loading...
Cover image for Could Apple Be Forced to Reduce App Store Fees?

Could Apple Be Forced to Reduce App Store Fees?

ben profile image Ben Halpern ・1 min read

Just ahead of Apple's World-Wide Developer Conference, the company is getting a lot of heat about their app store fees.

👉 Verge Story: Apple’s App Store Fees Are ‘Highway Robbery,’ Says House Antitrust Committee Chair

TLDR: The Basecamp folks are being loud about their treatment under App Store rules and Apple's attempts to earn 30% fees. These rules more or less date back to the inception of the app store, and somehow Apple has avoided much scrutiny in the matter.

Nobody is better at causing a fuss about this kind of stuff than DHH and Basecamp.

How do you predict this will shake out?

Discussion

pic
Editor guide
 

I have no idea how it will end up but I hope Apple comes to their senses.
It wouldn't be a problem and nobody probably blame them for anything if they would've been consistent.
But small companies which only started to earn money have to pay 30% and live with it but huge unicorns like Netflix and Spotify have not? I feel it's really unfair and should be another way around in the perfect world.

PS I'm Apple fanboy but even I resent it 😂

 

What we have noticed is that Netflix and Spotify handle their subscriptions outside of the app to avoid the 30% charge. With this though, there are limitations such as not being allowed to explicitly direct your users out of app to make payments. There are a lot of holes they are jumping through to avoid the 30%.

 

Unfortunately, there aren't holes and that's the problem. If you can charge for your product outside of the AppStore we wouldn't have this conversation in the first place.
Apple forbid charging the customers outside of the AppStore and you have to sign up and charge through the AppStore.

 

HEY is already trying to do this, but Apple changed their policy recently that if you offer a subscription you MUST allow for users to sign up through your iOS app which means paying the fee.

Also it seems to be a per case situation. They won't force Netflix or Spotify to change it, but they sure will try it on emerging apps that don't have the kind of resources those other behemoths have.

 

I love my Macbook Pro and my iPhone, I just appreciate Apple's decision on making their ecosystem stable and secure.

But in regards to the App Store fees, I think Apple is belittling their other customer which are the developers.

Have they ever thought to themselves that if all of a sudden all developers will stop publishing apps for their platform will greatly affect their revenue?

sure they can always pay other developers to build for them but would it be a boring ecosystem without competition? and without competition there's no innovation?

I hope Apple will think deeply on their current decision, because right now they might think they are superior, but they under estimated with what the open-source has achieved in these past couple of years and we can see that Microsoft is adopting the principles in to their business and it seems going pretty well for them.

So I think they should have to think about that long term and hear the feedbacks from us devs.

 

I feel Apple is relying on Stockholm syndrome a bit too much 😑

 

Yeah, the truth is that once you go through all of the effort and time and programming required to make sure that Apple gets their cut so that they'll accept your app - you feel almost a blind loyalty to their platform because you've taken the time to figure it out and understand it.

 
 

Have they ever thought to themselves that if all of a sudden all developers will stop publishing apps for their platform will greatly affect their revenue?

I imagine this has been discussed, but they won't think it's going to happen. And it probably won't. There isn't an alternative to the App Store that's usable for most users and if there were, Apple could keep releasing updates that disabled or hampered it.

 

yeah. that's what I also thought. It's their house their rules anyways, so it's only up to use if we play by their rules or move elsewhere.

 

Considering itunes and xcode, apple should never be allowed to develop any consumer app ever. This would look like reverting all web pages to fancy 90's.

 

Marketing is one of the many things DHH does best. Basecamp (creators of HEY) knew what Apple's rules were before writing a line of code. He found an opportunity to get a million dollars worth of press for HEY by doing what Spotify did last year.

How do you predict this will shake out?

In a few months, DHH, a representative from Spotify (USA Inc), and a few other App developers will testify in front of congress to debate why Apple is a monopoly. In the meantime, Basecamp will cave to Apple's rules because they need HEY to be in the App Store. For now, Apple holds all the cards, and they are not going to fold unless they have to.

