Apple Says Tile Trackers Sold Poorly in Apple Stores

[MacRumors]

Earlier last month, Spotify, Tile, and Match (owner of Tinder), testified at an app store antitrust hearing spearheaded by the U.S. Senate. During the hearing, Spotify called Apple's App Store "an abusive power grab," while Tile said Apple uses its platform to "unfairly limit competition for its products."

Now, in response to their testimonies, Apple's vice president and chief compliance officer, Kyle Andeer, has sent U.S. Senator Amy Klobuchar, who's overseeing the hearings, a letter signaling out Apple's response. In the letter, Apple says that Spotify, Tile, and Tinder are some of the "largest and most successful [developers] on the App Store" and that their testimonies focused "more on grievances related to business disputes with Apple than on competition concerns with the App Store."

Spotify has been one of the most vocal critics of the App Store and has long called into question Apple's in-app purchasing system that gives it a 30% commission on all purchases made. Apple has called its own system both secure and safe for users and developers, and Spotify aims to challenge that declaration. During the hearing, Spotify stated that Apple should allow third-party payment methods on the store if it truly believes that its own system is "superior."

If Apple is convinced that their payment system is that superior, that it really should command a 30% fee, they should allow for competition and let the market determine that. Let supply and demand determine what the right fee is, but they haven't done that.

Apple is pushing back, saying that Spotify's assertion that its own in-app purchasing system hasn't faced competition is incorrect and that it "meets or beats" the "intense competition."

Apple explains that before the birth of the App Store in 2008, developers had a difficult time with software distribution and that any possible attempt to distribute their apps was outright expensive. So when the App Store launched, it charged developers only a 30% commission on purchases, which Apple says helped in "reducing barriers to entry for software developers."

Since then we have never raised the commission; we have only lowered it, including for subscriptions and small businesses, or we have eliminated it altogether in certain situations, as with the Reader Rule and the Multi-Platform Rule. Today, about 85% of apps pay no commission, and the vast majority of developers that do pay a commission can pay just 15% by entering our Small Business Program. The remainder—those making over $1 million per year selling digital goods or services in the App Store— pay a 30% commission (which is reduced to 15% for subscription services after the first year).

Apple goes on to say that Spotify has benefited itself from its App Store commission structure since it "pays a commission on less than one percent of its premium subscribers, and that commission is always just 15%."

Addressing final concerns for Spotify, Apple says that despite what the music streaming giant said during the hearing, it does not prohibit developers from informing users about the ability to purchase in-app purchases, such as subscriptions, elsewhere, such as on the web. Apple correlates this rule to its inability to, for example, place a storefront sign at a Verizon location informing customers to purchase an iPhone from Apple instead.

Apple does not prohibit developers from communicating with their customers; Apple simply says that developers cannot redirect customers who are in the App Store to leave the App Store and go elsewhere—just as Apple cannot put a sign in the Verizon store, telling customers to buy iPhones directly from Apple instead.

The rule is one that has long-been embraced by retailers in both the physical and digital worlds. As for Apple, this common-sense rule has been in place since 2009, pre-dating Spotify's launch on the App Store. Spotify launched, grew, and thrived under these rules, but now Spotify apparently either wants Apple to change them or to hold Spotify to a different set of standards from everyone else.

Targeting Tile, which has long voiced opposition to the Apple ecosystem, and more so following the launch of AirTags, Apple says Tile's item trackers sold poorly at Apple Stores. Apple's response followed Tile raising concerns that since its item-trackers are sold at Apple Stores, Apple would have information on its sales performance which it could then use for development purposes of AirTags.

Years ago, Apple had some information about how Tile products sold in Apple's retail store. It did not sell well. Tile sells its products through dozens of retailers around the globe and its own website. Any information from Apple Store retail sales is both very limited and very outdated and likely no different from the information other brick-and- mortar stores have about products sold in those stores. Nonetheless, Apple has never used any of that information in any decision making related to AirTags.

In its letter to the U.S. Senator, Apple also laid out specifics regarding concerns brought up by Match, which owns the dating network Tinder. Tinder has raised concerns about underage users on the App Store and that Apple does not do enough to limit it. Apple disagreed with this, saying it "strives to make the App Store a safe and trusted marketplace, including by empowering parents with parental controls."

Apple says that it shares the subcommittee's commitment to "promoting competition and innovation, allowing developers to thrive, and supporting the success of great American ideas."

