Apple's EU Core Technology Fee Could Bankrupt Freemium App Developers

[NT1440]

Are you seriously suggesting that the purchase of an Apple device by the end user does not offset the cost?

That’s *Apple’s* business model. You’ll note the comment you quoted was talking about precedent that would be set.

 

[Timo_Existencia]

So what you're saying is that this is an example of Apple not trying to improve their customer's user experience? Which is what my point was in the first place. And are you telling me you actually believe that free software only existed after the introduction of the App Store? Boy have I got news for you. 😂

Apple has decided to not promote tobacco products. I don't know what else to say to you. That's the right of every business probably everywhere. Apple has chosen to not "improve tobacco users experiences" on iPhone. You got me there. But I still maintain that's just fine.

In the mobile app space, Apple predominantly created the idea of free mobile apps. I'm sure others used that model, but Apple made it a dominant feature of their platform. But even so, just because Apple does provide free apps, does not mean that they MUST provide free apps.

 

[gaximus]

Well, Adobe charge for the tools true, but they don’t then take commission on the money you make from what ever you created using their tools. More importantly, if you give said art away, they definitely don’t charge you for the privilege. The fact that Apple seem to think it’s ok to charge a developer for giving away an app, after paying the developer yearly fee, is absolutely not on.

True, but they charge a lot more for the tools, Adobe has a different model where they assume you won't make any money as an artist, so they get their money up front. They could create a business model where they give there users the option to buy there tools up front, or get them for free, then pay if there art goes viral, whether paid or free.

 

[vipergts2207]

the DMA isn't saying that Apple "have or had too much unchecked control over the market." I get that many of you have interpreted it that way...but if THAT were the case, then the EU would be outlawing the practices that Apple has used to grow their business. But the EU isn't outlawing those practices on anyone other than Apple (and perhaps the other gatekeepers).

You've emotionalized the DMA to fit your own perspective, to envision that the EU is a superhero that is vanquising evil business! But that's not the intent of the DMA. The DMA is taking extraordinary measures to curb NORMAL and fully acceptable business practices, due to the overwhelming popularity of Apple and other gatekeepers.

IF the EU thinks such practices are evil and fundamentally anti-competitive, then they would ban those same practices for every business.

For example...do you think Spotify should be forced to allow any artist to use their platform, for free, to promote and sell their music, without any compensation to Spotify? If the answer is no, then you're agreeing with me.

So let me get this straight, you think the EU forcing Apple to do something against their will, like the allowance of third-party app stores, isn't because they had too much control over the market? Sorry, that doesn't make any logical sense at all. Let's break it down.

- Apple wanted maximum control and disallowed third-party app stores
- The EU said nope sorry, you've got to let others play in the market as well
- Apple has now relinquished some control over the market by doing what was required of them in the EU in allowing for third-party app stores

I'm not sure how on Earth you can spin that to not mean the EU is putting some checks on Apple's control, but I'm sure you'll try lmao.

 

[mrothroc]

True, but they charge a lot more for the tools, Adobe has a different model where they assume you won't make any money as an artist, so they get their money up front. They could create a business model where they give there users the option to buy there tools up front, or get them for free, then pay if there art goes viral, whether paid or free.

I think the example you're seeking is Epic. They give away all their developer tools and let you use their engine.

Until you get to $1M, then they take 5% of worldwide gross.

That seems like a lot more than 0.50 per install over 1M for any app that has any kind of business model.

Also worth noting: if you make a completely free app, just stay in the original App Store. No charge, no problem.

 

[Timo_Existencia]

So let me get this straight, you think the EU forcing Apple to do something against their will, like the allowance of third-party app stores, isn't because they had too much control over the market?

You're conflating two issues.

So again, I'll ask. If I started a mobile phone platform and I was focused very tightly on privacy and security, and I denied 3rd Party App stores, but I only had 10% market share, would the EU force me to allow 3rd Party App Stores? Apparently not, since the DMA nor any other regulations in the EU specify that. I'd be free to operate my business in just the same way Apple does, and the EU would have no problem with it.

