DoJ Claims Apple Implemented In-App Purchase Rules to 'Retaliate Against Amazon'

[LordVic]

No, you're missing the point.

There is no logical reason for Apple to be making 30% off Amazon's books.

you are absolutely correct.

Amazon, and competition has the right to go sell their books elsewhere then.

there is no monopoly in tablet / phone marketplace. There is absolutely nothing that ties Amazon to require sales on iOS devices. Amazon has chosen to do so because they believe it will help reach more sales. Apple has in turn effectively said "fine, you want to use our platform to reach more sales, taking advantage of the ecosystem and market size we have, then pay us for it"

I think Apple is entirely within their right.

I dont think that in the long term Apples business plan here is smart, as what happens to Apples Marketshare of iOS devices if lots of companies start thinking it's no longer in their best interest to develop for iOS? here's an example: See RIM.

They are still within their right to do so though. And the vendors are within their right to take their business to a competing platform (which depending on the different charts, have larger market share these days)

 

[rjohnstone]

Again, the dev fee was never Apple's only source of revenue from the App Store. They also made 30% from the sales of each app. Without the IAP and subscription rules, developer could have cut Apple out of any additional revenue by offering free apps with an IAP or subscription to activate any significant content.

I'll agree to that with a limited scope.
Upgrading an iOS only game or app via IAP is different from a subscription or book purchase.
Things like buying a book or movie from Blockbuster or Amazon is not "activating content" especially when that content can be used elsewhere (i.e., not exclusive to the iOS app).

 

[BaldiMac]

It's a bogus fee... in both cases.
In both cases, the retailer is already paying for the space. Either through a Dev fee or via rent.
Taking a cut from the retailers profits on top of the fee/rent is pure greed and undeserved.

Undeserved? Where do ideas like this come from?

Consider it a break on rent/dev fee in exchange for a percentage of sales.

And then calling a company "greedy" for negotiating the most money it can is just a complete non sequitur.

 

[Born Again]

Again, you are missing the point. If you purchase the book from their website which is not in the appstore, then Amazon does not pay the 30% markup but if you do purchase it from the app in the appstore then there is a 30% fee paid to apple.

In the same way, retailers who have a presence in Grand Central station are only required to cough up a percentage of their profits from their location in Grand Central and not other locations in non-MTA controlled buildings.

----------


I think you missed the boat on this. The format offered in iBooks is superior as it offers interactivity whereas the Amazon format is just a DRM'ed version of ePub. So given that I get a better experience with certain books if bought for iBook, why would I want to buy the Amazon version? What am I getting for my money? If I buy from Amazon, I am getting exactly what I would get from a quick and dirty bootlegged ePub version.

Why stop there?

Why not charge 30% for amazon purchases?

 

[midnightdavid]

Never understood why Apple deserves 30% of IAP. Applications in general, but they don't need to host IAP content...

My take on this:

Yes, Apple makes a nice profit on the sale of the devices. Why should they make money on a book sold and served up by a competitor's server?

Answer: Because you are using it on an iOS device.

The 30% Apple earns from app sales and IAPs covers not just the cost of operating the appstore servers and their staff, but ALSO the continuing development of FREE iOS upgrades for (typically) 3 or 4 years.


So, that iPad you purchased in 2011? You know, the one that will have iOS 7 on it in a month or two? The one that, before you know it, may be running some iOS 7-only apps? Does Apple not deserve something for making that possible? Their 30% of 'everything you download to the device' helps cover the cost of continuous ongoing software support and development. They provide this for all devices that have hardware that is not significantly outdated.

30% of IAPs and downloaded items seems pretty reasonable to me.

 

[MarcelV]

Can I choose what register to use in a store?

I like to use the Kroger U-Scan register when shopping at Costco. Oh wait, Costco doesn't let me. I only can use their registers at their terms.

Because it's online, there shouldn't be any different rules. I already can make a choice by buying a different phone. And for the people that will say it isn't comparable because it's not physical, lets see: I can start using the XBox Live store on the PS3? Or the PS3 store on the Wii? Or the Nintendo store on PS3 and XBox? And there are already game consoles that are download only with their own stores, OUYA comes to mind. So, that would be stopped as well?

If I don't like Apple's platform, I just wouldn't deal with it and buy a different phone. If you own a platform, you should be able to restrict it anyway you want. As long as it wouldn't harm alternatives. And Apple doesn't. There is Windows Phone and Android and Blackberry and several others.