 

Exactly, Apple is too big to make a change without a higher power forcing them. But then again, even if they bring this to congress, the since the US has that lobbying thing, they could still come out good from this entire process.

 

Nope.
Developers are paying for access to a large and specific userbase.
App stores are very convenient from a software distribution perspective.
While the 30% fees is steep ,
developers/business owners should always consider it as a factor while deploying on app store.
I think the guys at basecamp should just behave rationally and hike the price for iOS platform or find some sort of pricing model which compensates the difference.

 

But the thing is you can't offer a different price for App Store subscription per their guidelines.

And yes, App Store is a convenient way to distribute your app, but its also the ONLY way. That's why this ends up as a monopolistic practice.

Also, how should multi-platforms app do? Would I need to subscribe through the App Store instead of web just so my iPhone can have the app? What if Google Play Store starts demanding the same thing?

 

As far android is concerned, sideloading is allowed but at the cost of lucrative play services SDK. And play store implements rules haphazardly.
App stores are platforms where softwares are deployed. While creating a sustainable business model, it's necessary to study the deployment platform and implement the suitable 1 business model.
One of the best case studies for multi platform deployment is alto's adventure. It's paid on iOS and free on Android. They know the platform and target audience and implemented pricing models with the platforms on mind.
gamasutra.com/blogs/BencinStudios/...

 

I see, you might have a point. seeing it on a broader perspective it's just capitalism at work so I think there's nothing too see much about it.

Yeah. I think this is just the matter of our own decision whether we stick with them or find alternatives that will work with us.

 

Also it looks like the basecamp dude testified against apple for app store pricing practices and now expects to have some sort of preferential treatment from Apple ....
Well that's some logic....

I don't understand your logic here. Basecamp has always been vocal about Apple's monopolistic practices.

I dunno the exact history around basecamp and apple. I just read the tweet thread and found it funny that dhh testified against the platform and then expects the platform to provide preferential treatment to his business.
It doesn't make sense to me but that's just my viewpoint.

 

I think the bigger problem is not the fee but the some apps get exempted while others are not even-though they are in the same category

 

Unpopular opinion: Apple will not be forced to reduce App Store fees.

Even more unpopular opinion: I am glad, as a developer and consumer, that Apple is enforcing the rules in this particular case.

Re. App Store Guideline 3.1.1 In-App Purchase:
Hey has zero functionality when you initially download the application from the App Store; you have to purchase a subscription, effectively a software license, for the app to have functionality. Spotify, Gmail, etc., work for free without a subscription. Furthermore, If I'm being forced purchase a license for an application that I'm using on my iPhone, I want to be able to purchase that license through Apple Pay. I do not want to have to go through a different provider; I want Apple to manage that for subscription for me, just like all of my other iOS subscriptions.

Re. App Store Guideline 3.1.3(a) “Reader” Apps:
Pretty self explanatory. Hey does not provide access to purchased content; it provides access to email. They're attempting to treat email as purchasable content, which it is not. I don't "buy" my email from another platform and access it on my iPhone. I do "buy" books, music, and video from other platforms and access that content on my iPhone.

Re. App Store Guideline 3.1.3(b) Multiplatform Services:
Again self explanatory. Hey is intentionally trying to side-step Apple's in-app purchase flow for services provided by their iOS application but purchased on a different platform.

Bottom line: Hey knew they'd be in violation of the rules before submitting their app. What they've done is actually pretty intelligent in my opinion, because they've created a win-win situation for themselves. On one hand, if their app was approved as-is, they get to retain 100% of their profits. Win! On the other hand, if their app was rejected, they get to turn this whole thing into a free publicity stunt by aligning themselves against Apple, resulting in lots of free (and valuable) PR. Win!

Since the success of companies like Hey is predicated on the existence of stores like Apple's App Store (and access to the store's massive pool of users), developers should follow the guidelines and pay the Apple Tax if they want to participate.

Source: developer.apple.com/app-store/revi...

