Apple Is At It Again

Posted on June 17, 2020 by Paul Thurrott in Apple, iOS, iPadOS with 55 Comments

In the wake of antitrust complaints, Apple this very week engaged in the same behavior that got it in trouble in the first place. And other firms are finally starting to speak up about this behavior.

I guess it’s like riding a bike.

This week, literally on the same day that the European Union announced that it was launching two antitrust investigations against Apple, Basecamp revealed that Apple had rejected its email app, called Hey, from the App Store. It’s a bit more nuanced than that: Apple had, in fact, allowed Basecamp to post Hey 1.0 in the Store. But that version was very buggy, so Basecamp issued a 1.0.1 version. Which Apple rejected.

According to Basecamp cofounder and CTO David H. Hansson, that’s because Apple determined that Hey wasn’t adhering to its strict policies on in-app purchases (IAPs), for which Apple expects a 30 percent vig. And that requirement is literally the focus of one of the EU’s two antitrust probes of the firm.

The issue is obvious: Since Basecamp charges $99 per year for the email service, Apple would get about $30 when a user signs-up using the iOS app. And it would get $33 for the next few years, too, as the user renews. For doing basically nothing. (The fee goes down only on subscription services after the first year, to 15 percent, as opposed to credit card processing fees, which are typically 2 or 3 percent, not 30 percent. Apple’s fee is always 30 percent for other IAPs.)

This would be acceptable if Apple allowed app makers to use other IAP payment systems, which they do not, or if Apple even allowed app makers to just communicate that they could pay this fee on the Basecamp website. But they don’t even allow that. And that, of course, is where Hey 1.0.1 ran afoul of Apple’s incredibly tone-deaf policies: Basecamp had the temerity to put a note in its own app explaining that users could go to the web and pay there instead.

“Like any good mafioso, [Apple then] paid us a visit by phone,” Hansson tweeted. “Stating that, firstly, that smashing our windows (by denying us the ability to fix bugs) was not a mistake. Then, without even as much of a [courtesy] euphemism, said they’d burn down our store (remove our app!), lest we paid up.”

Yikes.

Related to this, Match Group, the parent company of Match, OKCupid, Tinder, and other dating sites, this week complained about Apple’s 30 percent vig as well, noting that it has contacted antitrust regulators about its concerns.

“Apple is … a dominant platform whose actions force the vast majority of consumers to pay more for third-party apps that Apple arbitrarily defines as ‘digital services’,” the firm explained to Axios. “Apple squeezes industries like e-books, music and video streaming, cloud storage, gaming[,] and online dating for 30 percent of their revenue, which is all the more alarming when Apple then enters that space, as we’ve repeatedly seen. We’re acutely aware of their power over us. They claim we’re asking for a ‘free ride’ when the reality is, ‘digital services’ are the only category of apps that have to pay the App Store fees. The overwhelming majority of apps, including Internet behemoths that connect people (rideshare/gig apps), or monetize by selling advertising (social networks), have never been subject to Apple’s payments systems and fees, and this is not right. We welcome the opportunity to discuss this with Apple and create an equitable distribution of fees across the entire App Store, as well as with interested parties in the EU and in the U.S.”

Apple’s business practices in this case are obviously illegal, and my guess is that antitrust suits in both the United States and EU will put a stop to this insanity. The bigger question is whether any companies will sue for damages and demand that Apple refund them the onerous fees they’ve paid over the years. This could get interesting.

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Comments (59)

59 responses to “Apple Is At It Again”

  1. dcdevito

    We can’t have nice things

  2. jbinaz

    I read Hansson's twitter thread, and man, he was brutal. And correct.


    I've been seriously considering jumping from Android to iOS for my phone, because I'm sick of Google's privacy invasions, and seemingly arbitrary decisions on who violates their standards of right & wrong.


    But on the other hand, Apple is arrogant, and takes every chance to screw over developers and other companies.


    I guess it comes down to do I care more about my privacy or whether Apple can abuse developers and other companies, seemingly arbitrarily. I suspect that eventually regulators in the EU and the U.S. will force Apple to make their policies fairer, whereas Google will always invade my privacy, because without it, they have no business model.