Let the consumer make a choice.

 

[mabhatter]

Two things:

First, what examples does the DOJ have that Apple does not charge the 30% for everything? This is not a rhetorical question. I would just like to know what the examples are, if they exist.

Second, the email in the article does not, in and of itself show that Apple conspired to "punish" Amazon for their pricing. To me, it shows internal communications asking what their strategy should be. If the DOJ's assertion is true, one would think that this email thread would have developed into more of a smoking gun as it moved forward. Why doesn't the DOJ show a more developed conversation that would clearly show the conspiracy, assuming there is one?

The iTunes Store specifically disallows purchasing MERCHANDISE with App Store credits. It took a while before Apple would even let you use iTunes cards to pay for apple merchandise at their website. So Barnes and Noble and Target have a shopping app that lets you buy STUFF online and Apple doesn't take any cut .. That what the DOJ is referencing.

The argument is that Apple should allow other companies digital purchases to iOS devices thru apps. I think in a perfect world it will eventually be allowed.. Except that for things like iCloud, Apple has NO RIGHT to backup your Amazon books.. Which is probably as much motivation than sales. Right now Apple should offer the same terms as Amazon.. Users can load to 1GB of storage and their SD card. O wait, Amazon and Nook both gimp their COMPATIBLE devices so you are "persuaded" not to use the other's stores too? When did that happen?

 

[Michael Goff]

My take on this:

Yes, Apple makes a nice profit on the sale of the devices. Why should they make money on a book sold and served up by a competitor's server?

Answer: Because you are using it on an iOS device.

The 30% Apple earns from app sales and IAPs covers not just the cost of operating the appstore servers and their staff, but ALSO the continuing development of FREE iOS upgrades for (typically) 3 or 4 years.


So, that iPad you purchased in 2011? You know, the one that will have iOS 7 on it in a month or two? The one that, before you know it, may be running some iOS 7-only apps? Does Apple not deserve something for making that possible? Their 30% of 'everything you download to the device' helps cover the cost of continuous ongoing software support and development. They provide this for all devices that have hardware that is not significantly outdated.

30% of IAPs and downloaded items seems pretty reasonable to me.

...

So Amazon and others should subsidize free OS updates?

----------

I like to use the Kroger U-Scan register when shopping at Costco. Oh wait, Costco doesn't let me. I only can use their registers at their terms.

Because it's online, there shouldn't be any different rules. I already can make a choice by buying a different phone. And for the people that will say it isn't comparable because it's not physical, lets see: I can start using the XBox Live store on the PS3? Or the PS3 store on the Wii? Or the Nintendo store on PS3 and XBox? And there are already game consoles that are download only with their own stores, OUYA comes to mind. So, that would be stopped as well?

If I don't like Apple's platform, I just wouldn't deal with it and buy a different phone. If you own a platform, you should be able to restrict it anyway you want. As long as it wouldn't harm alternatives. And Apple doesn't. There is Windows Phone and Android and Blackberry and several others.

Let the consumer make a choice.

This is a continuation of a bad argument.

Online Sales are different than offline. Period.

 

[bb-15]

Here is my view of the DOJ case.

1. The monopoly that needed to be addressed was created by the book publishers who controlled the majority of the book market.

2. The DOJ broke up the collusion by the book publishers.

3. The actions of Apple that needed to be stopped;
- Since Apple was using the agency model where the publishers took control of retail pricing, and combined this with the most favored nation (“MFN”) pricing provision, this resulted in an anti-competitive situation.

* I agree with this provision of the proposed remedy;
- That contracts between Apple and the five named ebook publishers should be nullified.
- The contracts should be resigned so books sold through Apple compete on price.

* I disagree with the rest of the DOJ's proposals including;
- Costless hyperlinks to the App Store for competing e-books,
- An external monitor to oversee the company's internal antitrust compliance policies.

* Apple should be allowed to charge the 30% fee (or any other fee they decide on).

* The market should determine the success of Apple's App Store and not government regulation.

 

[AaronEdwards]

Are you talking about some fringe case about books published by Amazon? In general, Amazon has absolutely no influence on what authors get because they are not a significant book publisher, they are a retailer.

Further, the iBook store drove the price of ebooks down significantly on average, though not on every book. Before the iBook store I remember most ebooks costing as much or more than hardcovers.

You're funny, first you state a fact and then you back it up with your own recollection....

 

[Michael Goff]

you are absolutely correct.

