The Mac App Store gives a hint at what would happen if there was any choice. The amount of software actually available for the Mac is far, far greater than what’s listed in the store. Furthermore, while some quality and notable apps are still in the Mac App Store, many well-known apps are not there. The number of lousy apps is also extremely high every time I go to search or just look at the front page, to the point where Apple does itself no favors by even drawing attention to most of the apps on that store (and it gives the impression that “most” Mac software must be like this).
If they simply listed all major Mac apps, e.g. linking to their web sites or download links or whatever, they would hugely increase the value of the Mac platform and bring enough direct benefit to developers to be worth some kind of fee (and of course Apple gets $99/year anyway). Instead, they tried to port the same clueless, greedy, review-burdened scheme to that store, layering completely unnecessary requirements on top (like poorly-thought-out sandboxing). And since developers had a choice, they mostly said No.
Sometimes I try to imagine what the app store rules would look like if apple had to abide by those same rules for all of their own apps. I imagine the rules would be much more lenient, app review a lot less error prone, and developers would be chafed far less by those golden handcuffs.
Pretty sure apple’s developer documentation would still be bad though.
I work on a platform that provides its subscribers with a store for 1st and 3rd party apps/solutions built on that platform.
Every app delivered on this store must go through the same review process whether it's internally built or not. This has led to healthy innovation on the app store and deep empathy for the 3rd party developer.
To be fair, it is possible to ship components that are part of the core platform outside of this mechanism, but I think just having one subset of internal development go through the same review/approval channels as 3rd party apps has been very positive for our developer community.
The evolutionary history matters a lot in these things, since they set the culture and precedent on the platform.
Macs and desktops started (or at least, became popular) as an open environment where users obtained software directly from vendors. iOS and Android (with the caveat that it has always supported sideloading) started as closed systems, and the vast majority of customers are used to getting their software from the official app store.
The Mac App Store came after there was a thriving ecosystem for Mac apps online/organically and without a middle man, and it provided close to zero value for developers on top of that. I don’t think it’s a fair comparison.
> The Mac App Store came after there was a thriving ecosystem for Mac apps online/organically and without a middle man, and it provided close to zero value for developers on top of that. I don’t think it’s a fair comparison.
Perhaps the iOS and Android app stores are also middle men that provide close to zero value but forced themselves onto mobile phones.
I think there is still value in the comparison, but you are absolutely correct. Any comparison must include this huge caveat - the Mac had a third party software ecosystem for over 20 years, well before OS X or a Mac App Store came along. There simply was far, far less historical incentive to adopt the macOS App Store than there was on iOS, which of course mandated the App Store from the beginning.
As a thought experiment: how many companies would leave the official iOS App Store if offered a choice tomorrow? Epic Im sure... but the experience on Android suggests to me not that many. As with Android, I think a lot will still want a presence on the default/"official" store regardless of the 30 percent take. Don't forget Apple have also done the hard part of getting a customer to enter their CC number to their iCloud account for their store, removing an enormous amount of friction in the sales process too.
I believe there are many iOS apps that have never seen the light of day simply because it wasn't at all possible to make them compliant with the "review guidelines".
I would disagree with the premise that the two stores are comparable. The alternative to not use the Mac App Store is not just financial, but also allows developers to bypass the sandbox requirements.
Whether or not Apple permits alternative payment systems for iOS/iPadOS, all the apps will likely remain sandboxed.
Not only that, but if you ever have the option of buying a software license directly from the developer or through the Mac App Store, you usually get much worse terms from the Mac App Store.
You'll pay the same price, but instead of getting a license you can run on unlimited of your own machines, or sometimes a fixed number like you can register it to 3 machines at a time, you can only install it on other computers that are managed by the same iCloud account. I've learned this the hard way with a bunch of productivity apps, if you want to use it on a personal machine and a work machine in the same way you can easily install all the free apps that you use on both machines, you're out of luck if you bought it on the Mac App Store. I've ended up re-buying a few different productivity tools over the years that I made the mistake of buying on the Mac App Store first, so that I actually had a portable license I could use that wasn't tightly coupled to making my personal text messages and iCloud files available on the same computer I want to use the license on. You also can't install mac app store apps via homebrew in a setup script or any kind of tooling you use to manage the computer (maybe this is getting better with shortcuts, but I'm not aware of a way to do it).
If it's a cross-platform app, you pay the same price but lose the ability to ever run it on Windows in the future if you buy it from the app store. If it's one of the few AAA games that support MacOS at all, if you buy on Steam you usually get a cross-platform license and there will often be a bunch of bundles that include extra DLC packs at a discounted price. Once a game is a few years old it will start going on sale all the time on Steam. The mac app store version usually won't go on the same sales and usually doesn't have any bundles available either.
If you have multiple user accounts created on a computer, you can't even upgrade a free app that a different user installed via the Mac App store, even if your user also has admin privileges. Only the same user that originally installed it can upgrade the app even though the app is available to every user on the machine.
There's really no reason to ever install anything from the Mac App Store, other than first-party Apple apps where you have no other choice (like XCode, Garage Band, Keynote, Final Cut, etc.)
And it’s such an incredibly good example of why anti-steering rules should be illegal. Apple basically refuses to let apps even tell the user that such alternate licenses are available!
I hate anti-steering so much that I hope any future legislation against it also enforces retroactive refunds for a significant period of time. Whatever money they have made is basically entirely due to pulling wool over users’ eyes, and they need to be losing millions from this as a punishment.
> The Mac App Store gives a hint at what would happen if there was any choice.
There's a choice of app store in Android and almost nobody uses Amazon App Store, F-Droid, Samsung App Store and so on. It's great that they can exist, but I don't think the Mac App Store (which has been neglected since day 1) offers any guidance.
People mostly use what they know or are giving by default. In desktop, be it Windows, Linux or macOS, people aren't used to app stores.
The Amazon store used to have a killer feature where they gave away "bullshit excised" versions of apps (the "Actually Free" program), but sadly that has been discontinued and now the Amazon Store is a completely pointless cut down version of the Play Store.
It's a shame because the old Fire tablets were pretty good for kids, but now the malignant ad and micropayment cancer has returned so it's no good anymore.
The problem with alternate app stores on Android is that before Android 12 (which is still only in beta), other stores couldn't update the apps they install, which is kind of fatal.
You also can't install the various alternate stores themselves through Google Play and Google purposely makes installing APKs a pain for regular people.
And then it's "see, nobody wants them" after they purposely put a wall in front of them which most people can't get past.
So developers still need to be in Google Play to get all the users who can't figure it out, but if everything is in Google Play then even the customers who could figure it out have no incentive to go through the trouble.
Their store is basically unusable for me because it’s an app. I can’t save links to anything or open multiple tabs to compare products. It’s fine if I already know what I want but in terms of search, I think being able to run Google queries would be better.
At the very least Apple should improve the store to make it Amazon level in feature set. But it feels like they abandoned it.
Not Mac user but I guess it is the same as for Windows. I have some desktop products for Windows. The thought of releasing them to MS Store had never crossed my mind.
Isn't this mostly due to burdensome requirements which means most apps would have to remove features and the fact that they don't support upgrades? At least those are the arguments I have seen to not put the apps in the mac store.
MAS requires sandboxing, distribution outside the store does not. That said, Apple turns the 'default sandboxing' screw another half turn with every release.
In addition to subscription revenue, upgrades are possible by releasing a new product version (e.g. "OmniGraffle 7" in MAS) with a free tier ("read-only mode") and in-app purchases for new users as well as upgrades from OG 6.
I believe you can read purchase receipts within your developer team to determine upgrades.
Sound reasonable, and I see additional payment systems as improvement mostly.
But I have concerns about additional stores, not about entropy and all the multistore problem from a UX perspective, but as a privacy threat.
I like the current Apple politics "we are a hardware company, not another user data selling platform," and they do great things in that way.
But what happens, if Facebook move their apps to their store without any restrictions on privacy?
So they can do anything they want, and not only they. If now App Store got strict rules about privacy, what will happen in that situation?
It's not so unbelievable that Facebook will try to get back their "data profit" from Apple users.
In the Tim Cook era they are now (or are now transitioning into) a services company. Steve would have murdered anyone who proposed putting a 90 day Apple TV+ upsell in Settings on a new phone. Out the airlock. Instantly.
They’re moving to selling subscriptions and data is critical to that.
Strict rules would actually give them a huge edge over their other services competitors on platform and if they could couch it in anti-trust, that would be quite a coup.
The arbitrary integer n = 100 is out of place, comparing your example with GP's comment. The commenter is totally right - the Mac App Store is just a gimmick in the same way that the iOS App Store is a total gimmick to accumulate fees from app developers. The fact that the review system is so broken is a pure indictment of the model itself.
Well honestly they should just have links to all apps but that would require the search engine to not also suck (different discussion).
It’s just surprising to me that Apple didn’t take such a basic step to do this, when it seems it would so clearly increase the value of the platform. It is why it is difficult to believe anything they say about how much they “love” the Mac...every single action they take to “help” the Mac platform is just baffling.
