U.S. Antitrust Regulators Investigating Apple's App Store Fees and Policies

[MacRumors]

As part of an ongoing antitrust inquiry into Apple's App Store policies, U.S. antitrust regulators are looking into the 30 percent cut that Apple takes from in-app subscriptions, reports Bloomberg.

Government lawyers have been meeting with developers over the course of the last several months, and in meetings as recent as last week, developers have been asked questions about Apple's subscription rules.

Apple requires developers to use its App Store payment system for subscriptions, an issue that was in the spotlight recently when email app "Hey" was rejected for requiring users to purchase a subscription on its website because the app's developers did not want to pay Apple's subscription fees. The problem was ultimately resolved, but it led to multiple developer reports about unfair treatment from Apple.

Developers have been questioned by government officials about the App Store review process, and at least one developer was asked if Apple lowering its 30 percent cut would solve concerns, but the developer in question told the DoJ that the problem is not the commission, but the fact that Apple doesn't allow for alternate payment systems.

Representative David Cicilline, Chairman of the U.S, House Subcommittee on Antitrust that's looking into Apple's App Store policies, earlier this month called Apple's fees "highway robbery" and said that Apple's rules are unfair to developers and hurt consumers.

The U.S. investigation into Apple's App Store practices is in the early stages, according to Bloomberg, with the U.S. Justice Department focusing most of its resources on a separate investigation into Google's dominance in digital advertising. The case against Apple has been described as "serious," however, but the inquiry is ongoing and no decisions have been made.

At the conclusion of the investigation, the antitrust committee will generate a report with recommendations on legislative action.

Apple is also facing a European antitrust complaint over its 30 percent cut on ebooks in the App Store, brought about by Rakuten's Kobo subsidiary. Kobo said that Apple's rate is anti-competitive because of Apple's own Books service, which does not have to pay the same fee.

Article Link: U.S. Antitrust Regulators Investigating Apple's App Store Fees and Policies

 

[Appleman3546]

How about just allowing customers to download apps from safari...just like on a Mac. That would allow competition in the payment field too

 

[topdrawer]

How about just allowing customers to download apps from safari...just like on a Mac. That would allow competition in the payment field too

i think if people want to take the "security" risk, they should be allowed.

30 percent on distribution sales is one thing, but 30 percent on subscriptions is pretty steep considering they don't take responsibility in giving costumer support specific to those apps.

 

[LeeW]

The vast majority of users see the app store and the way it works as a good thing, not sure that even given the choice, most would choose anything other than the app store to make payment. It's convenient and that is the way users want it.

Not saying it's being done right by Apple in relation to developers, but it does not change the fact that it works for users.

Again, people only see 30%, it is that in the 1st year then 15% in all others.

 

[TiggrToo]

How about just allowing customers to download apps from safari...just like on a Mac. That would allow competition in the payment field too

Because that would be an abject disaster stability wise and Apple would bear the brunt of the horribly bad PR as a result.

 

[4jasontv]

Sure, and how about alongside that extra 30% they get they are held accountable for broken apps, viruses, spam, unfinished features, abandoning apps, apps that break with future OS updates, privacy violations, and everything else software developers get away with by claiming their software is “as is”.

How about before we ask does Apple deserve 30% we ask if the developers deserve 70%.

 

[Septembersrain]

Reminds me of how it was cheaper to sign up for YouTube Red on my Android rather than my iPhone.

Apple really does screw both the developers and subscribers.

 

[garylapointe]

30 percent on distribution sales is one thing, but 30 percent on subscriptions is pretty steep considering they don't take responsibility in giving costumer support specific to those apps.

No, customer support for an app is the responsibility of the people who get the 70%. Why would it be the store's responsibility?

Apple supports the device and the OS.

If buy things at Target, they don't support the digital game that I purchased in the store. My option is to exchange it (I probably can't even return it for my money if it's open?), that's Target's responsibility.

I'm guessing they normally make more than 30% on that game/movie/CD.

i think if people want to take the "security" risk, they should be allowed.

They're allowed to buy Android or anyone else they'd like to buy

 

[4jasontv]

Reminds me of how it was cheaper to sign up for YouTube Red on my Android rather than my iPhone.

Apple really does screw both the developers and subscribers.

It should be cheaper to sign up for a Google service via a Google run store.

 

[TiggrToo]

Reminds me of how it was cheaper to sign up for YouTube Red on my Android rather than my iPhone.

Apple really does screw both the developers and subscribers.