    • lvthunder

      In reply to jbinaz:

      How is it abuse when the developer knows these rules before they write a single line of code?

      • jbinaz

        In reply to lvthunder:

        If I understand it correctly, the app was already approved and in the store. It's when they went to update it with bug fixes, they were told they couldn't update it.


        And it seems they seem to enforce the rules arbitrarily. Consistency would help their case.

      • Paul Thurrott

        It's abuse. It's abuse because it's unfair and they have no choice, no other option. It's abuse because Apple doesn't disclose why it doesn't accept apps or app updates, it just does that non-transparently and using reasons that are not in that contract they signed. That's illegal, by the way, since you seem to care so much about the rules. More to the point, this is an incredibly gullible pro-Apple stance and is refuted by all of the complaints we've seen so far about this company and its business practices. You know what hasn't happened and won't happen? Some antitrust regulator looking at Apple and saying, our bad, developers knew the rules and Apple didn't do anything wrong. Why? Because Apple is the gatekeeper to 50 percent of consumers on mobile in the United States and in Western Europe. And their behavior is illegal. Wake up. Or at the very least stop spreading nonsense.
      • VancouverNinja

        In reply to lvthunder:

        That's simple - iOS is now a dominant platform that is restricting user's access to fair pricing - they are effectively abusing this position and power to the detriment of consumers around the world. The Developer has no recourse or choice to a fair opportunity at pricing their offerings by Apple's illegal business practices but yet they need to have their products on the platform.

    • Daishi

      In reply to jbinaz:

      It’s almost like what we need is a third player in the market.


      Wouldn’t it be great if there was another big tech company that wasn’t reliant on invading their customers privacy or fleecing developers that we could switch to. Even if they’d only had a single digit usage share until now and had been losing money on it just to stay in the most important consumer technology market of the time, but now that it was clear how awful the existing players are people could vote with their money.


      i wonder who could have offered such an option...?

  3. suhailali

    The really shameful part is Apple has different rules for Gmail, Netflix and Spotify apps. Apple can run their business how they want to even the detriment of others but they can't apply their own rules (aka legal contract) inconsistently.

  4. JH_Radio

    iMessage. Google can't get their messaging together to save their lives. Plus you got other android makers putting their own messaging apps. Its nice to not have to pay international chargers when I iMessage to somebody from another country. Yes. what's app and thoes other things t do exist, but its not seemless or baked into the OS. Also, speaking from me as a blind user, there are just things about VO that are way more intuitive than Talkback, although being able to use more than one finger in android 11 for the screne reader could finally change that. I mean Samsung has used multi-finger gestures in their forked version of talkback, Voice assistant for years. Also, if I have a problem with my iPhone, i can talk to someone who I can understand. since I have a severe hearing impairment on top of it all. Lenovo support is still based in the US which not that i'd need these people oftneoften, but at least if I do, I don't have to rely on somebody else to help me. That being said, I dont' see myself getting rid of apple any time soon. I'm too much of a geek, and find things about both platforms good. Amazon Music is quite sluggage on my iPhone SE 2016, and iPod 7th gen with voiceover . but it is much more snappy on my Samsung Galaxy S10+. Tidal is more accessible on iOS than andriodandroid. I feel like I hijacked this article and probably went off the rails somewhere lol. For me, apps tend to be easier to use on iOS. Really accessibility should be part of design from the start. Some apps looks the same on both platforms, but others not so much. Its madning and I don't know why. but coming back around to the article at hand lol, I think app developers should be aloud to use their own payment and not have to use apple's.

  5. nunamizzle

    Not that it ultimately matters to your article, but 30% of $99 is closer to $29.70. Unless sales taxes take it into the $33.00 range?

  6. RonV42

    The first rule of being a Apple developer, is that we don't talk about being a Apple developer. I have seen so many of these app developers just say ok because they want to have ability to target such a large group of consumers I'll never sign another NDA with Apple and I am glad I no longer have to support developers on the Apple platforms.

