Someone give me a good argument for why Apple deserves a THIRD of revenue generated from apps on their platform? Apple's app store is pure rent seeking. Even the supposed curation everyone is paying for is lackluster. People are scammed left and right.
Funnily enough, this applies to Uber and Lyft too. These middlemen companies have too much power to unilaterally dictate what cut they get from their service.
They might have a point when it comes upfront sales of apps and games. Steam also charges 30%, and the Xbox, Playstation and Nintendo Switch stores also charge similar if not higher premiums, as does other comparable app stores.
Where it get’s ugly is when Apple wants a cut of everything that happens after the sale of the app, too, like wanting a cut when I buy a new book in the Kindle app (and Amazon refusing, instead making it impossible to buy books in the app).
Steam charges 20% to games that sell over $50 million, and 25% over $10 million. Even though those games tend to be bigger and use more bandwidth, they were running into the problem that some of those companies were managing to get bargaining power (Valve announced the change around two days before the launch of the Epic Games store with a 12% cut). Bandwidth isn't actually much of a significant cost.
Yeah % cuts for products sold in stores is nothing new or unreasonable. But once the user has the app on their device, the "store" is now the app and there should be no cut of fees for things sold inside the apps own store.
With software can't you just hack this by selling a free "Epic Store app" and allowing all games and software to be purchased there.
If the "store" is now the app then how does Steam get their cut? Do they just disallow any product that has a "store" inside of it? What constitutes a "store"?
This is the hard question. Apple has already reduced subscription cut to 15% after 1 year, but do they deserve even that?
This isn't bad. There _should_ be able to be an Epic Store app which sells products without the Apple cut. Since Epic has done all of the work setting up the store and processing payments.
Steam gets their cut by developers listing their games there directly. Epic already has a store app and yet Valve still makes money because the steam store and ecosystem provide value that justifies the cost even when alternatives exist.
IMO what cut Apple deserves is the wrong question. A democratic society can in principle decide that the public would be better served if Apple had to allow alternative app stores, and enact legislation accordingly. Whether Apple deserves to establish itself as the sole gatekeeper and take a cut whenever they can manage isn't really a concern. I think using anthropomorphic language like "deserves" for a company isn't even conducive to thinking about this.
I'd ask this instead. Would it be beneficial for society as a whole if iOS had to allow alternative app stores?
Why should Apple be forced to include an app store on THEIR operating system? If they want to be the gatekeeper of all their software, it is on them as a private company to do so.
It is likely beneficial for society as a whole for iOS to allow alternative app stores, but that doesn't make it right for the government to force them to do so.
If the citizens of a particular country want to force Apple to allow alternative app stores, they can. It's their country. Apple can ignore their market if they don't like the rules.
What makes it fair is not that that other companies as you list have similar practices.
What makes it fair is that Apple is a private company, entitled to these kind of business decisions. As such, free market forces should then determine if the true cost of distribution (which is basically what App store provides) is more or less than what Apple charges for it. It does seem that this is still one of the most efficient ways to distribute an app to the end user, as witnessed by the sheer number of developers (silent majority) willing to take the 30% cut vs a loud minority (usually big companies on their own) that isn't.
Is this a joke? Of course it's the 'most efficient' way to distribute an app on iOS - it's literally the only one. 30% wasn't determined by market forces, because it's a monopoly and there is no competition. Your only other choice is to forsake >50% of total smartphone users.
I was not talking about distributing the app on iOS, but distributing an app. If you want to leverage iOS to distribute your app, then 30% is the price for that distribution and vast majority of developers accept it as a good deal as witnessed by enormous volume.
No, volume does not indicate that something is a 'good deal'. When market failure occurs (e.g. due to lacking competition), prices are distorted. How much this impacts volume depends on elasticity. A good with relatively inelastic demand will have high volume whether there is a good deal or not.
And you can frame it however you want, the price for iOS distribution is not determined by market forces because there is no competition for it. Distributing an application on android is not an alternative, but complimentary. It's like if there were two delivery services in the US, each covering one part of the country. It doesn't matter that there isn't only one delivery service, both of them still have a monopoly because they're not competing in regards to what they actually sell.
