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

[alien3dx]

Well, if you look at Walmart their gross margin is around 24%. Bookstores get even more. 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.

lol.. gross margin and commission per level item are totally different. The big company buying a bulk item which reduces cost price and increasing revenue. This is software development which totally different and the cost is totally super high. Most would sale as volume purchase so can bypass the 30% margin from google/apple for the digital items. For non-digital items, apple nor google have no legal right to enforce it. Normal software charge dungeon of $$$ but when market going to subscription base which is volume license instead of sales of box e.g Microsoft, Adobe.

The problem is not Big Microsoft, Adobe but the indie developer. The coupe the nill return on investment(ROI) they add advert annoying to coupe with investment.

The conclusion is simple to see, apple in-app subscription much higher than android to coupe the cost not because of 30% but the cost of development, the long testing, rejecting. Apple itself doesn't follow proper User Experience(UX) but always try to delay the publish such as "Hey"

 

[pasamio]

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

Bookstores will routinely expect 40% or 50% of retail price as the cut. Google "book store trade discount" if you're still dubious. That's just the bookstore with no accounting for printing the book, any editing work, any layout or design work for a cover or similar, any marketing that might have been done and any other costs that you yourself personally expended to author the book (a device to write it on, internet, electricity, food to eat, a place to live). If you go through a publisher they might pay you a 15% royalty for your work. That means everyone else between you and the consumer take a 85% cut which is a lot more than the 30% Apple takes.

That also puts in perspective the Apple bookstore charge of 30% as well, comparatively cheaper than a brick and mortar store. The contention there is because Apple run their own store that it is anticompetitive for someone else to use their platform and have to pay money for it.

 

[alien3dx]

Bookstores will routinely expect 40% or 50% of retail price as the cut. Google "book store trade discount" if you're still dubious. That's just the bookstore with no accounting for printing the book, any editing work, any layout or design work for a cover or similar, any marketing that might have been done and any other costs that you yourself personally expended to author the book (a device to write it on, internet, electricity, food to eat, a place to live). If you go through a publisher they might pay you a 15% royalty for your work. That means everyone else between you and the consumer take a 85% cut which is a lot more than the 30% Apple takes.

That also puts in perspective the Apple bookstore charge of 30% as well, comparatively cheaper than a brick and mortar store. The contention there is because Apple run their own store that it is anticompetitive for someone else to use their platform and have to pay money for it.

not sure with usa style, but here we not like that.A book,magazine not sold will return back and the profit per magazine not 50 percent or 40 percent just pure 5 to 10 percent from sales price. A bookstore no need to think all those aspect since just item to sold or return. In the end is all about volume sales or not.

 

[ctx86]

The vast majority of users see the app store and the way it works as a good thing, not sure that even given the choice, most would choose anything other than the app store to make payment. It's convenient and that is the way users want it.

Not saying it's being done right by Apple in relation to developers, but it does not change the fact that it works for users.

Again, people only see 30%, it is that in the 1st year then 15% in all others.

The thing that gets me is that Apple want developers to keep quiet about being able to shop around. Take the cost of an Amazon Music Unlimited subscription for example:

- App Store: £10.99 per month (no other options given)

- Direct from Amazon: £7.99 per month or £9.99 per month for non Prime members

it’s a simple one off activation for a recurring subscription and Apple are happy to benefit from customer ignorance.

When I was renewing my home contents insurance recently the renewal e-mail stated that I might benefit from shopping around. If Apple are proud of their prices & options for their customers they should not be discouraging customers from doing the same, instead they seem to prefer to keep them ignorant.

 

[m11rphy]

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.

Why dont developers instead of worrying about the 30% apple ask themselves how much money they have made from having there app on apples App Store and if they would have made that much money without the apple App Store. People like Netflix and Spotify are only even a thing thanks to apple and now they are just getting greedy

 

[swm]

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.

