I was mistaken in my original (now deleted) tweet and have been corrected by a few people
Apple does not keep the 30% commission on a refund the refund happens as you’d expect. I don’t know where I got the idea that it worked the way I thought it did
Misinformation really does spread like wildfire. Even with the number of naysayers on Hacker News we still seemed to have had a lapse in critical thinking.
I've been wanting to get into research on the study of the spread of tweets like this. Anyone have pointers for reading material?
I have sold apps on the App Store for a decade now, and I have to admit I did believe the original tweet. I was going to go through the financial reports during the weekend to verify, but the initial reaction was “of course they would do this, it’s Apple”.
CPC Gray had a video on why rage/anger related materials spread around internet.
TDLR: Materials that cause anger/ rage make people want to reshare it at higher rate (I want to do something) vs positive materials that make you feel good.
Moments ago, I stepped in to a discussion and corrected some angry people still spreading this misinformation.
My thought was to ask HN editors to run some kind of a correction post, because these angry people had learned of this “fact” here but never saw the follow-up comments. Since @twolivesleft already has a correction post up on Twitter, I just posted that on HN instead.
It remains to be seen if this post does well on HN. I'm afraid it won't, because personal embarrassment isn't quite as fun to spread as anger against billion-dollar companies.
Payment processors generally don't refund fees on payments when the payments are refunded, this isn't new. It's remarkable mainly because (a) it's 30%, not 3% and (b) the App store doesn't position itself as a payments processor the way Stripe does, so it sounds really weird that they would act like one.
If the app store took a 3% chunk and never refunded it regardless of the ongoing status of the transaction, that would put them right in line with other payment processors. It would also still net them billions of dollars, I think!
Credit card companies (i.e., Visa, Mastercard) absolutely do refund fees on payments when the retailer processes a refund. This is why retailers generally require you to use the same method of payment to get your refund.
It's uniquely online processors that do not refund fees.
Notably, it's a somewhat recent change for Stripe.
They had refunded fees but iirc it meant they were paying a small fee per refunded transaction (which in a sense subsidizes apps that incur frequent refunds) which they wanted to stop doing.
> It's uniquely online processors that do not refund fees.
It sorta makes sense, since the online processors are usually middlemen that only make money on the fees they themselves charge. I could see their perspective being "we provided the service; that service is not un-provided because the customer returned the item and you sent them a refund... in fact, you used us even more because we had to mediate the refund transaction!"
I think if the fees were just a few percent, I wouldn't have too much trouble accepting that logic, but from Apple, where it's 30%... not so much.
The card issuers don't care quite as much about keeping the fees in a refund scenario, I guess... though I believe you don't get everything back during a refund, regardless.
CC Processors like Visa and Mastercard do refund fees on CC processing, but the interchange or % of return is smaller than the actual gross. You don't necessarily get "all" of your refund, if you're a merchant.
That isn't true. They enable the return of the interchange (from the issuing bank), they do not refund the scheme fees.
In fact, you will pay more on the scheme fees to process a refund, as you need to send another message into the scheme's network - often charged per message or per byte etc.
Interchange is not payment scheme revenue - it is just passed through to the issuing bank.
My experience with PayPal was that they almost always gave me my fees back when I processed a refund (there were corner cases where that didn't happen); it is possible the rules changed or that I am misremembering the extent of the cases when they don't, though (I haven't processed payments in a year and a half).
That's because they're not the same class of processor. The chain is like
Your bank account -> visa/mastercard/discover -> PayPal's merchant bank account -> the person you're paying bank account
PayPal only replaces the ccs when you pay with their wallet. Otherwise they're just orchestrating the money flow (because integrating with the CC companies is a gigantic PITA)
"It's uniquely online processors that do not refund fees"
Uniquely those that provide some higher level thing, like PayPal or Stripe. If you have a merchant account, you can get an actual refund for online purchases.
The normal structure for credit card processing is a few cents flat payment plus a percentage of the transaction[1].
Something like 5 cents + 1.5% would be a great deal on payment processing, generally. (Apple is a juggernaut and may have been able to negotiate something else, of course.)
That does mean that for a $0.99 app, keeping the fees would still be more than that 3%, at ~$0.07... but not wildly divergent from the 30% amount.
Where the 30% gets really abusive is for things like Codea, the app being talked about in the Twitter thread. It costs $14.99. So it had presumptive fees of ~$0.28, while Apple's keeping $4.50. That's outrageous.
(Also, I see mixed reports on whether credit card refunds refund the processing fees. It might be contract-dependent.)
Payment processors also don't typically sell their own hardware, then lock said hardware down so that the payment processor's store is the only way to purchase things for the hardware. Payment processors typically allow you to buy a variety of goods from a range of storefronts. Comparing the Apple store to something like stripe or PayPal seems pretty apple and orangy to me.
Square used to refund the fees, they changed that policy when I was there and the reason was just to lose less money on refunds. I'm not sure whether they had to pay interchange on refunds or not.
For reference for folks who aren't familiar - in the US,even 3% would be an above market rate for credit card processing. The big companies like square and stripe are usually 2.9% for $0/year accounts, and rates go down from there. Smaller processors can do lower rates, and if you do over a few $100k/year, you can do lower with the bigger players as well.
To be fair, Apple and Google do a fair bit more than a payment processor does (basically nothing). Not 30pp more, but it wouldn't be reasonable to expect 3% fees.
I'd guess 10-15% is what is actually reasonable. Microsoft has settled for 15% in their store (because nobody was using it so charging 30% is ridiculous).
Yes, they do a lot, but not at the moment of, or as part of, processing a transaction. What work do they do specifically for a transaction so that they get to keep 30% of it?
Important difference: with Paypal, the seller decides to issue the refund, not Paypal unilaterally (except in cases of alleged fraud), and the seller can determine how much of a refund to provide.