  7. cwfinn

    Not to be pedantic, but 30% of $99 isn't $33, it's $29.70. Your point is still valid but...


  8. RobertJasiek

    Imagine distributing ebooks (or other in-app media) via an app when the Apple tax is 30% and the app developer tax might be 30~40%. Hence, an author earns only 30-40% for doing by far the most work. Not every author can accept this so Apple's market abuse hinders competition, exactly as the EU claims. I wish the EU to succeed and punish Apple severely.

  9. ejuly

    Apple is by far the greediest tech company. Its ethics is on the same level has BP and Comcast. Even knowing this I own a MacMini, and iPad minis. My job is simple I test stuff and not having Apple devices to evaluate would be remiss of me. Apple provides good products (so do BP/Comcast). it is clear that most normal users have a different (and lessor standard) on Apple behavior because of the devices they make. It kind of reminds me how people call out Walmart for destroying small businesses while drinking Starbucks. I just find the idolatry of Apple and the hypocrisy of some supporters amusing. Yes I do use BP gas and have Comcast fiber to my home. I do not shop at Walmart or drink coffee; I prefer Target and plain water.

  10. mikeharris123

    I'm going to enjoy this playing out. I think they had a go at the wrong person in DHH as he can be loud and has the following to be heard and amplified. He went on a rant about his wife having a much smaller Apple card limit than him (before everyone else jumped on the bandwagon).


    Apple going on about developers wanting a free ride.....when the entry cost to the Apple ecosystem is far from free to their 1 billion customers that don't have the option to go anywhere else if they want to use Apple hardware.


    Should be interesting to see how European regulators deal with them given the harsh ways they have dealt with Google so far. Just going to be another 3 years of tone deaf Apple responses I imagine


    Mike


  11. jgraebner

    From other reports I've seen on this, it sounds like there is something new here. Apple basically told Basecamp that they would not allow the Hey app to remain in the store even without any links or text explaining how to subscribe to the service. Their argument was that an email client doesn't count as a "reader app", which makes it ineligible for the rule that allows an app to access an external subscription. In other words, they were told that there was no way at all for them to have the app in the store unless they implemented the use of Apple's in-app payment system for signing up for subscriptions.


    They also were reportedly told that Basecamp was allowed because it is primarily an enterprise product while Hey wasn't because it is primarily consumer focused, although there doesn't appear to be any such distinction in the published rules.

  12. Chris Payne

    Um, this article is wrong on at least one point: Apple's share of the fee falls to 15% for subscriptions after the first year. The article states that the 30% fee stays year after year.

    • Paul Thurrott

      Yes, but that's only for subscriptions. Apple always takes a 30 percent cut of other IAPs. https://www.apple.com/ios/app-store/principles-practices/ And by laser-focusing on this one thing, you're ignoring the bigger issue: That developers have no choice for other payment systems nor can they even communicate to their own users that there are ways to pay on the web or elsewhere. Apple is a funnel designed to push money to itself.
  13. Winner

    Microsoft 1990s = Apple 2010s, 2020s

  14. dftf

    I struggle to see how Apple can defend this one.


    I mean, sure, they do have server-costs for hosting and distributing the apps and all their updates... but so do Google, for apps installed via the Google Play store, yet (1) you're not forced on Android to subscribe only using Google Pay -- PayPal, or just a credit or debit-card are options; (2) other stores, such as Samsung's own, or Amazon's, exist and can charge differing prices and (3) you can bypass stores directly, download APKs manually and sign-up on the website for a service, then the app will refresh next time you use it with your active subscription.


    For comparison, does anyone know what cut Google take? Also, what about game-purchases on Nintendo Switch, PS4 and Xbox?

  15. nbplopes

    Apple should be fined heavily and forced to abandoned the practice of charging for services and goods that does not provide. The App Store distributes and sells apps. That is all it does. The only reason they might think that this procedure is even reasonable is if the customer is the product for which the supplier pays a 30% share of its revenue finger to him.

