Apple can fix this themselves and get government off their backs by reaching a compromise that works for all parties involved, or they can let government fix it for them.
I suspect that they would prefer the former but are too proud to do it.
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Dutch Antitrust Watchdog Nears Draft Decision in App Store Probe
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I suspect that they would prefer the former but are too proud to do it.
Apple won’t deal with epic, that’s what the courts are for. As far as the rest, we’ll have to wait and see. Of course in the US this could take years to sort out.
Butv pple gives Netflix access to the Apple user base. If there was no ability to put Netflix on Apple devices many of those users would not have Netflix. They both benefit from each other.
How many people signed up for Netflix via iTunes because of the ease of doing so?
Yes, Netflix is a household brand now, but when it was starting out, there would have been a lot more friction if you wanted users to sign up for an account via a separate website.
I do agree that continuing to charge 30% every year is probably a bit excessive (which is why Apple has reduced that to 15% from the 2nd year onwards), but for the first year at least, I feel that 30% is a reasonable representation of the value that Apple plays with regards to customer acquisition.
In short, I would credit Apple with allowing Netflix to grow as quickly as it did at the start. Yes, people watching Netflix are Netflix’s customers, but let’s not forget who helped them become Netflix’s customers in the first place.
I know exactly what you said. If I were Apple, I wouldn't kow-tow to this directly. What Apple does, however, is anybody's guess.
As a foreigner you may not know it but Netflix introduced subscriptions for their service (DVD mail rentals at the time) in 1999. Their business grew up before App Store even existed. ATV being the small part of the video streaming device market, Apple role in Netflix business is probably marginal anyways.
Thanks for the quick history lesson on Netflix. I genuinely was not aware of this.
Many people watch netflix on their phones and tablets (made in part feasible thanks to 4g). Apple has 1 billion active iPhone users (and no small number of ipad users). It’s hard to just dismiss Apple’s contributions here.
I pay my ISP for internet access, they, unlike the app store, are not a store that sells third party products; your analogy is invalid.
However, if I buy services from them, such as streaming TV provided by a third party, they get a cut.
Never said that developer tools need to be free at all. In any business the production and sales costs are reflected into the product right. Development platforms got cheaper not due to Apple efforts in iOS but Open Source. Something that SJ did support back in the day. Well, now ... give me 30% of your revenue.
That is it. App Store does not distribute game streams, books, classes, videos whatever digital. It simply distributes Apps.
The App Store is not a Store. Its operations basis it’s more akin to a Shopping Center installed on devices bought to them, hence not owning anymore. While its policies are way more pervasive in how and what the shop owners in that Shopping Center, while competing directly with the shops themselves. Hence its policies are towards protecting their own “shops” while having a share of their revenue. Forget paying for infrastructure at a profit it goes way beyond that.
I’m a strong believer that all businesses should be able not to owe anyone a penny for what they distribute and create to their customers. Meaning, businesses should be totally free to choose an intermediary. In businesses terms that happens when the intermediary offers significant abilities to indeed sell and distribute when compared to to with themselves. For 50% of the US population digital businesses currently don’t have that option as per the App Store policies. For instance, digital services don’t have the option to sell without also going through this Shopping Center, if they did than selling though the App Store would not be a requirement. As I’ve said this, option does not perclude the right of Apple to be payed for the use of the her Cloud Service to distribute and update Apps, including the user of their APIs to develop the Apps.
I believe that the above perspective the right balance as it closer to pay per use rather than mere speculation.
That is not true. If you look around, the absense of App Store like funnerls lead to hundred of thousands of software companies and digital services. Big and small. Just look around on the Internet, a true “anarchic” business platform unlike the App Store. That lead to companies like we see now, including Apple.
My concerns is, as computing takes place in other kinds of devices, traditionally non computing centric, such as Cars, Houses, Books ... so an and so forth ...
Well it does not. Furthermore, whatever you buy in Amazon you can easily buy from anywhere else regardless of device. Meaning, it‘s true choice. Still Amazon is being investigated and sometimes looses lawsuits over their practices. As I remember Apple was only once penalized ... something to do with eBook price fixing.
You seam to run on the premise that for instance this site is substantially different from any app in the App Store when it comes to technical resource consumption to distribute and update it. I can tell you that for the purpose any given site probably consumes more resources in terms of computing power and bandwith than most Apps on the App Store. Go and check the prices for that matter. Pick a cloud service such as AWS, Azure ... even your own, you will be surprised.