Article Link: Apple Says Tile Trackers Sold Poorly in Apple Stores

 

[1262385]

Let's not forget that Match was spun off from the mega-conglomerate IAC. It's been a long time since Match was a scrappy start-up established by a couple of math nerds who did double duty in an indie band.

 

[Vol Braakzakje]

Wake me up when all this madness is over and tell me about the verdict.

Thanks.

 

[MacDevil7334]

Apple explains that before the birth of the App Store in 2008, developers had a difficult time with software distribution and that any possible attempt to distribute their apps was outright expensive. So when the App Store launched, it charged developers only a 30% commission on purchases, which Apple says helped in "reducing barriers to entry for software developers."

This is an incredibly misleading statement when it comes to iPhone. Prior to 2008, Apple did not allow any 3rd party apps of any kind on the iPhone. It wasn’t like I could get an app like Pandora but I had to go their website to download it. Apps simply weren’t allowed. The only way around that prohibition was to jailbreak the phone, and we all know how Apple reacted to people doing that…

To say that the App Store merely streamlined distribution might be true on the Mac. But it’s an outright lie when talking about the iPhone.

 

[unibility]

What was Apple going to say… Tile exceeded our sales expectations. 🥺

 

[mattspace]

Apple explains that before the birth of the App Store in 2008, developers had a difficult time with software distribution and that any possible attempt to distribute their apps was outright expensive. So when the App Store launched, it charged developers only a 30% commission on purchases, which Apple says helped in "reducing barriers to entry for software developers."

The thing about trying to rewrite history while those who remember the events are still alive, is they can speak the truth of the story themselves:

Michael Tsai - Blog - What It Was Like to Sell Apps Online in 2003

 

[emmab2006]

Of course, they did Apple...you probably put them way to the back of the shelves to hide the fact you have been Producing your own version .

 

[Macintosh IIvx]

This is an incredibly misleading statement when it comes to iPhone. Prior to 2008, Apple did not allow any 3rd party apps of any kind on the iPhone. It wasn’t like I could get an app like Pandora but I had to go their website to download it. Apps simply weren’t allowed. The only way around that prohibition was to jailbreak the phone, and we all know how Apple reacted to people doing that…

To say that the App Store merely streamlined distribution might be true on the Mac. But it’s an outright lie when talking about the iPhone.

That's not true at all. Remember the iPhone existed for only a year before the App Store came along.

The App Store is HUGE for developers. Most of them would never have their product seen if it wasn't for it. It's the difference between trying to sell your product on your own and having it featured at Target. It removes many hurdles for developers and the cut they take is actually smaller than a developer would have taken from other retailers (which is typically 40-50%). I say this as a developer for more than 25 years.

 

[andersmoldin]

What wallet is that?

 

[Mojohanna32]

This is an incredibly misleading statement when it comes to iPhone. Prior to 2008, Apple did not allow any 3rd party apps of any kind on the iPhone. It wasn’t like I could get an app like Pandora but I had to go their website to download it. Apps simply weren’t allowed. The only way around that prohibition was to jailbreak the phone, and we all know how Apple reacted to people doing that…

To say that the App Store merely streamlined distribution might be true on the Mac. But it’s an outright lie when talking about the iPhone.

It's not really, when you take into account brick and mortar distribution, which, prior to the digital app stores was the primary means of software distribution. The cost of which is very high. Physical copies of software, packaging, shipping, and yes, marketing $$'s spent to place software in stores etc. So when you look at the overhead and expense eliminated by the digital market places, costs paid by the software developers, all Google, Apple and others did was replace this overhead, and arguably reduce the cost of getting software into the hands of customers. At the same time, they made it instantaneous.

 

[Corsig]

I bought mine from Amazon like everything else.

 

[TraceyS/FL]

The thing about trying to rewrite history while those who remember the events are still alive, is they can speak the truth of the story themselves:

Michael Tsai - Blog - What It Was Like to Sell Apps Online in 2003

They are talking about the iOS App Store vs Mac.

Honestly, as a consumer - I have no desire to go back to the chaos that was buying apps for my Palm items on my Non-computers. I think Office365 Family is one of the only apps I buy outside of the Mac App Store.

 

[darkpaw]

Tile did sell their products in Apple Stores, and I was genuinely interested in them. Then I read the box, and it said the battery wasn't replaceable, so I put the box down.

