UK Class Action Accuses Apple of Breaking Competition Law by Overcharging for Apps

[mikeyy00]

Man.. all these dummies have no idea how things used to be pre-App Store. You wanted an app for your blackberry/palm/windows device.. you scoured review sites, google, yahoo etc. Maybe you found an app that sounded like what you wanted. Then you'd try to buy it.. if lucky they supported Paypal/Kagi.. if not lucky you had to mail a friggen check. Then you got your license code.. download file. You go to install and oh. It doesn't work on your specific processor (windows) bb/pal OS version. Great. Refund? lol. sure. Oh, and these apps weren't a buck or two.. no way. These mawfuggers were $10-$50. Nokia was the one outlier.. their store was "meh" to "okay", but you would still run into the odd issue trying to load an app for something like the n95 on a ******* device.

The App store was so much better than anything else at the time.. but if you're younger than 30, you wouldn't know that.

 

[cyb3rdud3]

The problem is. Apple blocks spotify from telling customers who user their app on how to get a subscription which is an abuse of power.

Most people know on how to get a Netflix and Spotify subscription, but I am sure there are a few elderly people who do not know it and Netflix and Spotify are not allowed by Apple to tell them on how to get it.

No they are no blocking app developers from linking to their own website at all. They are only disallowing the principle of "...don't buy in this store, buy it here instead.". There is absolutely no problem in providing links to the website for further information about the service.

Ok so now most people know, but you are worried about a few elderly people who do not know and want to stream netflix and spotify...Wow. They need good grandchildren. My nan is on my netflix family account I helped her set it up as well. And don't underestimate the silver surfers, they are smart enough and sharing and installing all sorts of **** amongst themselves. But can be very cunning as well in pretending they don't know when it suits them

Everyone is equating the App Store to a store. Well it is not, it never was. Again …

The App Store is fundamentally a technical device for people to install and update their apps in their smartphone of choice, yes 30% commission over in app transactions as payment is way outside the industry prices. The industry practice is for installing and updating apps 0, a facility included in the OS license, with only few exceptions extremely limited in scope, such as gaming consoles.

But everyone is comparing it to regular store tariffs where from a a function point of it’s not even close.

The reality is that a comparison with a regular store is nothing but a smoke screen to hide from consumers minds what it is at its core. Leading to totally misleading if not historical counter arguments.

Actually you can install software without using the app store through several mechanisms. Some of them actually quite old and common in the industry and I'm not talking about WAP When loading up a computer and hooking up the phone you can install apps that way, you can do that today.

At the point of use installing and updating free apps does cost 0. Developers who choose to update existing paid apps can also update their users for 0. You could distribute the apps outside the app store as well. But if you wanted official signed applications distributed you need to be part of the developer programme, and if you do that for commercial gain then you have a transactional charge as well. Very similar to many other app stores.

If you buy an iPhone without knowing the details about the whole walled garden App Store thing and find later on that it's not for you, no one is forcing you to stay with the iPhone and it's marketplace. You can switch to Samesung or other phone vendors any time. I hear there are even tools to migrate your stuff.

And you can even return it for a full refund within the statutory limit in the country where you purchased it.

It’s irrelevant to the case. The case is about abusively charging customers infinitely and indefinitely for the ability to install and update apps in their smartphones and tablets. Which by industry standards is close to 0 actually considering it’s included in the OS license. Not the ability for developer to charge their customer for the apps and services their deliver.

That is simply not true. The customers aren't charged at the point of use to install and update apps. And you can install and update them outside the store if the vendor of those apps made them available through say a github account. Really no big deal.

 

[I7guy]

Are you sure you have skin in the game? If you had you would know this:

The Dev does not charge anything. The App Store does, check your App Store billing. The App Store pays the dev 70% of the end price.

Here is how things actually work. Say you, the dev wants to receive 70 cents for the app, let call the suppliers price. You feel that the app is worth it, it fits your business model bla bla bla.