The fact that YouTube is owned by Google I'm sure has nothing to do with anything...

 

[Dimwhit]

Why do they have to spend months interviewing developers? Aren't the terms fairly obvious? Not sure what developers are going to tell them that we all don't already know.

 

[4jasontv]

The fact that YouTube is owned by Google I'm sure has nothing to do with anything...

Right? Imagine if Apple started making a stink and calling for legislation because developers were selling software and services cheaper directly and not allowing Apple room to compete in the digital market. You can't both be upset that someone is profiting from your work and try and undercut them.

 

[Arislan]

Just allow apps to be sideloaded and this goes away. Then an app is free to do whatever it wants. The ones that want greater distribution will use the app store. The ones that really want all the income will offer an app externally. That way, Apple isn't taking a cut for managing the distribution and it isn't a monopoly lockout anymore.

 

[ethanwa79]

I’m an app developer... I’ve been so for more than a decade. I had an app on the App Store in the first month of its launch in July 2008.

Here is why the 30% cut is a problem:

1. People argue that it’s the “storefront and distribution” and not just the payment processor that developers are paying for. But the reality is that free apps cost developers NOTHING (besides $100/year dev fee) to host on the App Store. And many of them make tons of money from ads within the app. But they own 0% to Apple. So why should paid apps have to subsidize free apps?

2. Payment processors typically take 1-3% of a transaction. Apple has a bit more convenience with in-app payments via Touch ID and Face ID, so let’s say 5%. Maybe even 10% if we are being generous. But 30%? Makes no sense except for a cash grab. It’s arbitrary. And when subscriptions are over a year, it’s 15%, which is still arbitrary.

3. The 30% wouldn’t be an issue if Apple allowed distribution outside of the App Store OR allowed developers to at the very least to advertise a different payment method within the app itself, even if it takes people out of the app for a purchase. Then devs would offer a “discount” to users for using a cheaper processor to save from the 30% rake. Which would in turn force Apple to be competitive in the cut, which is WHY they don’t want to allow outside payments.

4. But despite all of this, Apple does make exceptions to these rules to large companies with hidden contract terms no one knows about. “Reader” apps, for some reason, don’t have to follow these rules, such as Netflix. Why? Who knows. Apple just make up some rule to make them happy so they could be on their store. But the Hey email app wasn’t a “Reader” app so screw them right? Technologically there is no reason one should get hit with 30% and Netflix with 0%.

Apple has complete control and are using it to take arbitrary cuts of money for no real reason. There are millions and millions of iOS devices, WAY more than what Microsoft had with Windows when they got in trouble, and Apple owns large chunks of market share especially in North America and Europe.

I hope they are forced to change something.

 

[TiggrToo]

Just allow apps to be sideloaded and this goes away. Then an app is free to do whatever it wants. The ones that want greater distribution will use the app store. The ones that really want all the income will offer an app externally. That way, Apple isn't taking a cut for managing the distribution and it isn't a monopoly lockout anymore.

The answer to a problem isn't to give up.

Android has a reputation as a cess pool for this very reason.

 

[4jasontv]

Just allow apps to be sideloaded and this goes away. Then an app is free to do whatever it wants. The ones that want greater distribution will use the app store. The ones that really want all the income will offer an app externally. That way, Apple isn't taking a cut for managing the distribution and it isn't a monopoly lockout anymore.

How about Apple doesn't take any cut, but they get to sit on the revenue for 13 months before they pay it out. If an app fails to follow policy, including privacy, feature development and bug fixes, updates for new OS and device releases, etc. than they refund 85% to the customer and keep the remaining 15% as a refund processing fee. They could make it easy for customers by automating this process when they go to delete the App from their device.

 

[nutmac]

I think Apple needs to think deeper.

App Store revenue represents a significant percentage of Apple's growing service revenue, making Apple overly protective and cautious.

There are 4 types of App Store revenues:

1. App Purchase: 30%
2. In-App-Purchase for Features: 30%
3. In-App-Purchase for Consumables (e.g., games): 30%
4. Subscription: 30% first year, 15% from second year

Apple is completely missing out on subscriptions done outside App Store, such as Hey and Netflix.

What I like to see (new in bold):

1. App Purchase: 30%
2. App Version Upgrade: 15%
3. In-App-Purchase for Features: 30%
4. In-App-Purchase for Consumables (e.g., games): 30%
5. Subscription: 30% first year, 15% for 1-year subscription and from second year
6. Media Subscription (e.g., Disney+, Spotify): 15% for first year, 7.5% for 1-year subscription and from second year
7. Non-App Store Subscription: 5%. Apple will handle billing and distribution, but App will be unlisted and unsearchable on the App Store. Opens from a website link only.