Small business owner here...I use Wave for accounting. They absolutely do refund the fee. Shame on the processors who don't refund it, and shame on those who hasn't been doing that since the beginning (Strip, Paypal...) because they are knowingly sticking it to small business owners. I've used Wave for 4.5+ years and this is how I've known it.
"Regardless of the type of payment you received, the full amount that the client paid will be refunded to the client by clicking on the refund button at the bottom right-hand corner of the transaction details."
> Regardless of the type of payment you received, the full amount that the client paid will be refunded to the client by clicking on the refund button at the bottom right-hand corner of the transaction details.
That doesn't say anything about what the merchant gets charged. Stripe and PayPal also send the full amount to the card holder, so that blurb would apply to them too. The question is whether the merchant ends up with zero or minus the original processing fees after the refund.
I guess it's been a long time since I've been personally responsible for the financial side of Stripe accounts. I think it was 5 years ago when I used to run a lot of test transactions and refund for net $0, but times change. Sorry to lead anyone astray.
That's awesome! However, it WILL result in stripe attracting a LOT of the crappy billers (ie, folks who mislead / make customer unhappy etc). If your business is < 1% refunds, no worry if fees stay. A fair number of business have just 1 or 2 refunds PER YEAR.
Other business obviously have MUCH higher refund rates (sneaky autobill businesses etc). For these loosing 5% on the refunds matters if they have a lot of refunds, so they'll be very tempted by no costs if you autobill and get caught. They'll just autorenew everyone, autosign up and then be VERY good about refunds to avoid chargebacks. Even if just 30% of customers don't catch a few months you end up with real money.
Of course, CUSTOMERS may hate these players, but stripe I guess is focused on what works for the businesses generating lots of refunds.
Does this mean if there's a developer I don't like, I can buy their stuff and refund it to arbitrarily cost them money at no cost to myself and there's nothing they can do about it?
That seems ... not great, especially these days. What happens when mobs of internet morons decide review bombing isn't sufficient and realize Apple will help them cause direct financial harm instead?
I think this is part of what is holding back iPad software. You can't charge $100 for Sketch and lose $30 when someone asks for a refund. Apple designed this around $1-$10 apps where losing $2 at volume is fine.
What is worse, is that Apple doesn't remove the app from the user's device. When you get a refund of a paid app it is on the honor system for them to delete it. It is removed from their account, so they can no longer download/update, but the installed binary is not affected.
A dev flogs an app at 10 and pays 3 to Apple. Then on a refund they lose 3 and the end user has no incentive to even delete the app. Nope, I won't entertain that nonsense.
The only way that I can see for that model to play out is for the dev to factor in a lossrate x 1.3 uplift for their app. That means owners of shiny iStuff are paying Apple an additional unannounced "tax" based on their app churn. Use and discard more apps, then you pay more for the privilege. A dev would have to become a loss adjuster as well: "Hmm assume a 10% return rate" - so the upcharge on my app will have to be:
* My app should cost 10, assuming a fair market.
* I lose 3 on a refund, which happens on 1/10 sales (I was paid 10 on sale, I paid 3 to Apple, I refunded 10 and hence lost 3)
So my price adjustment would be 10 + (0.1 x 3) = 10.30. Yes, it looks like a simple uplift will deal with this. Sales: x, churn rate: c, Apple tax: a. => s' = s + (c.a)
That is anti-competitive behaviour on a gigantic scale. Apple are making the apps that are developed for their platform automatically more expensive by a process that looks suspiciously like stealing.
> What is worse, is that Apple doesn't remove the app from the user's device.
This. Is. Ridiculous.
We all know this is an intentional design decision by Apple and that they would absolutely not have designed the workflow this way if they had to dogfood their own platform.
Can you explain that point a bit more? It doesn't seem to make any sense to me. You revenue is going to be number of sales * price - (number of refunds * price * 0.3). Factor, and you get price * (sales - number of refunds * 0.3). Your unit cost is 0, so the only thing that matters is if your revenue exceeds your fixed costs.
I don't see how this would explain a disincentive to charge higher prices.
That’s the problem with paid apps... but I also believe now it’s a problem with devs not validating the app receipt to check for refunds and prevent access.
For in-app purchases, up until a few years ago, users would always have access to them (even after a refund) then it followed the same rules as paid apps - access always maintain but one couldn’t restore.
Subscriptions however are unique as a server would constantly check the receipt from Apple, which would show a refund flag, so you could block access. Now they even send you a push notification to your server to indicate a refund.
With iOS 14, in-app purchases will get a “notification” when a user receives a refund on device (with IAP encompassing subscriptions).
Will they? In some jurisdictions they are required by law to grant refunds. In others, they still have very little incentive to control refund fraud, what with the fact that they're still making money rather than losing it.
It would be one thing if they said "We're keeping the credit card processing fees so that we don't lose money," but to keep the whole 30% cut is just petty.
Getting a refund from Apple is really difficult, so I don’t think this would be a problem.
I once forgot to cancel a subscription, cancelled one day after renewal, and they would NOT refund me. It was a time based pricing model, so it’s not like I could’ve used any in-app credits.
Not for apps, at least in the UK - I've had four different apps (and one in-app purchase) refunded for a variety of reasons[1] without an issue.
[1] One listed features that were actually (expensive) in-app purchases, one didn't work, a new app had been released but they were still selling the old non-updated one as well (and I bought the wrong one), and one was just really clunky and borderline unusable; the in-app purchase was purchased by mistake (my thumb was resting on the home button and I hit something that triggered a purchase in the app by mistake, so it went straight through TouchID)
Returns are limited. At some point I returned 3 or 4 things pretty quickly, because I had an old iPad and some apps didn't advertise compatibility well enough and then you get put in a "special" category of "you can't get a refund unless you are very, very obnoxious or there is a very real reason".
this would happen to you with paypal and credit card chargebacks, no idea if this is still the case (but it wouldn't surprise me). you lose the money and an additional 10$ fee, for every transaction. so someone could send you 5$ in 5 transactions, chargeback and you'd be out of 55 dollars.
