Apple's In-App Purchase Rules Are Anti-Competitive, Rules Dutch Antitrust Watchdog

[Rogifan]

Exactly this, Apple wants to get paid for services they did not perform. Yes they need to be compensated for running the AppStore, this is the develop fees, if they are too low Apple should raise them. Maybe even charge the developer per App download.

Yes Apple needs to be compensated for iOS security, but the user already did that when they bought a $1,000 device.

No, Apple should NOT be compensated when a developer wrote an App that has two tiers of service and I paid them to unlock new features. Nor do they deserve anything because I bought 3000 gems somewhere. If Apple handled the payment than they need to be compensated for payment processing, which is around 1-5%, but nothing above that. And if a third party handled the payment than Apple deserves nothing.

In my opinion there are three things at play here:

1. Running the App Store (and all that is required to maintain it) + all the tools required to make iOS apps + developer relations
2. Costs associated with processing credit card transactions, refunds, taxes etc.
3. Customer acquisition commission/fee

I think most people would agree that Apple deserves something for 1 and 2 (though they should allow 3rd party payment options for those developers who don’t need to use Apple’s IAP). It’s number 3 that is the gray area to everyone but Apple. In my mind there are very few app categories where you can say customer acquisition is coming from Apple. Of course in the mind of Apple execs any digital revenue coming from an iOS app is because of Apple and thus Apple deserves a share. The only reason they carved out big names like Netflix, Amazon and Spotify is because they need those apps on the platform. It’s more important to Apple that Netflix is on the platform than some indie developer app that has a small but dedicated user base.

 

[macfacts]

Do a search for wsj apple 8.5 billion, and you will learn why apple wants to be the gatekeeper of in app purchases.

 

[4jasontv]

Spotify pays for the rights to the music. In your example Apple should be paying Uber for the right to have Uber on the AppStore and charging users a monthly fee to download apps. You want that?

I don’t understand your comment. Spotify pays for the music, of course, all businesses pay something for their product. They sell it to customers by charging for access to use. If I don’t listen to a song Spotify doesn’t refund me.

Wait, can I get refunded if I don’t listen to every song on Spotify?!

 

[vipergts2207]

I don’t know, but you are right to assume they should get something.

But they did provide a service. They provided Uber with a platform of people who can all be reached with a single application. Either they need to pay for access per transaction or they need to pay an annual fee based on the number of users who have access to downloading their app.

If you took this to it's logical conclusion, then MS should start charging for purchases made on Windows because they created the platform enabling you to purchase something from Target. And instantly everything just got 30% more expensive.

 

[gaximus]

So when 1000's of people start getting scammed out of money, because they thought the payment processing site they went to, "looks" legit, who will reimburse their money? The governments that enforced these laws? or will it just kind of be Wild West, and well you should have known better, lessoned learned?

 

[Rogifan]

The service Apple provided is securely sending an App from their servers to a user's device. Everything after that Uber provided. I believe the cost to Apple to store an App on their servers is like 1 cent per month, and the cost to transmit the app to the user's phone is another cent. Round it up a few times and say maybe Apple spent ten cents to get Uber installed on an iPhone.

I am okay with Uber paying Apple a few cents per App download/update.

The user already paid for iOS security when they bought the iPhone for $1000

The argument is Apple is providing a customer base (e.g. everyone who owns an iPhone) for Uber to tap into. It’s hard for me to see how anyone can argue Apple doesn’t deserve a cut of Uber transactions but does when someone pays to remove an ad from an app.

 

[vasilenko93]

In my opinion there are three things at play here:

1. Running the App Store (and all that is required to maintain it) + all the tools required to make iOS apps + developer relations
2. Costs associated with processing credit card transactions, refunds, taxes etc.
3. Customer acquisition commission/fee

I think most people would agree that Apple deserves something for 1 and 2 (though they should allow 3rd party payment options for those developers who don’t need to use Apple’s IAP). It’s number 3 that is the gray area to everyone but Apple. In my mind there are very few app categories where you can say customer acquisition is coming from Apple. Of course in the mind of Apple execs any digital revenue coming from an iOS app is because of Apple and thus Apple deserves a share. The only reason they carved out big names like Netflix, Amazon and Spotify is because they need those apps on the platform. It’s more important to Apple that Netflix is on the platform than some indie developer app that has a small but dedicated user base.