I have a question about monopolies and market abuses.
Apple released their phone in 2007, the App Store in 2008, and in-app payments in 2009. During that time their marketshare was fairly small, and it didn't start to really grow until they expanded availability to the Verizon network in 2011.
Right at launch of the App Store, Apple announced its sales commission would be 30%. Then they extended that same fee to in-app purchases a year later. At the same time they set the rules that third-party app stores were not allowed, and that third-party payment processors could not be used.
I'm mentioning all of this history to make this point: Apple made these rules when they were not a monopoly by any definition. They released these products, with these rules, into a free market and let the market (both users and developers) decide which products to use and which products to develop for.
Now, obviously, between 2007 and 2021 the iPhone has been a wild success. Its platform has grown in users and developers every year.
So in terms of the framing of "market abuse", at what point between the launch of these rules and now did Apple cross that threshold between free-market competitor who can legally control their own platform to monopolist abusing its power?
I'm asking this question not just to make a point, but because I think it will be instructive for future companies to understand where in the growth curve the rules they started with can potentially cross over into being "abusive".
You can do all sorts of "monopolistic abuse" on your platform as long as it is small and inconsequential. No one cares, even if it was illegal, though it mostly is not.
But the rules and scrutiny changes once you become large enough to be "considered" a monopoly i.e. once your decisions and policies start affecting a significant portion of the market/ecosystem, then your policies are going to be subject to new regulation.
Google supporting side loading from the very beginning was a smart idea, even if its too complex and scary for the majority of Android users. They should have done the same for payments.
30% was highway robbery from the start. Pure and simple.
It was merely a less awful deal than most other indie commission models, with sites like Kongregate and their ilk demanding >80%. Against that kind of flaying and skinning, 30% was an improvement!
I've said it before. A very good agent, who actually works for their client and arranges them with repeat lucrative contracts, gets 15%. App stores, as gatekeepers to their walled gardens, extort twice that.
Btw - if they want to get into recurring payment scene, let them compete with payment processor fee structures. For the privilege of arranging trusted, mostly secured payments and handling the back office accounting, 3% should be a damn good ceiling. The payment industry is making money hand over fist with that kind of cut.
That was not at all obvious to anyone in 2008. It's a pretty typical margin from the console industry, which was the main point of reference at the time. Apple spent several billion building the App Store infrastructure, the SDK and setting up the review and payments system and it took years for App Store revenue to catch up with the sunk investment and expenses. Also practically everyone in the industry at the time was saying Microsoft and Google would imminently wipe Apple out of the mobile market.
This is a tough one, I think 30% made perfect sense in 2008 but does seem steep now. Apple makes huge profits on the App Store, but it mostly seems to have happened by accident, their original strategy seems to have genuinely been to just break even and maybe make a modest margin, with the store mainly just being a competitive advantage. The huge success and profits have been a windfall.
However that all happened and we are where we are. I don't object to Apple's app store margins or IAP charges, it's their product, their rules.
I do think banning developers from informing users of how to get subscriptions and such outside the store is foolish. That's clear overreach. I see why they do it, otherwise subscription services can cut Apple out and free-ride, but they probably just have to take the hit.
>30% was highway robbery from the start. Pure and simple.
From the Start? Credit where credit's are due, 30% for software was good enough for a lot of independent developers. Even to this day. Handle Processing charges, distribution, Tax etc. For a lot of categories 30% isn't that bad. Especially for Software.
The problem start when they are enforcing 30% on Services and not on Software. Signing up a Teaching Class with Real instructor on iOS? 30% to Apple. Signing up Services like Web Hosting, Video Streaming, or whatever it is, 30% to Apple. Apple had to made exempt to each and every category after people complain. At this point when the whole world is moving to digitisation, 30% no longer becomes a cost of Software but a Tax on all things.
It seems to me that you're thinking of "market abuse" in terms of intent. But it's not really about, it's about what the practical impact is. The test is "is this significantly impacting users in a negative way". If that sounds like a subjective judgement call, then that's because it is. Anti-competition laws are basically an escape hatch that allow governments to intervene at their discretion when markets fail.
So to answer your question: it potentially crosses over into abusive as soon as you are restricting customers from doing anything. And it gets less likely that you'll get away with it the more dominant your market position (as a scale), and the greater the importance of your product or service to society (which is why game console currently get away with these practices but utilities don't).
In the United States the courts have consistently said this determination is based on how much market power the competitor wields:
Of course where the seller has no control or dominance over the tying product so that it does not represent an effectual weapon to pressure buyers into taking the tied item any restraint of trade attributable to such tying arrangements would obviously be insignificant at most. As a simple example, if one of a dozen food stores in a community were to refuse to sell flour unless the buyer also took sugar it would hardly tend to restrain competition in sugar if its competitors were ready and able to sell flour by itself. (https://casetext.com/case/northern-pac-r-co-v-united-states)
Whether Apple has enough dominance over the smartphone market to cause an unreasonable restraint of trade in the app distribution market is up to a court to decide at this point.
You are framing this as if there is a magical "growth curve" that must take you from an inovative startup to a 800 pound gorilla that has a complete chokehold over the market.
No, if regulators do their job, nobody gets to ask that question because there is continuous competition. Getting to that monopoly or oligopoly requires sustained effort from would be monopolists, it's a strategy they have been executing for more than a decade. And if you do that, you must expect there is a moment where society says: ok, it's time to regulate it and not let company X extract economic rent solely based on market dominance.
Not at all, there was nothing inevitable about Apple's success, many analysts, pundits and their competitors have been adamant Apple would fail for the first decade or so of the iPhone. After that these claims started looking a bit thin.
You're presuming that market abuse has occurred and that market abuse is the only way to get popular, but I don't see that's a given. Maybe people simply genuinely like iPhones just the way they are, and maybe network effects just legitimately lead to the most popular platforms dominating.
Apple don't have a monopoly on the phone market anyway, they only have 27% of the South Korean phone market. In the US it's 65%, high but not a monopoly, but it only went over 50% in 2020.
What changed to make them a market abuser and when did it happen, as you allege? That's the question OP is asking.
Ask yourself - is there a difference between a small company acquiring another competitor and a large monopoly acquiring a competitor? They’re both acquisitions. Same event at two different market conditions attract two different reactions by regulators.
To answer your question - when developing for Apple went from being a choice to a necessity to run your business.
First, with regards to the App store or Music store, Apple is the Market maker. It controls who gets to sell Apps on their market similar to how NASDAQ or the NY Stock Exchange controls which stocks are listed. Korea is saying Apple you already control the market, but you shouldn't dictate the payment systems too. I expect Apple will start raising the fees it charges to list Apps on their App store.
Second, this article is about South Korea. South Korea doesn't care about the historical context of the US. Korea is saying if the Apple App store want access to South Korean customers, you must play by our rules. This is not unlike the European Union saying if you want to store data about EU citizens, then you must comply with GDPR.
For the past few decades, we had assumed there was a monolithic global market for software apps. We are seeing now the fragmentation of the internet and the software market as countries assert their power over big tech.
This is an incorrect argument. If group of people A refused to use Apple, but group B made Apple the most popular option, then group A still suffers from Apple being monopolist.
>So in terms of the framing of "market abuse", at what point between the launch of these rules and now did Apple cross that threshold between free-market competitor who can legally control their own platform to monopolist abusing its power?
When Apple launched Apple Pay (in 2014, not that long ago), its App Store rules turned from dubious to outright market abuse by using one market where it had a strong position to infiltrate another very different market of payment processing (there are other issues, but this story is about payment processors).
By the way, 'monopoly' has little to do with it. It's about market power, monopoly is an nigh irrelevant term to the issue.
> So in terms of the framing of "market abuse", at what point between the launch of these rules and now did Apple cross that threshold between free-market competitor who can legally control their own platform to monopolist abusing its power?
I'd presume that would be when they became a monopoly, which may be seen as something that comes with new responsibilities. "With great [market] power, comes great responsibility" would probably make a lot of sense to a lot of people. We wouldn't hold tiny entrants to the same standards as those who can set prices, sue into dust or buy almost all of the competition.
abuse of monopoly power is a big area, there's no one answer, but you're asking good questions. It's not really going to help future companies though, because any company in a position to think about this problem has the type and quality of attorneys who already best know the answers.
In any case, though, that's not what's going on with this Korean law. Antitrust violations of existing law are generally determined by courts and or regulatory agencies, whereas this is a new law from a legislature signalling that they want to encourage a competitive marketplace in this manner. Of course, with lobbying and nationalism, it's quite possible that this law was guided by powerful Korean interests or nationalist parties who simply want to hobble foreign entities in favor of local companies: still not an example of antitrust, except possibly in the other direction.
in any case, in the US it's not monopoly that's against the law, it's that market power being used to abuse market participants or influence prices. And there is no clearcut answer, but there are "guidelines", for example if you control 70% of a market and your major competitor controls 25%, you have a good basis to say that you are not a monopoly. Notice that Microsoft invested to prop up Apple when Apple was on the ropes in the late 90's. That type of action shows how tricky and pernicious these regulations can be, Microsoft gets the excuse "we have a major competitor" and also benefits from the success of the competitor.
