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The show notes didn’t contain links to the Stratechery articles mentioned in the discussion. Could someone add the links? TY.an
Update: Clearly, that article was one behind the Stratechery paywall. Nevermind. 
I already said that on other occasions that I 100% agree with Alex Lindsay about Apple’s App Store practices. I think that the major problem is the misconception that it’s a public market, which in fact, it’s anything but that. This is what it costs to reach iPhone users, so you can either accept it or bail out. It’s the same as complaining that renting a space at a mall in a certain neighborhood costs too much. Or, that a stand at a flea market would require you to sell most of your stuff in order to be able to pay for. It makes no sense.
The rules are pretty fair and clear. I would also have to disagree with @Lory about a flat fee being a solution. It would directly exclude every small developer. Right now, everybody has to pay 30% of their revenue. I could imagine that with that model, it would have to be at least $1G per year per app.
Another common misinterpretation is that a mobile operating system is universal and that a mobile platform is an open environment. They’re not. Apple’s ecosystem is as closed as it gets, and this is its biggest strength. It costs a user to enter it, so it does the developers. If users didn’t like it, if the developers left the Store, or if Apple would let fewer apps in, iPhone wouldn’t sell so well.
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I admittedly don’t know enough about anti trust law to comment as to whether it’s illegal or not. I actually agree with most of what you’ve said regarding it being Apple’s platform. What I will say is that the current state of things provides an objectively bad user experience. If I launch Spotify, Netflix, etc and I am presented with a login page and no additional information as to what I need to do or where I need to do it, it’s confusing and user hostile. If Apple believes that their payment solution is superior (a sentiment that I happen to agree with), they should allow devs to link to Safari from within their apps. Again, I am not arguing that they have to, but I think that if they do, they wouldn’t lose a lot of revenue and most providers would still stick with Apple’s IAP solution given how much higher conversion rates would likely be.
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Apple knows that money talks. If they don’t prevent an app purveyor from offering a cheaper price (minus the Apple vig) by some other means then they know they’ll lose out. And this alone states that they’re being monopolistic… there is a way for a customer to have a cheaper experience, but Apple won’t allow it to be provided.
They should be legally required to allow 3rd party app stores, just like Google. This would completely solve the problem. Then they can spend their efforts convincing people how wonderful their store is over any other. Of course they could refuse to support anything from a 3rd party store, and could even require any 3rd party store app uninstalled as part of their support investigations. But other OS vendors don’t do this with their support, they just point their finger at someone else as the problem.
You are exactly right. And this is intended, I believe. This is the moment where a user decides to either blame the developer and give up on them or to follow them to the other platform if they find it worth the switch. Unfortunately, what actually happens is, the developer blames Apple for their own failure and tricks their user into believing that.
What Apple should do in such situation is, remove that an app from the Store as it provides no value to the user. This is where I would blame Apple for not being able to fully deliver.
I would agree if the App Store were the only place for a developer to sell mobile apps. But it’s not. It’s the only way to reach iPhone users and show your presence in the Apple ecosystem. That’s correct. But it’s also perfectly fine.
This is the common misconception I talked about in my original post. As an analogy, one could blame a restaurant for their dress code. Or a golf club for their membership fee. Nobody forces anyone to eat in that restaurant, nobody makes anyone to provide them with food supplies. Just like no one forces anyone to join Pebble Beach club if they wish to play golf. Sure, it would be nice to do so, I’d love that, too, but hey, if I don’t want to or cannot buy myself in, I may choose to go someplace else.
It’s the mobile market where the authorities may search for monopolistic behavior, not a company’s private playground.
Okay, so what about the reverse? What if Netflix and Amazon Prime and Hulu and all the rest of the subscription based services said that no Apple user was allowed to use the service (because of the Apple vig.) That would be viewed as anti-comptetive, so the reverse also has to be anti-competitive. Apple is controlling who can offer their services to Apple users and at which price (compared to other services) and this is not fair competition.
They won’t do it. They would lose too many very popular apps and services. Android would look far more enticing to many if it were the only mobile platform offering Netflix, Spotify, etc.
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That would completely different. Apple doesn’t prevent anyone from using their services. There are certain rules to be followed and a price to be paid. They’re the same for anyone. In your example, it would be refusing service to someone for who they are, not for them not being able to pay the price.
I don’t know about that. Amazon got a sweetheart deal (a 15% cut instead of the usual 30% for the first year of all new subs).
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And that is exactly my point. That’s how the free market works.
Let’s say I operate a shopping mall. I’ll only make money if there are enough customers that make my facility attractive to my tenants, who in turn are only able to pay the rent because there are enough customers buying their products.
If I set my rent too high, I might lose some of my tenants as they won’t be able to sustain their business models. This would make my customers go away, which would require more tenants to look for a better place. This is how it’s always worked. It’s a delicate balance, but that’s called real business.
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You make a compelling argument.
Yes, this is what might need looking at. However, nothing prevents a customer from getting a special deal or a supplier from offering it. So, it might be complicated.