  16. karlinhigh

    I remember reading about a website that had an "IE7 tax."


    www.kogan.com/au/blog/new-internet-explorer-7-tax/


    That place found that keeping the out-of-support IE7 working properly was consuming more web developer time than compatibility efforts for all other browsers combined. Therefore, an extra charge for anyone using it.


    Does Apple allow convenience fees? With a notice that it's avoidable by paying outside of iOS?


    Service costs $99.

    Apple Pay Convenience Fee = $42.43 (($99 / (100% - 30%)) - $99)

    Total $141.43

    Apple gets 30%, $42.43

    Service Provider gets $99

  17. Omen_20

    For anyone thinking the App Store requires a ton of money from developers, even if that were true (it isn't) it is a very inefficient use of funds. PWA will negate the app store. Developers will host their application, a user will load it up, and then can install it if they want to keep it. The app store will just be a centralized library of links to other servers. Updating every night will simply be a process of their server getting notified of a new version, and then revealing that to the user in one update screen.

  18. skramer49

    This "highlights" the dark side of Apple and the side that makes me wish I could break free of the Apple ecosystem. BUT…everyone in our close and extended family and the overwhelming majority of our friends are in that ecosystem too AND their darned hardware is so good, if not often overpriced, that I just can't.

    • rob_segal

      In reply to skramer49:

      This is one reason why I use cross-platform solutions and services. I'm not locked in to any single ecosystem. If I had Apple devices now, I would move off of them for several reasons, including this one. There is good hardware for Android, Windows, and ChromeOS, too.

    • navarac

      In reply to skramer49:

      Don't wish to break free, just do it. You know it makes sense.

    • wright_is

      In reply to skramer49:

      I think we only have 1 Apple iPhone user left in the family, all the rest are Android.

      Even so, all the iPhone users I know still use Telegram, Signal or WhatsApp for communications, for example.

    • dashrender

      In reply to skramer49:

      I just had a thought - I no longer consider Apple hardware significantly overpriced. Reason being - They provide FREE updates for, generally, 5+ years. This isn't free. This costs developer time to ensure the updates are compatible with older hardware.


      On Android - you're damned lucky to get 2 years worth of updates - and that's assuming the carriers don't block them.


      Don't get me wrong - I freaking hate Apple's lock-in, I wish they were more open, but they do put a huge mind toward privacy and security while providing decent if not great hardware that can generally last the 5 years that they provide updates for it.

      let me know when Google/carriers/etc get their frakin' act together and provide privacy and security AND updates for 5 years - we're past the days of needing to buy a new phone every year, every other year because the advances are so awesome, those days are over.

    • mclark2112

      In reply to skramer49:

      Same boat, I use Macs, iPads and iPhones for everything (same with most that I know). And the integration between all those devices is just to perfect to leave.


      iTunes Match at $25/ year for my 20,000+ song library is also too easy to use. And I don't trust Google to actually ever stick with a service that makes sense for consumers for any length of time.


      I don't agree with Apple's business practices, but for now, it's the most seamless solution for me.

  19. miamimauler

    Given I'm not an Apple user I was unaware of any of this. The points put forward in the article are shameful and, if accurate, Apple should be punished to the full extent that the regulations allow.

    • lvthunder

      In reply to miamimauler:

      This article tells you only part of the story. It doesn't tell you what you actually get for that 30%. It also doesn't tell you that traditional retail charges 50%.


      Apple uses that 30% to run the app store. It pays for all the bandwidth of the app install and updates which is a lot. Just go look at the list of updates and you'll see a lot of we update this app every week (or two weeks) to fix bugs and polish things. That's a lot of bandwidth for the hundreds of millions of iOS users out there. They also take care of the payments and keeping track of who's subscribed and who hasn't. They also make it really easy for customers to cancel these subscriptions.

      • jgraebner

        In reply to lvthunder:

        I don't think anyone is denying that Apple has costs to cover for the App Store and that it is reasonable to recover them when app developers choose to use the services that Apple offers. The problem is that Apple insists that developers use, and pay for, Apple's services whether they need them or not. Since, in the current market, it is almost impossible to have a successful application or service without supporting the iPhone, there is at least a potentially valid anti-trust claim here.