Now, to the 30%... That's pretty much the standard across all the app stores. We all know this. Epic and Spotify know this. But who are they to say that 30% is too much? I don't know how much the App Stores cost to run, or how much Apple spends on R&D to improve the SDKs and developer software, or how much the hosting costs or card charges are, but I do know that it's not free. Apple is a business, and is there to make a profit. 30% is not too much, and as they say, most apps pay no commission, and most of the remaining developers can cut theirs to 15%.

Who's to say 30% is too much? Apple won't drop it below the costs of running it, so it's either breaking even or is set above the costs of running it. If they set it at break even now, say 10%, what if the costs are 12% next year? Does Apple have to redo all their contracts to explain that they now need another 2% off their developers? No; they've set it at the right price for them.

What are the costs of running Spotify? Are they making any profit? If so, how dare they! They should reduce their prices so they either break even or lose money. That's essentially the argument over the 30% cut.

 

[ashdelacroix]

The thing about trying to rewrite history while those who remember the events are still alive, is they can speak the truth of the story themselves:

Michael Tsai - Blog - What It Was Like to Sell Apps Online in 2003

Well those people can still sell via Kagi (or likewise) on to the Mac platform (they are talking of macOS not iOS, after all). Plus, I don't think Apple claimed it invented software sales. Did Apple invent the whole app store ecosystem idea in relation to phones, allowing sophisticated apps to run atop a sophisticated new mobile platform via an underlying desktop-class OS and not just "baby apps" as Jobs would describe them? Yes it did.

 

[alexandr]

tile says — reason their trackers sold poorly in apple stores is apple store employees would whisper in ears of those, who wanted to buy a tile tracker — "do not buy — we're working on our own, better version!" — and proceeded to gently push them away from the product.

 

[laptech]

Apple does not allow any other payment system in it's app store, you either have to use Apple's payment system or not use the app store. Therefore for Apple to respond to Spotify's argument that Apple's app store payment system faces no competition with Apple responding with:-

Apple is pushing back, saying that Spotify's assertion that its own in-app purchasing system hasn't faced competition is incorrect and that it "meets or beats" the "intense competition."

Is very disingenuous because there is only one payment system in the app store and that payment system belongs to Apple so just how exactly is Apple facing 'intense competition' with it's payment system?

 

[ravenstar]

The thing about trying to rewrite history while those who remember the events are still alive, is they can speak the truth of the story themselves:

Michael Tsai - Blog - What It Was Like to Sell Apps Online in 2003

I recall developers cheering when the 30% commission was announced. I'm sure Apple still has a recording of that keynote around somewhere, so you don't have to take my word for it.

 

[MacDevil7334]

That's not true at all. Remember the iPhone existed for only a year before the App Store came along.

The App Store is HUGE for developers. Most of them would never have their product seen if it wasn't for it. It's the difference between trying to sell your product on your own and having it featured at Target. It removes many hurdles for developers and the cut they take is actually smaller than a developer would have taken from other retailers (which is typically 40-50%). I say this as a developer for more than 25 years.

What does it matter how long the iPhone was around before the App Store came along? There were originally no apps allowed. When Apple decided to allow apps, the only legitimate way to get them on to your phone was to go through Apple’s App Store where Apple gets to take a cut of every purchase. I’m not saying that the App Store hasn’t offered benefits for developers or been a net positive. But to only allow people to get software through your own App Store where you take a cut is pretty clearly anticompetitive in my opinion. To take your Target analogy a step further, this is like the US government outlawing all other stores except for Target and you have to buy everything through them. Would you be ok with that?

If the situation on the iPhone were like on the Mac where you can still install software from other sources besides the App Store, this would be a moot point. The issue is not that Apple charges fees on the App Store. I think it’s completely reasonable for them to charge fees to handle distribution etc. for the developer. The problem is that they have made it so that the only way to get your software out there is to go through their store where they collect fees.

It's not really, when you take into account brick and mortar distribution, which, prior to the digital app stores was the primary means of software distribution. The cost of which is very high. Physical copies of software, packaging, shipping, and yes, marketing $$'s spent to place software in stores etc. So when you look at the overhead and expense eliminated by the digital market places, costs paid by the software developers, all Google, Apple and others did was replace this overhead, and arguably reduce the cost of getting software into the hands of customers. At the same time, they made it instantaneous.