So, the problem wasn't that Apple was denying 3rd Party App stores; otherwise, they'd pass a universal law against that.

The problem is that in the opinion of the EU (I disagree), Apple has too much power. So, one of the tools the EU is trying to use to reign in Apple's power is to deny APPLE the ability to deny 3rd Party App stores.

The EU has crafted a narrow law that is only applicable to "Gatekeepers." Every other business in the EU is free to deny 3rd Parties to freely use their business.

Edit to add: In fact, the DMA does not deny Apple the ability to deny 3rd Party App Stores on iPadOS! If the problem were all about denying 3rd party App stores, the DMA would require apple to allow them on IOS, iPad OS, WatchOS, TVOS, and Vision OS. But, the DMA doesn't do that.

 

[PixelsMaster]

I think you are still not seeing the problem. As a seller, you don't have to sell at Amazon. You don't like Amazon? Don't sell at Amazon. You can reach the same people by other means. But you cannot create a software for iOS, iPadOS, visionOS, watchOS without paying Apple something. It should not be on Apple to decide whether you can create a software for a customer you want to reach to. That is the whole idea.

It’s near impossible to reach the same audience that Amazon has built since many people shop there exclusively. They’ve also grown that customer base and loyalty at huge expense.

Apple built the technology and developed the code behind iOS. Why should anyone have the option to freely use it and profit from their customer base? By this line of thought, companies that spend billions creating tech should be forced to allow anyone to freely profit from their investment.

You can’t build a website without owning a domain. Should domain registrars not collect any fees? You can’t host a website without owning equipment or using a hosting service, should those also be free?

The whole idea was never to allow companies to freely (as in with zero cost) enter new markets.

 

[nick42983]

This was the first result that popped up when searching for "how many apps in the app store?" it's from Apple's website:

"Because we offer nearly two million apps — and we want you to feel good about using every single one of them."

The question for me is, how many of the developers who will be negatively affected by this are actually bringing App store users value with their apps? There are way too many apps gunking up the app store, many of them are crap that is never updated and exists only as someone's passive income source, users be damned. I'm sure there will be some casualties, and hopefully Apple helps out good developers who get caught in the mix, but the bad actors need to be culled.

More insights here: https://developer.apple.com/app-store/freemium-business-model/

 

[little2v]

...

FYI: a) Apple doesn't charge for any base software, including office, etc. b) Apple OpenSources the vast majority of their stuff. c) Large swatches of the Internet were built on OSS from apple, like WebKit, which was the foundation of Chrome, PlayStation, etc. d) Apple is one of the largest contributors of opensource sofware

Apple is charging for services and distribution, not the software. Distribution of software to 2 billion devices is *expensive* and beyond the reach of just about every company on earth. Running a global CDN with multi-data center databases to support app downloads, versioning, state sync, build, test, release, etc is what you pay for. Not the software. There's a difference.

 

[waterbug]

This is a massively misleading headline. "X could bankrupt Y" typically implies that when X happens, Y will go bankrupt, and there's not much that Y can do about it.

Which is completely false, because in this case Y can continue on the Apple App Store, as they've been doing, and pay no more than they paid yesterday. X is an _option_ to opt out of the Apple App Store for a different fee structure.

If the Apple App Store works for your business today, it will also work for your business tomorrow, and the addition of Option X does not change that. This is buried later in the article as:

Free and freemium app developers can, however, choose to stick with Apple's current App Storebusiness terms instead of opting for the new terms. In that situation, nothing would change, and app developers would continue to pay a 15 to 30 percent commission to Apple.

[emphasis mine]

A more accurate headline would be "Apple's EU Core Technology Fee Not an Attractive Option for Freemium App Developers." But headline writers want clickbait more than accuracy.

 

[vipergts2207]

Apple has decided to not promote tobacco products. I don't know what else to say to you. That's the right of every business probably everywhere. Apple has chosen to not "improve tobacco users experiences" on iPhone. You got me there. But I still maintain that's just fine.