> Yeah Apple keeps their 30% no matter what. So if someone refunds an app they get the whole amount back, Apple keeps 30%, and the developer has to cover that extra amount
Seems like a pointless technicality. If somebody refunds my $100 app and Apple "keeps" $30 from me, that means the next person who buys my app only earns me $40. I've lost $30 either way.
The fact that that is even a thought screams silly and childish in my mind, but then again life has taught me that 'maturity' really is a social construct and the rule of law and contracts really should be the only baseline expectation of human behavior from strangers.
Also - that plotline from SV where he just buys pizza from thd pizza startup that is operating at a loss seems like the same idea as this but just slightly different. Business is funny
It's a bit different when a company is completely voluntarily engaging in self-destructive behavior - when it comes to the app store it is voluntary that folks post their apps there but Apple has an absolute monopoly on the market.
"which I think adds weight to the argument that is unfair behaviour by Apple"
Apple takes back from the developer exactly what they gave the developer. This has been verified by a number of people, and this submission is just farcically wrong.
How is this nonsense front page on HN? Is this community this clueless?
Do you have any sources for your claim? The original claim - i.e. developers lost money for each refund - is backed not only by the original post, but also by several other sources linked in the comments.
If you charge $10, you get paid $7, and if the customer refunds, Apple removes $10 from your account – you'll be $3 worse off than if the customer never purchased anything.
On the Play Store there is a two hour window after purchasing apps where you can simply return to the store and refund your purchase yourself as the 'buy' button temporarily turns into a 'cancel purchase' button. This feels like the future to me, not some regressive scheme where refunds are discouraged and 'taxed'.
Absolutely – I don't want to feel bad for the developers of apps I return either. Sometimes the app just isn't very good, or doesn't do what I thought it would. I shouldn't have to feel guilty about returning it.
A Statement of Tim Cook for the House of Representatives claimed that "For the vast majority of apps on the App Store , developers keep 100% of the money they make." [1]
How can this be even remotely true if Apple takes a 30% commission for every sale in the App Store?
The idea that they could make less than 100% of the money that they "make" under these terms reminds me of the Simpsons episode where Bill Gates "buys out" Homer's fake business Hyperglobalmeganet.
He's referring to the fact that most commerce on the App Store is for physical goods and services (Airbnb, Amazon, Uber, food delivery, etc). Apple doesn't take a cut of those transactions.
Yeah, they also don't take a cut of the regular day job salary of an app developer who writes an app on the side, or his inheritance from his mother, or his niece's dog.
1) Free apps with advertisements. Paid apps are by far the minority.
2) I guess this statement is related to subscription models like spotify. If you acquire the user outside of the apple ecosystem and they subscribe on your own website and then download your free app from the app store, you get to keep 100% on the revenue that the user generates as well.
Ah, the ad thing makes sense. It's technically true but the meaning conveyed in the statement is quite different.
As for the subscription model, I've thought about that but developers that aren't huge companies have a hard time NOT integrating in-app purchases for cloud services (see "Hey", which had to use social media to get their update approved [1]), so it couldn't be the "vast majority of apps".
No most apps aren’t ad supported mostly games are. The ad supported apps are not real business but side hustles or one time, one hit apps that die quickly.
He’s probably saying these are free apps which Apple doesn’t take any money for, and the money the developers keep are from ads or fees from clients and so on.
App stores need heavy regulations. It's not only Apple but Google and even steam to a small extent. Apple is of course the biggest offender as they heavily guard their monopoly with code signing enforcement. This shouldn't have been legal. They are the very definitions of predatory competition squashing monopolies.
I don't see what kind of regulation Steam needs. They are hardly the only storefront on the platforms they support, aren't the default one, have almost no exclusive content, and don't even take a cut if you sell Steam keys on other stores.
What is there to regulate? If you don't like their terms you can sell on a different store or distribute yourself, there's nothing stopping you like there is on a typical iPhone or Android device. And frankly their terms are pretty damned fair. For the longest time they took such a hands-off approach to their marketplace that people got angry about that instead!
Steam is not a monopoly. You can install other stores and you can acquire and install software directly on your computer.
AppStore and, to lesser extent, Google Play are monopolies, that severely restrict rights of their users, no matter what people say that 'Apple is not a monopoly because you can buy another phone'
I remember when we didn’t have app stores. All we really need is decentralized app publisher trust. Centralized app publishing will always be abused by the publisher in the long run. It’s just too powerful and tempting to not stack the deck in your favor as the app store owner.
What if the choice really is to only make things lucrative for restrictive shop owners vs malware authors? So far those have been the only two options.
If the web really did take over you don’t think platforms would be any less restrictive when they control the main browser on their respective platforms?
The iPhone is an Apple product. The App Store is an Apple product. The libraries and development tools needed to create iOS apps are Apple products.
Traditionally the company that develops a product gets to decide what features that product has. There are various laws that require a product be safe to use, is not misrepresented and does what it is advertised to do, but beyond that there are very few actual features of products that they are required by law to have. Maybe some standards they need to meet.
Sometimes companies will invite other companies to join them in adding features to a product. A TV company might add licensed audio technology from Dolby, a car company might add licensed software for infotainment or navigation software, and they may charge their customers for the added software features.
This is how games consoles work, you buy the console from the manufacturer, who licenses other companies to write games for their product as add-on modules. In the past CDs and cartridges were used, but now this often happen via downloads. These games are developed using the console manufacturers tools, run against their code libraries on the device and are clearly an extension of their product. This has been an established approach for many decades. When my kids were toddlers I bought an educational toy where you could buy little cartridges for it that added educational features.