 

I found a good number of these points invalid.

  • I've seen a number of fitness apps, and also have worked on some apps that have zero functionality without a purchase. Is a free tier really mandatory?

  • Similarly I worked on implementing credit card forms that buys access/subscription to an iOS app, and confirmed.

  • Also about email, I don't think nothing wrong with charging for an intermediate tool. I am not arguing if it worths or not. It's up to consumer. There are paid git clients out there that does the same thing that already can be done for free by command line or say Sourcetree. You pay for the UX and convenience.

 

Very well written Colby.

 

I think Apple has become too big to care about anything else but its bottom-line. History has a clear lesson for people like that. Kings fall, it takes time, but tyranny eventually gets over.

 

As a Developer, Apple abuse of "privacy and security" they use as an excuse for hight fees, for the paleozoic tool they made us use (Xcode looking at you), an excuse to not implement features only because they threat their app store revenues.
They are not creating a likely environment for developers.
They are already like IE, but they do it on purpose.
As a developer, I will never develop anything for apple's device unless I have too.
They are losing the trust of the community with their tyranny.

 

XCode (all 6.66GB of it) is gross. No lie. 😁

 

I don't know if there is something worse than XCode.

Seriously I would love to drink a beer and chat with an application product designer working at Apple.

 

I hope, it will lead mobile app companies coming to their senses ans leave those platforms.

They should pour resources in the web to get it on-par.

 

How it is even a problem? Hey is for profit, their subscription costs money, those are the terms Apple suggests, you either like them and pay or go away. This is how free trade works. Not sure what all the fuss is about, or what do you mean by "scrutiny".

 

I think there's plenty of motives to hold a grudge against Apple:

  • its approval policies are far from clear;
  • and farther from being consistently applied;
  • it doesn't allow other platforms in their systems;
  • it doesn't allow developers to tell users that they can subscribe elsewhere;
  • it's holding PWAs back in Safari because of pretty money;
  • it doesn't even allow other browser engines, because of "security reasons"... what?!
  • also, 30% is a lot.

I can go on. On the other hand, Hey would use Apple's platform to be distributed, and DHH says they don't want to pay for that. I don't think it's fair either.

Maybe if Apple can lower their share...

 

I think if Apple doesn't decide, it will become the next IE.

 

Never hurts to try!

 

with a few minutes of research

and at least a few hours of setup and still clunky and weird to use. Just the screening feature requires non-trivial config on any other email service. Changing the displayed subject and merging multiple email threads into one cannot be implemented at the config level. Not sure whether that's worth the price, but the features sure are novel.

 

Apple charges are really high. I mean 30% , for an app that has a fair share of profit , has to increase their prices so as to cope with this. Apple has a monopoly in the platform that's also true. What they did to Spotify is an example

 

While we're on the topic of usurious fees, can Congress maybe do something about credit-card fees? I mean, even with an 850 credit rating, most cards seem to want 10-20% if you're not on a 0% introductory offer. Funny thing is, seems like as Prime Rate has dropped, over the decades, the interest rates – regardless of creditworthiness – as have swipe fees.

 

i just dont know why they really want that much money either they worth trillion dollar the macbook is 3000 dollars and beats and all of the revenue they got already if they reduce the cost of making app pretty sure everybody go to apple because apple is the only closed sourced that consistent over the year even thought its cheap and doesnt get 30% revenue today pretty sure it will help them later just like google when its first start even now android is open source the play store os super cheap and upload to play store is also easy thus make everybody love android even more and thus make revenue up for them also so i think apple should think for the future too not just today

 

I just read the discussion on Tech Crunch and basically what Apple says is "you've been freeloading for 8 years, now grow up." I'm fine with that.

 

I love how they categorize paying $100 per year as, "freeloading". They just see Basecamp as just small enough to bully, yet big enough to juice for lots of money. 30% is crazy too. Especially when you consider how small of a cut most payment processers.