Actually marijuana users, but yeah. Also glad to see the EU step in and diminish Apple's ability to play content nanny. Like anyone needs Apple to tell them what content they can and cannot consume.

In the mobile app space, Apple predominantly created the idea of free mobile apps. I'm sure others used that model, but Apple made it a dominant feature of their platform. But even so, just because Apple does provide free apps, does not mean that they MUST provide free apps.

So what you're saying is it’s about $$$ and/or control over their users, which is what I said.

 

[little2v]

I think the example you're seeking is Epic. They give away all their developer tools and let you use their engine.

Until you get to $1M, then they take 5% of worldwide gross.

That seems like a lot more than 0.50 per install over 1M for any app that has any kind of business model.

Also worth noting: if you make a completely free app, just stay in the original App Store. No charge, no problem.

And in the Epic example, they aren't delivering any where near the same services as Apple for that 5%.

People need to look at what the 15/30% is. It's not a tax, it's not a distribution fee... it's Revenue Sharing for all the things Apple *gives* to developers. Want to play with machine learning? Apple did it for you. Want to build an Augmented Reality app? Apple did it for you. Want to integrate with every smart consumer product without coding it for each vendor? Apple did it for you. Want to integrate with every health product? Apple did it for you. Want to support downloading 2 billion apps at $0 cost? Apple did it for you. Want to process $1/day to $1,000,000/day in revenue overnight globally without worry about tax laws? Apple did it for you.

Apple removed all up front barriers about releasing a global app and all you have to do is build it. They took care of the rest and they want a cut of the revenue. It worked great when apps were for sale, but the free apps they get $0 out of unless they monetize in-app purchases.

The alternative is much worse. Epic is the evil one here that wants to stamp out indy game devs and make the barrier to entry being you must be big enough to do all this stuff yourself.

 

[Analog Kid]

It hurts the alternative store which cannot advertise that it has all the apps you will need.

It hurts the alternative app store which cannot advertise that they can give you all the benefits of Apple's iOS without the need to compensate its creator.

It hurts the app developer by requiring exclusive distributions via Apple’s store. It hurts them as they are required to submit themselves to Apple’s app review team instead of a potentially more permissive team at another store.

It hurts the app developer who first entered into a partnership with Apple, whereby Apple provides a sophisticated hardware platform and the APIs making it easy to customize, then wants to distribute the fruits of that shared effort through a backchannel distributor out of view of their partner.

 

[Kastellen]

It’s a fee basically for access to devtools. DMA can force Apple to offer access to those for free? Don’t think so.

Don't developers already pay $99/year for access to the the devtools? Or does that change if you opt into this fee structure?

 

[vipergts2207]

You're conflating two issues.

So again, I'll ask. If I started a mobile phone platform and I was focused very tightly on privacy and security, and I denied 3rd Party App stores, but I only had 10% market share, would the EU force me to allow 3rd Party App Stores? Apparently not, since the DMA nor any other regulations in the EU specify that. I'd be free to operate my business in just the same way Apple does, and the EU would have no problem with it.

So, the problem wasn't that Apple was denying 3rd Party App stores; otherwise, they'd pass a universal law against that.

The problem is that in the opinion of the EU (I disagree), Apple has too much power. So, one of the tools the EU is trying to use to reign in Apple's power is to deny APPLE the ability to deny 3rd Party App stores.

The EU has crafted a narrow law that is only applicable to "Gatekeepers." Every other business in the EU is free to deny 3rd Parties to freely use their business.

Edit to add: In fact, the DMA does not deny Apple the ability to deny 3rd Party App Stores on iPadOS! If the problem were all about denying 3rd party App stores, the DMA would require apple to allow them on IOS, iPad OS, WatchOS, TVOS, and Vision OS. But, the DMA doesn't do that.

It wasn't a singular factor and I never said otherwise. It was because Apple was denying alternate routes of app installation in combination with their market power. If one of those two factors hadn't been the case, then Apple likely wouldn't have been considered a gatekeeper.

 

[Timo_Existencia]

Actually marijuana users, but yeah.