Running the App Store (and all that is required to maintain it) + all the tools required to make iOS apps + developer relations

Yes, Apple needs to be compensated for this 100%. Developers need to pay for this BEFORE the app even got on the AppStore. Or on a monthly basis depending on the number of downloads/updates. The more server/bandwidth an App uses for Apple the more the developer should pay.

Costs associated with processing credit card transactions, refunds, taxes etc.

Yes. If someone used Apple Pay there is a fee. The industry average is 1-5%.

Customer acquisition commission/fee

This is a really tricky one. Every app I have I knew about without the AppStore. Perhaps an Ad online or a friend told me. I had to go to the AppStore to see if its there, at no point did I browse the AppStore and click on an App outside of maybe some game one time which I deleted after five minutes. For this Apple should just have sponsored Apps where they get a cut from that.

 

[gaximus]

But those costs will be offset by developers who are motivated to not raise prices by abusing their access to customer information.

And we already pay for OS updates. We pay upfront as part of the equipment price.

Hulu, Disney, Netflix, etc, have all raised prices and they have access to customer information. The only reason to want customer information is to make money in some way.

 

[Rogifan]

Because Apple built the mall they placed their store in. Target is acquiring customers from Apple. Without Apple target would have had to build dozens of apps for every device that might possibly have wanted to access their content. You can’t say, no android is the other option because had Apple not built the iPhone we wouldn’t have android like it exists today.

That’s ridiculous. Anyone can go to target.com and buy something. There is nothing special about their app that only Apple can offer. Going by your logic every ISP or cell provider should get a cut too because without the internet you wouldn’t be able to download and use Target’s app to buy anything.

 

[vasilenko93]

The argument is Apple is providing a customer base (e.g. everyone who owns an iPhone) for Uber to tap into. It’s hard for me to see how anyone can argue Apple doesn’t deserve a cut of Uber transactions but does when someone pays to remove an ad from an app.

Apple wants to double dip here. They want money from the users and from the user activity on apps Apple did not write. And as I said before, Apple already charges a developer fee. So its not like developers get free access to the users.

 

[vipergts2207]

I am pretty sure that Target gets paid when someone buys an iPhone from them. Do you think they don’t make money off the sale of iPhones?

I am pretty sure that Apple gets paid when Target buys their dev kits and pays dev fees. Do you think the Apple doesn’t make money off the sale of their dev kits and dev fees?

 

[gaximus]

The service Apple provided is securely sending an App from their servers to a user's device. Everything after that Uber provided. I believe the cost to Apple to store an App on their servers is like 1 cent per month, and the cost to transmit the app to the user's phone is another cent. Round it up a few times and say maybe Apple spent ten cents to get Uber installed on an iPhone.

I am okay with Uber paying Apple a few cents per App download/update.

The user already paid for iOS security when they bought the iPhone for $1000

So I could create an app called Uber+, and put it on the App Store? No one is going to check that, and if they do, do those people not get paid?

 

[turbineseaplane]

I have no idea why some people so vehemently defend the manipulative business positions and exertions of force of a two TRILLION dollar company.

 

[MathersMahmood]

Seems like apple is being forced to not be apple lately.

 

[vasilenko93]

So I could create an app called Uber+, and put it on the App Store? No one is going to check that, and if they do, do those people not get paid?

Well you as a developer pay Apple for a developer license. So that's already paid for.

 

[turbineseaplane]

Seems like apple is being forced to not be apple lately.

Apple really changed itself away from the Apple most of us loved.

They pivoted away from being all about products and usage experiences and have turned into a multinational nickel & dime operation....

It's no accident this has happened under Bean Counter Tim's leadership.

I don't even qualify for Apple Card (nor do I want it) - yet I get routinely badgered about it on my own phone.