But that's the market share part of the equation. The additional aspects are "can it be shown that the price of the good is being manipulated upward?" So, Microsoft offering big discounts to PC manufacturers to get them to exclusively offer MS OSes on their platform: are those discounts abuse of the market?
I'm not a particular expert on this, there are many places to quibble with what I've said, I'm just trying to offer the flavor of what I thought when I read your questions.
Oh, at what point did Apple cross the line? Has Apple even crossed the line now? Is not really the question. By the time enforcement actions are taken, companies are generally well over the line. The real question is "how much can we abuse our market power and get away with it before the clamor to regulate us gets too strong for politicians to ignore? And what is the temperament of the administration in office?"
1. Not only were iPhone a niche in the market in pre 2010, Smartphone itself were a niche. Apple sold more iPhone in its iPhone 11 launch quarter than all of iPhone from 2007 to 2010 combined.
2. iPhone was really, a phone, an internet communicator, and a wide screen iPod. That was arguably true all the way until 2014 when the larger screen iPhone 6 Plus was introduced.
3. But today's Smartphone are more like Pocket Computer. Games, Video Consumption, Facebook. At a point when some people were laughing about phablet. Now vast majority of phones on the planet are phablet. They replaces consumer computing. They are no longer a phone in the sense of phone in 2007.
4. You now have a phone that replaces everything, Smartphone becomes a pocket computer that is the centre of our modern society. Access to everything digital.
5. The problem starts when Apple decided to focus on Services Revenue. Remember before the success of iPhone Plus, people were writing off Apple as their sales number did not grow as much as the Smartphone market. And Wall Street was putting pressure on Apple. Service Revenue was Tim Cook's answer ( or middle finger ) to shut these people up.
6. So Apple start breaking out services revenue, stopped reporting iPhone Unit sales, rework iOS, macOS, Map, iCloud and other cost from their product segment to paying $10 per unit to Services Revenue. And announce their target of Services Revenue by 2020.
7. Apple started enforcing rules on 30% as access fees. If it was coming from iPhone, Apple want 30% of it. It wasn't much of a problem with an App. It is much more problematic with services that use App as access. Wordpress blog, Domain Name, Teaching Class, Video Streaming Site, Creator Selling Digital Asset. Until someone complain, Apple started adding exemption to their rules of collecting 30%.
8. Services Sector works different to products. Software like Pixelmator or Photoshop are Software products. Netflix, or some Cartoon Network are Services. Apple used to turn a blind eye on many of these services. Once they start enforcing it because they had to chase their services revenue target. You start seeing lots of complaining.
9. Why should Apple dictate everything that goes through iPhone? If the world is going digitisation, does that mean everything that goes through iPhone will be charged 30% more? How is that not a tax? When it is Applied the same ( or nearly the same ) everywhere. How is this even sustainable?
10. Customer signing up a Email, when majority of cost are in Server. Or Signing a Real Person tutoring, where the cost is the Teacher in front of Screen. Why does Apple demand 30% of it? And how did this 30% number came from for their industry?
11. Lots of argument about Apple wrongly focus on consumer and completely ignore business. SMB are still large part of our society. And they are complaining just as much as big companies like Netflix or Spotify.
12. It is made worst when COVID hit, it speed up the whole digitisation of our society by at least 5 years if not 10 years. Explosive growth in e-commerce and other Digital goods or services. Why is it so hard to deal with Apple?
13. And they are not a niche anymore, they have anywhere from 20% to over 60% in key markets. Despite Tim Cook flat out lie about this. ( His likely defence is the term Market Share could be defined as Unit Sales and not unit usage ). And despite court doesn't like to define market themselves, if iPhone's owner are higher spending group and vast majority of your customer are iPhone customer, is that 30% an abuse of their market power?
> Apple made these rules when they were not a monopoly by any definition
Didn't Apple have the only app store for iOS devices at that point? For that matter the competing app stores of the time (for Symbian devices) were dreadful and all of them are long gone.
Didn't they become a monopoly when they stopped allowing other app stores. From that point they were a monopoly on iPhone. But being a monopoly is not enough to warrant action, it's abusing the monopoly position that is market abuse, i would have thought?
I've been saying this awhile, most notably when Apple (of course followed by Google) introduced a discount on commission for smaller developers.
This is completely backwards.
I know why they did it. They wanted some positive PR that didn't cost them anything. Thing is, it's the larger publishers who are going to lobby regulators and challenge things in court. It's those same publishers who already have their own payment processing systems where the 30% is pure overhead (minus the CC fees). Small publishers actually get a lot of benefit for that 30% (IMHO).
So what Apple/Google should've done is give larger publishers a volume discount. Of course this should force them into binding arbitration and otherwise challenging the discount should void that discount.
Why? Because it changes the calculus for Epic, etc. Currently that is:
Option 1: Keep paying 30%
Option 2: Leave the app store
Option 3: Challenge the 30% cut in court
Game theory will tell you that there is essentially no downside to (3). Worst case you will be back on the app store at 30% or will leave.
But what if the options were:
Option 1: Keep a volume discount and pay 10%
Option 2: Leave
Option 3: Challenge the cut and possibly end up paying 30% or leaving
Now they have something to lose.
More importantly, it takes the sting out of efforts to lobby regulators because now we're talking about the difference between 1-2% (CC fees at volume) and 10% not 30%.
I stand by my position that end users don't actually want competing third-party app stores. That's just a usability nightmare. But backend payment processing is something else entirely and is the likely first step in breaking the stranglehold.
> Of course this should force them into binding arbitration and otherwise challenging the discount should void that discount.
So you want apple and google to act as even more monopolistic bullies ...
I see that you're taking this position as what you would do if you were Apple or Google, not what is the best course of action for all stakeholders. But you then opine that this is justified because the status quo is better for consumers.
The thing is, we already know that it's not. Apple and Google allow third party payment processors for _some_ of their apps. Would it be your best interests as a consumer to pay 40-50% more then you currently do for Uber and GrubHub? There's a reasonable argument to be made that those businesses simply would not be economically viable if they had to pay a 30% apple/google tax on every transaction. How many other apps or services went under (or were never made in the first instance) because Apple decided that their business needed to pay them a 30% cut of everything.
Which brings us to another salient point. Apple claims that they need to charge their 30% cut to pay for the cost of running the app store and for the developer tools they provide. But if this is the case, why should Uber and Facebook get to use them for free?
I don't think he's saying that it'd be good if Apple and Google did that. He's saying they should have done that if they had had their strategic thinking caps on.
> How many other apps or services went under (or were never made in the first instance) because Apple decided that their business needed to pay them a 30% cut of everything.
Probably very few apps fit this. This rule basically only applies to digital goods, which are "free" to manufacture. There is some fixed server/dev costs, but its practically "free" to serve n+1 users.
This applies especially true to games where you buy in-app "coins". They're free to the dev, and giving our more / de-valuating the currency is a not-issue.
Of course, it probably takes a toll on licence-based apps like netflix/spotify and mostly server-heavy apps like Hey (by basecamp)
> So what Apple/Google should've done is give larger publishers a volume discount.
From Apple/Google's perspective this is a terrible strategy.
The problem is that, if we assume the Pareto Principle holds, the larger publishers probably generate 80% of revenue on the App Store.
So assuming 5% is operating at cost, you are talking about them probably sacrificing 70%-75% of their current profits (i.e. moving to 5% margin vs 25%, profit for high-grossing apps is probably closer to 1/5th previous rather than 1/3rd).
So they avoid the lawsuit, but they also lose all the profits they are trying to protect anyway.
Not only that, "we charge 10% to the big monster and 30% to the little guy" is terrible PR against the amount of money they would generate from just the little guy. It's so bad that by that point they might as well just charge the lower rate to everybody. Especially when they're trying to stave off legislation.
> Game theory will tell you that there is essentially no downside to (3). Worst case you will be back on the app store at 30% or will leave.
Worst case is you want to be on the app store at 30% but are not allowed back in.
> I stand by my position that end users don't actually want competing third-party app stores
I disagree. More stores bring more competition. Both in terms of platform costs and in terms of promos for customer acquisition.
The epic game store is kind of crap, but their weekly free game setup has offered some great content. I haven't given them a single dollar and I've gotten a number of titles including Control, Enter the Gungeon, Alien Isolation, etc.
While technically possible I consider that incredibly unlikely as a result of what's essentially a contract dispute. What would Apple's cause of action be to terminate, say, Epic from the App Store entirely?
They sort of tried this at the beginning of the dispute when they claimed anything running Unreal Engine was a security risk and should be kicked. They overplayed their hand with that one and a court blocked it.
Game theory applies to Apple too. What's their upside from banning Epic from the App Store? They face the risk that a court may take that decision out of their hands. And while they're doing it they are losing out on that 30%.