well, not really. 1st, the overall marketshare of IOS is around 29% - but i agree, they do quite some better with the market segment that actually *pays* for apps. but the example with microsoft is flawed. microsoft did not made no HW, just the OS. they basically forced PC manufacturers to not to preload their software selection (say netscape) or they got to pay way higher prices for bundled windows OS - which was more or less the only 'sensible' OS at that time. As If nowadays google would only license android to 3rd party smartphone manufacturers if they keep Chrome as the default browser and don't install their set of (mostly useless) apps initially.
Apple doesn't license IOS to anyone, they control both the HW and OS, so they set the rules. You want to sell stuff on their ecosystem (using the free tools & environment) they provide for anyone, you pay the annual developer fee and you give their a 30% cut for the first year.
It is a steep cut on subscription revenues, and yes, you're not allowed to directly market _any_ further option for subscription in your app, but you still can offer alternative sign-up/subscription methods anywhere else. obviously for the customer this doesn't matter, if they pay the same price - they might choose convenience (and trust). It's just another sales channel, as it is anywhere. You can retail regular stuff in your store and have all the profit, in addition to reach a bigger market by selling it through a retailer - and surprise-surprise - you'll pay for it with a part of you profit. Never the less i can not really imagine anyone alone to have the same retailing reach and capacity as the IOS App Store has today.
on the other hand you have independent tools like Microsoft's Xamarin, that lets you build stuff a bit easier for multiplatform environment, so you can actually sell your apps in the play store or offer it in you web store.
Hell, you can just issue a 'certificate' along your ipa, people will be able to download and run your stuff - as long they trust you and your certificate. the choice is yours.

 

[pasamio]

not sure with usa style, but here we not like that.A book,magazine not sold will return back and the profit per magazine not 50 percent or 40 percent just pure 5 to 10 percent from sales price. A bookstore no need to think all those aspect since just item to sold or return. In the end is all about volume sales or not.

Would love to understand more about where you're from and the cut that a bookstore takes where you're at, do you have any references to that?

 

[LeeW]

Given a choice of stores, would customers choose the Apple store if the seller had a 30% premium on the Apple app store version to cover the cut to Apple?

You are overthinking the interest of the average user to care that much. This is my point, they don't want a choice of store, they use Apple and the app store for the convenience it provides.

People buy an item from Amazon and select prime delivery because they want the item tomorrow, they know they are paying more for that, they also know if they took the time to look elsewhere and wait a bit longer for delivery they can get it cheaper, but they don't. Convenience, it is a well-proven trait, people pay more for it.

 

[alien3dx]

Would love to understand more about where you're from and the cut that a bookstore takes where you're at, do you have any references to that?

im from malaysia.Sorry no reference in web since i used to talk with small shop owner,shop owner in mall.

 

[Agit21]

Where is the bad PR from mac viruses

This says it all. Thank you!

 

[FlyingDutch]

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

Yes, and who cares about security, right ? 🤦🏻‍♂️

 

[ethanwa79]

Why dont developers instead of worrying about the 30% apple ask themselves how much money they have made from having there app on apples App Store and if they would have made that much money without the apple App Store. People like Netflix and Spotify are only even a thing thanks to apple and now they are just getting greedy

Netflix and Spotify are only a thing because of Apple? Ooooookkkkkk....

 

[FlyingDutch]

I think the 30% fee is just too high (a 15% would be more reasonable in my opinion), but most of you are missing the point here. Developers just don’t want any fee at all. The would like Apple to distribute their software, giving Apple no money at all. It seems to be even more unreasonable, since Apple is giving them a way to reach millions of customers.
[automerge]1593250014[/automerge]

Netflix and Spotify are only a thing because of Apple? Ooooookkkkkk....

Surely they wouldn’t have the same number of subscriptions.

 

[alien3dx]

Yes, and who cares about security, right ? 🤦🏻‍♂️

Just apple make as sign/knowable developer. If non the apple developer paid 99 or 299 just reject it. But do remember, customer are not always right. So much easier to told customer please download at the play store/apple store rather then please download at this website xxx. Only B2B customer needed those website link, those B2C just go to play store/apple store/amazon store or whatever is it.

If you want example which might be rasis, people now avoid Huawei because no play store as even huawei app gallery allow download but user as user always be in lazy mode and developer also lazy to register all huawei,vivo or whatever else X store.

 

[yyy]

There's a serious problem in Apple's whole pricing model regarding development tools and apps distribution and hosting in the App Store. They set it up so that development tools (like Xcode) are virtually free and free apps can be hosted for free (barring the yearly membership fee). That pricing model is flawed because Apple end up not making a profit for their development tools and for hosting free-apps in the App Store unless they overcharge developers of paid apps (and free apps with IAP). This is very unfair as some developers wish to use their own IAP system and obviously no developer wants to be overcharged.