Sure, it’s great that Apple skipped the old model of buying software where you had to buy it at a physical store and load the software on your machine with a CD drive. I’m especially glad that there aren’t product keys anywhere to be found. That doesn’t change the fact that on the iPhone, the App Store is the only legitimate way to distribute software on an iPhone and Apple collects a cut each time. On the Mac, this model is fine since users still have other options for getting software. On the iPhone, I don’t think it matters how much better the App Store is compared to the old ways of doing things. It’s still Apple forcing people to use its market place and then collecting a cut. Not sure how that can be spun as anything other than anticompetitive.

 

[mattspace]

They are talking about the iOS App Store vs Mac.

Honestly, as a consumer - I have no desire to go back to the chaos that was buying apps for my Palm items on my Non-computers. I think Office365 Family is one of the only apps I buy outside of the Mac App Store.

No, they are talking about the fact that Apple's primary assertion, is that before they made their App Stores, all software was boxed retail brick & mortar software, and they somehow made things cheaper for developers.

This is untrue. Both in terms of the fact that the vast majority of software for Apple platforms was already being sold digitally before Apple created their app store, and in terms of the fact that non-Apple digital sales were much, much cheaper for developers than Apple's system.

To argue that because there was no sales for apps at all on iOS prior to the app store, that somehow makes Apple's disinformation true, is nonsense.

 

[ravenstar]

When Apple decided to allow apps, the only legitimate way to get them on to your phone was to go through Apple’s App Store where Apple gets to take a cut of every purchase

And prior the app store there was no legitimate way to get apps on your phone. I don't see the logic in the argument that because Apple created its own store for its product is must also enable other stores on its product.

 

[mattspace]

I recall developers cheering when the 30% commission was announced. I'm sure Apple still has a recording of that keynote around somewhere, so you don't have to take my word for it.

It was called the Reality Distortion Field for a reason

 

[mattspace]

And prior the app store there was no legitimate way to get apps on your phone. I don't see the logic in the argument that because Apple created its own store for its product is must also enable other stores on its product.

Yes, if they own the platform, and the platform constitutes a market in itself (which is what regulators around the world are saying) when they created the ability for themselves to have a business selling apps to iPhone users, they should have done so with a mechanism that lets competing businesses sell apps to iPhone users (or at least not created things such that competitors were actively prevented from competing with them).

 

[jav6454]

That's not true at all. Remember the iPhone existed for only a year before the App Store came along.

The App Store is HUGE for developers. Most of them would never have their product seen if it wasn't for it. It's the difference between trying to sell your product on your own and having it featured at Target. It removes many hurdles for developers and the cut they take is actually smaller than a developer would have taken from other retailers (which is typically 40-50%). I say this as a developer for more than 25 years.

No. Installer existed before the App Store during the year Apple did not allow 3rd party apps. It was Installer's success in app distribution and sales that prompted Apple to create the App Store.

Apple only did a copy/paste of what the jailbreak community had for a year. Heck, versions 1.0.2, 1.1.2 and 1.1.4 were specifically meant to break the jailbreak. Where as 1.1.1 and 1.1.3 were meant as feature enhancing versions.

 

[MacDevil7334]

And prior the app store there was no legitimate way to get apps on your phone. I don't see the logic in the argument that because Apple created its own store for its product is must also enable other stores on its product.

Yeah, there was no legitimate way because Apple artificially locked down the phone. It wasn’t like the first iPhone couldn’t run other software. It was jailbroken in no time and developers quickly proved what was possible with 3rd party apps. You could even argue that the success of the early jailbreak apps is part of what prompted Apple to allow 3rd party apps. Prior to iOS 2 and the App Store, Jobs was out there insisting that web apps were great and would be all people would ever need on the iPhone.

 

[MauiPa]

This is an incredibly misleading statement when it comes to iPhone. Prior to 2008, Apple did not allow any 3rd party apps of any kind on the iPhone. It wasn’t like I could get an app like Pandora but I had to go their website to download it. Apps simply weren’t allowed. The only way around that prohibition was to jailbreak the phone, and we all know how Apple reacted to people doing that…

To say that the App Store merely streamlined distribution might be true on the Mac. But it’s an outright lie when talking about the iPhone.

Sorry, you are wrong. The iPhone as first released envisioned web apps as the vehicle for apps. Remember that Apple pioneered the market, and short of one firm selling smart phones, the market was fairly small. This proved ineffective and various versions of iOS enhanced the experience and met, sometimes led, sometimes followed competition from android.
The statement about app distribution, if you are honest, is that it created an electronic marketplace as opposed to buying cd with software installers in boxes from brick and mortar or via mail, some downloads were also available from independent developers. Distribution costs for the software were quite high