U.S. Antitrust Regulators Investigating Apple's App Store Fees and Policies

[sw1tcher]

You confused two concepts in your race to make a case.

Lets take your analogy and correct it: If a bricks and motar store sells a boxed game that requires a physydisk for each subscription release then yes, they'll keep something for the subscription.

You went for a b&m analogy then immediately took a tangent into online distribution, thus demolishing your argument.

Again, it's mixing the analogy. You've crossed from a physical item handled by the store to one that's no longer handled by the store.

I've purchased software as a download (Kaskpersky, BitDefender) from both online-only retailers (Newegg) and retailers with both online and brick and mortar locations (Best Buy, Staples, Fry's) and they only get a percentage from the initial sale. They do not get a cut of the subscription when I renew.

The same goes for downloaded Tax prep software. Does Best Buy, Newegg, Amazon, etc. get a cut of the State e-file fee H&R Block or Intuit TurboTax charges me? No.

 

[TiggrToo]

I've purchased software as a download (Kaskpersky, BitDefender) from both online retailers (Newegg) and brick and mortar (Best Buy, Staples, Fry's) and they only get a percentage from the initial sale. They do not get a cut of the subscription when I renew.

And again you're mixing analogies.

The analogy of a b&m store works only if they control the distribution of both the initial item but also the subsequent releases.

To take this argument to the app store it would be akin to Apple releasing the app but then someone else entirely different handling the updates - payments and distribution.

That's obviously not the case - hence why the analogy is faulty.

 

[mkldev]

1. People argue that it’s the “storefront and distribution” and not just the payment processor that developers are paying for. But the reality is that free apps cost developers NOTHING (besides $100/year dev fee) to host on the App Store. And many of them make tons of money from ads within the app. But they own 0% to Apple. So why should paid apps have to subsidize free apps?

Worse, Apple's decision to host free apps and charge a high percentage cut on non-free apps actually encourages developers to ship apps that cost nothing, but bombard you with ads. You almost can't find games that aren't adware these days, and some of them very obnoxiously so. In an ideal world, those apps would be distributed outside the app store, the way that Developer ID apps are distributed on macOS. That way, Apple wouldn't have to fund their distribution and pawn off the costs on everybody else, and they could lower their margins to a more reasonable percentage.

 

[@Brett]

You would think the US government would have more to worry about than this at the moment. Also companies need to stop being greedy on all fronts. Apple maintains the App Store and everything that goes with that. They also update and maintain the devices and these companies effectively want to get that for free. Spotify for instance loves to brag about it numbers against Apple but then cries poor whilst trying to get money back from artist they claim the over paid. I feel better doing these things through the App Store. Choice is great but I am betting people will still continue doing things through the App Store.

 

[sw1tcher]

And again you're mixing analogies.

The analogy of a b&m store works only if they control the distribution of both the initial item but also the subsequent releases.

To take this argument to the app store it would be akin to Apple releasing the app but then someone else entirely different handling the updates - payments and distribution.

That's obviously not the case - hence why the analogy is faulty.

Therein lies the problem. Apple won't let the app developers handle the updates, payments, or distribution. As I said before, it's Apples app store or it's nothing. That IMO is an abuse of their monopoly position.

 

[TiggrToo]

Therein lies the problem. Apple won't let the app developers handle the updates, payments, or distribution. As I said before, it's Apples app store or it's nothing. That IMO is an abuse of their monopoly position.

Having a monopoly is not illegal. Abusing that status can be.

Apple's issue isn't that is the sole distribution channel, is more down to the horrendous cut they take.

30% in my eyes is obsene - especially for an app with low sales. Ditto subscription costs.

I absolutely think they need to totally revisit their charges. I also think they totally should continue to control the distribution channel.

 

[ineedanaccont]

I’m an app developer... I’ve been so for more than a decade. I had an app on the App Store in the first month of its launch in July 2008.

Here is why the 30% cut is a problem:

1. People argue that it’s the “storefront and distribution” and not just the payment processor that developers are paying for. But the reality is that free apps cost developers NOTHING (besides $100/year dev fee) to host on the App Store. And many of them make tons of money from ads within the app. But they own 0% to Apple. So why should paid apps have to subsidize free apps?

2. Payment processors typically take 1-3% of a transaction. Apple has a bit more convenience with in-app payments via Touch ID and Face ID, so let’s say 5%. Maybe even 10% if we are being generous. But 30%? Makes no sense except for a cash grab. It’s arbitrary. And when subscriptions are over a year, it’s 15%, which is still arbitrary.

3. The 30% wouldn’t be an issue if Apple allowed distribution outside of the App Store OR allowed developers to at the very least to advertise a different payment method within the app itself, even if it takes people out of the app for a purchase. Then devs would offer a “discount” to users for using a cheaper processor to save from the 30% rake. Which would in turn force Apple to be competitive in the cut, which is WHY they don’t want to allow outside payments.