For instance do you know that the average App size is around 35MB, and that is transmitted only one per user when installing and on subsequent updates? Yet the home page of this site alone is 24MB. Come here twice a week .... Don’t even compare with the infrastructure required to say stream a something out of Netflix to the TV at 4K.
you can imagine now how the App Store get’s such an amazing profit margin. A mix of locking in the shopping center 50% of population through the devices they sell and a ultra expensive Cloud Service that is able to drive prices up out of that lock in.
Look I’m not against Apple charging 30% or 15% of revenue created inside digital business Apps in iOS if they choose to do so. But what if they don’t choose to do so? What are the other options to reach those customers on par with Apple? The solution cannot be building their own devices, don’t think that would benefit the consumer. What’s next? Build your own Car, House, Roads ... having as the base the tax payers to fuel everything else around that allows these enterprises to exist including their freedoms?
That is not true. Air Space does not belong to anyone but the Country. Airlines buy/rent Air Space from the country. This is unlike for instance the digital space where is mostly no mans land assured by regulated telecom businesses. You see, why Apple can do this is indeed standing on the shoulders of regulation..Furthermore a lot of Airlines were born out of state investment.
Now, regulation that I am at least talking about is concerned with competition and assuring a fair space for innovation to happen and not be managed trough 3 or 4 major technological companies that funnel hundreds of thousands of companies.
Back in the day, before Apple massive growth, MS tried to do the same with Windows at their peak. They were stopped. Still unlike the devastation that Tim Cook and Co talks about if the same thing happens to iOS, it should look at what MS did ... it prospered out of that fixation while allowing open space for companies like Google, Apple and Amazon to appear and innovations such as Google Chrome and Safari to come out and lead. That would not happen in the iOS world view of things.
As for regulation in Cards there are thousands of brands worldwide and even more types of motor vehicles and price ranges.
True. It was not being well regulated. It happens. But that does not take value out of regulation. Regulation its a tool in a liberal market. There is a difference between liberalism and pure anarchy in market context. The difference lies that the first actually sees the necessity of regulation to achieve a more competitive and fare market place towards progress. Usually market anarchists are a bunch of hypocrits because when the s* hits the fan there comes the state to bank on family, support, buy masks .... health not to mention billions in dept to be forgiven. This while their companies use a few millions to show how much they care. Increasing state dept to foreign countries such as China that in turn buys US dept making the country more fragile.
Anyway, in terms of price, that is not what happens with App Store. Actually if you look at it, today at App Store born apps, cost 12 times more than they cost initially with the Apple “invention” of in app subscription model. Apps that have less features than their counterparts offering subscriptions outside such an environment. Other Apps such as Things weren’t so lucky, they got Sherlocked. So initially while the field was green ... prices were low, but once is became no longer green it went up 12 fold, while policies remain mostly the same for paying, but far more intrusive in the businesses.
It’s just the nature of things. Don’t even consider Apple a bad company at all. The contrary, an inspiring and aspiring company. They simply doing what is best for themselves. Its a great way as a business principle.
Still, it’s a deeply disappointing position for the company that invented the personal computer as a mainstream product and established the open platform software economy is now adopting approaches that both IBM and Microsoft tries to adopt to funnel third party innovation value into their bank accounts. Microsoft was actually stopped by regulation in such an attempt. The first, well was eliminated by the later.
Unfortunately the practices of the company are even more draconian than both of the above combined relative to today’s tech landscape.
A company that only 14 countries in the world actually have a higher “GDP” than they have revenue. Deeply carrying for customers .... humm the math does not add up that way. Want to fix your iPhone, give it to us and pay for a refurb ... Want to see to devices users? Give us 30% of your sales done s through their devices. Otherwise, you can have this little windows call Safari that you can do whatever you want ... within our Safari limits.
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Only if you won’t mention the even cheaper garbage from the same guys next door. Because user choice is oh so bad.
Not if they’re too slow and let Apple run it against a wall by itself. Times change and business models will follow.
Apple does it's share of tax avoidance to be fair. Apple are lucky they aren't thrown out of all of the regions they've dodged tax.
It's only right to let the regulators decide.
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Interesting though that Walmart doesn’t stop selling Coke just because some other reseller has a sale on it. Offering a product in multiple channels is not a problem in the real world.
It becomes one cause certain folks chose to make it a problem.