But I argue there is no market failure here. You can distribute the app via web or Android. iOS just one of the options that you are free to boycott if you find the fee unreasonable. The fact that vast number of developers don't (although they have a choice) proves my case.
> the price for iOS distribution is not determined by market forces because there is no competition for it.
Perhaps you misunderstood. The price for iOS distribution is determined by Apple; whether that price is a good value is determined by market forces. Again, it seems that it is indeed a great deal, because vast (and silent majority) of developers accept it.
> It's like if there were two delivery services in the US, each covering one part of the country.
But it is not. You can reach your user via Web or if they are mobile via Android or Windows phone. Apple can not be blamed if your user prefers to use iPhone (despite it being most expensive) and now you have 30% cost of distribution to reach them. That is exactly type of an outcome a free market would produce. The freedom here is expressed in your user's ability to pick their mobile device and by no stretch of imagination Apple has a monopoly there.
>The price for iOS distribution is determined by Apple; whether that price is a good value is determined by market forces. Again, it seems that it is indeed a great deal, because vast (and silent majority) of developers accept it.
The famous monopoly cases (e.g. Standard oil or Bell system) also had tons of customers, that's what happens when demand is rather inelastic. If you want to say that artificially inflated prices due to e.g. a monopoly can still be a good deal because people are still willing to buy it, then we shouldn't be content with just good deals because they still cause harm to society overall by not being pareto efficient. Apple can't charge the rate they do purely by the strength of their distribution service - it's the device base that is the real value and only by anti-competitive measures can they keep the price up.
>But it is not. You can reach your user via Web or if they are mobile via Android or Windows phone.
What if Apple also decided that every transaction made through their browser had to give them a cut? The situation doesn't fundamentally change (you could still just offer your app to android/desktop users), but I think it's pretty clear that this would be anti-competitive. They might not have a monopoly on smartphones/devices, but they have such a large share that boycotting them isn't really an option.
Users are also currently funneled into apps due to how web is limited in functionality as determined by Apple. e.g. if your app needs long term local storage you now need an 'real' app because Apple changed it so that web app local storage gets cleared on the regular. Windows phone has also been dead for years now.
> If you want to say that artificially inflated prices due to e.g. a monopoly
Perhaps you misread, but I am saying opposite of both. I am saying that both Apple's prices are not high, proven by number of people agreeing to pay them in a market where other options to distribute an app exist, and that Apple does not have a monopoly.
> What if Apple also decided that every transaction made through their browser had to give them a cut... but I think it's pretty clear that this would be anti-competitive.
It is not pretty clear? There are plenty other options on the market in terms of a browser.
> They might not have a monopoly on smartphones/devices, but they have such a large share that boycotting them isn't really an option.
At least we can agree that Apple does not have a monopoly. Everything else is market forces at play. My argument was that the price set by Apple for distribution is such that it is acceptable to majority of developers. If Apple set an unreasonable price instead, say 70% cut, I am sure that a lot of developers would simply not develop for iOS, nor would iOS achieve same reach it has. Thus we can only conclude that Apple carefully picked a price which is both acceptable by vast number of people and maximizes Apple's revenue at the same time. This is free market at its finest.
This isn't a free market. A free market would be that the user purchases the device and that they are free to do whatever they want with what they own, including installing third party stores.
Whether Apple is a monopoly that is still to be determined and entirely different discussion. If it is it would have much bigger problems that the one discussed here.
This discussion is about where Apple as a private company has a right to charge 30% for the distribution on its platform and I argue that it has every right to do so.
That’s your problem right there. We don’t allocate resources or make business deals based on how deserving a group or person is. They can charge it right now so they are
I think it’s similar to why Walmart deserves a third (or more) from manufacturers selling stuff in their store. Or Amazon. Or any store.
Physical goods have about a 100% markup between manufacturer and what a customer pays.
I think it should be less for digital goods, but you wanted a good argument. Apple charges because they are between you and the app makers, like Walmart and target and stuff.