Amazon, and competition has the right to go sell their books elsewhere then.

there is no monopoly in tablet / phone marketplace. There is absolutely nothing that ties Amazon to require sales on iOS devices. Amazon has chosen to do so because they believe it will help reach more sales. Apple has in turn effectively said "fine, you want to use our platform to reach more sales, taking advantage of the ecosystem and market size we have, then pay us for it"

I think Apple is entirely within their right.

I dont think that in the long term Apples business plan here is smart, as what happens to Apples Marketshare of iOS devices if lots of companies start thinking it's no longer in their best interest to develop for iOS? here's an example: See RIM.

They are still within their right to do so though. And the vendors are within their right to take their business to a competing platform (which depending on the different charts, have larger market share these days)

Given this, I propose that Microsoft stops letting iTunes get a free ride. They should demand 30% from Apple for each sale.

 

[rjohnstone]

I like to use the Kroger U-Scan register when shopping at Costco. Oh wait, Costco doesn't let me. I only can use their registers at their terms.

Because it's online, there shouldn't be any different rules. I already can make a choice by buying a different phone. And for the people that will say it isn't comparable because it's not physical, lets see: I can start using the XBox Live store on the PS3? Or the PS3 store on the Wii? Or the Nintendo store on PS3 and XBox? And there are already game consoles that are download only with their own stores, OUYA comes to mind. So, that would be stopped as well?

If I don't like Apple's platform, I just wouldn't deal with it and buy a different phone. If you own a platform, you should be able to restrict it anyway you want. As long as it wouldn't harm alternatives. And Apple doesn't. There is Windows Phone and Android and Blackberry and several others.

Let the consumer make a choice.

Bad analogy.
Think more like a shopping mall where Apple owns the mall, but not the stores. The stores pay rent to Apple be in the mall.
Should the mall owner (Apple) be allowed to take a cut of each stores profits on top of the rent they already pay to be there?
I don't think so.
If Apple thinks the rent is to low, raise the rent... stay out of my cash register.

 

[Michael Goff]

Again, you are missing the point. If you purchase the book from their website which is not in the appstore, then Amazon does not pay the 30% markup but if you do purchase it from the app in the appstore then there is a 30% fee paid to apple.

In the same way, retailers who have a presence in Grand Central station are only required to cough up a percentage of their profits from their location in Grand Central and not other locations in non-MTA controlled buildings.

----------


I think you missed the boat on this. The format offered in iBooks is superior as it offers interactivity whereas the Amazon format is just a DRM'ed version of ePub. So given that I get a better experience with certain books if bought for iBook, why would I want to buy the Amazon version? What am I getting for my money? If I buy from Amazon, I am getting exactly what I would get from a quick and dirty bootlegged ePub version.

Their presence there costs a limited resource (space). IAP do not take away space.

If Apple doesn't take a cut of IAPs then everyone will start releasing free apps with actual app content being sold as IAP, so Apple won't get any money.

If that were going to happen, a lot of places would just be foisting people out of their games to a site where they could get the same things. It hasn't happened with that, and it wouldn't happen here.

 

[bsolar]

If you sell something in my store, I get a piece of it. Just like physical stores. There's no difference as the size or type of sale. A sale is a sale and I get a piece. Sure you could sell your wares someplace else, but this is revenue, in my store, that you would not get if you were not in my store.

A sale within the Kindle App is made in Amazon's store, not Apple's. Amazon provides the goods, designs the store within the app, prices the goods, delivers them, and manages them. Apple wants to manage the sale's payment transaction only and take a 30% cut for that.

Again, why can't people understand this? I've countless post from people who don't get it. I even read tons of posts that wrongly say the opposite - that Apple should pay the app devs.

Apple has a return from the Kindle App being available on iOS. There are many high-quality third-party apps which make iOS devices interesting. Just imagine iOS without third-party apps... when Google Maps disappeared from iOS to be replaced by Apple Maps people started to look at alternatives almost immediately. Of course many of these Apps also make a profit from being available on iOS, so it's a symbiotic relationship. Many people seem not to understand this and assume that only the developers "leech from the iOS's ecosystem" without realizing that iOS without third-party apps would be dead.

This is simple business. Apple has to make money of IAP. Imagine this. All apps go free but have IAP. Apple make NO money. So now you see why. Those IAP are sales in their store. Please try and understand.

