Your Thoughts on the App Store: Apple Should Change, but Voluntarily

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41

Facebook is significantly adding to its bottom line by gathering information about everyone who sees the content and what and how much they pay for whatever, all of which will be lumped in to their tracking and ad serving treasure trove. They did not say anything about it being an ad free zone. They will most certainly be profiting from this even though they “won’t collect any fees from paid online events for at least the next year”

“We asked Apple to reduce its 30% App Store tax or allow us to offer Facebook Pay so we could absorb all costs for businesses struggling during COVID-19.” Did Facebook announce that they would donate a % of the money this channel will rake in from its first, second and third party tracking and ad serving businesses? Facebook will be profiting from every click, the amount of time spent + billions and billions of new highly targeted tracking and internal and external ad serving opportunities. They might not be collecting fees, but they will be raking in a big load of money by establishing new and profitable revenue streams, and the yield will be an extremely large load more than Apple will earn from its 30% cut.

Facebook is also getting a s—load of good publicity from whining about Apple’s 30%, especially at a time when a new, super effective tracking block is a default in the new iOS, putting a humongous kabosh on Facebook’s biggest revenue stream, a default that will block cookies in apps as well as web cookies:

42

Facebook just admitted they will probably loose 50% of its total audience revenue due to iOS 14’s anti tracking:

This is probably a big reason why Spotify is whining about the App Store as well.

43

I’m not a gamer, and I don’t know anything about Fortnight other than that it’s a very popular, wildly successful app that is giving Apple grief about App Store commissions. So I decided to check out whether or not Epic Games sells ads on Fortnight. Ads are a huge revenue stream:

“Fortnite is still a battle royale game at its core, but it has since evolved into more of a social tool and advertising opportunity for many big-named brands. Sites joke that Fortnite is no longer a game, but one big advertisement — and there is some truth to that. It’s exaggerated a bit, for sure, as Fortnite is still very much a game; but, it’s become so much more than that.“

Epic Games is probably going to be affected at least as badly by the new iOS anti tracking feature as Facebook will. And I couldn’t find out whether or not Epic Games is a part of Facebook’s in app ad network, which will be affected as well.

44

I think the discussion has been entirely dominated by developers and anyone who bias against Apple.

Epic’s strategy is clear. Knowing that users for the most part don’t care, intentionally getting their platform banned is simply an effort to create outrage amongst users against Apple. What’s my proof? The video they pre-produced.

Is 30% too much? Maybe. But if Epic is paying out 30% to other unnamed console makers and the Google Play store while complaining about Apple, they are being disingenuous.

Any ruling against Apple is bound to affect unnamed console makers and Google Play, along with other stores and platforms in other industries. Be careful what you wish for.

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45

I agree…the other stores, including Epics own IIRC all charge 30% so how this is a great imposition I am having a hard time grokking. Rene Ritchie and Andy Inatkho seem to think that Apples cut is egregious…but it is their store and they are not a monopoly despite what Zucker tug said…so my thought is that if you don’t want to pay them…get the heck outa the App Store and quit whining about it. I sincerely hope that Apple doesn’t knuckle under to the extortion and threats that are being conducted…one of the bit reasons we have Apple devices is the security provided by the store rules.

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46

When it comes to a web site for downloading software, this is what I want:

  1. A list of software with a brief, accurate description of each program.
  2. A long list—longer than ten at a time, so I don’t have to click through many pages
  3. The ability to sort the list by:
    a) Paid/Free
    b) Number of Downloads
    c) possibly date of release
    d) possibly by reviews (stars) if the reviews are reliable
    e) possibly by type of program
  4. System requirements should be shown clearly and accurately.
  5. The download link should be obvious and easy to find. It should lead directly to the download and it should work.
  6. The information, such as the version number, should be accurate.
  7. The ability to open a link in a tab. I use tabs all the time.

The App Store fails on nearly every point.

47

What is also not taken into account is that if Apple allowed side loading the Apple Genius Bar would become overwhelmed with users having problems they created themselves. There is a cost not only to the user but to Apple. Apple prevents all of this Chaos which is clear as day on Android and Windows by vetting software, setting rules and enforcing those rules - yet another cost.

I’m at the point where I’m calling bullshit on Epic and developers.

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48

An important point is that when someone writes an app then they make use of Apple’s ecosystem. One way of charging for this is to take a percentage of the fee. One problem that Apple may also experience is that competition for phones becomes more intense, pushing prices down. Then it will be much like the printer market. Printers are sold at unrealistically low prices, and then the manufacturers make money from the sale of consumables.It won’t progress as far, as it is unlikely that someone would spend $1000 on apps, but it is a nice earner.

49

I remember back when the App Store was a new thing, the 30% cut was compared against the costs of traditional publishing (get a company to manufacture CDs or floppy disks) and put them on store shelves).

With physical packaging, the publisher and distributor typically applied a 50-100% markup each, plus what the retailer charges. So an author may only see $5 from the sale of a title that costs $30 in a retail store (in other words, “the system” taking a >80% cut).