 

Basecamp is a 57 employees company that makes probably north of $10 millions a year. For them $100/year is the non edible shell part of one peanut. Even if you count 1 account for each employee. That's a rounding error on a rounding error. So, yes totally freeloading.

 

I think the main problem with this situation is beautifully illustrated here: youdownloadtheappanditdoesntwork.com

The problem is that Apple sets up rules that are applied differently from case to case, and no one knows why (well spoiler: it probably has to do with executives rubbing shoulders and coming up with a deal). Above link lists several examples of paywalled / digital subscription based iOS apps that manage to bypass Apple's hefty 30% fee. Why should Hey be treated any different, especially since they:

  1. Do not use IAP payment processing provided by Apple
  2. Do not use account management or DRM provided by Apple
  3. Set up and run their entire email infrastructure that does not need a single Apple service (except for App Store presence)

I would have no problem with Apple doing that to Hey, if they'd also force Netflix, GitHub, Google, DropBox etc. to pay their "fair share of 30%" or be banned from the App Store.

 

I'm not a Hey customer, so I really have no opinion on the issue as a stakeholder.

But, no, the main problem is not well illustrated up there. Hey could have a free tier and a free app, or a very cheap app, or whatever. This is not rent seeking by Apple on the $99 that the service costs.

And there are plenty of issues with the app store, which is also the reason why I don't buy apps there and try to only buy indies (or not) stuff that doesn't go through Apple filters on my mac, and also the reason why I try to stick as much as possible to software that I can build on my machine (regardless of whether I do or do not build it).

Also, genuine question, is the Hey web app not available on iPhone ?

 

I don't really care so much the fee they charge as the IAP issue.

Like, charge whatever you like, but let me opt-out and use the payment processing of my choosing.

 

It only becomes highway robbery when enough developers decide to quit developing under iOS, not when some politician tries to play Robin Hood.

 

Everyone always knew the App store took a lot of money. We had the same competition for lower fees between things like Steam and Epic and so on, too.

I think the reasons Apple is different are

  • they have the monopoly on apps for their own ecosystem
  • they can afford to not charge anything
  • people expect to pay more for Apple stuff - even if it's not Apple's Apple stuff

I don't get why someone raising a fuss now would make any difference.

 

I don't like that word "forced." I wish more devs would push back, up to and including "Fine. I'll just make apps for [Android/Windows/Linux? (hope springs eternal)]," and I hope that Apple will come to their senses either way. What I don't want is yet another precedent of politicians dictating how a company does business (I have enough hoops to jump through already, and I don't face nearly as many as the big companies).

 

Imagine Apple taking 30% on every Amazon purchase through their mobile app

 

Here's Jason Fried's (DHH's cofounder) write-up of the situation:

hey.com/apple/iap/

tl;dr: it's not about the 30% fee, it's about the ability to serve and help their customers in a direct, compassionate way.

 

I think that this issue will run into the same wall all similar developer issues: lack of unity. There's no public authority that can act as a counterweight to the giants like Apple and unite the interests of various developer groups. Apple is a monopoly on their platform and they assert this monopoly in all possible ways, leaving no reasonable option for the developers, but also, hence, slowing down the innovation and progress. It's in this way it's similar to Microsoft's exposed EEE strategy. Microsoft's monopolistic behavior only changed when they lost to WHATWG (funny enough, Apple was a big part of that) and W3C, groups that united much wider developer interests. This took many years, mind you, and it's not perfect, not truly public, and is constantly threatened by other monopolies like Google, which, admittedly, act wiser.

So, with that in mind, how likely is this that anything will be done for this issue? How likely is that an entity big enough will appear to bring balance to the conflict? And now, how likely is it that the issue will simply be forgotten due to our short attention span?

Pessimism aside, there's real big opportunities in this issue. Awareness is brought to Apple as a monopoly. More developers might consider PWAs. In general, since issues like these happen and we learn from them, there's also a certain growing attitude towards monopolies and centralized systems, that has a potential, in time, to create more public and decentralized developer organizations and make the way development happens more fair and ethical.