Products sold in wallmart can then provide extra external services which walmart gets no cut of. If I buy an air purifier in Walmart, they get a cut on that initial sale. But the purifier company can tell me they sell filters on their website, Walmart gets no cut of that. On mobile, Apple does get a cut on that sale which they did not facilitate.
The difference is Walmart holds so much less power. It would be like if Walmart owned the exclusive ability to delivery packages to 50% of houses in the world, and then no matter what the filter company does, they can't avoid this fee because Walmart holds their huge captive market and is able to extract these fees without adding much if anything to the transaction.
Walmart does have competition across town, unlike apple store. I can got to Target, Costco, Safeway, et c. Unless they collude to price fix, they will indeed have to compete by driving down their margin.
Moving "across town" from the apple store involves an IT project and hundreds of dollars in order to save dozens of dollars.
Moving from Walmart to target requires lots of supply chain logistics. I suspect it’s actually easier to move apps to new App Stores than work out how to get products into completely different vendors.
Also for IT, Walmart requires IT interfaces from its suppliers.
If I buy a bread maker from Walmart, they aren't entitled to a cut of my revenue should I sell the bread I make. Similarly, if I buy a tablet at Walmart, that doesn't mean they're entitled to a cut of all the purchases I make using it.
Great example! In retail it’s bad if there isn’t a 300%+ markup.
The fascination with making Apple a boogey man on this is bizarre. Your local corner store — which you should very much support! — has a markup that makes Apple look lazy.
Retail provides a necessary service of managing a large inventory of vetted goods readily available under reasonable terms 5-10 minutes from most everywhere america.
There is no way I'm flying to South America for a banana or to Taiwan for a toaster. Their profit is payment for this service.
Your oem provided you a device which is perfectly capable via your ISP and your vendors infrastructure of arranging products and services. Your oem is only an essential part because they insist on it.
FedEx and ford could have in theory done the same or Dell and Verizon.
Sideloading is not allowed per Apple rules and requires jailbreaking which comes with a list of caveats. So technically yes as a user I can side load but as a company providing apps it's not a realistic method of app delivery for the vast majority of use cases.
This is the second time you've made this claim on the thread. Nobody knows what you're talking about. What side loading are you referring to? You mean taking advantage of the dev loophole by asking users to build and sign your code every 7 days?
If you don't like the landlord, don't move into the building. It's not the only building in town, but just the one with the most lucrative customers. If you want them to be your customers, you gotta pay to play.
I bought an iPhone before I knew about the fee. This is like the landlord telling me there's a 30% convenience fee on paying rent after I've signed the contract.
You're now complaining that a BMW costs more than a Toyota. Shop where you can afford. You know how the prices are not too high? People are buying apps left, right, and center.
The cost is mostly being passed on to the purchasers. The same app is nearly always more expensive in Apple's store than in Google's.
But the funny thing is that even with the premium, Apple users spend far more on app purchases than Android users. And in turn developers make more money on IOS app sales - which is why they flock to the platform.
To sum up: developers make more money on the platform, Apple makes lots of money from running the platform, and customers are indicating they are getting value on the platform (even if you personally don't see why) by spending more on the platform. I don't see grounds for outrage here.
Someone once told me this joke, why does the dog suck his genitals? Because he can.
Same with Apple, of course they will do this as long as they can. There is no moral or ethical reason why they are doing this, simply they can get away with it.
I mean if you found a hack where you could get 1% of all the world's transactions, would you really say no to that, or try to find out why you deserve it?
> Someone give me a good argument for why Apple deserves a THIRD of revenue generated from apps on their platform?
You are using their intellectual property? As in the App Store? Thus, as long as you are using that to distribute your app, they are entitled to collect the commission from where-ever they want and it doesn't matter if it is IAP, Web, etc.
From [0] of page 66
> Under all models, Apple would be entitled to a commission or licensing fee, even if IAP was optional.
From [0] of page 112 (b)
> The Court agrees with the general proposition that Apple is entitled to be paid for its intellectual property. The inquiry though does not end with the bald conclusion. Apple provides evidence that it invests enormous sums into
developing new tools and features for iOS.