Apple’s 30% was seen as incredibly cheap, especially because it includes hosting, distribution and payment processing.

Today, over 10 years later, retail sales have almost completely dried up, being unable to compete with app stores and direct downloads, and now that 30% is considered extortion. Not because it’s so horribly expensive but because the alternatives that were horribly expensive no longer exist.

Then why not ban third-party software altogether like they did in the early days of iOS? And why not impose the same set of rules on the Mac platform? Because customers would revolt. They would buy other products and file lawsuits. And in mane cases, they would win those suits.

Lowering support costs can’t be used as justification for every business decision you make.

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50

I forget exactly where I read this, but recently somebody pointed out that for small sales (~$5) card terminal fees usually amount to about 6% (flat fee plus percentage commission). Obviously that just accounts for payment transaction, not the app vetting process, the dev tools, the security effort, etc. But at least for simple in-app payments (such as Fortnite’s V-bucks) I guess you could argue a 30% cut is excessive.

On one hand I want to say, so what, people can leave iOS where they’re forced to use the app store, if they find the prices there too high. On the other hand I also realize that in the US iOS has a ~45% phone market share and there’s only one other competitor (who incidentally also charges that very same 30% commission). Customers don’t have a free market to choose from. In that sense I feel Apple (and Google, although there you can argue since they allow sideloading they are already exposed to competition) obviously can (and probably should) be regulated.

51

The competition for mobile phone sales has been increasing since the debut of iPhones. Apple always flourished when it focused on the high end of the market. And when Apple shifted to competing in terms of price and licensed the Mac system to hardware cloners? Mac and iOS software is what sells their premium priced hardware, and saved Apple from imminent doom.

52

Yes they do…as you noted they can switch to Android. Just because they pay the same 30% there doesn’t mean they have no choice.

Earlier post in the thread talked about how 30% was so much cheaper and better for both buyers and developers than the box on the store shelf model of software sales.

Frankly…I hope Apple does not knuckle under to Epic and give them a break. Yes…they do occasionally make special deals but a game seller…even a big one like Epic…isn’t worthy of a special deal. Apple provides security, payment, distribution of proceeds and a lot of other things for their 30%…and it is their store and their business decision about what to charge. And all of the whining because some other billionaire wants an even bigger slice of the billions their app makes is just a pile of BS and should be ignored as such. I heard on Macbreak Weekly yesterday a long discussion about this…and it appears that Rene and Andy (the two extreme liberals on the panel) are thinking that Apple is in the wrong here and should change their store because…well just because.

Don’t work that way. I realize that Apple…at least according to the media…is under “intense scrutiny for their monopolistic practices and needs to be broken up”…but Apple isn’t a monopoly with 15ish% of worldwide market share of smart phones. They do pretty much monopolize the profits in the industry…but that isn’t illegal…the reason they make all the profits is because they provide a platform, experience, and security that people are willing to pay for…and Apple refuses to lose money on every sale because they will “make it up in volume”…an argument that’s never made any sense.

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53

In an earlier post I mentioned just some of all the the other app stores that exist. And there is nothing restraining another developer from introducing another operating system, or opening another App Store. though they won’t be able to run on Apple hardware.

Remember how Windows Phone was going to conquer the world? It was as successful as Zune.

54

I agree with this 100%. To date, Epic hasn’t broken out its earnings for Fortnight, but I did find out what Fortnight earned this past April:

"In 2019, Epic Games reported $4.2 billion in revenue and $730 million in earnings before interest, taxes, depreciation, and amortization (EBITDA, a key measure of profitability). Revenue for 2020 is forecast to be $5 billion, with EBITDA of $1 billion.

In April alone, thanks to the pandemic, Fortnite revenue was $400 million, sources told me. Epic has said that in April, players spent 3.2 billion hours in the battle royale shooter. Fortnite also garnered a huge amount of attention for staging a virtual Travis Scott concert that drew more than 27 million people."

https://venturebeat.com/2020/06/15/epic-games-shareholders-seeking-to-sell-stake-for-750-million-at-17-billion-valuation/

Something else I find even more interesting in the article quoted above about the ownership of Epic:

“Tencent bought 40% of the company in 2012 and it remains a shareholder.”

Tencent developed and owns We Chat, the biggest ecommerce retailer and biggest of all retailers, in China. Tencent, at one point, made a big stink about Apple’s 30% revenue cut but ended up paying it. Tencent recently agreed to paying Apple 30% of what is now a paid news app:

Tencent is also the biggest Chinese online game developer. And Tencent has its own App Store and its own payment systems:

https://appstore.tencent.com

And here’s the cut they are getting for their games:

“The social media giant is seeking as much as 70% of the sales generated from its games, up from just 50% now, said the people, who requested anonymity discussing private negotiations. That would bring Tencent’s portion in line with the proportion shared with game publishers on other platforms, including Apple Inc.’s iOS store and Google Play, which each keep 30% of revenue that comes from apps.”

https://www.bloomberg.com/news/articles/2019-07-11/tencent-presses-chinese-app-stores-for-bigger-cut-of-game-sales

55

As long as there are alternatives to the App Store, I don’t care much about what Apple does with it. But given how they use it to squeeze out the competition, that’s bad news for all of us. The App Store is now an integral part of the OS that you can’t avoid. It’s a loose comparison, but I remember when Microsoft integrated Internet Explorer into their OS, and they were sued for monopolistic practices. That was a long time ago.