That's all the App Store is. It's a feature added by Apple to their product for adding optional features to the device. As in many cases in the past, across many types of device, this is a feature added by the manufacturer and your relationship as a customer remains with them.
There is no law requiring that a device containing a computer, be it a car, TV, games console, phone or whatever have any specific features to enable loading additional software. That's just not a requirement that exists, and if a device does have a mechanism to add or update its software, there are no laws about how that must or must not be implemented, that I'm aware of anyway.
If you disagree that this is the way it should be that's fine, that's absolutely your right, but can you explain how such laws should be drafted. What kinds of requirements should be put on manufacturers? Under what criteria should they apply and to what devices?
If you think Apple has failed to comply with some law in the way they implemented their products, I'd appreciate some clarity about exactly what you think Apple has done wrong, and how that should be redressed.
Anti-monopoly legislation seems like a good starting place. Game console app stores are, at least in my opinion, equally exploitative, but Apple is one of the most problematic publishers out there. Being able to run whatever software you want on general purpose hardware isn't what this is about (although you should be able to, as the FSF has been saying for years). It's that Apple can't monopolise the market like this, so the government should be able to force them to allow competing app stores.
OP didn't say Apple was breaking the law. They said that they need to be regulated. There's a difference. Make all the equivalences you want, at the end of the day the government has a mandate to regulate business practice to benefit the consumer. If that means treating a mobile phone as a platform but not a game console, so be it.
It's different when TV manufactures put Dolby in charge of advertising and supporting the feature. Then charge them a cut of their profit, with little to no recourse or dispute mechanisms.
Besides that, it could be argued that running software is the feature. What software does is not a feature of the iPhone. Like a recipe is not a feature of a stove.
We are buying the device, it's a tool, and we should control how it's used.
Power is power, and power needs to be accountable to those subject to that power. A company that makes commodity screws and bolts has no power over me: I can find a different commodity screw and bolt company. A company providing key tech infrastructure had quite a bit of power over me. We live in an information society. Why should a few people in the bay area unilaterally get to kick people out of that society?
Common carrier regulations on railroads provide a model for regulating critical tech infrastructure that happens to be privately held. I'm as big a fan as it gets of the capitalist market-based way of organizing society, but even I acknowledge that at large scales, companies need to play by a different set of rules, one that makes them accountable to the public. The alternative is essentially the subversion of democracy. You can take a purist approach to corporate autonomy all the way to its natural feudal end, but I'm not going with you.
Please understand I don't in any way mean to pick on you. The comment has 8 paragraphs that are mostly a description of how property rights work. Analogies to how they worked in other markets, examination of the law, etc. This detail is all very clear and I appreciate it because it helps me understand your point of view.
It is less clear to me, why the current situation of property rights is good. Of course many bad things (and for that matter many good things) have been done in the name of how property rights worked at one time. But in democratic societies we decide how things work, so in that sense we are the author of things like property rights, we decide how we want them to be based on our values.
> If you think Apple has failed to comply with some law in the way they implemented their products, I'd appreciate some clarity about exactly what you think Apple has done wrong, and how that should be redressed.
I don't know if they have "broken the law" but there are certainly similarities to historical situations.
You discuss game consoles and licensing games. I might suggest from Sega v. Accolade that a hardware marker's ability to license games exclusively was quite controversial at that time, was ultimately reversed by courts.
In DOJ vs MS, Microsoft was convicted as an illegal monopoly for (among other things) illegally bundling software with Windows, and using technical means to keep Netscape off the platform.
I am sure that Apple has great arguments for why they are different than these cases, and a lot has changed since then. At the same time, some things are similar. It's really about our values. Is the law about encouraging companies to innovate new ways to lock out all their competitors? Or is it about helping competitors? Or helping the large companies? Society has not yet decided, so the question has no answer.
> What kinds of requirements should be put on manufacturers? Under what criteria should they apply and to what devices?
Personally? My designer regulation is one where we have a tiered regime which gets worse the bigger you are.
So, for a small startup that serves basically nobody, we have the current regime, or maybe even we remove some things. There's still regulation on things like HIPAA and SEC rules, fraud, etc. I would also be in favor of much stronger privacy regulation, and limiting arbitration clauses, mostly because a lot of adtech is fly-by-night.
Once you reach some threshold, we regulate at a basic level. This is probably defined as some combination of revenue, daily active users, units sold, subscribers, employee/contractor headcount, but let's just call it a $10m company. Here you fill out a form once a year with an address the regulators can write letters to you, send in your EULA and privacy policy, and there's a list of basic rules like "don't sell user data", "make your software accessible", that are mostly on the honor system unless someone complains in which case the regulator writes you letters.
As we go up in orders of magnitude it becomes a bigger deal. By the time we get to FAANG, you have a regulatory team looking at individual products full-time, the same way we have inspectors in food or finance or anything else. For Apple specifically, maybe "users can jailbreak their device, subject to certain warranty consequences", "all first-party apps will only use public APIs", "developers of first-party apps will find out about new APIs the same time as everyone else", etc.
Exactly. If anyone wants to run an app store, fine, but I must be allowed to "side load" apps onto my device so that I don't have to participate in the app store economy.
To avoid unhealthy competition that endangers competition itself, regulation is required. Humans have tendency to monopolise.
Regulations makes competition important for benefit maximization. Apple would have long bought and closed by Microsoft if not for Regulation. AMD would have had suffered end.
May be a stupid idea, but I always feel that appstores should be independent from device and service providers. Consumers should have the flexibility to not get tied to certain distributors of software. Even if apple and Google are not prevented from hosting appstores they should be required to support third party ones as though they were native.