There’s an entire cottage industry of jailbroken app stores. You might argue that those using alternative stores are a minority (1-5%), but the act of jailbreaking a phone is quite challenging and we still have a lot of people doing it. If iPhones were able to run third party stores I think you’d see 30 or 40% of users opting in to that.
Is it a usability nightmare? Perhaps. But device makers shouldn’t make that “choice” for their users. Likewise you might not like the fact that your city has small businesses instead of a single large warehouse store on the basis of convenience and usability. But the public would not agree with you and that’s why we enact laws against anti-competitive behavior.
No. This would entrench their monopolies even further.
It should be legally required that any device that is marketed as a general-purpose computer, whether pocketable or not, and is shipped in a locked state, is fully unlockable by the end user. Without a single network packet sent to manufacturer's servers. That's the only way we as a society could fix this dire situation.
In other words, if I buy a phone from Apple, I should have the choice for this to be the only interaction I have with Apple. They sold it to me. I gave them money, they gave me an iPhone. It's mine now. They're no longer in possession of it. I thus should be able to run arbitrary code on it with highest privileges possible with no hindrance.
Sure, though they may chose to wipe iOS from your device if you unlock it. Then you are free to build your own os and execute root level code if you wish.
>I stand by my position that end users don't actually want competing third-party app stores.
I have 9 chat apps on my phone. I just counted, and that's skipping things like email and basecamp that I might have included to inflate the number. It's not ideal, and the downsides can be exaggerated for the sake of banter, but overall the chat app situation is fine. Similarly, I wouldn't mind having more app stores.
I expect there'd be one all the free software hardcores believe in, one that fills the role Steam does on PC, another with all the "too hot for TV" content that Apple and Google won't touch with a 10 foot pole, a few developer-publishers big enough to get traction, and dozens of also-rans that nobody uses. Yes, slightly more inconvenient like all the chat apps, but in reality it'd also be fine.
I don't think it makes sense to say what consumers do and don't "want," because largely they don't understand the terrain the App Store and Google Play put down. Ask people if they'd like a 2nd store that lets them install apps that contain porn without putting it behind hidden curtains in otherwise general-purpose apps, then we might expect positive responses. Ask people if they want an app store that contains more malware because the app store monopoly provides a chokepoint to enact user protection that on-device sandboxing can't, then we'd expect negative responses.
The reason Apple and Google would never offer up a volume discount for large publishers without legal action is because it's 99% of the app store's revenue. Giving a discount to small developers cost them nothing, giving a discount to Epic Games and similar would cost them billions.
I think it's certainly heavily weighted to the big publishers but 99%? I'm not so sure.
But you know what's expensive? Private lawsuits, government lawsuits, a court or legislature deciding the outcome, compliance with legislation, compliance with consent decrees, compliance with judgements, etc.
The biggest issue is that third parties will end up deciding the outcome. You're almost always better off heading off government action by instituting the least bad solution for you.
What if the outcome of governent action is completely independent third party app stores? Apple and Google certainly don't want that. I would argue that neither do end users actually. A vocal minority thinks they do but they're wrong. That could happen if the wheels of the US or EU regulators start turning against you.
The tech giants simply flexed their power too hard during the last few years and now pretty much every country on earth realizes they are a threat to national security in various ways. They are getting sued, fined, or punished in almost every major country now and they deserve it honestly
> So what Apple/Google should've done is give larger publishers a volume discount. Of course this should force them into binding arbitration and otherwise challenging the discount should void that discount.
Binding arbitration is a uniquely US-legal system thing that is not legal elsewhere. (And imo it is better to have a more neutral third party than an arbitration private firm that has one of the parties as a recurring customer)
That's exactly it, so many users are afraid that this will mean every random app you download will have a credit card entry field. Nope. Those random apps will still benefit from the simplicity of the system IAP, one tap, auth, done. The ones asking for a credit card will drop in ratings and search results.
The big players are the ones that will switch, amazon, Netflix, Spotify, Hulu, etc. And beyond that, competitors like Square and Stripe will release SDKs that make purchasing just as easy as the system IAP, and will actually force Apple to improve their system.
If Apple thinks hosting costs are of any consequence, then charge people for hosting if they don't actively use IAP. For 99% of apps hosting is pennies on the dollar, but for games like Fortnite it may actually cost a decent amount, especially for the binary size.
The end point is that there are no technical limitations to anything here, it is all political and Apple has the ability to change this at any time. There just isn't any point when they can continue to rake in 30% of every digital subscription service on the internet that wants to exist on their platform.
It's more than just one-time IAP, though. I'm generally "whatever" on what payment processor people use, but one of the things that does concern me is subscription management. To me there is a lot of value to having a central place where all my subscriptions are and where they can be canceled easily, even if I don't have the app installed anymore.
YOLOing something with Stripe doesn't give me that without a bunch of fundamentally opt-in stuff on the part of the developer, and that's pretty concerning. If the platforms can (and do) solve this, then I feel a lot better about it.
> If Apple thinks hosting costs are of any consequence, then charge people for hosting If they don't actively use IAP. For 99% of apps hosting is pennies on the dollar, but for games like Fortnite it may actually cost a decent amount, especially for the binary size.
I don't know how this is on iPhones, but on android (large) games are usually still a small download with just the binary and no assets from the app store, and the game assets are then downloaded from the game company server by the game binary itself.
That also allows them to push some updates (think e.g. balance patches) that don't require a new binary to be pushed without having to wait for appstore approval again.
So there's a decent chance they may already do that because it also gives them other benefits.
I haven't heard of any actual regulation or court proceedings that would end with Apple Pay being removed as a payment option from apps.
Apple can always require an Apple Pay option for any app in its app store which collects payments. And honestly it'd probably be okay if they require devs to charge users the same amount regardless of how they pay.
The issue is that they ban other options entirely, which reeks of monopolistic anticompetitive behavior.
Just let devs tell their users about Apple's 30% cut, then let devs give users an option to pay however they want.
> The ones asking for a credit card will drop in ratings and search results.
Ratings and general search are already useless in appstores, dominated by apps filled with pay2win dark patterns and optimized/gamed to be higher in ratings. The times where you could go to top games section and find a genuine good app are over more than a decade ago. So you can find the app you need only be it's exact name or via link from external source.
So now appstore is nothing more than a very restrictive guardian/censor. No value lost.
It's also quite possible that if they had just set it at 10% from the beginning across the board, there would simply be more sales than there are now with 30%. I know a lot of apps make users foot the bill for the extra 30%, with different pricing if you buy not through apple. This just translates to lost sales. The market is the market.
It’s not usual for news on my country to be on top of HN. Very unexpected.
I’m guessing though that the South Korean market is be significant enough for Apple and Google to not just pull out it’s business from South Korea and call it a day. I guess this is, in some kind, a victory against the huge companies.
But… personally I do find sad that this would be detrimental to South Korean app UX. Stripe isn’t a thing here, and most of the home-grown web-based payment systems have… like super shitty UX that require (on the desktop) native plugins running a server on some bespoke port. It did come a long way since from when we were the country that required IE6 for web banking, but the UX is still not really there.
I’m hoping that Apple will provide APIs for showing payment screens and Apple will still control the ability to show all subscriptions, cancel them in one single place, etc… but I don’t think Apple will ever do that. Unfortunate…
> I’m guessing though that the South Korean market is be significant enough for Apple and Google to not just pull out it’s business from South Korea and call it a day.
I think that's right. The next step would be for a large enough market to have a similar law, and then they'll just have that as their policy globally. That probably means EU or US.
They already do that on the Web.. I'd be surprised if, when available (eg. an iOS visitor using Safari on a Shopify site), people chose manually entering their payment info more than Apple Pay.
Apple Pay is already available as an API, you can even use it on the web.
Indeed would be nice to centralize all subscriptions, we have yet to see how they would interface with 3rd party payment options. But on the whole this should be a win - if anything, those competitors will have a strong incentive to improve their UX.
Companies pull out of countries all the time when changes in the socio, political, economic and most importantly regularly environment make their business untenable.
Case in point: China or post-Brexit UK.
You use this hyperbolic rhetoric to describe the situation but it really is an every day occurence.
> are we saying we would rather kneecap our democratic institutions, right or wrong, than live without iPhones?
No, it's just that this is the choice these companies have. They can completely stop doing business in a country (or countries) if they don't want to obey the relevant laws/court rulings of that country. The only thing SK could do then is sanction Apple products so it becomes illegal to import them (reminder that a sizable portion of SK's economy is directly attributed to Samsung/LG).
> I’m hoping that Apple will provide APIs for showing payment screens and Apple will still control the ability to show all subscriptions, cancel them in one single place, etc… but I don’t think Apple will ever do that. Unfortunate…
I'm not sure that Apple can do it without being an intermediary in the process - managing the billing. And... well... that's what Apple Pay is.
In order for Apple to be the one to show and cancel subscriptions, they need to be the ones billing you and then processing that transaction (possibly batching it up with others to reduce processing fees).