4. But despite all of this, Apple does make exceptions to these rules to large companies with hidden contract terms no one knows about. “Reader” apps, for some reason, don’t have to follow these rules, such as Netflix. Why? Who knows. Apple just make up some rule to make them happy so they could be on their store. But the Hey email app wasn’t a “Reader” app so screw them right? Technologically there is no reason one should get hit with 30% and Netflix with 0%.

Apple has complete control and are using it to take arbitrary cuts of money for no real reason. There are millions and millions of iOS devices, WAY more than what Microsoft had with Windows when they got in trouble, and Apple owns large chunks of market share especially in North America and Europe.

I hope they are forced to change something.

As a consumer I don't want to deal with your shady terms and conditions of getting a refund.

I don't want to goto you website and find out I have to call you between the hours of X and Y, I want a consistent REFUND and CANCELLATION policy on app purchases, in-app purchases and subscriptions. At the end of the day the majority of these purchases are micro-transactions or low value purchases I want it to be AS easy to get my money back as it was to GIVE you my money if I'm not happy with my purchase. Apple provides me with that which is why I'm against the idea of side loading apps or allowing developers to choose their own payment providers. Right now I buy 1 app I buy 100 apps it all comes in on a nice easy to read email... and cancelation or refund is 1 click.

I also don't want to have to find out that my credit card data was stolen. As a developer if you don't like Apples terms pull your app and just sell it on Android... there's got to be SOME reason many developers choose not to.

Here's a great example of what I'm talking about Sneaky subscriptions are plaguing the App Store

Apple blocks Facebook from running its internal iOS apps

Apple Is Taking Action Against Fake Ratings On The App Store

I don't TRUST app developers to do the right thing, and I have no doubt that you will abuse consumers if given the opportunity.

 

[alien3dx]

As a consumer I don't want to deal with your shady terms and conditions of getting a refund.

I don't want to goto you website and find out I have to call you between the hours of X and Y, I want a consistent REFUND and CANCELLATION policy on app purchases, in-app purchases and subscriptions. At the end of the day the majority of these purchases are micro-transactions or low value purchases I want it to be AS easy to get my money back as it was to GIVE you my money if I'm not happy with my purchase. Apple provides me with that which is why I'm against the idea of side loading apps or allowing developers to choose their own payment providers. Right now I buy 1 app I buy 100 apps it all comes in on a nice easy to read email... and cancelation or refund is 1 click.

I also don't want to have to find out that my credit card data was stolen. As a developer if you don't like Apples terms pull your app and just sell it on Android... there's got to be SOME reason many developers choose not to.

as consumer and developer, i would said true. But is not all about money sometimes, its about distribution. If apple can provided some revenue like apple arcade for developer much easier. But for my issue is more on business 2 business app distribution(b2b) then business to consumer(b2c). If b2b , everybody want to cut commission on non digital product which we allow to push to apple store and no need to paid 30 percent but we dont want non related customer to download it and argue.

 

[farewelwilliams]

this is absolutely an overblown issue.
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How about just allowing customers to download apps from safari...just like on a Mac. That would allow competition in the payment field too

as well as competition for malware developers.

 

[alexhardaker]

I’m annoyed that I can’t subscribe to Netflix et al through my iPhone anymore. I like to keep things organised.

 

[Seoras]

Regardless of Apple's 30% being right or wrong does anyone think developers will charge any less if Apple doesn't get 30%?
I seriously doubt that so I don't really get the "public" being behind this and supporting it. No skin in the game.
I'm a developer and I've been getting a 4 figure payout every month from Apple for several years now.
I'd like to not pay the 30%, I wouldn't drop my prices if I didn't have to pay it and I have a suspicion that the App Store's keyword ranking algorithm is almost certainly factoring in how much my app's make compared to keyword rivals.
Therefore if I had the option of using an alternative payment system - I wouldn't. Google Play won't be any different.
If you own a store you deserve to make money on your store. Ask any shop keeper if he'll sell your stuff for 0% commission.
You can make good money on the internet by driving paying customers to websites which payout anything from 30-50% of revenue made as affiliate marketing commission.
Amazon, now there's a store which should be getting mentioned in this context but doesn't.

 

[Rogifan]

I want to be able to buy whopper jr’s at mcdonalds. It’s more convenient for me.

That argument works if you say Apple owns the device or that the customer isn’t buying a device but a software license agreement.

 

[cmaier]

That argument works if you say Apple owns the device or that the customer isn’t buying a device but a software license agreement.

They’re buying both

 

[Rogifan]

Again, it's mixing the analogy. You've crossed from a physical item handled by the store to one that's no longer handled by the store.

