I don't understand why the App Store, this small "side business" in the grand scheme of things, is something Apple is worth fighting and dying over.
It's literally, a small fraction of their revenue, and yet it grabs 80% of the bad PR and is now under investigation and proposed legislation in the US, UK, EU, Korea, and I think Australia.
If I'm Apple, shouldn't it be obvious at this point that losing the App Store monopoly is inevitable, a when instead of an if? And yet...
Apple hides how much it makes in the app store by combining it into their iPhone product segment.
"Apple doesn’t disclose how much revenue its App Store makes per year. Instead, since 2013, it has released data points in January that include the total that Apple has paid to developers since the beginning of the App Store in 2008."
The low estimates for the app store are $64 billion last year and 70%+ margins. It is entirely possible Apple makes most of its money from the app store.
I’m pretty sure the App Store is accounted under “Services” not “iPhone.” $64B sounds about right, but even if services had a 70% margin and hardware had only a 30% margin, hardware would still be the more profitable side of the business at the moment.
Maybe so, however if they drop their take to 15% from 30% it will drop their annual profit by 30Billion , which will influence the stock price massively.
Senior management who have a large chunk of their salary in stock arent going to do it easily.
Apple can survive without this money yes, but no one at apple is likely to let it go without fighting for it.
It's a corollary to Apple's mantra "The best way to make software to make your own hardware". Apple believes in total end-to-end control over the experience.
Yes to a certain extent they are motivated by money, but they are far more motivated by maintaining control. Allowing users to install third party software via another route means that Apple is no longer in control. Apple wants to be the singular provider of everything on their platform.
You can see this in action on macOS. Apple makes almost no money from macOS, yet their grip over it is ever tightening.
At this point, I don't think it's an economic calculation anymore, if it ever was. I think it's moreso that Apple genuinely believes that third parties shouldn't have access to their platforms without prior review. Everything else has an explanation from that:
- We need to monopolize control over who can publish software for our platforms, so we can enforce our security guidelines.
(This includes banning third-party app stores, emulators, virtualization, alternative browser engines, and all the other fun things Android users chuckle at iPhone users about.)
- Hiring reviewers to check all the apps we ship for problems costs money, so we need to get paid for that review.
- However, we can't just charge developers money for review, as it would be prohibitively expensive and encourage developers to not fix broken software.
(At this point we need to review what Apple's competition was in this space at the time of the App Store launch. That is, game consoles, which have been universally locked down and monopolized since 1985. The companies that owned those platforms generally charged per software build submitted for review. The cost per submission was somewhere in the 5 figure range and could take up to a month to approve. Nintendo was extra spiteful, and would actually refuse to pay you after you updated your game, until you sold another 1000 units. Steam didn't really bother reviewing software submissions, not because it was a free-for-all, but because partnering with them used to be a legitimate challenge involving bugging several different Valve employees.)
- Therefore, we need to bundle how we get paid for reviewing software into the cost structure of apps. That way, we get paid when developers get paid.
- Thus, we can't have third-party billing, because that would let developers evade payment for our software review.
I didn't want to get into that part of it, but Apple definitely needs developers just as much as developers need them. They tried "just make webapps" (which is way better if your main focus is security over all else) for a year and realized very quickly on that they needed native software for their phones.
I know, it's not popular to be on the developers' side. But being an Apple developer many times feels like being an unpaid employee. Apple users get value from your work, for free. Actually, it's not even free since you have to pay a subscription and buy Apple hardware
Monetization is so broken.. the whole model is designed to discourage legitimate app sales. If I didn't enjoy my work I'd think I'm crazy
> If I'm Apple, shouldn't it be obvious at this point that losing the App Store monopoly is inevitable?
I think Apple believes their own PR story here. They really do believe that the App Store is great for everyone, not just them. They really do believe that they're entitled to a generous cut of all transactions that happen on their devices.
Objectively, you're right -- although I think I'd go farther and suggest that it actually wasn't inevitable from the start. If Apple had dropped their cut from 30% to 20% five years ago, had looser restrictions on third-party in-app purchases (say, allowing them for "cross-platform digital media" like ebooks), and treated streaming game apps the way they treat other streaming media, those alone might have been enough. Sure, they'd have lost some money that way, but objectively, probably not enough to be worth the risk of going through what they're facing now.
> probably not enough to be worth the risk of going through what they're facing now.
Easing restrictions over the years wouldn't prevent the inevitable. Doing it this way lets them face the inevitable lawsuits from a position of power, rather than a weaker position after years of slowly easing restrictions.
It's literally, a small fraction of their revenue, and yet it grabs 80% of the bad PR and is now under investigation and proposed legislation in the US, UK, EU, Korea, and I think Australia.
If I'm Apple, shouldn't it be obvious at this point that losing the App Store monopoly is inevitable, a when instead of an if? And yet...