment processor.

When will it be enough?!?!?

They will say google made no difference as the cost is still exactly the same. Should google really have a right to take a cut of In-app purchases outside the store?
how about 0% or at cost?. If Walmart can sell me an iPhone and take a cut of Apple's profit, BUT also without taking a cut of Apple's iCloud subscription after I already bought it.

If Walmart can't take a cut of after market sales, why should apple and Google be able to take a cut of aftermarket sales? Should AT&T be allowed to take a cut of all online sales? should amazon take a cut of all sales on their servers? should all power providers take a cut for all things using their electricity? etc in an infinite chain of cuts on the end product?

this makes them currently the exception with zero justification

 

[Nuno Lopes]

Wait... didn't Apple finally backtrack and will allow one sentence and one link to a website to sign-up externally?

Progress!

?

It seams they are having technical problems with that one

 

[Nuno Lopes]

But should governments force companies to change their entire business model?

Well. That question makes no sense to me as business models are already regulated in many industries forcing changes between prior practice and the new practice ... sometimes even a ban. Would you care to rephrase it?

 

[Michael Scrip]

Well. That question makes no sense to me as business models are already regulated in many industries forcing changes between prior practice and the new practice... sometimes even a ban. Would you care to rephrase it?

Old way:
Apple makes a commission on every purchase in the App Store. It's been like that since 2008.

New way:
_______________________

What goes in the blank? How does Apple make money from the App Store?

It sounds like they need to come up with an entirely new business model if they are no longer allowed to make a commission.