Likewise, if there's a dispute - for example a child made a few hundred dollars of in app purchase and the parents would like to refund that... Apple can reverse those transactions ( https://support.apple.com/en-gb/HT204084 ). If you're dealing with a 3rd party payment system... you're going to have to deal with the 3rd party payment system on your own.
Another "it can be gotten around" when you leave the App Store and payment processor is the in app purchase constraints ( https://support.apple.com/en-us/HT204396 ) in that a developer wouldn't have to honor that check at all.
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The future of 3rd party payment processors that developers ask for really means taking Apple and its APIs out of the process. Entering in the credit card information (making sure that developers aren't trying to bypass access constraints on the wallet) and sending that out themselves.
For example, PayPal charges 4.99% plus a fixed fee that's about $0.10 per transaction ( https://www.paypal.com/us/webapps/mpp/merchant-fees ). This is comparable to what a developer would have to pay to Visa or any other payment processor for doing micro transactions of their own. Having Apple do it means that Apple would really like to charge at least 5% + $0.10/transaction which for a $0.99 is $0.15 and that's 15%... which is the amount that a small developer shop would have to pay for doing it through Apple.
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And so, I return back to the question - how would you see Apple opening up the APIs for doing payment processing without doing the payment processing themselves (and insuring extra expenses)?
This is not true. Apple can absolutely (but probably won't, as unfortunate as that is - and I hope I'm wrong on this) build APIs for hooking into the views used in the current system, while the actual transactions happen outside of it. They can't guarantee that the data shown is what is actually being charged though, which is why they probably won't do that.
Traction brings improvement over time. SV companies enjoy enormous first mover advantage and megaphone that pushes their products to the masses early to capture them, and then iterate on UX.
They should unbundle. At the moment, doing business on the app stores entails so many things, but they can break them apart and allow developers to purchase them individually:
1. Put your app on the store. (but only reachable via direct link)
2. Have Gapple verify that your app does not represent any obvious security threat. (or else warn users upon install)
3. Make your app appear in search. (organically)
4. Make your app eligible as a recommendation. (organically)
5. Use Gapple payments.
6. Have your app appear in search. (guaranteed placement)
7. Have your app appear as a recommendation. (guaranteed placement)
(and probably many others)
I'm not sure how well that would go down with developers, but I view it as a more honest way for them to create a developer offering. If they want to then go ahead and bundle some of these and offer a discount for developers purchasing more of them, so be it, but unbundling allows developers to pick & choose the value they want provided.
2. Verification is key! I don’t want more garbage (there’s already plenty) in app stores. They should charge a flat one time fee or for smaller developers give the option of higher fee/transaction till the amount is paid and then revert back to normal fees.
How about getting rid of App Stores altogether unless they follow an f-droid like model? (Selection of alternative repos, Published source, declaring potentially unwanted behavior etc.)
I don't think we can ever get rid of app stores but I am pro multiple app stores per operating system.
The only downside I see to multiple app stores is having to download multiple stores to get certain apps, kinda what it is like with purchasing video games on steam versus origin, etc. That is although minor, still an inconvenience.
The concessions Apple & Google made to "stave off regulation" are informative in themselves:
It also agreed to let developers inform their users about payment options outside the App Store, using the email addresses that users gave them. Google said that it would only take 15 percent of developers' first million dollars instead of 30 percent.
Combined with "competition for monopoly" elements like paying Telcoms not to develop their own app stores or support 3rd party ones, the whole thing stinks to high heavens.
Once upon a time, "net neutrality" had wide support, and there was understanding that it required constant vigilance. Google, ironically, was a big defender of net neutrality... even as they established their own dam immediately downstream of ISPs.
Net Neutrality just meant that Google got to shovel YouTube streams onto ISP networks without having to pay. Let's not pretend there were ever any noble intentions behind it.
You think it’s okay for ISPs to double dip on charging their customers for access and then charging their customers’ most popular services (who are frequently competitors of the ISPs) for the privilege of accessing their customers? Why should any ISP think they can charge the source of my bits when I am already paying them for the bandwidth?
Net Neutrality is not just about “shoveling YouTube streams without having to pay.” In one case, an ISP was deliberately dropping packets for a popular online game (which, if you didn’t know, online games are known for requiring very little bandwidth), and extorting the game developer with the loss of ISP’s customers if they did not pay up.
ISPs are monopoly-abusing extortionists. They deserve every bit of ire they receive.
Good. I once bought into the gatekeeping concept - except Apple hasn't followed through with their end of the bargain. Scam apps are still rampant - even dominating the recommended sections in the app store. Customer service is abysmal - if you do go for a refund it's a crap shoot as to if you will ever get a human response. When they kicked Parlor for purely political reasons - that was it. Time to force the gates open and let the market decide.
Readit News
If they simply listed all major Mac apps, e.g. linking to their web sites or download links or whatever, they would hugely increase the value of the Mac platform and bring enough direct benefit to developers to be worth some kind of fee (and of course Apple gets $99/year anyway). Instead, they tried to port the same clueless, greedy, review-burdened scheme to that store, layering completely unnecessary requirements on top (like poorly-thought-out sandboxing). And since developers had a choice, they mostly said No.
Pretty sure apple’s developer documentation would still be bad though.
Every app delivered on this store must go through the same review process whether it's internally built or not. This has led to healthy innovation on the app store and deep empathy for the 3rd party developer.
To be fair, it is possible to ship components that are part of the core platform outside of this mechanism, but I think just having one subset of internal development go through the same review/approval channels as 3rd party apps has been very positive for our developer community.
I'd love to see the same thing here.
Deleted Comment
The evolutionary history matters a lot in these things, since they set the culture and precedent on the platform.
Macs and desktops started (or at least, became popular) as an open environment where users obtained software directly from vendors. iOS and Android (with the caveat that it has always supported sideloading) started as closed systems, and the vast majority of customers are used to getting their software from the official app store.
UPDATE: Fixed a typo
Not necessarily alternative app stores / install mechanisms, which is a separate issue.
Perhaps the iOS and Android app stores are also middle men that provide close to zero value but forced themselves onto mobile phones.
As a thought experiment: how many companies would leave the official iOS App Store if offered a choice tomorrow? Epic Im sure... but the experience on Android suggests to me not that many. As with Android, I think a lot will still want a presence on the default/"official" store regardless of the 30 percent take. Don't forget Apple have also done the hard part of getting a customer to enter their CC number to their iCloud account for their store, removing an enormous amount of friction in the sales process too.
Whether or not Apple permits alternative payment systems for iOS/iPadOS, all the apps will likely remain sandboxed.
You'll pay the same price, but instead of getting a license you can run on unlimited of your own machines, or sometimes a fixed number like you can register it to 3 machines at a time, you can only install it on other computers that are managed by the same iCloud account. I've learned this the hard way with a bunch of productivity apps, if you want to use it on a personal machine and a work machine in the same way you can easily install all the free apps that you use on both machines, you're out of luck if you bought it on the Mac App Store. I've ended up re-buying a few different productivity tools over the years that I made the mistake of buying on the Mac App Store first, so that I actually had a portable license I could use that wasn't tightly coupled to making my personal text messages and iCloud files available on the same computer I want to use the license on. You also can't install mac app store apps via homebrew in a setup script or any kind of tooling you use to manage the computer (maybe this is getting better with shortcuts, but I'm not aware of a way to do it).
If it's a cross-platform app, you pay the same price but lose the ability to ever run it on Windows in the future if you buy it from the app store. If it's one of the few AAA games that support MacOS at all, if you buy on Steam you usually get a cross-platform license and there will often be a bunch of bundles that include extra DLC packs at a discounted price. Once a game is a few years old it will start going on sale all the time on Steam. The mac app store version usually won't go on the same sales and usually doesn't have any bundles available either.
If you have multiple user accounts created on a computer, you can't even upgrade a free app that a different user installed via the Mac App store, even if your user also has admin privileges. Only the same user that originally installed it can upgrade the app even though the app is available to every user on the machine.
There's really no reason to ever install anything from the Mac App Store, other than first-party Apple apps where you have no other choice (like XCode, Garage Band, Keynote, Final Cut, etc.)
I hate anti-steering so much that I hope any future legislation against it also enforces retroactive refunds for a significant period of time. Whatever money they have made is basically entirely due to pulling wool over users’ eyes, and they need to be losing millions from this as a punishment.
There's a choice of app store in Android and almost nobody uses Amazon App Store, F-Droid, Samsung App Store and so on. It's great that they can exist, but I don't think the Mac App Store (which has been neglected since day 1) offers any guidance.
People mostly use what they know or are giving by default. In desktop, be it Windows, Linux or macOS, people aren't used to app stores.
It's a shame because the old Fire tablets were pretty good for kids, but now the malignant ad and micropayment cancer has returned so it's no good anymore.
You also can't install the various alternate stores themselves through Google Play and Google purposely makes installing APKs a pain for regular people.
And then it's "see, nobody wants them" after they purposely put a wall in front of them which most people can't get past.