Also, the whole revenue sharing business model is unfair. Apple claims developers owe them part of their success and they measure that success by revenue. That is highly inaccurate, as more revenue doesn't necessarily mean better value from the App Store or Apple's services and products. There are many reasons for an app to make more (or less) revenue. Meanwhile, free apps are making revenue in different ways and Apple sometimes make no profit out of them. So Apple's solution was to overcharge developers and force them to use Apple's own services to cover up for their flawed business model.

The solution is very simple: Apple should start charging developers for development tools and for hosting free-apps in the App Store. If you get a product (Xcode) you pay for it. If you get a service (host your free app in the App Store) you pay for it. The more attention your app gets in the store - the more you pay, regardless of revenue or whether the app is free or not. Stop digging into the developers' wallets and use more accurate data to decide how much developers should pay you.

The idea that free apps can be hosted in the App Store for free dates back to when IAP didn't even exist and advertising in apps was in its infancy. Developers either made money by selling apps or they didn't make much money at all. Things have changed over the years and instead of Apple (and Google) adapting their business models to changes in technology, they just quietly kept charging developer 30%, probably because they know it yields a much bigger profit for them. They managed to pull it off for many years but now people are starting to notice and I hope both Apple and Google stop practicing these shady techniques and start charging developers fairly.

BTW, considering the expensive 30% commission, you'd think Apple would have provided a great service to their developers but that's not always the case. Developers are being forced to wait for months to be enrolled to the Apple Developer Program and Apple don't seem to care: https://developer.apple.com/forums/thread/126314

 

[7149041]

Let’s say you build a chair store. You make your own chairs and sell them there. Then, you let other people sell chairs in your store but you take a 30% cut (pretty reasonable markup in retail). BUT obviously you wouldn’t allow these other makers to attach a leaflet to their merchandise, saying “screw this store anyway, come to mine and buy there cheaper”.

Maybe you’d let some very famous designer do it - at least it drives traffic to your store and without that, people wouldn’t come to you at all. But that’s a business agreement between you and the other guy.

You don’t like the rules, don’t build apps for the iPhone. I’m sure they would change rules if they had an economical pressure for it. Anything else is just communist bickering and bothering the judical system with attempts to terrorize a well functioning business to act against the interest of its shareholders.

Go build exclusively Android and Windows Phone apps, see where that takes you and your busines with all the piracy permeating these platforms.

 

[panangi]

Where is the bad PR from mac viruses

Try comparing the # of iOS users vs macOS users. I’m sure the impact would be a tremendous PR disaster relatively comparing!

 

[alien3dx]

There's a serious problem in Apple's whole pricing model regarding development tools and apps distribution and hosting in the App Store. They set it up so that development tools (like Xcode) are virtually free and free apps can be hosted for free (barring the yearly membership fee). That pricing model is flawed because Apple end up not making a profit for their development tools and for hosting free-apps in the App Store unless they overcharge developers of paid apps (and free apps with IAP). This is very unfair as some developers wish to use their own IAP system and obviously no developer wants to be overcharged.

Also, the whole revenue sharing business model is unfair. Apple claims developers owe them part of their success and they measure that success by revenue. That is highly inaccurate, as more revenue doesn't necessarily mean better value from the App Store or Apple's services and products. There are many reasons for an app to make more (or less) revenue. Meanwhile, free apps are making revenue in different ways and Apple sometimes make no profit out of them. So Apple's solution was to overcharge developers and force them to use Apple's own services to cover up for their flawed business model.

The solution is very simple: Apple should start charging developers for development tools and for hosting free-apps in the App Store. If you get a product (Xcode) you pay for it. If you get a service (host your free app in the App Store) you pay for it. The more attention your app gets in the store - the more you pay, regardless of revenue or whether the app is free or not. Stop digging into the developers' wallets and use more accurate data to decide how much developers should pay you.

The idea that free apps can be hosted in the App Store for free dates back to when IAP didn't even exist and advertising in apps was in its infancy. Developers either made money by selling apps or they didn't make much money at all. Things have changed over the years and instead of Apple (and Google) adapting their business models to changes in technology, they just quietly kept charging developer 30%, probably because they know it yields a much bigger profit for them. They managed to pull it off for many years but now people are starting to notice and I hope both Apple and Google stop practicing these shady techniques and start charging developers fairly.