More like apps that also happen to use iOS as a frontend in addition to other funnels/marketplaces. Costco is one of the examples cited, and I frankly didn't even know that they had an app even though I have a membership. How exactly Apple is planning on justifying taking a cut of this membership fee is completely beyond me.
If Apple allowed installing other apps or appstores from outside sources it'd be one thing. That they've managed to go on this long without an antitrust is incredible. Microsoft got an antitrust case against them for simply installing a default browser. What Apple does is magnitudes worse.
It really comes down to the definition of monopoly and how a market is defined. If Microsoft wasn't found to have a monopoly in desktop operating systems, what they did wouldn't be illegal. Microsoft had north of 90% desktop OS market share at the time of the anti-trust suits. Does Apple have a monopoly? It depends on how you look at it. If the market is defined as iOS market share, then they definitely do (obviously). If it's defined as mobile operating systems, then maybe not. Currently iOS has a 59% market share in the US and only about 16% worldwide.
Imagine paying Apple to show ads for your app/service to the end user, and then once it converts to a sale, Apple comes in and does a 30% money grab from all future sales to that customer. To me, that is super unethical.
> Someone give me a good argument for why Apple deserves a THIRD of revenue generated from apps on their platform?
If you say “X doesn’t deserve Y”, then roughly I hear, “I don’t like that X is getting Y”. It’s like you’re asking, “Why should I like Apple’s revenue streams?” I don’t think I can answer that, but can you tell me why I should care about whether you like Apple’s revenue streams or not?
Apple deserves a third of revenue generated from apps on their platform as much as credit card companies deserve a third of all credit card transactions...
If you look at demographics, iOS devices are the gateway to the most affluent and lucrative market segment. That's the value proposition of Apple, and also why app always ship first on iOS then get ported to Android.
I say let them do it. But we need some anti-competitive regulations in place to prevent Apple for penalizing companies that want to offer a cheaper alternative elsewhere.
That's facile. If no one made apps for these platforms then they would not be nearly as popular. Remember the "There's an App For That" marketing campaign? That's not mentioning the fact that other phone/computing platforms exist where an app could capture some percentage of revenue you get from the App Store.
There's an element of symbiosis between Apple and app developers.
30% is insane, but lets keep the number aside for a moment.
If the user chose app A over app B then specifically what help has Apple provided to the App creator of A to justify the 30%? Apple's argument is they're bringing customers. But even if they do nothing one App is going to get the customer anyway. Also, Apple gets paid for advertising Apps and services to end users, so again, what are they doing to bring in customers to specific apps?
>what are they doing to bring in customers to specific apps?
They are making all the devices your app runs on. They are putting your app in their app store. They could remove your app from the app store and 0 customers would come to your app.
I don't know. I have released 0 apps and own 0 apple devices. I have never used their app store, so I do not have enough information to answer. I believe that question is irrelevant because apple is providing you a platform regardless about what apps they try to get people to install.
Everybody and everything can "provide a platform" if you do enough mental gymnastics. The AWS infrastructure you do you business on 'provides a platform'. The networking devices that route customer traffic 'provide a platform', the browser API 'provides a platform', the CPU that you code runs on also 'provides a platform'. "Providing a platform" doesn't entitle someone to grab 30% of sales from a business. If I rent office space, I pay the rent which is a mostly fixed amount, I don't pay them 30% of sales from my business - Yes, not a perfect analogy, but you get the point! Grabbing 30% of sales is just unethical, but that is just my view.
We can choose to have a legal system where this is OK. Or we can chose to have a legal system which busts anti competitive practices like this. Both are possible and I know which one I would vote for.
The situation is untenable, and as you can see, businesses who aren't scared of Apple are fighting back. Unfortunately, the smaller ones will easily get crushed by Apple and can't finance this sort of push-back without some grass-roots pressure.
Funnily enough, this applies to Uber and Lyft too. These middlemen companies have too much power to unilaterally dictate what cut they get from their service.