Rather than try to separate the response let me address what I see as your main points. If I misrepresented any of your positions I apologize.
Developer tool pricing: While OSS has helped reduce development costs for tools, the pricing of them is irrelevant to what the costs of producing them are. Apple makes them available for free or cheaply to drive development of apps and because the App Store can cover the costs to develop tools. If App Store revenue is reduced Apple could raise the price of the tools to compensate if they wanted.
Shopping Mall Model: True, and that model, applied to the app store is how it operates. Companies build and sell apps and products, Apple charges rent for being in the Apple "mall." Quite a reasonable approach.
Allowing other app stores: In the end, it's Apple's choice. Even if Apple is forced to allow that I think users and developers will be worse off. Apple can charge developers for things that are essentially free now, developers will have to decide what stores to put products and how to get them noticed. If they chose to use their own site and third party payment they will have to deal with processing, tax issues, etc., taking time from development.
Users will have no assurance a store is legit or that they screen apps at least minimally for malware.
Airfares: The CAB, in the US, set prices on a seat mile basis to ensure all routes were profitable. Deregulation ended that.
Regulation: I agree regulation is needed for a functioning marketplace; however regulation often results in advantages for incumbents and creates barriers to entry that limit competition. Companies are good at using regulation to their advantage, and when politicians propose regulations "to help consumers" I reach for my wallet. Look at the EU. Prices are often higher than elsewhere, VAT excluded, since companies bake in regulatory costs in the price. A M1 Air, at $999 in the US is roughly $1140 in Portugal, after subtracting IVA. While some of the price delta allows for currency fluctuations, no doubt EU regulations on warranties etc. add to the price as well.
Apple doesn't dodge (evade) tax. The use legal strategies, which is why the tax case out of Ireland isn't yet settled, because Apple did nothing illegal.
If you can’t see that the hammer of regulation is coming eventually if Apple keeps marching down this path, I can’t help you.
My mistake in my original reply. I looked at the merchant fees, not the bank transaction fees. Apple does take 0.15% of the bank's current transaction fee. It is hard to find anything "official" on similar fees from Google. Third-party financial analysis implies that Google is foregoing fees in lieu of ads and marketshare for monetization for now. One report states a commitment from Google at launch that they would not look for transaction fees for the first several years, but does not rule it out.
As for PayPay - the most likely issue is that they don't want to support Apple Pay. PayPal has branded credit and debit cards that may be tied to a PayPal account, but these card may not be added to Apple Pay. That is a business decision from PayPay.
Again, it is not wrong, immoral, or illegal for companies to monetize. If you want to use CarPlay on BMW there is an annual fee (or was, not sure if they finally dropped it). Just because a component is added to a device (any device - computer, car, whatever) does not mean that the manufacturer HAS to provide direct access to it for all without limitation (again - the example of requiring auto makers to provide access to GPS antenna). Apple has designed the NFC access to be tied to the Secure Enclave. Therefore all transactions much pass through Apple Pay.
The issue you raise is a position that Apple should not monetize Apple Pay. There is a business and philosophical argument to be had. I am not debating transaction fees here.
I'm not asking for "help." As you, I'm voicing an opinion on the subject. Agree/disagree. That's what these discussions are about.
Whether or not the “hammer of regulation” drops and where and how much is anyone’s guess. Clearly some want apple regulated and some want the market to determine the “regulation”.
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I agree with you that market should be placed based on the principle that companies can do whatever they want with their products and services.
They do not give it for free as you know. If you intend not to get money out of your efforts Apple gets 100% app for free for their their marketplace. If you intend not to give it back for free then than you are required to share 30% of your revenue. A price that is an at least an order of magnate above current market prices for the same service.
Today what gives visibility to a digital service or App, is not the App Store. As I’ve said, the green field effect is long gone. It’s as usual the quality of the product or service as well as ability of the builder to do marketing way beyond the App Store. Google Ads, Social Platforms, Articles and Reviews, Conferences and fairs, YouTube, you name it. The App Store is no miracle seller.
Customer on the other hand expect the service to be wherever they are. In their devices of choice.Nothing to do with Apple. Now, this customer demands, paired with the 50% device market share and App Store solo gateway to install and update apps is what drives the App Store revenue.