Again, these are not sales in their store, which is the Apple Store. An Amazon store would be within the Kindle App (or whatever app), designed and implemented by Amazon, so the store would be Amazon's. Also, on Android there is no mandatory IAP which means that you can make money even without forcing it.

PS: to be clear, I don't consider Apple forcing its IAP for iOS devices to be illegal or something like that, as they say, it's their ecosystem. I simply disagree with many of the arguments made to justify the mandatory IAP.

 

[midnightdavid]

...

So Amazon and others should subsidize free OS updates?

Yes, absolutely, if they want to sell something for use on an iOS device.

 

[SuperMatt]

Did Jeff Bezos give free Amazon Prime memberships to everybody in the DoJ or something? Amazon has larger shares of the markets being looked at, and yet Apple's accused of anti-competitive practices? How about Amazon's blatant dumping of product at a loss to crush competition? That's illegal in many industries (look up the steel industry and dumping), but apparently it's ok if your company is named Amazon.

 

[parapup]

Easy to switch from iPhone to Android. Not Fun to Watch

Reeks Microsoft from the Bill Gates era - platform lock-in at the expense of user convenience. Apple cares about users - yeah right!

People seem to be conveniently missing the point that the suggestion to use Apple's Payment system - and thus hand over a 30% cut of Amazon book sales on iOS to Apple - came in response to Phil Schiller getting uncomfortable at the ad that shows how easy it is to switch from iPhone to Android. Once people are using Apple Payment system for buying Amazon books (!) - they need to use iTunes, iOS and stick to it forever. If they switch to Android their books are gone. Way to care about users Apple!

 

[mabhatter]

Here's the thing: Apple is given all this praise, but without Microsoft money in the 90's, Apple would have been out of business.

And then Microsoft would have been an illegally acting monopoly and busted up harder than AT&T. Their $125m of stock purchase to Apple kept them just a hair from "reasonable doubt" in the government trashing them.

Ironically, they didn't INNOVATE for a decade and cried about Apple that paid them off years ago... Which was also a bad investment cashout because they got Apple stock REALLY, REALLY cheap... They could have made a few dozen billion.

 

[Michael Goff]

Yes, absolutely, if they want to sell something for use on an iOS device.

Then I repeat my suggest from before.

Apple should be forced to give Microsoft a cut from iTunes on Windows. This can then be used to subsidize the price of Windows (maybe not free, but lower the price significantly).

What do you say?

 

[rjohnstone]

Did Jeff Bezos give free Amazon Prime memberships to everybody in the DoJ or something? Amazon has larger shares of the markets being looked at, and yet Apple's accused of anti-competitive practices? How about Amazon's blatant dumping of product at a loss to crush competition? That's illegal in many industries (look up the steel industry and dumping), but apparently it's ok if your company is named Amazon.

The issue here is they are not "dumping". So they are not doing anything illegal.
They are selling a portion of their books below cost to attract users to their store to buy other books that are more profitable.
Called a loss leader.
Most stores use crap products as loss leaders. The issue with that is you get crap clients with shallow pockets.
Sell a few premium products (best sellers in this case) at cost or just below to try and attract a buyer with deeper pockets.
Seems to be working too as they do actually operate with a profit. Small, but that is irrelevant.

 

[rdlink]

Amazon app, ebay app for example

There are many examples. One I can think off, I can buy movie tickets for any theather in my are using their apps in the App store. Tickets are bought using a normal credit card as not as an in app purchase. If this is allowed then amazon should be allowed too.

Well this is pretty obvious. If i use safari on my iOS device and go to amazon's website and order any thing apple does not take a 30% cut (of any purchase).
even better if use amazon's app and order a toaster apple does not take a 30% cut. They only do this for amazons digital versions of books, magazines, and music. physical goods they do not take 30% of. Of course if they wanted to apple could make a rule and force a 30% cut on any purchase through an iOS app but they do not (would be ridiculous backlash)

Thanks. This clears it up.

 

[appleii.c]

The issue with me is that Apple is doing NO WRONG in this issue. It's not any fanboy sentimentality, it's the truth in my opinion.

Apple has a walled garden. Apple's 30% is no issue at all. It's completely legal - for anyone to argue the 30% issue is not legal is just plain wrong. I don't know why it keeps being brought up. Many people don't understand retail. Amazon prices many of it's own books at 30% or more markup! It's normal in the industry. Apple can make whatever rules they want about what apps are allowed in their store, what aren't, and what the fees are. You might not like it, but it's all completely legal.