So developers still need to be in Google Play to get all the users who can't figure it out, but if everything is in Google Play then even the customers who could figure it out have no incentive to go through the trouble.
Dead Comment
At the very least Apple should improve the store to make it Amazon level in feature set. But it feels like they abandoned it.
Not Mac user but I guess it is the same as for Windows. I have some desktop products for Windows. The thought of releasing them to MS Store had never crossed my mind.
https://panic.com/blog/coda-2-5-and-the-mac-app-store/
MAS requires sandboxing, distribution outside the store does not. That said, Apple turns the 'default sandboxing' screw another half turn with every release.
In addition to subscription revenue, upgrades are possible by releasing a new product version (e.g. "OmniGraffle 7" in MAS) with a free tier ("read-only mode") and in-app purchases for new users as well as upgrades from OG 6.
I believe you can read purchase receipts within your developer team to determine upgrades.
But I have concerns about additional stores, not about entropy and all the multistore problem from a UX perspective, but as a privacy threat. I like the current Apple politics "we are a hardware company, not another user data selling platform," and they do great things in that way.
But what happens, if Facebook move their apps to their store without any restrictions on privacy? So they can do anything they want, and not only they. If now App Store got strict rules about privacy, what will happen in that situation?
It's not so unbelievable that Facebook will try to get back their "data profit" from Apple users.
They’re moving to selling subscriptions and data is critical to that.
Strict rules would actually give them a huge edge over their other services competitors on platform and if they could couch it in anti-trust, that would be quite a coup.
That would take away from the smaller person's chance.
That list grows stale and complaints over who is on the list starts.
It’s just surprising to me that Apple didn’t take such a basic step to do this, when it seems it would so clearly increase the value of the platform. It is why it is difficult to believe anything they say about how much they “love” the Mac...every single action they take to “help” the Mac platform is just baffling.
Apple released their phone in 2007, the App Store in 2008, and in-app payments in 2009. During that time their marketshare was fairly small, and it didn't start to really grow until they expanded availability to the Verizon network in 2011.
Right at launch of the App Store, Apple announced its sales commission would be 30%. Then they extended that same fee to in-app purchases a year later. At the same time they set the rules that third-party app stores were not allowed, and that third-party payment processors could not be used.
I'm mentioning all of this history to make this point: Apple made these rules when they were not a monopoly by any definition. They released these products, with these rules, into a free market and let the market (both users and developers) decide which products to use and which products to develop for.
Now, obviously, between 2007 and 2021 the iPhone has been a wild success. Its platform has grown in users and developers every year.
So in terms of the framing of "market abuse", at what point between the launch of these rules and now did Apple cross that threshold between free-market competitor who can legally control their own platform to monopolist abusing its power?
I'm asking this question not just to make a point, but because I think it will be instructive for future companies to understand where in the growth curve the rules they started with can potentially cross over into being "abusive".
But the rules and scrutiny changes once you become large enough to be "considered" a monopoly i.e. once your decisions and policies start affecting a significant portion of the market/ecosystem, then your policies are going to be subject to new regulation.
Google supporting side loading from the very beginning was a smart idea, even if its too complex and scary for the majority of Android users. They should have done the same for payments.
This statement feels like an oxymoron.
It was merely a less awful deal than most other indie commission models, with sites like Kongregate and their ilk demanding >80%. Against that kind of flaying and skinning, 30% was an improvement!
I've said it before. A very good agent, who actually works for their client and arranges them with repeat lucrative contracts, gets 15%. App stores, as gatekeepers to their walled gardens, extort twice that.
Btw - if they want to get into recurring payment scene, let them compete with payment processor fee structures. For the privilege of arranging trusted, mostly secured payments and handling the back office accounting, 3% should be a damn good ceiling. The payment industry is making money hand over fist with that kind of cut.
That was not at all obvious to anyone in 2008. It's a pretty typical margin from the console industry, which was the main point of reference at the time. Apple spent several billion building the App Store infrastructure, the SDK and setting up the review and payments system and it took years for App Store revenue to catch up with the sunk investment and expenses. Also practically everyone in the industry at the time was saying Microsoft and Google would imminently wipe Apple out of the mobile market.
This is a tough one, I think 30% made perfect sense in 2008 but does seem steep now. Apple makes huge profits on the App Store, but it mostly seems to have happened by accident, their original strategy seems to have genuinely been to just break even and maybe make a modest margin, with the store mainly just being a competitive advantage. The huge success and profits have been a windfall.
However that all happened and we are where we are. I don't object to Apple's app store margins or IAP charges, it's their product, their rules.
I do think banning developers from informing users of how to get subscriptions and such outside the store is foolish. That's clear overreach. I see why they do it, otherwise subscription services can cut Apple out and free-ride, but they probably just have to take the hit.
From the Start? Credit where credit's are due, 30% for software was good enough for a lot of independent developers. Even to this day. Handle Processing charges, distribution, Tax etc. For a lot of categories 30% isn't that bad. Especially for Software.
The problem start when they are enforcing 30% on Services and not on Software. Signing up a Teaching Class with Real instructor on iOS? 30% to Apple. Signing up Services like Web Hosting, Video Streaming, or whatever it is, 30% to Apple. Apple had to made exempt to each and every category after people complain. At this point when the whole world is moving to digitisation, 30% no longer becomes a cost of Software but a Tax on all things.
Except it wasn't. Try getting an app published before the app store. It was 70% if you were lucky enough to find someone to publish it.
You have no idea what you are talking about.
So to answer your question: it potentially crosses over into abusive as soon as you are restricting customers from doing anything. And it gets less likely that you'll get away with it the more dominant your market position (as a scale), and the greater the importance of your product or service to society (which is why game console currently get away with these practices but utilities don't).
Of course where the seller has no control or dominance over the tying product so that it does not represent an effectual weapon to pressure buyers into taking the tied item any restraint of trade attributable to such tying arrangements would obviously be insignificant at most. As a simple example, if one of a dozen food stores in a community were to refuse to sell flour unless the buyer also took sugar it would hardly tend to restrain competition in sugar if its competitors were ready and able to sell flour by itself. (https://casetext.com/case/northern-pac-r-co-v-united-states)
Whether Apple has enough dominance over the smartphone market to cause an unreasonable restraint of trade in the app distribution market is up to a court to decide at this point.
No, if regulators do their job, nobody gets to ask that question because there is continuous competition. Getting to that monopoly or oligopoly requires sustained effort from would be monopolists, it's a strategy they have been executing for more than a decade. And if you do that, you must expect there is a moment where society says: ok, it's time to regulate it and not let company X extract economic rent solely based on market dominance.
You're presuming that market abuse has occurred and that market abuse is the only way to get popular, but I don't see that's a given. Maybe people simply genuinely like iPhones just the way they are, and maybe network effects just legitimately lead to the most popular platforms dominating.
Apple don't have a monopoly on the phone market anyway, they only have 27% of the South Korean phone market. In the US it's 65%, high but not a monopoly, but it only went over 50% in 2020.
What changed to make them a market abuser and when did it happen, as you allege? That's the question OP is asking.
To answer your question - when developing for Apple went from being a choice to a necessity to run your business.
First, with regards to the App store or Music store, Apple is the Market maker. It controls who gets to sell Apps on their market similar to how NASDAQ or the NY Stock Exchange controls which stocks are listed. Korea is saying Apple you already control the market, but you shouldn't dictate the payment systems too. I expect Apple will start raising the fees it charges to list Apps on their App store.
Second, this article is about South Korea. South Korea doesn't care about the historical context of the US. Korea is saying if the Apple App store want access to South Korean customers, you must play by our rules. This is not unlike the European Union saying if you want to store data about EU citizens, then you must comply with GDPR.
For the past few decades, we had assumed there was a monolithic global market for software apps. We are seeing now the fragmentation of the internet and the software market as countries assert their power over big tech.
When Apple launched Apple Pay (in 2014, not that long ago), its App Store rules turned from dubious to outright market abuse by using one market where it had a strong position to infiltrate another very different market of payment processing (there are other issues, but this story is about payment processors).
By the way, 'monopoly' has little to do with it. It's about market power, monopoly is an nigh irrelevant term to the issue.
I'd presume that would be when they became a monopoly, which may be seen as something that comes with new responsibilities. "With great [market] power, comes great responsibility" would probably make a lot of sense to a lot of people. We wouldn't hold tiny entrants to the same standards as those who can set prices, sue into dust or buy almost all of the competition.
In any case, though, that's not what's going on with this Korean law. Antitrust violations of existing law are generally determined by courts and or regulatory agencies, whereas this is a new law from a legislature signalling that they want to encourage a competitive marketplace in this manner. Of course, with lobbying and nationalism, it's quite possible that this law was guided by powerful Korean interests or nationalist parties who simply want to hobble foreign entities in favor of local companies: still not an example of antitrust, except possibly in the other direction.
in any case, in the US it's not monopoly that's against the law, it's that market power being used to abuse market participants or influence prices. And there is no clearcut answer, but there are "guidelines", for example if you control 70% of a market and your major competitor controls 25%, you have a good basis to say that you are not a monopoly. Notice that Microsoft invested to prop up Apple when Apple was on the ropes in the late 90's. That type of action shows how tricky and pernicious these regulations can be, Microsoft gets the excuse "we have a major competitor" and also benefits from the success of the competitor.