You may think that customers love to pay in the App Store ... yet, the reality is a bit different. Has I’ve exposed before, the most revenue generating Apps/Businesses aren’t not even in the the top 100 most sold apps. Which basically indicates that once given other clear alternatives of payment customers opt for other forms of payment such as direct payment. Now, some companies simply don’t have enough brand awareness to pass other options of payment and promotions out side their apps.
If you want to understand my stance ... it very simple:
Given their device market share I fundamentally object their policies that basically state, no App Store fees, no digital business through Apps for 50% of the population. I further object their pricing scheme where they use the volume of business the digital business generates to establish their licencing and service price. It should be value based on usage not revenue.
My objections fundamentally are fundamentally similar to Apple objections regarding Qualcomm. Just recently Apple sued Qualcomm for wanting to charge too much to Apple for the use o their technology within their product (believe me it isn’t 30% of the device price. They objected their practice that if Apple haven’t not bought the licences (licensed their tech) than they would not supply chips allowing them to build the iPhones (believe me its isn’t 30% of the price of an iPhone). Furthermore amongst other objections, Apple objected to Qualcomm’s pricing scheme, where it used the total sales price of an entire device to figure out what to charge (probably a percentage), instead of the sales price of a modem chip (usage of the chip)!!!!!
Which is very similar to my objections when aplied not to the licensing of chip technology and usage of a chip but to licencing to APIs and usage of a cloud service to distribute, update and charge for apps/services.
Considering that 50% of the population uses iOS devices and demand digital services to be wherever they are in they devices of choice I believe that Apple does not follow FRAND principles in any shape or form regarding its approach to licensing their tech to third party digital services and software developers. The company believes that it generates 30% of the value any digital services deliver to their customers.
In FRAND terms, coining this practice as a Store is nothing but a smoke screen. Apple thinks precisely the same way I do when it comes to their suppliers. For digital services or software developer, Apple is nothing but a supplier. A supplier with a dominant position in the market. Do not confuse with monopoly. You don’t need to be a monopoly to have a dominant position.
Have fun.
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Buying an iPhone is optional. Becg a dev is optional. As long as apple / google is not breaking the law let the market decide if the App Store model is viable.
If this model is regulated it will be across the board and effect all distribution models.
Apples market share is a pittance compared to android. True their revenue numbers are outrageous, but by virtue of their minority market share, they aren’t a monopoly as defined today.
Everything in life is optional man. Stop confusing issues, we are talking about the App Store business model not the devices they sell. The second is what catapulted the company to such an incredible run. Keep doing that, its great. We aren’t talking monopolies here either. Another concept, called abuse of dominant position.
Still, software and hardware licensing will be regulated much like any other kind of licensing is. Just because you did not license some tech, you cannot be denied access to something else that that uses such tech, much less on things you own. It is assumed that the something else contains all the proper licenses to be fully used, included in the price in its price. In the Qualcomm vs Apple case was the chip, further more Apple objected to its price based on the value of the entire device rather than the component itself at market prices, which was far lower. Yet what Apple objected in Qualcomm practice is precisely what the App Store policies do, it denies access to devices sold device using properly licensed software, working as a gate enforcing further payments to Apple for its use both to their customers and their customers suppliers, and enforces an access prices taking into account the entire apps or digital service revenue in the device, not simply their tech as a component. Furthemore it cannot hurt their customers for such a measure, things such as voiding OS licensing if they install or pay for anything in App not going through the App Store payment service. This practice is simply “um-FRAND”.
Such thing does not happen with macOS / iMac, any Windows / PC , Android, Alexa platform you name it ... almost any piece of tech but Apple’s. And it wasn’t the App Store that made the iPhone / iPad phenomena, were thousands of other things that Apple did so well. App Store per App Store users would probably go somewhere else like they do.
Again Apple itself use these FRAND premisses when dealing with their suppliers, including Qualcomm. Imagine Qualcomm coming up with, “our chips power your device, your App Store works on your device requiring our very important technology and IPs, you can only exist because of our tech, therefore you need to give us 30% of the revenue of the App Store”. Would be ridiculous right? How would this be FRAND? The ones that don’t, such as XBox have very little expression in the digital service and app marketplace that are truly optional digital business wise Now Apple and Google are in a position to truly siphon money out of third party digital services as much as they feel like they need and block competition with their digital services when also needed.