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Apple does NOT believe in a free market. Their walled garden is anything but free. You’re not even free in their world to place your icons where you want. What if an app developer believed that Apple users were wealthy assholes and wanted to prove that point by offering a hugely overpriced app on the Apple store that people could freely choose to overpay for to prove that point… guess what they couldn’t do it because Apple doesn’t believe in freedom of choice.
I agree with the majority of what you have written here and below. As it happens I have been in the commercial software business for a small company and have been following and thinking about the App Store a lot since the latest brouhaha.
A few data points and opinions:
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If you are a small scale commercial software provider and sign up a reseller in a new market or geography plan on give them 50% of the sale price and the ongoing support revenue.
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The comparisons of the 15% to the App Store with the percentage a credit card processor takes seems invalid to me. Apple is providing the end customer with a high level of assurance that the app isn’t malware or going to steal their data or continue charging them for a cryptically named difficult to cancel subscription.
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The last point above is why I don’t believe Apple will offer the developers the opportunity to link out to their own payment method. I have no inside knowledge about Apple but it seems very unlikely to me that they will do anything that comes even close to the customer buying an app in the App Store and starting a subscription they cannot cancel from the App Store. Saying “you followed the payment link to the browser so it’s between you and the developer” to the App Store customer is not something Apple wants to do.
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I think the lack of clarity and consistency in how Apple enforces App Store rules is a problem and Apple’s relationship with their developer would be improved if they cleaned this up.
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Forcing Apple to allow side loading apps would destroy much of the perceived safety and security and two or three or ten flashing red warning messages does not solve the problem. Also, even only allowing side loading of notarized apps doesn’t look to me like it would give the same assurance the App Store review process does.
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I do believe clarity around the Apple percentage would be good. If I were king of the App Store I would probably move to a straight volume based price instead time based discount. Say 30% of the first $100k, 15% of the next $900k and %10 thereafter.
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The current Apple percentage for digital goods bought within the app but Apple getting nothing from
a free app whose core value requires a subscription (like Slack for enterprise users) seem almost backward. It also leads to a degraded user experience. -
I do think developers should be careful what they wish for about fixing #7. I can easily see Apple moving to a percentage of total revenue model similar to what Qualcomm does. I doubt Developers like Slack and Basecamp would be happy if Apple said “Put your app in the store for free, sell subscriptions for free and give us %3 of your total corporate revenue or something similar”.
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I believe you are correct that flat fee from every developer could easily turn into a death spiral of fewer small developer, rising developer fees, fewer developers and so on.
There is a ton of stuff Apple should do to improve the App Store that would make developers and users happier. Not because they are doing something illegal but because it improves the whole
Apple ecosystem. It seems very unlikely and unreasonable to expect Apple to
Implement any changes that significantly reduce the the total profit they make from the App Store. I don’t want to be overly harsh but an awful lot of the argument over the Apple percentage seems to boil down to “Apple has a lot of money. I don’t think they need or deserve all of it so they should give some to me or my friendly neighborhood developer.”
My very long two cents.
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In fact they could do that and Amazon basically did it in a small way by not supporting the Apple
TV box for quite a while. Nobody forced them to make iOS apps for their services. They thought they were better off if they did and paid the Apple percentage than they were by avoiding the Apple percentage but giving up some customers.
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I’m not sure what Apple believes in, but as I stated in my original post, their ecosystem isn’t a free market nor is it expected to be unlike the mobile-app market, which is public and guarded by the federal rules. There’s a clear distinction between those two. No one forces anyone to use Apple products or services, whether it’s the iPhone, the App Store, or the ecosystem as such.
It’s clearly my decision to use the “restricted systems” as you refer to them, as much as it’s the developers’ decision to offer me their apps. If I don’t like the walled garden, I’m free to look somewhere else.
However, if we consider the number of Apple products sold every year as well as the number of developers and apps in the App Store, the whole situation cannot be that bad. But it’s for every individual to have their own view on that.
It’s obvious that not everyone has to like the rules which Apple places. And it would be bad if they did. But it’s for Apple to make them, and for us to tell Apple if we’re willing to accept them by either buying or not buying their products.
If I may refer to you claiming that Apple is a monopoly in one of your previous posts: Even if they ever happen to be one, the App Store rules may not be considered using monopoly power as they’ve been the same from day one and brought Apple to where they are now.
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I’d have to agree with that.
Exactly. And this is a matter between Apple and their users and developers.
I pretty much agree with all you said. The App Store is a premium multi-layer service, which has its price. It often goes unnoticed that there’s a lot more to it than just being able to double-tap to use an app.
Very sad but true. This could be a nice discussion in the off-topic channel at some point. It happens a lot in many areas.
Except, that if the mall price is too high, I can open a store in a cheaper neighbourhood and take my chances there.
And, if I don’t want to shop in a mall, I can go to a normal street and browse the shops there.
Thankfully, malls never happened around here.
Edit : also, in Apple’s case, you don’t go shopping in their mall, you are down a list of products the mall sells and somebody goes and buys it for you, so not only is the store keeper paying a high rent, they never even get a chance to create a relationship with their customers.