But that's the market share part of the equation. The additional aspects are "can it be shown that the price of the good is being manipulated upward?" So, Microsoft offering big discounts to PC manufacturers to get them to exclusively offer MS OSes on their platform: are those discounts abuse of the market?
I'm not a particular expert on this, there are many places to quibble with what I've said, I'm just trying to offer the flavor of what I thought when I read your questions.
Oh, at what point did Apple cross the line? Has Apple even crossed the line now? Is not really the question. By the time enforcement actions are taken, companies are generally well over the line. The real question is "how much can we abuse our market power and get away with it before the clamor to regulate us gets too strong for politicians to ignore? And what is the temperament of the administration in office?"
2. iPhone was really, a phone, an internet communicator, and a wide screen iPod. That was arguably true all the way until 2014 when the larger screen iPhone 6 Plus was introduced.
3. But today's Smartphone are more like Pocket Computer. Games, Video Consumption, Facebook. At a point when some people were laughing about phablet. Now vast majority of phones on the planet are phablet. They replaces consumer computing. They are no longer a phone in the sense of phone in 2007.
4. You now have a phone that replaces everything, Smartphone becomes a pocket computer that is the centre of our modern society. Access to everything digital.
5. The problem starts when Apple decided to focus on Services Revenue. Remember before the success of iPhone Plus, people were writing off Apple as their sales number did not grow as much as the Smartphone market. And Wall Street was putting pressure on Apple. Service Revenue was Tim Cook's answer ( or middle finger ) to shut these people up.
6. So Apple start breaking out services revenue, stopped reporting iPhone Unit sales, rework iOS, macOS, Map, iCloud and other cost from their product segment to paying $10 per unit to Services Revenue. And announce their target of Services Revenue by 2020.
7. Apple started enforcing rules on 30% as access fees. If it was coming from iPhone, Apple want 30% of it. It wasn't much of a problem with an App. It is much more problematic with services that use App as access. Wordpress blog, Domain Name, Teaching Class, Video Streaming Site, Creator Selling Digital Asset. Until someone complain, Apple started adding exemption to their rules of collecting 30%.
8. Services Sector works different to products. Software like Pixelmator or Photoshop are Software products. Netflix, or some Cartoon Network are Services. Apple used to turn a blind eye on many of these services. Once they start enforcing it because they had to chase their services revenue target. You start seeing lots of complaining.
9. Why should Apple dictate everything that goes through iPhone? If the world is going digitisation, does that mean everything that goes through iPhone will be charged 30% more? How is that not a tax? When it is Applied the same ( or nearly the same ) everywhere. How is this even sustainable?
10. Customer signing up a Email, when majority of cost are in Server. Or Signing a Real Person tutoring, where the cost is the Teacher in front of Screen. Why does Apple demand 30% of it? And how did this 30% number came from for their industry?
11. Lots of argument about Apple wrongly focus on consumer and completely ignore business. SMB are still large part of our society. And they are complaining just as much as big companies like Netflix or Spotify.
12. It is made worst when COVID hit, it speed up the whole digitisation of our society by at least 5 years if not 10 years. Explosive growth in e-commerce and other Digital goods or services. Why is it so hard to deal with Apple?
13. And they are not a niche anymore, they have anywhere from 20% to over 60% in key markets. Despite Tim Cook flat out lie about this. ( His likely defence is the term Market Share could be defined as Unit Sales and not unit usage ). And despite court doesn't like to define market themselves, if iPhone's owner are higher spending group and vast majority of your customer are iPhone customer, is that 30% an abuse of their market power?
Didn't Apple have the only app store for iOS devices at that point? For that matter the competing app stores of the time (for Symbian devices) were dreadful and all of them are long gone.
They are a monopoly for getting your app on ios phones and in front of ios users.
This is why bundling is part of anti-trust law.
Bundling their app store as the only way to install applications on ios devices should have been stopped years ago.
I've been saying this awhile, most notably when Apple (of course followed by Google) introduced a discount on commission for smaller developers.
This is completely backwards.
I know why they did it. They wanted some positive PR that didn't cost them anything. Thing is, it's the larger publishers who are going to lobby regulators and challenge things in court. It's those same publishers who already have their own payment processing systems where the 30% is pure overhead (minus the CC fees). Small publishers actually get a lot of benefit for that 30% (IMHO).
So what Apple/Google should've done is give larger publishers a volume discount. Of course this should force them into binding arbitration and otherwise challenging the discount should void that discount.
Why? Because it changes the calculus for Epic, etc. Currently that is:
Option 1: Keep paying 30%
Option 2: Leave the app store
Option 3: Challenge the 30% cut in court
Game theory will tell you that there is essentially no downside to (3). Worst case you will be back on the app store at 30% or will leave.
But what if the options were:
Option 1: Keep a volume discount and pay 10%
Option 2: Leave
Option 3: Challenge the cut and possibly end up paying 30% or leaving
Now they have something to lose.
More importantly, it takes the sting out of efforts to lobby regulators because now we're talking about the difference between 1-2% (CC fees at volume) and 10% not 30%.
I stand by my position that end users don't actually want competing third-party app stores. That's just a usability nightmare. But backend payment processing is something else entirely and is the likely first step in breaking the stranglehold.
> Of course this should force them into binding arbitration and otherwise challenging the discount should void that discount.
So you want apple and google to act as even more monopolistic bullies ...
I see that you're taking this position as what you would do if you were Apple or Google, not what is the best course of action for all stakeholders. But you then opine that this is justified because the status quo is better for consumers.
The thing is, we already know that it's not. Apple and Google allow third party payment processors for _some_ of their apps. Would it be your best interests as a consumer to pay 40-50% more then you currently do for Uber and GrubHub? There's a reasonable argument to be made that those businesses simply would not be economically viable if they had to pay a 30% apple/google tax on every transaction. How many other apps or services went under (or were never made in the first instance) because Apple decided that their business needed to pay them a 30% cut of everything.
Which brings us to another salient point. Apple claims that they need to charge their 30% cut to pay for the cost of running the app store and for the developer tools they provide. But if this is the case, why should Uber and Facebook get to use them for free?
Probably very few apps fit this. This rule basically only applies to digital goods, which are "free" to manufacture. There is some fixed server/dev costs, but its practically "free" to serve n+1 users.
This applies especially true to games where you buy in-app "coins". They're free to the dev, and giving our more / de-valuating the currency is a not-issue.
Of course, it probably takes a toll on licence-based apps like netflix/spotify and mostly server-heavy apps like Hey (by basecamp)
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From Apple/Google's perspective this is a terrible strategy.
The problem is that, if we assume the Pareto Principle holds, the larger publishers probably generate 80% of revenue on the App Store.
So assuming 5% is operating at cost, you are talking about them probably sacrificing 70%-75% of their current profits (i.e. moving to 5% margin vs 25%, profit for high-grossing apps is probably closer to 1/5th previous rather than 1/3rd).
So they avoid the lawsuit, but they also lose all the profits they are trying to protect anyway.
Worst case is you want to be on the app store at 30% but are not allowed back in.
> I stand by my position that end users don't actually want competing third-party app stores
I disagree. More stores bring more competition. Both in terms of platform costs and in terms of promos for customer acquisition.
The epic game store is kind of crap, but their weekly free game setup has offered some great content. I haven't given them a single dollar and I've gotten a number of titles including Control, Enter the Gungeon, Alien Isolation, etc.
I say let them fight
If 30% cut of your revenue is big enough, Apple will let you back in even if the two companies apparently just tried to murder each other in court.
Money talks.
Companies keep massive clients and vendors that they are locked in lawsuits with all the time, just look at Apple and Samsung.
They sort of tried this at the beginning of the dispute when they claimed anything running Unreal Engine was a security risk and should be kicked. They overplayed their hand with that one and a court blocked it.
Game theory applies to Apple too. What's their upside from banning Epic from the App Store? They face the risk that a court may take that decision out of their hands. And while they're doing it they are losing out on that 30%.
Is it a usability nightmare? Perhaps. But device makers shouldn’t make that “choice” for their users. Likewise you might not like the fact that your city has small businesses instead of a single large warehouse store on the basis of convenience and usability. But the public would not agree with you and that’s why we enact laws against anti-competitive behavior.
Waay less.
It should be legally required that any device that is marketed as a general-purpose computer, whether pocketable or not, and is shipped in a locked state, is fully unlockable by the end user. Without a single network packet sent to manufacturer's servers. That's the only way we as a society could fix this dire situation.
In other words, if I buy a phone from Apple, I should have the choice for this to be the only interaction I have with Apple. They sold it to me. I gave them money, they gave me an iPhone. It's mine now. They're no longer in possession of it. I thus should be able to run arbitrary code on it with highest privileges possible with no hindrance.