Once this practice is regulated using FRAND premises nothing much will change really. Because the absolute most of software licensing schemes comply with this very simple premise, its stops with the “chip”. The one that seams to sell non compliance with simple concept of fairness as something of a virtue is fundamentally Apple. This is the company who is driving this bandwagon that others followed. Yet Apple argues this basic FRAND principles when facing their suppliers. The world was a bit confused ... as time passes ... it will become less and less confused.
Believe me, the iOS business will not collapse. In fact it may even grow far more in market presence as well as device sales, winning terrain over Android. Just not with such outrageous profit margins when it comes to the App Store dealings due to “un-frand” business practices. Far higher margins than anything device Apple sells. Take for instance, Windows, regulations did not hamper MS growth when stopped MS from trying to keep disruptive stuff out of “their” garden. They also faced more or less Apple situation back than when they saw Windows licensing would stall as the PC growth would stall flat, year over year .... They regrouped and pushed other incredible things out to the market, more matured Office business models, Azure ... you name it ... Unfortunately they got so complacent with their own success even still that missed the smarphone generation. Apple will do their own thing, the things they do best. Incredible new devices are in the pipeline driving Apple even more growth and profits. Don’t think Apple will be as complacent. It’s amazing what they do ... the App Store in the Apple universe is just a detail that needs to be corrected and it will, let’s not get lost in details. I would prefer Apple corrected it rather than be lead to correct it by many countries.
Still, software and hardware licensing will be regulated much like any other kind of licensing is. Just because you did not license some tech, you cannot be denied access to something else that that uses such tech, much less on things you own. It is assumed that the something else contains all the proper licenses to be fully used, included in the price in its price. In the Qualcomm vs Apple case was the chip, further more Apple objected to its price based on the value of the entire device rather than the component itself at market prices, which was far lower. Yet what Apple objected in Qualcomm practice is precisely what the App Store policies do, it denies access to devices sold device using properly licensed software, working as a gate enforcing further payments to Apple for its use both to their customers and their customers suppliers, and enforces an access prices taking into account the entire apps or digital service revenue in the device, not simply their tech as a component. Furthemore it cannot hurt their customers for such a measure, things such as voiding OS licensing if they install or pay for anything in App not going through the App Store payment service. This practice is simply “um-FRAND”.
Such thing does not happen with macOS / iMac, any Windows / PC , Android, Alexa platform you name it ... almost any piece of tech but Apple’s. And it wasn’t the App Store that made the iPhone / iPad phenomena, were thousands of other things that Apple did so well. App Store per App Store users would probably go somewhere else like they do.
Again Apple itself use these FRAND premisses when dealing with their suppliers, including Qualcomm. Imagine Qualcomm coming up with, “our chips power your device, your App Store works on your device requiring our very important technology and IPs, you can only exist because of our tech, therefore you need to give us 30% of the revenue of the App Store”. Would be ridiculous right? How would this be FRAND? The ones that don’t, such as XBox have very little expression in the digital service and app marketplace that are truly optional digital business wise Now Apple and Google are in a position to truly siphon money out of third party digital services as much as they feel like they need and block competition with their digital services when also needed.
Once this practice is regulated using FRAND premises nothing much will change really. Because the absolute most of software licensing schemes comply with this very simple premise, its stops with the “chip”. The one that seams to sell non compliance with simple concept of fairness as something of a virtue is fundamentally Apple. This is the company who is driving this bandwagon that others followed. Yet Apple argues this basic FRAND principles when facing their suppliers. The world was a bit confused ... as time passes ... it will become less and less confused.
Believe me, the iOS business will not collapse. In fact it may even grow far more in market presence as well as device sales, winning terrain over Android. Just not with such outrageous profit margins when it comes to the App Store dealings due to “un-frand” business practices. Far higher margins than anything device Apple sells. Take for instance, Windows, regulations did not hamper MS growth when stopped MS from trying to keep disruptive stuff out of “their” garden. They also faced more or less Apple situation back than when they saw Windows licensing would stall as the PC growth would stall flat, year over year .... They regrouped and pushed other incredible things out to the market, more matured Office business models, Azure ... you name it ... Unfortunately they got so complacent with their own success even still that missed the smarphone generation. Apple will do their own thing, the things they do best. Incredible new devices are in the pipeline driving Apple even more growth and profits. Don’t think Apple will be as complacent. It’s amazing what they do ... the App Store in the Apple universe is just a detail that needs to be corrected and it will, let’s not get lost in details. I would prefer Apple corrected it rather than be lead to correct it by many countries.
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