So what the dev does some basic maths: 70/0.7 = 100 cents. Check Apple price tables and voila, the thing closer to that is 99 cents, select. You get ~70 cents and the App Store gets ~30 cents. That is the end price.

If Apple decided to charge say 40%.

70/0.6=144 cents. Do a lookup again on Apple price look up tables, find somthing close, either you go for .99 or 1.99. If you go for 99 Apple is eating your lunch. Don’t want that of course, you go 1.99. You get more than you thought, Apple gets less, customers pay more.

Now say %15 commission.

70/0.85=82.4 cents. Do a look up again, .99. Ok select. Apple gets less with its reduced fee, the dev gets more … customer pay more than you thought initially.

So in the end of the say in this 3 scenarios, in rounded numbers:

1) Customer payes 30 cents to be able to install and update the App
2) 57.7 cents
3) 15 cents

In all cases of course it affects the end price.

We are talking one off. Now subscriptions … consider this values every month only to be able to install and update the App. Wether customers are paying to watch Netflix videos, or buying an eBook.

Simple.

Cheers.

In the interest of being precise, I think the point was lost. The dev sets the price on the app store. My speculation is, if Apple tomorrow, reduced the commission to 5% say, the dev would not pass the savings onto the customer.

 

[cyb3rdud3]

You are great at picking loser platforms. Next time ask for help or at least tell us your choices.

Well there is just Android and iOS left...And the droids now using iOS seem to want to turn iOS into Android so it is a purely hypothetical experience....

Let's just say I like to try new things, each time I've come back to iOS. Saying that I have an Android phone as well

Man.. all these dummies have no idea how things used to be pre-App Store. You wanted an app for your blackberry/palm/windows device.. you scoured review sites, google, yahoo etc. Maybe you found an app that sounded like what you wanted. Then you'd try to buy it.. if lucky they supported Paypal/Kagi.. if not lucky you had to mail a friggen check. Then you got your license code.. download file. You go to install and oh. It doesn't work on your specific processor (windows) bb/pal OS version. Great. Refund? lol. sure. Oh, and these apps weren't a buck or two.. no way. These mawfuggers were $10-$50. Nokia was the one outlier.. their store was "meh" to "okay", but you would still run into the odd issue trying to load an app for something like the n95 on a ******* device.

The App store was so much better than anything else at the time.. but if you're younger than 30, you wouldn't know that.

Yup, I remember it well...And then the apps for the N95 wouldn't work on the E65 etc...And that is just from a consumer perspective. As a developer distributing apps it is so heavenly simple nowadays and able to earn a lot more money from it as well. Yet many want to move it back to the bad old days. Very odd...

 

[I7guy]

The problem is. Apple blocks spotify from telling customers who user their app on how to get a subscription which is an abuse of power.

Most people know on how to get a Netflix and Spotify subscription, but I am sure there are a few elderly people who do not know it and Netflix and Spotify are not allowed by Apple to tell them on how to get it.

The driving force behind this becomes the use case of the elderly? So the elderly can figure out how to buy a phone, how to setup a phone, how to setup an apple id, but can't figure out how to get a spotify subscription?

Just asking to describe a generalized straw-man of a typical elderly persons' technical abilities.

 

[gsurf123]

If the developers have such a raw deal then they should pick another platform or target audience or career.

One thing Spotify and others might consider is that they are ripping off the customers paying through their website by 30%.

There is not a store in the world that does not set their own margins.

 

[XXPP]

I am waiting for the Tesco trial. Nobody else can sell their products at a Tesco store. It's a monopoly.

 

[XXPP]

The driving force behind this becomes the use case of the elderly? So the elderly can figure out how to buy a phone, how to setup a phone, how to setup an apple id, but can't figure out how to get a spotify subscription?

Just asking to describe a generalized straw-man of a typical elderly persons' technical abilities.

99% buys spotify subscription outside app store.