Well a digital subscription is only handled by Apple because they don’t allow it any other way. Except of course for the carve outs they created for companies like Netflix.
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They’re buying both

Not according to Apple.
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Regardless of Apple's 30% being right or wrong does anyone think developers will charge any less if Apple doesn't get 30%?
I seriously doubt that so I don't really get the "public" being behind this and supporting it. No skin in the game.
I'm a developer and I've been getting a 4 figure payout every month from Apple for several years now.
I'd like to not pay the 30%, I wouldn't drop my prices if I didn't have to pay it and I have a suspicion that the App Store's keyword ranking algorithm is almost certainly factoring in how much my app's make compared to keyword rivals.
Therefore if I had the option of using an alternative payment system - I wouldn't. Google Play won't be any different.
If you own a store you deserve to make money on your store. Ask any shop keeper if he'll sell your stuff for 0% commission.
You can make good money on the internet by driving paying customers to websites which payout anything from 30-50% of revenue made as affiliate marketing commission.
Amazon, now there's a store which should be getting mentioned in this context but doesn't.

This isn’t about apps being too expensive. In fact one could argue the proliferation of “free” apps has forced developers to charge less because consumers don’t expect to pay much for apps. Of course Apple could allow upgrade pricing. It sure seems like developers want that.

 

[cmaier]

Not according to Apple.

Of course according to apple. Your phone comes with a license agreement for the software, and you own the hardware.

 

[jonblatho]

Remember when Apple didn't like the rates Qualcomm was charging them? Some people will defend them no matter what.

The terms are clear! The terms are clear!
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as well as competition for malware developers.

If there are vulnerabilities to exploit that are only stopped by the App Store, then that sounds like Apple’s problem, not that of some developer who already has an established business model that isn’t compatible with the App Store.

 

[SurferPup]

I believe in a free market economy and I thought America also followed this ideology. Who or whatever person / organisation creates a product or service should decide the price they charge and if the market (you, other consumers and I) will decide if the product is of value for us to pay for it or not. If an App Developer or company are unhappy paying 30% to Apple then I think dobbing to the Government is a dirty trick. No one starts a business model to give their services away or for too cheaply, just like I would not go to work if they did not pay me.

 

[ethanwa79]

As a consumer I don't want to deal with your shady terms and conditions of getting a refund.

I don't want to goto you website and find out I have to call you between the hours of X and Y, I want a consistent REFUND and CANCELLATION policy on app purchases, in-app purchases and subscriptions. At the end of the day the majority of these purchases are micro-transactions or low value purchases I want it to be AS easy to get my money back as it was to GIVE you my money if I'm not happy with my purchase. Apple provides me with that which is why I'm against the idea of side loading apps or allowing developers to choose their own payment providers. Right now I buy 1 app I buy 100 apps it all comes in on a nice easy to read email... and cancelation or refund is 1 click.

I also don't want to have to find out that my credit card data was stolen. As a developer if you don't like Apples terms pull your app and just sell it on Android... there's got to be SOME reason many developers choose not to.

Here's a great example of what I'm talking about Sneaky subscriptions are plaguing the App Store

Apple blocks Facebook from running its internal iOS apps

Apple Is Taking Action Against Fake Ratings On The App Store

I don't TRUST app developers to do the right thing, and I have no doubt that you will abuse consumers if given the opportunity.

That’s fine, use Apple’s App Store system still then. The problem is that Apple doesn’t provide developers a CHOICE to distribute in a different model. I’m not saying the App Store should go away.

 

[maerz001]

For anyone who has a problem with Apple's policy, I have only one thing to say. Why don't you build an "iPhone" and an "App Store" and charge people less on it.

What’s your problem with anticompetitive investigations? There’s a time when a company has created a monopoly.
not the first time this happened and there are good reasons for customers not to have one. You included

 

[jlc1978]

I’m an app developer... I’ve been so for more than a decade. I had an app on the App Store in the first month of its launch in July 2008.

Here is why the 30% cut is a problem:

1. People argue that it’s the “storefront and distribution” and not just the payment processor that developers are paying for. But the reality is that free apps cost developers NOTHING (besides $100/year dev fee) to host on the App Store. And many of them make tons of money from ads within the app. But they own 0% to Apple. So why should paid apps have to subsidize free apps?

So why not make your app free and make tons of money on ads?

2. Payment processors typically take 1-3% of a transaction. Apple has a bit more convenience with in-app payments via Touch ID and Face ID, so let’s say 5%. Maybe even 10% if we are being generous. But 30%? Makes no sense except for a cash grab. It’s arbitrary. And when subscriptions are over a year, it’s 15%, which is still arbitrary.

15% is very low for a retail operation. Apple is more than just a payment processing system - they maintain a storefront, distribute updates, provide worldwide access to a base that spends more than other phones, etc.