The only questionable issue is Apple's insistence that the price you sell something inside an app in the App Store must be the same as the price you sell them outside their ecosystem. I can argue both sides of this point, and see truths and falsehoods on BOTH sides. It's very controversial. However, the PUNISHMENT is completely beyond anything normal, crossing the border into vengeance type punishment.

If I was Apple, I'm legally allowed to remove the Kindle app if I wanted to, and accept none of the 'punishments'. The judge does not recognize this.

I completely agree. I don't see why the DOJ is meddling in the private market. Apple, and ibooks (and appstore for that matter) are not monopolies. Android has more users, Amazon has more traffic. If someone doesn't like Apple's terms or business practices, then move elsewhere. Android, Kindle, MS. you have options.

Regarding Apple expecting others to sell their product at the same price everywhere, this is practiced in many other retail areas as well. It's just the agreement they sign in order to be on the Appstore. I've been in retail before where (for example) Shoe manufacturers don't allow you to sell specific styles less than $xx amount. Again, the developers or publishers don't need to agree to this, just don't sell on Apple. It's obviously not that big a deal since many of them are agreeing to it.

And for those who say "Apple should just compete fairly with Amazon"? Why can't amazon just compete with Apple? Stop selling your books on iBooks and create a better alternative for users. Cut your own deal with the publishers, the developers. Whatever you need to do to grow your business. Why complain about it to the DOJ?

 

[Renzatic]

Again, you are missing the point. If you purchase the book from their website which is not in the appstore, then Amazon does not pay the 30% markup but if you do purchase it from the app in the appstore then there is a 30% fee paid to apple.

In the same way, retailers who have a presence in Grand Central station are only required to cough up a percentage of their profits from their location in Grand Central and not other locations in non-MTA controlled buildings.

Your analogy only works if you assume the apps themselves are a part of the app store.

See, I agree with Apple charging 30% for hosting an app. I also agree that they should get their cut if they assist developers in any way. If an app uses Apple's servers or payment systems, then they deserve their cut.

But the apps that are built around a service Apple has no hand in whatsoever? Like Netflix, Nook bookstore, Dropbox, etc.? Why should Apple get 30% just because they're paying through an app? Once it's out of the App Store and on the iOS "desktop", it should be the sole purview of the service provider.

It's like what's been said about MS demanding 30% of all Apple's revenue garnered from any copy of iTunes run on Windows. Apple made a huge profit by "leeching" off MS' customers. Should they have to pay for the right to have access to that? If you ask me, all 3rd party apps should be treated as an equal partnership. MS provides the platform and audience, and Apple makes the platform more attractive by offering up a popular service.

If Apple wants to make more money off 3rd party service based apps, they should require the developers charge for them, rather than perpetually sucking at the revenue required to keep said services running.

 

[Oletros]

I completely agree. I don't see why the DOJ is meddling in the private market.

Because there are laws against monopolistic or anti competitiveness practices

And for those who say "Apple should just compete fairly with Amazon"? Why can't amazon just compete with Apple? Stop selling your books on iBooks and create a better alternative for users. Cut your own deal with the publishers, the developers. Whatever you need to do to grow your business. Why complain about it to the DOJ?

What are you talking about? Do you know anything about the case?

 

[Michael Goff]

Your analogy only works if you assume the apps themselves are a part of the app store.

See, I agree with Apple charging 30% for hosting an app. I also agree that they should get their cut if they assist developers in any way. If an app uses Apple's servers or payment systems, then they deserve their cut.

But the apps that are built around a service Apple has no hand in whatsoever? Like Netflix, Nook bookstore, Dropbox, etc.? Why should Apple get 30% just because they're paying through an app? Once it's out of the App Store and on the iOS "desktop", it should be the sole purview of the service provider.

It's like what's been said about MS demanding 30% of all Apple's revenue garnered from any copy of iTunes run on Windows. Apple made a huge profit by "leeching" off MS' customers. Should they have to pay for the right to have access to that? If you ask me, all 3rd party apps should be treated as an equal partnership. MS provides the platform and audience, and Apple makes the platform more attractive by offering up a popular service.

If Apple wants to make more money off 3rd party service based apps, they should require the developers charge for them, rather than perpetually sucking at the revenue required to keep said services running.

Microsoft really needs to start paying attention to that idea.

Seriously.

Apple won't stop putting iTunes on Windows, and I doubt they could litigate their way out of this one.