 

It cannot be better explained that Jason himself! I woud say this is a must read! hey.com/apple/iap/

The lack of decision making for the business owner is something that needs serious attention! The users are Hey's, Basecamp's or say ABC's customers! But Apple places themselves in between the customer and the business owner!

There should never be a monopoly.

I predict, nothing's going to happen this soon. But this would atleast make some noise... A lot of people would be educated about Apple's practices. The rest would be shown by numbers a few weeks down the line!

 

When developing for iPhones, iPads was new and hugely popular I investigated app store development. I was so dismayed to learn their controls, and eco system that I refused to buy an iPhone or Mac. Never looked back never will. I cannot stand Apple and their proprietary ways. But they do own the phone market.

 

My bet is that Apple will totally ignore the issue during the WWDC keynote. But I'm notoriously bad at political predictions... :-) So maybe that means that WWDC wil not ignore the issue... But I'm bad at prediction so... Haaaaaa !!!!

Related question: could mask makers be forced to not inflate mask prices ?

 

EU is slow as always, and the US is not in a mood of enforcing antitrust right now. HEY will get its publicity (I really like the app!) and its app into the App Store, Apple will not change the fee, and the story will fade until next time. Maybe it will become one question during the US presidential debates.

As a consumer I am not even mad at the policies. I trust Apple Pay more than alternatives and I enjoy the convenience of in-app subscriptions. I don't know how adjusting the cut will affect either of their bottom lines, so I will defer judgement to the EU and US (and apparently South Korea too?) antitrust investigators and courts.

 

The problem is not the fee, is the lack of choice. As IMO Jason Fried expose clearly on hey.com/apple/iap

Apple can charge 30% (and don't forget the cost of hardware and software that apple also sales and developer fees) that is the nature of Capitalism, but supposedly capitalism is also about choice and in iOS ecosystem there is no choice but doing it through the App Store, so things have to change or we are just seeing an old monopoly like Standard Oil and the likes at work.

 
  • Apple's fees are ridiculous. Often, so are DHH's tweets.
  • 30% != a third
  • Is DHH saying that HEY will only be available on iOS? Or almost all of the user base is expected to be iOS? Because that's the only way his statement makes sense.
  • Apple is saying that the app has no functionality as downloaded, it first requires a purchase. And when you do purchase from the iOS app, it takes you to a 3rd party instead of using the built-in system (from which they take a significant cut of course).
  • Apple isn't requiring purchases to only go through them... just ones made from iOS.
 

Even in IE or MS Office case, you still had the option to get an alternative later. Having them by default was already a problem, but Apple gone worse by banning all alternatives (stores and payment services) ever.

Apple should have its payment service as an option among other payment services, and make customers choose among them by fair competition. Without an option, it's monopoly. Imagine having to use only Walmart owned credit card in their stores without an alternative store around.

It's pretty unclear what apple sells to end users. A device, access to store, a payment system?.. As a customer (not a developer), I may not want to pay a 30% payment fee to Apple after paying for an iPad when there are cheaper alternatives. I may still choose Apple for security and convenience. However there is no alternative store, no alternative payment system. Such blurry lines sound like scam face of the things. Don't think only as a developer, think in the shoes of customer as well.

 

I just want a way to side load apps. Something similar to Android. If Apple is forced to allow side loading apps then other companies will offer their apps outside the appstore if Apple doesn't lower the fees and acts less monopolistic.

 

I sure hope so. I'm a big fan of iOS and a dogmatic user. And I prefer to develop for iOS (mostly with React Native) and these fees have always been a turnoff.

 

I think there would have to be very significant blowback honestly—possibly requiring some kind of mass exodus to even make them budge. Guess we'll see what happens.

 

Did someone remember what was the payments for a developer before Apple / Google store?
Sure much less them 70%.....

 

It's a shame that good hardware is being ruined by a shit organization, and many poor choices in software.

 

I have no stake at the moment, having no apps in the store by virtue of using tools incapable of iOS support, though I do pay the developer program fee. Interested in how this all shakes out.