BTW, considering the expensive 30% commission, you'd think Apple would have provided a great service to their developers but that's not always the case. Developers are being forced to wait for months to be enrolled to the Apple Developer Program and Apple don't seem to care: https://developer.apple.com/forums/thread/126314

what da hel* have free app store ? you need to paid 99 dollar per annum..

 

[steve62388]

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.

Being a developer hopefully you can answer my question. I understand pretty much all the digital store fronts charge 30%. I think Epic is an outlier on that.

Before these app stores existed and a developer had to go to a publisher to get their software in front of an audience, what percentage was left for a developer after the publisher and distributor took their cut? I have no idea.

 

[LeeW]

Before these app stores existed and a developer had to go to a publisher to get their software in front of an audience, what percentage was left for a developer after the publisher and distributor took their cut? I have no idea.

Going back to my early days, that is 25 years ago in software development, you would feel good if you got 30-40% from the publisher. It would go up if they sold over (insert ridiculous number here) units.

 

[Kabeyun]

I think Apple will lose, not because they’re doing something wrong, but because when it comes to tech lawmakers are idiots. The example of the iBooks decision jumps immediately to mind.

How about Apple doesn't take any cut, but they get to sit on the revenue for 13 months before they pay it out. If an app fails to follow policy, including privacy, feature development and bug fixes, updates for new OS and device releases, etc. than they refund 85% to the customer and keep the remaining 15% as a refund processing fee. They could make it easy for customers by automating this process when they go to delete the App from their device.

So malevolent devs would know to roll out secret evil at 13 months + 1 day? Not a good plan.

 

[arvinsim]

Why dont developers instead of worrying about the 30% apple ask themselves how much money they have made from having there app on apples App Store and if they would have made that much money without the apple App Store.

Your statement is not as rhetorical as you think.

People like Netflix and Spotify are only even a thing thanks to apple and now they are just getting greedy

In a hypothetical scenario where Apple prevents Netflix and Spotify in its App store, I guarantee 100% that the pitchforks and backlash wouldn't be on Netflix and Spotify.

Apple needs Netflix and Spotify more than you think.

Scratch that, Apple needs apps more than you think.

 

[tatsumi]

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.

A decade of developing apps and still no clue why Netflix can get off for free?

I developed an iOS app which was simply a “companion app”. You can’t sign up through it, you can’t subscribe through it. And there is no link to our web app from the mobile app.
But if you “by chance” have an account created and subscribed for via our web app, then you can use all the same feature on our mobile app.
This is how we very simply avoided paying 30% to Apple.
Has nothing to do with giving big companies an advantage through hidden contracts. That’s simply a lie. Anybody can do that, not just Netflix.
Just reading the policies and finding a way around them.
We did that as a start-up of 4 people. And I was even just a little junior developer at that time who developed it.

But still I think Apple should simply do the same logic they got on the Mac. By default just block external installations, but if the user chooses to and is aware of the risk, then he can still install it.
Problem is most users will still choose the AppStore though and therefore the 30%/15% issue wouldn’t really be solved for many.

As a dev I have a different perspective on these things. What Apple does with those 30% is ensuring a stable future for a product and therefore economy that I can profit from. Thanks to that they can spend a lot into research, improving their services and products which in return keeps users there who would use my app.
But yeah, an OPTION for external installs wouldn’t hurt for those who really really want it.

 

[steve62388]

Going back to my early days, that is 25 years ago in software development, you would feel good if you got 30-40% from the publisher. It would go up if they sold over (insert ridiculous number here) units.

So when these stores started launching were developers satisfied with the share?

 

[4jasontv]

I think Apple will lose, not because they’re doing something wrong, but because when it comes to tech lawmakers are idiots. The example of the iBooks decision jumps immediately to mind.

So malevolent devs would know to roll out secret evil at 13 months + 1 day? Not a good plan.

I think Apple will lose, not because they’re doing something wrong, but because when it comes to tech lawmakers are idiots. The example of the iBooks decision jumps immediately to mind.

So malevolent devs would know to roll out secret evil at 13 months + 1 day? Not a good plan.

Well my idea was it was rolling revenue. You always have a year of revenue in jeopardy.