But the regulations you are looking for should be on the device manufactures not the app stores. Require Apple to allow other app stores to be installed that has the same level of access to the OS and APIs that their native app store has, as well as direct app downloads from the internet with the same level of access (maybe with some extra hoops for security controls).
That would solve the problem. Someone will spin up a better App store. Someone already has in fact. If you jailbreak your iPhone you get access to a second app store (https://cydia-app.com) which has apps that Apple won't put in their regular store.
A simple regulation that would fix this without overbearing price controls is to require manufacturers to allow users to sideload their own app stores.
Regulation granted! There are
now many stores on Apple devices. But the platform still requires code signing from Apple for code to run and must still abide by all existing Apple policy including entering into a contract with Apple that 30% of all revenue from your app on iOS is paid to them.
>Apple is of course the biggest offender as they heavily guard their monopoly with code signing enforcement.
What monopoly? Apple controls maybe 8% of the desktop/notebook market and ~13% of the smartphone market. They don't even come close to qualifying as a monopoly.
Competitive? It is an oligopoly with tacit collusion on price fixing. This is the exact reason why anti-trust legislation exists.
A competitive market would be one in which the platform providers were forced to divest from the app markets, and support competing app markets which meet requirements, and which actively compete on features and price.
If cars only supported gasoline from manufacturer gas stations, and 95% of the market was controlled by cars from GM and Ford, and once you bought a GM car you could only buy gasoline from a GM gas station, would you call the gasoline market competitive?
To extend the metaphor, let's say it was technically possible to use third-party gas stations, but the manufacturers had hidden this ability, and it required a small amount of mechanical knowledge to enable, and maybe voided your warranty, would you then consider the market competitive?
It seems like a pretty clear duopoly to me, Apple and Android are the only two mobile platforms, and rather than compete with each other on price they are just both leaving their cut at 30%. Personally it’s not even the 30% I mind so much as, maybe there are cool new products like new mobile browsers that are just forbidden by the app stores and so we will never get them.
Huh? Which space is competitive? Apple and Google are pretty much the only shows in town and even more restricted is that the App Store is the exclusive store for iOS.
In fact, they don’t even really compete with each other. Play is only on Android and App Store is only on iOS.
You could say Android and iOS compete with each other, but once someone has bought a phone, they do not have a choice of where to buy apps.
Not really, at least not in a sense that different products and stores compete.
When I buy a phone I can choose from multiple models, then once I choose a model I can choose a store where I want to buy it. These 2 examples are competitive. Then I can choose what app I want to buy, but I can't choose anymore where I buy it (at least on IOS). There's no competition between stores. There's just competition between phone manufacturers that ends the moment you choose the phone, from then onwards is a monopoly (or near monopoly in case of Android)
The stock market is heavily regulated. Commodity markets are regulated. It's actually the slowness and corruption of the law makers that we're still without any regulations to virtual markets.
It’s amazing that a decade and a half later Apple still hasn’t fulfilled Steve Jobs’ original dream of merging the web and apps.
He wasn’t saying third party apps should be HTML5 just to stall for time. He really believed it. And it was a good idea and still is.
Processors, memory, bandwidth, and browsers have all advanced by leaps and bounds and yet the dream remains unrealized and Apple is the most to blame. They got addicted to the ill gotten gains of their walled garden and can’t bring themselves to kick the addiction. Rent seeking is a powerful force.
It’s pathetic for a company so good at being honest with themselves and moving forward when they know what the best future is.
The App Store shouldn’t exist at this point. It has outlived its usefulness. It’s in their users’ best interests to move beyond it. And yet maybe it’s too traumatic and daring a move for anyone other than Steve Jobs to attempt.
Tim Cook could drop the headphone jack because it didn’t damage the bottom line but dropping the App Store would actually cost something in the short term even if it is the right thing to do for everyone in the long term.
I think they were creating a walled garden and this was just lip service. Blaming it on state of tech/HTML5/etc was easy. The app store could be open from administration/censors and thus would function exactly like the web even if native code was required. The frustrating part of current state is they censor who, what, and how can be brought to market and the 30% cut is just egregious.
Apple has a history of pushing along after Steve left without any true vision until he returns. If anyone will return from the grave it's probably Steve. When he does he will probably VR Apple phones and we'll be in a new era.
> It’s amazing that a decade and a half later Apple still hasn’t fulfilled Steve Jobs’ original dream of merging the web and apps.
Because Google exists, and is diametrically opposed to this vision. The past decade have shown constant examples of these two visions of the future clashing. Google wants more people on the internet. Apple wants more people on their devices.
Interesting. I wonder if it varies from region to region perhaps? Going to do a bit more research as this guy seems quite convinced they are taking the cut but evidently you’ve experienced otherwise!
Yeah I'm not sure what the discrepancy is. This afternoon I'm going to dig a bit more into my records.
In my data right now I see a few examples of an $80 purchase match to $56 in proceeds (70%) matched to $56 of a refund.
I can't say I think the 30% fee is appropriate anymore, but this particular case being made about refunds does not appear to be accurate for me at least.
Readit News
https://twitter.com/twolivesleft/status/1288625617873694721?...
I've been wanting to get into research on the study of the spread of tweets like this. Anyone have pointers for reading material?
TDLR: Materials that cause anger/ rage make people want to reshare it at higher rate (I want to do something) vs positive materials that make you feel good.
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My thought was to ask HN editors to run some kind of a correction post, because these angry people had learned of this “fact” here but never saw the follow-up comments. Since @twolivesleft already has a correction post up on Twitter, I just posted that on HN instead.
It remains to be seen if this post does well on HN. I'm afraid it won't, because personal embarrassment isn't quite as fun to spread as anger against billion-dollar companies.
If the app store took a 3% chunk and never refunded it regardless of the ongoing status of the transaction, that would put them right in line with other payment processors. It would also still net them billions of dollars, I think!