 

[Rogifan]

Running the App Store (and all that is required to maintain it) + all the tools required to make iOS apps + developer relations

Yes, Apple needs to be compensated for this 100%. Developers need to pay for this BEFORE the app even got on the AppStore. Or on a monthly basis depending on the number of downloads/updates. The more server/bandwidth an App uses for Apple the more the developer should pay.

Costs associated with processing credit card transactions, refunds, taxes etc.

Yes. If someone used Apple Pay there is a fee. The industry average is 1-5%.

Customer acquisition commission/fee

This is a really tricky one. Every app I have I knew about without the AppStore. Perhaps an Ad online or a friend told me. I had to go to the AppStore to see if its there, at no point did I browse the AppStore and click on an App outside of maybe some game one time which I deleted after five minutes. For this Apple should just have sponsored Apps where they get a cut from that.

And that’s the issue, when it looks like Apple is just rent seeking. Apple makes a lot of money off their cut of micro transactions in the App Store and it‘s hard to give that up.

 

[scottrichardson]

Wow there's so much money and energy being wasted on this stuff hey..... I mean, a bunch of legal teams are making some good coin with all of this but honestly, it's ridiculous. Apple built the entire platform, the hardware, and the ecosystem. They can do whatever they want, and if it isn't liked, then seek development elsewhere. Boggles my mind that a company can be forced to change the way they operate at the behest of watchdogs and a selection of noisy, upset developers who wish they could eat into the well-deserved profits of Apple.

 

[vasilenko93]

Apple really changed itself from the Apple most of us loved.

They pivoted away from being all about products and usage experiences and are turning into a multinational nickel & dime operation....

It's no accident this has happened under Bean Counter Tim's leadership.

Yep. I love the hardware but hate the greedy behavior. I am already paying a lot for the product why do they have to Nickle and dime me some more?!

 

[MathersMahmood]

Apple really changed itself away from the Apple most of us loved.

They pivoted away from being all about products and usage experiences and have turned into a multinational nickel & dime operation....

It's no accident this has happened under Bean Counter Tim's leadership.

I don't even qualify for Apple Card (nor do I want it) - yet I get routinely badgered about it on my own phone.

Couldn't have said it better.

 

[Rogifan]

So when 1000's of people start getting scammed out of money, because they thought the payment processing site they went to, "looks" legit, who will reimburse their money? The governments that enforced these laws? or will it just kind of be Wild West, and well you should have known better, lessoned learned?

Well IAP doesn’t apply to non-digital goods. Or stuff purchased via a browser. Are 1000’s of people getting scammed there?

 

[vipergts2207]

Apple really changed itself away from the Apple most of us loved.

They pivoted away from being all about products and usage experiences and have turned into a multinational nickel & dime operation....

It's no accident this has happened under Bean Counter Tim's leadership.

I don't even qualify for Apple Card (nor do I want it) - yet I get routinely badgered about it on my own phone.

Hey, why worry about innovation to drive growth when you can just charge money every time someone transacts business with a user of one of your phones?

 

[turbineseaplane]

Well IAP doesn’t apply to non-digital goods. Or stuff purchased via a browser. Are 1000’s of people getting scammed there?

It's a good point -- how long until Uncle Tim sets up a toll booth in the web browser too
I'm sure he'd love to.

Buying anything with Safari?
30% for Uncle Tim
/s

This is all totally absurd

 

[Michael Scrip]

On one hand I do think Apple deserves some commission for app purchases. But on the other hand I thought that's what the $99 and $299 yearly developer fees were all about.

Don't be surprised if those prices go up after App Store changes go into effect.

There are a lot of people saying "I already give Apple $99 a year... why do they want more money?"

So I have a suggestion:

The $99 yearly fee should actually be called "Application Fee" to become a developer.

And the per-sale commission should be called the "Developer Fee" or "Commission Fee"

That would make it simpler to understand.

 

[Natrium]

Epic v Apple, many investigations and directives by antitrust watchdogs around the world including the US (Apple’s biggest market), the EU (Apple’s second biggest market), Japan, South Korea, the Netherlands, increasingly vocal and assertive developers, increasing awareness of consumers, increasing awareness of politicians … I think it is safe to say that Apple overreached and made quite a few determined enemies. The best days in terms of Apple’s profit from the App Store are likely behind us.