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56

What evidence do you have that they are doing that? I have yet to see any concrete examples, other than whiners such as Spotify that complain, and a sort of general meme that Apple’s abusing their power.

As far as I’ve seen, whenever Apple has restrictions on iOS there are sound security and policy reasons for doing so. For instance, Apple doesn’t allow any other web browsers than the built-in Webkit engine on iOS (so “alternative” browsers on iOS are really just a different user interface on the same underlying tech that Safari uses). Some consider this unfairly restrictive, but browsers are a huge security hole (especially javascript) and Apple is smart for limiting infection vectors.

I find plenty of competition on iOS and you aren’t restricted to Apple’s solutions – Apple’s apps and services are often just easier and better integrated. That’s not unfair, just a side effect of them building the platform and they’d be fools to not take advantage of their position.

I actually wish Apple was more strict with app developers. There are so many junky and scammy apps that while technically in compliance with Store rules, aren’t benefiting anyone. If you look through the history of the App Store, every time Apple opens a window there are dozens of developers trying to make it a door. (A good example are the scumbags who took advantage of Apple’s screen time monitoring APIs to abuse privacy and track users.) I love Apple’s recent trends to improving privacy and stop user tracking.

I’m not saying the Store or Apple is perfect – I certainly wish Apple was clearer in their rules and less absolute in some of their decisions – but they are always trying to improve and make things better. (For example, I just read about a developer that successfully used Apple’s new appeals process to overturn their app rejection. The reviewer had misapplied a rule that didn’t apply to their product. Prior to this summer if that had happened, the developer’s only recourse was to change their app or whine to the media and hope Apple would notice.)

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57

MS lost the US anti trust case that went all the way up through the Supreme Court because of monopolistic restraint of trade; the case had nothing to do with pricing. Weather or not MS integrated IE’s software into the OS wasn’t the problem either; all operating systems developers can build whatever they want unless it’s something illegal. Microsoft lost because they made it impossible to install another browser on Windows. It was Netscape, who was then owned by AOL, who brought the case.

Anyone who wants to avoid downloading an app from Apple’s App Store can side load an app. It might be a PITA to do so, and sideloading means throwing anything resembling caution or a concern about privacy, to the wind. But Apple created the App Store to encourage developers to build quality products that would work beautifully and safely on iOS, which is the opposite of the road MS took at the time.

58

That’s exactly the problem. They only allow this one venue to get apps.

Nobody is arguing it shouldn’t be possible for users to restrict themselves to the walled garden. But for those users who prefer choice and competition over nanny Apple exclusivity, there should be a sideloading option. Just as on the Mac. No Mac user would ever argue the current situation with MAS as well as independent dev distribution is untenable. It’s just fine. And if it works on my Mac, it can work on my iPhone.

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59

I don’'t think it’s about support costs since Apple would just charge to clean up the mess. It’s about the user experience and that would cost the user and Apple more than money. While iPhones and iPads can do a lot, they are still more about consumption. Most people would not benefit much from side loading.

60

Perhaps, but I’ve never heard any indication that Apple support is significantly impacted by support for independent Mac apps causing problems.

As we’ve noted in the articles, a great deal of Mac software was sold directly via developers using services like Kagi and eSellerate that charged far, far less than 30%. I’d have to research this, but my impression is that boxed Mac software in a retail channel went away well before 2008 when the App Store launched. For instance, from Wikipedia:

Crushed by competition from online and other brick-and-mortar retailers, CompUSA began closing locations in 2006. By 2008 only 16 locations were left to be sold to Systemax. In 2012, remaining CompUSA and Circuit City stores were converted to TigerDirect stores, and later closed. CompUSA now operates as an online-only retailer.

When the App Store was announced, here’s what we we wrote:

Response to the revenue sharing among the developer community was largely positive, with many saying they’d expected a 60:40 split, and would have of course preferred an 80:20 split. 70:30 is entirely reasonable in our opinion, partly because that’s an all-inclusive fee covering processing, bandwidth, hosting, and marketing; in the traditional book world, for instance, the split between publishers and bookstores is often 50:50. Many ecommerce providers charge 10 to 15 percent for less than Apple will be providing via the App Store’s directory and interface.

In retrospect, yes, the App Store provides more than a straight ecommerce provider did, but it also came with a lot of headaches and limitations that were unique to Apple. And the advantages to the developer, like marketing and discovery, seem to have disappeared with the App Store given the vast number of apps and the need to pay for ads.

Standard transaction fees from the likes PayPal and Stripe are 2.9% plus $0.30. Apple gets around that in part by bundling multiple transactions together. And probably lower negotiated fees from credit card companies due to volume.