It's uniquely online processors that do not refund fees.
They had refunded fees but iirc it meant they were paying a small fee per refunded transaction (which in a sense subsidizes apps that incur frequent refunds) which they wanted to stop doing.
A quick search showed they started refunding fees in 2012 and stopped in 2017. Here's a discussion from the past couple years: https://news.ycombinator.com/item?id=22371330
It sorta makes sense, since the online processors are usually middlemen that only make money on the fees they themselves charge. I could see their perspective being "we provided the service; that service is not un-provided because the customer returned the item and you sent them a refund... in fact, you used us even more because we had to mediate the refund transaction!"
I think if the fees were just a few percent, I wouldn't have too much trouble accepting that logic, but from Apple, where it's 30%... not so much.
The card issuers don't care quite as much about keeping the fees in a refund scenario, I guess... though I believe you don't get everything back during a refund, regardless.
In fact, you will pay more on the scheme fees to process a refund, as you need to send another message into the scheme's network - often charged per message or per byte etc.
Interchange is not payment scheme revenue - it is just passed through to the issuing bank.
Your bank account -> visa/mastercard/discover -> PayPal's merchant bank account -> the person you're paying bank account
PayPal only replaces the ccs when you pay with their wallet. Otherwise they're just orchestrating the money flow (because integrating with the CC companies is a gigantic PITA)
Uniquely those that provide some higher level thing, like PayPal or Stripe. If you have a merchant account, you can get an actual refund for online purchases.
This is for AML, not because of fee refunds.
Something like 5 cents + 1.5% would be a great deal on payment processing, generally. (Apple is a juggernaut and may have been able to negotiate something else, of course.)
That does mean that for a $0.99 app, keeping the fees would still be more than that 3%, at ~$0.07... but not wildly divergent from the 30% amount.
Where the 30% gets really abusive is for things like Codea, the app being talked about in the Twitter thread. It costs $14.99. So it had presumptive fees of ~$0.28, while Apple's keeping $4.50. That's outrageous.
(Also, I see mixed reports on whether credit card refunds refund the processing fees. It might be contract-dependent.)
[1]: https://www.fool.com/the-ascent/research/average-credit-card...
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This is new, and in fact PayPal and Stripe enacted this policy only this (or last year if I recall correctly).
Some payment processors like Affirm or Amazon Pay have not changed their policy on this yet.
I'd guess 10-15% is what is actually reasonable. Microsoft has settled for 15% in their store (because nobody was using it so charging 30% is ridiculous).
"Regardless of the type of payment you received, the full amount that the client paid will be refunded to the client by clicking on the refund button at the bottom right-hand corner of the transaction details."
https://support.waveapps.com/hc/en-us/articles/115004056523-...
That doesn't say anything about what the merchant gets charged. Stripe and PayPal also send the full amount to the card holder, so that blurb would apply to them too. The question is whether the merchant ends up with zero or minus the original processing fees after the refund.
[1] https://stripe.com/docs/refunds
https://stripe.com/docs/refunds
Other business obviously have MUCH higher refund rates (sneaky autobill businesses etc). For these loosing 5% on the refunds matters if they have a lot of refunds, so they'll be very tempted by no costs if you autobill and get caught. They'll just autorenew everyone, autosign up and then be VERY good about refunds to avoid chargebacks. Even if just 30% of customers don't catch a few months you end up with real money.
Of course, CUSTOMERS may hate these players, but stripe I guess is focused on what works for the businesses generating lots of refunds.
That seems ... not great, especially these days. What happens when mobs of internet morons decide review bombing isn't sufficient and realize Apple will help them cause direct financial harm instead?
What is worse, is that Apple doesn't remove the app from the user's device. When you get a refund of a paid app it is on the honor system for them to delete it. It is removed from their account, so they can no longer download/update, but the installed binary is not affected.
Sorry, when is this fine?
A dev flogs an app at 10 and pays 3 to Apple. Then on a refund they lose 3 and the end user has no incentive to even delete the app. Nope, I won't entertain that nonsense.
The only way that I can see for that model to play out is for the dev to factor in a lossrate x 1.3 uplift for their app. That means owners of shiny iStuff are paying Apple an additional unannounced "tax" based on their app churn. Use and discard more apps, then you pay more for the privilege. A dev would have to become a loss adjuster as well: "Hmm assume a 10% return rate" - so the upcharge on my app will have to be:
* My app should cost 10, assuming a fair market. * I lose 3 on a refund, which happens on 1/10 sales (I was paid 10 on sale, I paid 3 to Apple, I refunded 10 and hence lost 3)
So my price adjustment would be 10 + (0.1 x 3) = 10.30. Yes, it looks like a simple uplift will deal with this. Sales: x, churn rate: c, Apple tax: a. => s' = s + (c.a)
That is anti-competitive behaviour on a gigantic scale. Apple are making the apps that are developed for their platform automatically more expensive by a process that looks suspiciously like stealing.
I call that parasitic.
This. Is. Ridiculous.
We all know this is an intentional design decision by Apple and that they would absolutely not have designed the workflow this way if they had to dogfood their own platform.
Apple gets $30, and you never see it.
I believe that the $70 is taxed; not the $100.
I know that if a customer get a refund, the full Benjamin comes back to them (I have received refunds).
So does that mean that Apple asks the developer to pay "back" $100, when they only paid the developer $70?
I have never had to issue a refund, so I don't know.
I don't see how this would explain a disincentive to charge higher prices.
For in-app purchases, up until a few years ago, users would always have access to them (even after a refund) then it followed the same rules as paid apps - access always maintain but one couldn’t restore.
Subscriptions however are unique as a server would constantly check the receipt from Apple, which would show a refund flag, so you could block access. Now they even send you a push notification to your server to indicate a refund.
