Apple App Store Concessions
I hope you all are doing well and welcome to Dozen Worthy Reads. A newsletter where I talk about the most interesting things about tech that I read the past couple of weeks or write about tech happenings. You can sign up here or just read on …
This week I’d like to cover App Store & Policy changes related to the App Store. In the last couple of months the Apple App Store has made or been forced to make concessions and they are all pretty minor concessions. Let's take a quick look:
August 26th, 2021 : Apple announces a program where news publishers that participate in Apple news qualify for a 15% cut instead of the regular 30%. Further Apple settles a class action lawsuit with devs allowing developers to email users directly on how users can subscribe outside of the app store. This second change was already happening since a lot of apps collect email addresses and are able to email their subscribers. Of course this was at the cost of getting caught and enforced which Apple likely turned a blind eye to.
August 31st, 2021 : South Korea passed a law that required Apple and Google to allow for 3rd party payment systems (only in South Korea, of course)
Sept. 1st, 2021 : Another day, another settlement that lets “reader” apps have a “single link” to payment services inside their apps. Now remember most of these reader apps such as Netflix and Spotify have long since stopped accepting IAP inside their apps so this does not materially impact either the reader app’s revenue or Apple’s revenue. These anti-steering rules are again a minor concession and how a reader app is defined is purely upto Apple
Sept. 10th, 2021 : Apple refused to allow Fortnite to return to the App Store in South Korea even though there is a new law there. Additionally in the Epic v. Apple ruling the judge says that Apple is permanently restrained from prohibiting developers from including links, buttons, or other CTA’s to send users to alternatively payment mechanisms. A company called Paddle, in the hope, that the the ruling is upheld has already created a replacement for IAP
Sept. 29th, 2021 : Apple now allows users to rate and review inbuilt (read Apple) apps which was never possible before
Oct. 4th, 2021 : Apple now allows a user to directly report apps from the App Store Listing with a better version of the “Report a Problem” button
Oct. 8th, 2021 : Apple appeals ruling that forces Apple to allow any kind of developer (not just reader apps) to add in-app links/buttons/messaging to non-Apple payment websites.
If you look closer, the majority of these changes are related to money. To be sure, this is a HUGE business. In Q3/21 global app store revenue was $21.5B (70% of the entire App Store’s revenue, and 98% percent of in-app purchase revenue). That's a run rate of $80+B and Apple’s take rate even if averaged out to 15-20% is $16B.. For providing an App Store!
The larger ones of course are forced changes and the smaller ones are what Apple is trying to do to bridge the gap from being regulated to self-regulation. In some ways as far as payments are concerned, Apple is right to be concerned since there are so already so many payment/app scams but Apple has themselves been hard pressed to prevent such scams
The problem of course gets worse if you have non-IAP payment mechanisms. Where do users go if they have an issue? Apple? The 3rd Party payment system? The scammer who, of course, is going to ignore you. Where there are payments there are always scams (anyone remember the famous Nigerian payment scams on craigslist?)
Also as far as user experience goes I haven’t seen a single App Store user complain about IAP because it is seamless and I am not scared or worried about paying with IAP (even if that costs a bit more). Now of course businesses such as Spotify care hugely given their streaming costs, their margins are low. They do all the hard work and Apple gets a cool cut for “allowing” them to “sell their services”
The other non-payments, non-forced changes are Apple walking an inch toward meeting developers on a road that is 100miles long. In other words, too.. too little.
Potential solutions for Apple to walk more toward the middle.
Apple Developer Program
Increase the cost of membership to the Apple Developer Program. Evaluate Apps/companies based on location and make it more expensive to develop apps. This will help prevent scams and it's not like the App store lacks apps. Apple can of course make exceptions for Apps they consider important or for specific developers
Charge a review fee
Apple should basically charge for each review of any app that has payments (non-payments ones of course don’t make money and must be subsidized by ones that have payments). Rather than bundling up all services into a 30% fee, Apple can be more transparent and make the App Store review a profit center on its own. Apple can increase the fee based on costs to keep this fair to Apple. If developers do not want to get their apps reviewed Apple can gate this by showing a “Not reviewed by Apple and thereby this is risky” label. Developers can respond back with certifications or anything else they want to counter back with and allow the consumer to make a decision if they want to download an app. Fair game right since Apple can’t really comment on the App. Apple has ~500 app reviews that work for Apple. Let that sink in. 500 people review 100k apps a week. Of course there are tools and all that “cool” review tech but that. The math is simple. Each reviewer has to do ~30 apps/day.Assuming an 8 hour workday every app gets 16 minutes. Is that truly enough to verify Apple’s (probably long) checklist? Any wonder there are scams! Of course Apple being stingy probably considers this a waste of resources but the reputational damage they suffer when such apps get through is probably way more expensive than having more review professionals – especially if Apple touts the review process as robust!
Take Rates
Apple isn’t going to forsake its take rates. Apple should strongly consider reduced take rates after a certain revenue threshold. This incentivizes developers to try and reach that threshold. Additionally Apple should consider not allowing IAP at all if a developer wants to use a 3rd party payment mechanism. This is a bit drastic but as an end user will I buy an app where it has a sketchy payment option? A developer should choose if they want to pay or not have the luxury of Apple’s payment system (and protection that comes with that – even if it's only perceived in the mind of the customer) If customers are OK with paying outside of IAP it's a win for the developer. This of course sounds ridiculous and will never happen for apps with a monthly subscription. Way too much for Apple to lose probably. For games and such it’s likely to be a heat-of-the-moment purchase and a user likely does not want to exit, go to a third party app and come back to continue playing. How does Apple justify doing this only for in-app payments v/s a subscription.
App Insurance
If Apple considers its development process, review process, and payment system so robust Apple should bundle in fraud insurance for end users. If I rely on Apple’s review process and I buy an App then of course this is based on my perceived trust in Apple. I trust the developer because I trust Apple. Hence Apple should insure me when I pay using Apple IAP. Technically, Apple does refund users today with a refund request but this should not be available to a user/dev that does not use IAP. Or perhaps the dev has to pay it v/s Apple paying it by depositing money in escrow based on anticipated payment volume. This provides an incentive to Apple as well as possibly weed’s out fraudulent apps from the app store
The sad fact is that Apple probably won’t do any/many of these things since it will hurt their bottom line. Which is why the antitrust lawsuits are so key to making this fairer to developers. The other thing is currently Apple doesn’t charge apps that allow for the purchase of physical goods (think Uber or Walmart or Amazon) where you use the payment system that the app provides. Apple does not mandate the use of IAP. At the end of it, all these App Store concessions are too few and far apart and are not going to help Apple stave off lawsuits. Apple, though, will keep fighting, even if it comes with the cost of bad publicity, which only tech folks and developers understand or care about. Users on the other hand care less and with 1.65B active Apple devices developers haven’t much of a choice
Thank you for reading. Stay safe, be well! If you enjoyed reading this please consider sharing with a friend or two (or sign up here if you came across this or were forwarded this)