 

[XXPP]

If you don’t want to side load apps in an open iOS, you won’t have to. Nobody will force you.

That's not true. There will be applications that you will need and want to install and the only way is to install an additional app store. It will destroy iOS.

 

[DesignTime]

Good! Unfortunately, Apple owns the US government so they will use their power to force this case be dropped.

 

[Cosmosent]

Apple needs App Discovery competition, which in turn, would result in reduced App Store Commissions, as well as Raising the Educational Bar.

NOT Rocket Science, a well-trained monkey could figure-out a nice compromise solution that works nicely for both Apple & End Users.

The main problem / challenge is that Apple is a Control Freak, & probably loves to have a Total & Complete Stranglehold on App Discovery.

But, outside of Game Apps, they have Failed badly.

Consider the fact that even today in the today tab, Apple is promoting GIF making apps !

Seriously Apple ?

This App Dev does NOT need ANY more proof that Phil Schiller was entirely the wrong person to be running the App Store the past few years !

Apple should at least have someone running the App Store who has both App Dev experience, & experience running a NON-Game App company !

Phil has neither !

Matt Fischer, Phil's replacement ?, has a Bachelor of Arts in something NON-Tech

Have said it BEFORE, will say it again, the NON-Game App portion of the App Store is catastrophically broken, but will blossom once Apple loses FULL control of it !

I'll bet their greatest feat is precisely that, that it blossoms AFTER they lose ownership / control of it !

 

[DesignTime]

IOS vs. MacOS: entirely different things.

How?

 

[Mescagnus]

So, AppStore is what, "13 years old"? And its growth & success in all those years is the problem?

Simple solution for Apple: launch a new AppStore 2. Let's call it AppStore Pro. Those pickering about AppStore can choose to stay in the "old" AppStore with adjusted terms & conditions.

Those who want to be a part of the future of apps will migrate to AppStore Pro with its new terms & conditions – something like 40% cut for Apple.

Only AppStore Pro will offer the latest and greatest development kits, services & promotions. Old grumpy developers like Epic can stay in the old AppStore. New, forward-looking developers will happily opt for the superior AppStore Pro – even though it is a tad more expensive.

Being a front-runner and pioneer has its perks but also its costs. So by default, the stellar apps in AppStore Pro command a 30% higher price. Apple's customers will pay.

Everybody wins: the complaining developers (such as Epic & Spotify), next-generation developers, customers (who now have choice) and Apple.

AppStore and AppStore Pro. Apple offers choice, which the (complaining) developers & customers (are there any complaining customers?) are asking for.

Then one AppStore will no longer have a "monopoly".

 

[Nuno Lopes]

In the interest of being precise, I think the point was lost. The dev sets the price on the app store. My speculation is, if Apple tomorrow, reduced the commission to 5% say, the dev would not pass the savings onto the customer.

But that as irrelevant as is hypothetical. What is not that irrelevant is how much Apple is charging users for the ability to install and update an app … 30% of the app ot digital service price. Up until recently Spotify and Netflix had to include the in-app-purchase device. That meant back than, if the subscription cost $10 a month in app, that is $3 a month just to be able to install the Netflix app, say $36 in a year just for that, for one app …

Not much? Consider it 3.6 months of service, leveraged on one single thing: The user ability to Install and update an app. That is on top of the devices and OS licensing cost. Praise the lord Jesus by multiplying breads out of an half a piece of bread, feeding an entire nation of shareholders. I agree with Tim Cook when he said in a hearing that the App Store is a economic Miracle.

 

[falainber]

It sounds like Apple fans are the only people on this planet who love paying the taxes (43% in this case). It must be some sort of disease. Not only that, in addition to loving paying the taxes they also love going around and arguing how higher taxes are good for them.

 

[Mescagnus]

So, AppStore is what, "13 years old"? And its growth & success in all those years is the problem?