With iOS 14, in-app purchases will get a “notification” when a user receives a refund on device (with IAP encompassing subscriptions).
So it’s getting better. Not perfect. But better.
Whether you sell 1000 copies at $100 or 100,000 copies at $1, assuming the percent of refunds is constant, then the effect is identical. Right?
It would be one thing if they said "We're keeping the credit card processing fees so that we don't lose money," but to keep the whole 30% cut is just petty.
Dead Comment
I once forgot to cancel a subscription, cancelled one day after renewal, and they would NOT refund me. It was a time based pricing model, so it’s not like I could’ve used any in-app credits.
[1] One listed features that were actually (expensive) in-app purchases, one didn't work, a new app had been released but they were still selling the old non-updated one as well (and I bought the wrong one), and one was just really clunky and borderline unusable; the in-app purchase was purchased by mistake (my thumb was resting on the home button and I hit something that triggered a purchase in the app by mistake, so it went straight through TouchID)
> Yeah Apple keeps their 30% no matter what. So if someone refunds an app they get the whole amount back, Apple keeps 30%, and the developer has to cover that extra amount
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Also - that plotline from SV where he just buys pizza from thd pizza startup that is operating at a loss seems like the same idea as this but just slightly different. Business is funny
https://support.google.com/googleplay/android-developer/answ...
"Google will return the transaction fee to you. You'll see the returned transaction fee on your next earnings report."
Apple takes back from the developer exactly what they gave the developer. This has been verified by a number of people, and this submission is just farcically wrong.
How is this nonsense front page on HN? Is this community this clueless?
If you charge $10, you get paid $7, and if the customer refunds, Apple removes $10 from your account – you'll be $3 worse off than if the customer never purchased anything.
How can this be even remotely true if Apple takes a 30% commission for every sale in the App Store?
[1] https://docs.house.gov/meetings/JU/JU05/20200729/110883/HHRG...
They keep 100% of the 70% of the store price. Truthful statement, just one that is designed to mislead you.
1) Free apps with advertisements. Paid apps are by far the minority.
2) I guess this statement is related to subscription models like spotify. If you acquire the user outside of the apple ecosystem and they subscribe on your own website and then download your free app from the app store, you get to keep 100% on the revenue that the user generates as well.
As for the subscription model, I've thought about that but developers that aren't huge companies have a hard time NOT integrating in-app purchases for cloud services (see "Hey", which had to use social media to get their update approved [1]), so it couldn't be the "vast majority of apps".
[1] https://www.theverge.com/2020/6/18/21296180/apple-hey-email-...
That's why it's true.
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Tim Cook is saying developers keep 100% of their cut of the sale.
And it sounds like you interpret Cook's statement to mean developers keep 100% of the entire sale.
What is there to regulate? If you don't like their terms you can sell on a different store or distribute yourself, there's nothing stopping you like there is on a typical iPhone or Android device. And frankly their terms are pretty damned fair. For the longest time they took such a hands-off approach to their marketplace that people got angry about that instead!
AppStore and, to lesser extent, Google Play are monopolies, that severely restrict rights of their users, no matter what people say that 'Apple is not a monopoly because you can buy another phone'
Traditionally the company that develops a product gets to decide what features that product has. There are various laws that require a product be safe to use, is not misrepresented and does what it is advertised to do, but beyond that there are very few actual features of products that they are required by law to have. Maybe some standards they need to meet.
Sometimes companies will invite other companies to join them in adding features to a product. A TV company might add licensed audio technology from Dolby, a car company might add licensed software for infotainment or navigation software, and they may charge their customers for the added software features.
This is how games consoles work, you buy the console from the manufacturer, who licenses other companies to write games for their product as add-on modules. In the past CDs and cartridges were used, but now this often happen via downloads. These games are developed using the console manufacturers tools, run against their code libraries on the device and are clearly an extension of their product. This has been an established approach for many decades. When my kids were toddlers I bought an educational toy where you could buy little cartridges for it that added educational features.
That's all the App Store is. It's a feature added by Apple to their product for adding optional features to the device. As in many cases in the past, across many types of device, this is a feature added by the manufacturer and your relationship as a customer remains with them.
There is no law requiring that a device containing a computer, be it a car, TV, games console, phone or whatever have any specific features to enable loading additional software. That's just not a requirement that exists, and if a device does have a mechanism to add or update its software, there are no laws about how that must or must not be implemented, that I'm aware of anyway.
If you disagree that this is the way it should be that's fine, that's absolutely your right, but can you explain how such laws should be drafted. What kinds of requirements should be put on manufacturers? Under what criteria should they apply and to what devices?
If you think Apple has failed to comply with some law in the way they implemented their products, I'd appreciate some clarity about exactly what you think Apple has done wrong, and how that should be redressed.
Besides that, it could be argued that running software is the feature. What software does is not a feature of the iPhone. Like a recipe is not a feature of a stove.
We are buying the device, it's a tool, and we should control how it's used.
So, let's make them!
Saying that there is "no law" is the weakest argument ever.
We the people make the laws, we can decide whatever we want, and we can certainly vote into law the regulations we think are necessary.
Common carrier regulations on railroads provide a model for regulating critical tech infrastructure that happens to be privately held. I'm as big a fan as it gets of the capitalist market-based way of organizing society, but even I acknowledge that at large scales, companies need to play by a different set of rules, one that makes them accountable to the public. The alternative is essentially the subversion of democracy. You can take a purist approach to corporate autonomy all the way to its natural feudal end, but I'm not going with you.
Please understand I don't in any way mean to pick on you. The comment has 8 paragraphs that are mostly a description of how property rights work. Analogies to how they worked in other markets, examination of the law, etc. This detail is all very clear and I appreciate it because it helps me understand your point of view.