I have 9 chat apps on my phone. I just counted, and that's skipping things like email and basecamp that I might have included to inflate the number. It's not ideal, and the downsides can be exaggerated for the sake of banter, but overall the chat app situation is fine. Similarly, I wouldn't mind having more app stores.
I expect there'd be one all the free software hardcores believe in, one that fills the role Steam does on PC, another with all the "too hot for TV" content that Apple and Google won't touch with a 10 foot pole, a few developer-publishers big enough to get traction, and dozens of also-rans that nobody uses. Yes, slightly more inconvenient like all the chat apps, but in reality it'd also be fine.
I don't think it makes sense to say what consumers do and don't "want," because largely they don't understand the terrain the App Store and Google Play put down. Ask people if they'd like a 2nd store that lets them install apps that contain porn without putting it behind hidden curtains in otherwise general-purpose apps, then we might expect positive responses. Ask people if they want an app store that contains more malware because the app store monopoly provides a chokepoint to enact user protection that on-device sandboxing can't, then we'd expect negative responses.
But you know what's expensive? Private lawsuits, government lawsuits, a court or legislature deciding the outcome, compliance with legislation, compliance with consent decrees, compliance with judgements, etc.
The biggest issue is that third parties will end up deciding the outcome. You're almost always better off heading off government action by instituting the least bad solution for you.
What if the outcome of governent action is completely independent third party app stores? Apple and Google certainly don't want that. I would argue that neither do end users actually. A vocal minority thinks they do but they're wrong. That could happen if the wheels of the US or EU regulators start turning against you.
Binding arbitration is a uniquely US-legal system thing that is not legal elsewhere. (And imo it is better to have a more neutral third party than an arbitration private firm that has one of the parties as a recurring customer)
The big players are the ones that will switch, amazon, Netflix, Spotify, Hulu, etc. And beyond that, competitors like Square and Stripe will release SDKs that make purchasing just as easy as the system IAP, and will actually force Apple to improve their system.
If Apple thinks hosting costs are of any consequence, then charge people for hosting if they don't actively use IAP. For 99% of apps hosting is pennies on the dollar, but for games like Fortnite it may actually cost a decent amount, especially for the binary size.
The end point is that there are no technical limitations to anything here, it is all political and Apple has the ability to change this at any time. There just isn't any point when they can continue to rake in 30% of every digital subscription service on the internet that wants to exist on their platform.
YOLOing something with Stripe doesn't give me that without a bunch of fundamentally opt-in stuff on the part of the developer, and that's pretty concerning. If the platforms can (and do) solve this, then I feel a lot better about it.
I don't know how this is on iPhones, but on android (large) games are usually still a small download with just the binary and no assets from the app store, and the game assets are then downloaded from the game company server by the game binary itself.
That also allows them to push some updates (think e.g. balance patches) that don't require a new binary to be pushed without having to wait for appstore approval again.
So there's a decent chance they may already do that because it also gives them other benefits.
Apple can always require an Apple Pay option for any app in its app store which collects payments. And honestly it'd probably be okay if they require devs to charge users the same amount regardless of how they pay.
The issue is that they ban other options entirely, which reeks of monopolistic anticompetitive behavior.
Just let devs tell their users about Apple's 30% cut, then let devs give users an option to pay however they want.
Ratings and general search are already useless in appstores, dominated by apps filled with pay2win dark patterns and optimized/gamed to be higher in ratings. The times where you could go to top games section and find a genuine good app are over more than a decade ago. So you can find the app you need only be it's exact name or via link from external source.
So now appstore is nothing more than a very restrictive guardian/censor. No value lost.
Apple overstepped, and they are going to get reeled back.
I’m guessing though that the South Korean market is be significant enough for Apple and Google to not just pull out it’s business from South Korea and call it a day. I guess this is, in some kind, a victory against the huge companies.
But… personally I do find sad that this would be detrimental to South Korean app UX. Stripe isn’t a thing here, and most of the home-grown web-based payment systems have… like super shitty UX that require (on the desktop) native plugins running a server on some bespoke port. It did come a long way since from when we were the country that required IE6 for web banking, but the UX is still not really there.
I’m hoping that Apple will provide APIs for showing payment screens and Apple will still control the ability to show all subscriptions, cancel them in one single place, etc… but I don’t think Apple will ever do that. Unfortunate…
I think that's right. The next step would be for a large enough market to have a similar law, and then they'll just have that as their policy globally. That probably means EU or US.
Or the UK, which has a larger economy than South Korea. Although going after big tech is not, as far as I know, on the radar of the UK government.
They now have a reason to make it better, since they can now actually compete with Apple Pay and Google Pay.
Indeed would be nice to centralize all subscriptions, we have yet to see how they would interface with 3rd party payment options. But on the whole this should be a win - if anything, those competitors will have a strong incentive to improve their UX.
I always found this line of argument disingenious and disturbing.
Disingenious because it doesn't happen historically, so it sounds like a tired threat
Disturbing - are we saying we would rather kneecap our democratic institutions, right or wrong, than live without iPhones?
We'd die to defend our lands and laws from demands of foreign governments, but fold to demands of foreign megacorps?
Case in point: China or post-Brexit UK.
You use this hyperbolic rhetoric to describe the situation but it really is an every day occurence.
No, it's just that this is the choice these companies have. They can completely stop doing business in a country (or countries) if they don't want to obey the relevant laws/court rulings of that country. The only thing SK could do then is sanction Apple products so it becomes illegal to import them (reminder that a sizable portion of SK's economy is directly attributed to Samsung/LG).
Hasn't this happened several times with Google-news?
I'm not sure that Apple can do it without being an intermediary in the process - managing the billing. And... well... that's what Apple Pay is.
In order for Apple to be the one to show and cancel subscriptions, they need to be the ones billing you and then processing that transaction (possibly batching it up with others to reduce processing fees).
Likewise, if there's a dispute - for example a child made a few hundred dollars of in app purchase and the parents would like to refund that... Apple can reverse those transactions ( https://support.apple.com/en-gb/HT204084 ). If you're dealing with a 3rd party payment system... you're going to have to deal with the 3rd party payment system on your own.
Another "it can be gotten around" when you leave the App Store and payment processor is the in app purchase constraints ( https://support.apple.com/en-us/HT204396 ) in that a developer wouldn't have to honor that check at all.
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The future of 3rd party payment processors that developers ask for really means taking Apple and its APIs out of the process. Entering in the credit card information (making sure that developers aren't trying to bypass access constraints on the wallet) and sending that out themselves.
For example, PayPal charges 4.99% plus a fixed fee that's about $0.10 per transaction ( https://www.paypal.com/us/webapps/mpp/merchant-fees ). This is comparable to what a developer would have to pay to Visa or any other payment processor for doing micro transactions of their own. Having Apple do it means that Apple would really like to charge at least 5% + $0.10/transaction which for a $0.99 is $0.15 and that's 15%... which is the amount that a small developer shop would have to pay for doing it through Apple.
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And so, I return back to the question - how would you see Apple opening up the APIs for doing payment processing without doing the payment processing themselves (and insuring extra expenses)?
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1. Put your app on the store. (but only reachable via direct link)
2. Have Gapple verify that your app does not represent any obvious security threat. (or else warn users upon install)
3. Make your app appear in search. (organically)
4. Make your app eligible as a recommendation. (organically)
5. Use Gapple payments.
6. Have your app appear in search. (guaranteed placement)
7. Have your app appear as a recommendation. (guaranteed placement)
(and probably many others)
I'm not sure how well that would go down with developers, but I view it as a more honest way for them to create a developer offering. If they want to then go ahead and bundle some of these and offer a discount for developers purchasing more of them, so be it, but unbundling allows developers to pick & choose the value they want provided.
The only downside I see to multiple app stores is having to download multiple stores to get certain apps, kinda what it is like with purchasing video games on steam versus origin, etc. That is although minor, still an inconvenience.
It also agreed to let developers inform their users about payment options outside the App Store, using the email addresses that users gave them. Google said that it would only take 15 percent of developers' first million dollars instead of 30 percent.
Combined with "competition for monopoly" elements like paying Telcoms not to develop their own app stores or support 3rd party ones, the whole thing stinks to high heavens.
Once upon a time, "net neutrality" had wide support, and there was understanding that it required constant vigilance. Google, ironically, was a big defender of net neutrality... even as they established their own dam immediately downstream of ISPs.
https://www.theversed.com/2754/riot-games-seek-court-justice...
Net Neutrality is not just about “shoveling YouTube streams without having to pay.” In one case, an ISP was deliberately dropping packets for a popular online game (which, if you didn’t know, online games are known for requiring very little bandwidth), and extorting the game developer with the loss of ISP’s customers if they did not pay up.
ISPs are monopoly-abusing extortionists. They deserve every bit of ire they receive.
Once upon a time, flip phones had 'app stores' also maintained by a solo telecom.