Simple solution for Apple: launch a new AppStore 2. Let's call it AppStore Pro. Those pickering about AppStore can choose to stay in the "old" AppStore with adjusted terms & conditions.

Those who want to be a part of the future of apps will migrate to AppStore Pro with its new terms & conditions – something like 40% cut for Apple.

Only AppStore Pro will offer the latest and greatest development kits, services & promotions. Old grumpy developers like Epic can stay in the old AppStore. New, forward-looking developers will happily opt for the superior AppStore Pro – even though it is a tad more expensive.

Being a front-runner and pioneer has its perks but also its costs. So by default, the stellar apps in AppStore Pro command a 30% higher price. Apple's customers will pay.

Everybody wins: the complaining developers (such as Epic & Spotify), next-generation developers, customers (who now have choice) and Apple.

AppStore and AppStore Pro. Apple offers choice, which the (complaining) developers & customers (are there any complaining customers?) are asking for.

Then one AppStore will no longer have a "monopoly".

And for people who want to sideload whatever they want, Apple could offer a new closed environment called Sandbox. There nerds could install & use whatever apps they like – of course with restricted access to core iOS APIs to protect the integrity & security of iPhone.

 

[1258186]

Seems to me they should go after app developers - they're making 70% profit!

How are they making 70% profit? That money has to cover all their wages and running costs.

 

[1258186]

It sounds like Apple fans are the only people on this planet who love paying the taxes (43% in this case). It must be some sort of disease. Not only that, in addition to loving paying the taxes they also love going around and arguing how higher taxes are good for them.

I was thinking exactly the same. Who wants to pay more. I want to pay less.

 

[Mescagnus]

Actually, I don’t think the 30% number is arbitrary. The distribution costs I’ve seen from the days of boxed software was 70%, to which the developer got 30%. I think Apple just wanted to flip the 70/30 ratio. I don’t know for sure, but it seems like a logical reason to me.

Indeed. Apple was – and is – the benefactor here.

 

[1258186]

I'm not a lawyer but you're right in what you say.

Ultimately this is a lawsuit brought-about by one person - "King's College London digital-economy lecturer" Dr Rachael Kent, on behalf of everybody affected.

It seems quite frivolous to me. Ultimately, 30% is an arbitrary number on which Apple decided. It is not for the courts to decide "how much profit is fair." That is up to the market. If the claim is that Apple has a monopoly, then that also doesn't hold water since nobody is forced to buy Apple devices.

If the claim is that "Apple has a monopoly on selling iPhone apps" then, of course, the statement is true, but is there anything wrong with that? For me, it's a little bit too much like walking into a Tesco supermarket and then complaining then you have to purchase PG Tips at Tesco's prices rather than Aldi's.

But if you don’t like the price the Apple iOS AppStore is charging you don’t have the option to shop elsewhere. I can shop around for apps on my Mac but not on iPhone or iPad. That is wrong IMO.

 

[coredev]

It sounds like Apple fans are the only people on this planet who love paying the taxes (43% in this case). It must be some sort of disease. Not only that, in addition to loving paying the taxes they also love going around and arguing how higher taxes are good for them.

In my case, not true. As a shareholder I really like the 30% cut from all the big ticket items on the App Store.
As a consumer, I am pretty sure that most developers will not lower prices one bit if there is a reduced commission on the store.
I see this in my line of work a lot. I deal with products that have a lot of distribution channels, as well as direct marketing via the web. The price is the same everywhere, although different channels demand different cuts (sometimes there are even more actors in between, each demanding their cut). For the customer, it's all the same, the price does not change regardless of the channel they heard about the product and proceeded to checkout.

 

[Mescagnus]

Apple will have a big legal bill this year. But good luck with this. Next up, government caps earning potential of people working.

Apple hasn't raised the "Apple tax" in 10-something years. Governments, of the other hand, have raised taxes on all of us many, many times. So, for all this controversy of how much developers make from and customers "overpay" for apps, maybe they should put blame where blame is due – and that's not Apple!