It is less clear to me, why the current situation of property rights is good. Of course many bad things (and for that matter many good things) have been done in the name of how property rights worked at one time. But in democratic societies we decide how things work, so in that sense we are the author of things like property rights, we decide how we want them to be based on our values.
> If you think Apple has failed to comply with some law in the way they implemented their products, I'd appreciate some clarity about exactly what you think Apple has done wrong, and how that should be redressed.
I don't know if they have "broken the law" but there are certainly similarities to historical situations.
You discuss game consoles and licensing games. I might suggest from Sega v. Accolade that a hardware marker's ability to license games exclusively was quite controversial at that time, was ultimately reversed by courts.
In DOJ vs MS, Microsoft was convicted as an illegal monopoly for (among other things) illegally bundling software with Windows, and using technical means to keep Netscape off the platform.
I am sure that Apple has great arguments for why they are different than these cases, and a lot has changed since then. At the same time, some things are similar. It's really about our values. Is the law about encouraging companies to innovate new ways to lock out all their competitors? Or is it about helping competitors? Or helping the large companies? Society has not yet decided, so the question has no answer.
> What kinds of requirements should be put on manufacturers? Under what criteria should they apply and to what devices?
Personally? My designer regulation is one where we have a tiered regime which gets worse the bigger you are.
So, for a small startup that serves basically nobody, we have the current regime, or maybe even we remove some things. There's still regulation on things like HIPAA and SEC rules, fraud, etc. I would also be in favor of much stronger privacy regulation, and limiting arbitration clauses, mostly because a lot of adtech is fly-by-night.
Once you reach some threshold, we regulate at a basic level. This is probably defined as some combination of revenue, daily active users, units sold, subscribers, employee/contractor headcount, but let's just call it a $10m company. Here you fill out a form once a year with an address the regulators can write letters to you, send in your EULA and privacy policy, and there's a list of basic rules like "don't sell user data", "make your software accessible", that are mostly on the honor system unless someone complains in which case the regulator writes you letters.
As we go up in orders of magnitude it becomes a bigger deal. By the time we get to FAANG, you have a regulatory team looking at individual products full-time, the same way we have inspectors in food or finance or anything else. For Apple specifically, maybe "users can jailbreak their device, subject to certain warranty consequences", "all first-party apps will only use public APIs", "developers of first-party apps will find out about new APIs the same time as everyone else", etc.
Regulations makes competition important for benefit maximization. Apple would have long bought and closed by Microsoft if not for Regulation. AMD would have had suffered end.
Putting them in the list but leaving out all console manufacturers and operating system devs? Strange.
That would solve the problem. Someone will spin up a better App store. Someone already has in fact. If you jailbreak your iPhone you get access to a second app store (https://cydia-app.com) which has apps that Apple won't put in their regular store.
Regulation granted! There are now many stores on Apple devices. But the platform still requires code signing from Apple for code to run and must still abide by all existing Apple policy including entering into a contract with Apple that 30% of all revenue from your app on iOS is paid to them.
What monopoly? Apple controls maybe 8% of the desktop/notebook market and ~13% of the smartphone market. They don't even come close to qualifying as a monopoly.
> They are the very definitions of predatory competition squashing monopolies.
But they aren’t, this is a rather competitive space.
A competitive market would be one in which the platform providers were forced to divest from the app markets, and support competing app markets which meet requirements, and which actively compete on features and price.
If cars only supported gasoline from manufacturer gas stations, and 95% of the market was controlled by cars from GM and Ford, and once you bought a GM car you could only buy gasoline from a GM gas station, would you call the gasoline market competitive?
To extend the metaphor, let's say it was technically possible to use third-party gas stations, but the manufacturers had hidden this ability, and it required a small amount of mechanical knowledge to enable, and maybe voided your warranty, would you then consider the market competitive?
In fact, they don’t even really compete with each other. Play is only on Android and App Store is only on iOS.
You could say Android and iOS compete with each other, but once someone has bought a phone, they do not have a choice of where to buy apps.
When I buy a phone I can choose from multiple models, then once I choose a model I can choose a store where I want to buy it. These 2 examples are competitive. Then I can choose what app I want to buy, but I can't choose anymore where I buy it (at least on IOS). There's no competition between stores. There's just competition between phone manufacturers that ends the moment you choose the phone, from then onwards is a monopoly (or near monopoly in case of Android)
He wasn’t saying third party apps should be HTML5 just to stall for time. He really believed it. And it was a good idea and still is.
Processors, memory, bandwidth, and browsers have all advanced by leaps and bounds and yet the dream remains unrealized and Apple is the most to blame. They got addicted to the ill gotten gains of their walled garden and can’t bring themselves to kick the addiction. Rent seeking is a powerful force.
It’s pathetic for a company so good at being honest with themselves and moving forward when they know what the best future is.
The App Store shouldn’t exist at this point. It has outlived its usefulness. It’s in their users’ best interests to move beyond it. And yet maybe it’s too traumatic and daring a move for anyone other than Steve Jobs to attempt.
Tim Cook could drop the headphone jack because it didn’t damage the bottom line but dropping the App Store would actually cost something in the short term even if it is the right thing to do for everyone in the long term.
Because Google exists, and is diametrically opposed to this vision. The past decade have shown constant examples of these two visions of the future clashing. Google wants more people on the internet. Apple wants more people on their devices.
Great website, by the way!
https://www.nikolaapp.com/
Out of curiosity, can you say whether Tesla has approached you for acquisition?
In my data right now I see a few examples of an $80 purchase match to $56 in proceeds (70%) matched to $56 of a refund.
I can't say I think the 30% fee is appropriate anymore, but this particular case being made about refunds does not appear to be accurate for me at least.
The group think on here always reaches a fever pitch when it comes to Apple - HN is particularly susceptible to it