As I understand it, those vaporizers CAN mix tobacco and Marijuana, but Storz doesn't like to point this out.

Also glad to see the EU step in and diminish Apple's ability to play content nanny. Like anyone needs Apple to tell them what content they can and cannot consume.

Again, you misunderstand the DMA. IF the EU was trying to stop Apple from being a "content nanny" as you suggest, then why didn't the DMA require that on iPadOS, WatchOS, TVOS, or VisionOS? (because that's not the "goal" of the DMA).

 

[darngooddesign]

Yes, it’s what Apple doesn’t have in the cellphone market. Saying Apple has a monopoly in the iPhone market is like saying that Honda has a monopoly on the Honda Civic market.

I mean.... Honda does. 🤣

 

[Timo_Existencia]

It wasn't a singular factor and I never said otherwise. It was because Apple was denying alternate routes of app installation in combination with their market power. If one of those two factors hadn't been the case, then Apple likely wouldn't have been considered a gatekeeper.

Market Power is the only triggering mechanism. It's the only concern of the DMA. Any company, absent that market power, can be a content nanny, can deny 3rd Party App Stores, etc. For example, the DMA nor the EU denies Apple the ability to be those things on iPadOS, WatchOS, TVOS, or VisionOS. Why? Because the EU isn't concerned with those things specifically. They are only tools being used to try to curb market power.

 

[little2v]

This is a massively misleading headline. "X could bankrupt Y" typically implies that when X happens, Y will go bankrupt, and there's not much that Y can do about it.

Which is completely false, because in this case Y can continue on the Apple App Store, as they've been doing, and pay no more than they paid yesterday. X is an _option_ to opt out of the Apple App Store for a different fee structure.

If the Apple App Store works for your business today, it will also work for your business tomorrow, and the addition of Option X does not change that. This is buried later in the article as:


[emphasis mine]

A more accurate headline would be "Apple's EU Core Technology Fee Not an Attractive Option for Freemium App Developers." But headline writers want clickbait more than accuracy.

Yeah, misleading as hell. Apple is offering a "pay per use" model as an alternative to their "revenue share" model. Surprise surprise, app distribution and maintenance is expensive. The rev share model hid just how expensive it is to do this stuff.

 

[darngooddesign]

If Apple were interested in the customer experience rather than just more money, consumers wouldn’t have to pay money for what would otherwise be a free vape app. Or not even have access to the app at all due to the cost to Storz.

That app would t be free in the App Store, you pay for it when you use their product.

 

[MVMNT]

This is a Unity-level move. And we know how that went.

 

[PommeFruits]

Why should YOUR wish suppress the wants of others?

So the exact thing you're doing?

 

[little2v]

It hurts the alternative app store which cannot advertise that they can give you all the benefits of Apple's iOS without the need to compensate its creator.



It hurts the app developer who first entered into a partnership with Apple, whereby Apple provides a sophisticated hardware platform and the APIs making it easy to customize, then wants to distribute the fruits of that shared effort through a backchannel distributor out of view of their partner.

Not to mention it's not very incentivizing to Apple to keep building API's if folks can build on their hard work and distribute it via a 3rd party and collect nothing.

Or if so many of the API's just don't work with the 3rd party because they don't offer databases as a service, logs as a service, telemetry as a service, CI/CD as a service or the host of other things built into CloudKit/X-Code. Look how fractured the Android ecosystem is with multiple vendors and multiple stores. As a consumer, I buy Apple because I *DONT* want that garbage pile. I don't develop apps for Android for the same reason.

Don't turn my Apple world into Android. There isn't anything about Android I want to develop for.

 

[darngooddesign]

Not to mention it's not very incentivizing to Apple to keep building API's if folks can build on their hard work and distribute it via a 3rd party and collect nothing.

At the very least they collect a fee for the dev account.

 

[iOS Geek]

So the exact thing you're doing?

Are you saying you don't like that? Then I guess we understand each other then! Neither one of us likes having something we don't want forced on us! The difference is which side had to go whine to a power hungry government to get them to dictate what they wanted.