 

[sideshowuniqueuser]

The vast majority of users see the app store and the way it works as a good thing, not sure that even given the choice, most would choose anything other than the app store to make payment. It's convenient and that is the way users want it.

Not saying it's being done right by Apple in relation to developers, but it does not change the fact that it works for users.

Again, people only see 30%, it is that in the 1st year then 15% in all others.

Given a choice of stores, would customers choose the Apple store if the seller had a 30% premium on the Apple app store version to cover the cut to Apple?

 

[4jasontv]

I’m an app developer... I’ve been so for more than a decade. I had an app on the App Store in the first month of its launch in July 2008.

Here is why the 30% cut is a problem:

1. People argue that it’s the “storefront and distribution” and not just the payment processor that developers are paying for. But the reality is that free apps cost developers NOTHING (besides $100/year dev fee) to host on the App Store. And many of them make tons of money from ads within the app. Why should paid apps have to subsidize free apps?

Off the top of my head?

Because free apps increase overall interest in the app store in general which increases exposure potential of your app.

2. Payment processors typically take 1-3% of a transaction. Apple has a bit more convenience with in-app payments via Touch ID and Face ID, so let’s say 5%. Maybe even 10% if we are being generous. But 30%? Makes no sense except for a cash grab. It’s arbitrary. And when subscriptions are over a year, it’s 15%, which is still arbitrary.

Because Apple should make a profit on top of paying bills. Just because other similar services do it for cheaper doesn't make Apple's deployment less valuable. We should be able to make the call over what our time is worth. Apple decided their time was worth 30%.

3. The 30% wouldn’t be an issue if Apple allowed distribution outside of the App Store OR allowed developers to at the very least to advertise a different payment method within the app itself, even if it takes people out of the app for a purchase. Then devs would offer a “discount” to users for using a cheaper processor to save from the 30% rake. Which would in turn force Apple to be competitive in the cut, which is WHY they don’t want to allow outside payments.

The 30% wouldn't be an issue if you sold more units. I don't mean that to be rude, but it sounds like you want to make more money per app. So does Apple. I don't own stock in your studio, but I do own Apple Stock. So Apple has an obligation to me to make more from your software. The terms should be just generous enough that you keep developing, but if I discovered they could of taken a 40% cut and couldn't explain why they didn't I would have followup questions.

4. But despite all of this, Apple does make exceptions to these rules to large companies with hidden contract terms no one knows about. “Reader” apps, for some reason, don’t have to follow these rules, such as Netflix. Why? Who knows. Apple just make up some rule to make them happy so they could be on their store. But the Hey email app wasn’t a “Reader” app so screw them right? Technologically there is no reason one should get hit with 30% and Netflix with 0%.

I agree there should be no exceptions. Netflix does have a habit of making apps that gets updated frequently and hasn't had any major security violations so maybe they were able to negotiate better terms due to their favorable relationship.

Apple has complete control and are using it to take arbitrary cuts of money for no real reason. There are millions and millions of iOS devices, WAY more than what Microsoft had with Windows when they got in trouble, and Apple owns large chunks of market share especially in North America and Europe.

I hope they are forced to change something.

It's not no reason. They have shareholders that demand they make more money. Large chunks don't equal a monopoly.

 

[macfacts]

Because that would be an abject disaster stability wise and Apple would bear the brunt of the horribly bad PR as a result.

Where is the bad PR from mac viruses

 

[alex2792]

Do people seriously believe that Apple spends 30% cut in millions of daily transactions to run the App Store? If so, whoever’s in charge of procurement must be using government contractors who charge $10k for a toilet seat.

 

[Villarrealadrian]

Its about time!

 

[ian87w]

i think if people want to take the "security" risk, they should be allowed.

30 percent on distribution sales is one thing, but 30 percent on subscriptions is pretty steep considering they don't take responsibility in giving costumer support specific to those apps.

30% only on the first year, then 15%.

 

[0924487]

Why do they have to spend months interviewing developers? Aren't the terms fairly obvious? Not sure what developers are going to tell them that we all don't already know.

ha, you'd be surprised. Politicians are not the most educated group in America, just people with the thickest skin.

 

[albert421]

For anyone who has a problem with Apple's policy, I have only one thing to say. Why don't you build an "iPhone" and an "App Store" and charge people less on it.