 

[poseidondev]

Are you sure you have skin in the game? If you had you would know this:

The Dev does not charge anything. The App Store does, check your App Store billing. The App Store pays the dev 70% of the end price.

Here is how things actually work. Say you, the dev wants to receive 70 cents for the app. You feel that the app is worth it, it fits your business model bla bla bla.

So. 70/0.7 = 100 cents. Check Apple price tables and voila, the thing closer to that is 99 cents, select. You get ~70 cents and the App Store gets ~30 cents. That is the end price.

If Apple decided to charge say 40%.

70/0.6=144 cents. Do a lookup again on Apple price look up tables, find somthing close, either you go for .99 or 1.99. If you go for 99 Apple is eating your lunch. Don’t want that of course, you go 1.99. You get more than you thought, Apple gets less, customers pay more.

Simple.

Cheers.

This oversimplifies things and only makes sense in a narrow vacuum.

For starters, devs also need to take into account the market they operate in.
If they feel they should get 3.50 for their note taking app, they could pick the 4.99 option from the tier list, but if their competitors primarily price their app at 2.99, then that's another consideration to be made.

As an aside, this is why developer darling Panic, has such a hard time in the mobile app department, they weren't willing to price their mobile apps at a price comparable to their competitors (or that of mobile apps in general) and instead opted to price their apps around a more classical desktop price point. Leading them to pull most of their mobile apps in the end due to lack of success. There's a whole discussion to be had here on the devaluation of software, but that's a bit outside of the scope of this discussion.

In any case, your hypothetical seems to already been disproven.
I've seen many indie devs share their acceptance into the small business program, which slashes their commission rate in half.
Additionally, as you may or may not know, many indie devs have somewhat of an affliction that leads to them being more likely to using the apps of their fellow indie devs. I myself, "suffer" from the same affliction, and as such I've noticed that none of them have lowered their price as a result of their commission rate being cut in half.
While this is by no means an empirical study, it seems to imply that things aren't as cut and dry as "lower commission == lower price". Suggesting that there's more involved in a developer's decision than just the commission rate.

The above is by no means a dig at those indie devs, I myself haven't lowered prices either. It's merely an observation shared in service of the debate at hand.

Whatever the outcome of an empirical statistical analysis will bring, the Small Business Program is undisputedly a way to put theories such as yours to the test, in particular because the the commission rate is so drastically lowered (from a statistical POV).

 

[gregmancuso]

Not exactly. Microsoft charges 30% because it is selling their devices at a loss. Apple is has huge profit margins on the devices they sell already. How else you think Apple is the richest company in the world. They have more money than some countries even.

Microsoft and Sony make money of the games, not the consoles they sell (which they are sponsering basically as they make a loss on it). So there, the 30% is justified.

Besides, on Android you are not tied to the "App Store". The same also for Windows, you can install software from other sources so nobody is forced to pay 30%.

So Apple is doing something completely different.

That is a load of crap. Selling hardware at a loss is a business decision and does not justify anything regarding app fees. Also, not all consoles are sold at a loss. All Nintendo machines are sold at a profit. Sony sells profitable after a very short runway. Neither reduce or eliminate the fees once profitable. So, again, the consoles are different so fees are ok makes no sense.

serious question - do the MS or Sony stores do anything for the 30% or is it just to make up for their poorly designed business model on the hardware side? Do they do the customer servicing for all sales and returns? Do they do global tax payment, reporting, and account for the software develooers? I don’t know the answer to that but from all the rhetoric on these boards I am guessing not.

and that does not consider the significantly higher upfront developer program fees the game console manufacturers also charge that same license on physical copies of gamea.

 

[1258186]

It's a gateway with good reason. The devs set the price knowing they're creating on a platform asking for that 30% cut.

All that means is users like me end up paying the 30% AppStore tax by way of higher prices because developers pass it on. Thanks for nothing.