3. The 30% wouldn’t be an issue if Apple allowed distribution outside of the App Store OR allowed developers to at the very least to advertise a different payment method within the app itself, even if it takes people out of the app for a purchase. Then devs would offer a “discount” to users for using a cheaper processor to save from the 30% rake. Which would in turn force Apple to be competitive in the cut, which is WHY they don’t want to allow outside payments.

Or, Apple can up developer fees, charge for hosting, charge for downloads, etc. At least with a fixed cut you have some certainty on your costs. Would you want to pay a fee every time someone viewed your app? Or d/l it and decided not to buy it? Or pay a slotting fee to get it placed higher in searches or to be advertised?

4. But despite all of this, Apple does make exceptions to these rules to large companies with hidden contract terms no one knows about. “Reader” apps, for some reason, don’t have to follow these rules, such as Netflix. Why? Who knows. Apple just make up some rule to make them happy so they could be on their store. But the Hey email app wasn’t a “Reader” app so screw them right? Technologically there is no reason one should get hit with 30% and Netflix with 0%.

Technology has nothing to do with pricing, only profit. Apple charges what they do because enough developers find the market lucrative enough to pay that cut. Large companies, by virtue of their ability to drive revenue, often get better deals than small ones.

Technology makes things easier, but to use your argument why should you charge what you do? Once the app is developed each additional sale costs you nothing on the margin, so the cost of your product should drop significantly as sales mount because your costs for that sale are negligible.

Apple has complete control and are using it to take arbitrary cuts of money for no real reason. There are millions and millions of iOS devices, WAY more than what Microsoft had with Windows when they got in trouble, and Apple owns large chunks of market share especially in North America and Europe.

I hope they are forced to change something.

MS dominated the OS market. Apple, while it is a significant part of the market, still hovers around 30 annually, which is not enough, IMHO, to exercise market power. Apple does not dictate the price for an app, and gives a break on fees after 1 year.

Is 30% too high? Good question.Apple could do a tiered system and take less as sales mount. They could charge more to be a developer, weeding out the marginal ones, and take a smaller cut. I doubt Apple will simply roll over and accept less revenue.

I'm just not convinced regulators will come up with a solution that benefits consumers, which is the whole point of anti-trust laws. Will consumers see lower prices or developers simply enjoy the extra money? That is the real question to ask. If the answer is no then all the regulators are taking the consumers money and giving it to a different corporation.

 

[alien3dx]

...

15% low ? Are you even in retail? if each level asking 30% then you will have outrages price item.

** sorry hard to read.. too long

 

[jlc1978]

What’s your problem with anticompetitive investigations? There’s a time when a company has created a monopoly.
not the first time this happened and there are good reasons for customers not to have one. You included

Except Apple does not have a monopoly. It does not control the smart phone market and dictate prices. The consumer has a choice of phone OS's and Apple's share is around 30%; way below a monopolistic level. Everyone focuses on Apple's ecosystem to argue they have a monopoly, but the reality is that is not the definition of a monopoly in a market.

 

[Tech198]

....And you could say without the 'say' app, or if this developer just accepted to the 30% rather than getting around it, none of this would have happened as an investigation. The EU investigation would have happened anyway.. but that's another matter.

True everyone focuses on Apple because they are the odd ones out... Its the act of anti-competitive...compared to 90% of those who "do it right" when the reality should be "It's Apple's ecosystem, they have always done it for few years.. rather than trying to change something, don't be part of it"

 

[alien3dx]

Except Apple does not have a monopoly. It does not control the smart phone market and dictate prices. The consumer has a choice of phone OS's and Apple's share is around 30%; way below a monopolistic level. Everyone focuses on Apple's ecosystem to argue they have a monopoly, but the reality is that is not the definition of a monopoly in a market.

so i can install macos in x86 platform legally.. Said it loud..

 

[jlc1978]

15% low ? Are you even in retail? if each level asking 30% then you will have outrages price item.

** sorry hard to read.. too long

Well, if you look at Walmart their gross margin is around 24%. Bookstores get even more. Wholesale prices for gift items are often way less than 70% of the price charged at retail. The rule of thumb was a product sell for about 3x at retail vs the what the producer gets; so yes 15% is a low markup. If you look at what markups there are in boxed software at each step of the process you'd find that the developer gets way less than 70% of each sale.

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so i can install macos in x86 platform legally.. Said it loud..

The inability to do that doesn't make Apple a monopoly.
[automerge]1593244289[/automerge]

What’s your problem with anticompetitive investigations? There’s a time when a company has created a monopoly.
not the first time this happened and there are good reasons for customers not to have one. You included

The problem is developers are not claiming they're forced to charge too much and would lower prices if Apple lowers their cut, but that Apple is taking too much of money they believe is theirs. Breaking up. monopoly should result in lower prices to consumers, not more money in some other supplier's pocket. If Apple suddenly lowered their cut to 10% do you think developers will say. "Oh, now Apple takes less so let's cut 20% off of our prices?"