      • miamimauler

        In reply to lvthunder:

        Fair enough. As I stated I'm not an Apple user.


        If you are stating there is more to it than the article provides then in good faith I accept that.

      • Lordbaal

        In reply to lvthunder:

        That's a bunch of crap. $30 for using bandwidth for each user.

        Basecamp charging $99 on their site, and in the store.

        So they would only be making $69.30 through Apple. The retail is not 50%.

        Stop lying.

        • Chris Payne

          In reply to Lordbaal:

          I think you misunderstood the previous poster. In the old days, when you would go to a retail STORE, the markup was often 50%. Nowadays, the vast majority of people don't buy software in a store anymore, but it's a close enough analogy. Basecamp can sell their stuff in the Apple store (the biggest software store) and pay 30%, or they can try to sell it themselves out of their garage or road-side stand and eat those distribution costs themselves.


          Also, Apple's share of the fee falls to 15% for subscriptions after the first year.

          • dftf

            In reply to unkinected:

            "In the old days, when you would go to a retail STORE, the markup was often 50% [...] it's a close enough analogy."


            Not really... in a store, you have rents, heating, lighting, staff-training, electric, gas, maintaining the buildings and car-park areas, staff salaries. With an App Store, it's just a data-centre running their database, which won't require more-money now than when they first set it up as it's now effectively in "maintenance mode". Only increasing costs would be electric and server hardware as the size of the database increases as more apps get added.


            "Basecamp can sell their stuff in the Apple store (the biggest software store) and pay 30%, or they can try to sell it themselves out of their garage or road-side stand and eat those distribution costs themselves"


            On Android, yes: they could offer an app as a download-only APK file on their own website. But with Apple devices, that's not an option -- unless you're an enterprise customer using either InTune or Airwatch and self-publish apps. But that's not most home/small-business users.

      • Andi

        In reply to lvthunder:

        All devs pay 120$ to Apple, per year. That's more than reasonable for all hosting costs. Larger companies afford their own payment infrastructure - Spotify, Netflix - thus they don't need Apple's. When you use Netflix or Spotify, Apple shouldn't get a iota of data from this as they are a 3rd party. Subscription related info belongs to these services and not Apple.

        • dftf

          In reply to Andi:

          It would make very-little sense with Netflix and Spotify, yes, as once the app is installed the vast amount of the bandwidth-use is from those companies own servers.


          With Spotify, you could even go to their play.spotify.com website in Safari and turn on "Desktop mode" and even not require the app...

        • lvthunder

          In reply to Andi:

          Really. You think $120 a year is enough to cover Facebook updating their apps every other week for their tens or hundred of millions of users?

      • dftf

        In reply to lvthunder:

        "Apple uses that 30% to run the App Store. It pays for all the bandwidth of the app install and updates [...] that's a lot of bandwidth for the hundreds of millions of iOS users out there."


        I'd assume Google also have to pay for all the bandwidth of Android users for Google Play installed apps, which will usually get updates around the same time as iOS, and roughly the same-number of updates each month/year.


        Yet with Google it is possible to do an in-app subscription using the vendor's own payment method, or a third-party option like PayPal, and not exclusively Google Pay.

      • nbplopes

        In reply to lvthunder:


        You in turn sell a metaphor. Here is another one.


        What if all Telcos decided to charge Apple for 30% of every iPhone connected to their network while offering their own phones? And the Apple Store and App Store be banned too unless paying sharing 30% of that revenue too. Apple would have been a long time out of business. Heck, they would not be able even to start considering their product. All the things used by the iPhone are distributed through the Telcos network too. Including the digital services over which Apple feels that it’s entitled 3’0% of the revenue.


        You see, Telcos also offer a significant value to Apple for which they charge zilch and are still able to grow and maintain they network. And more complex one than Apple. To put it simply, their customers are not the product in their business model ... unlike thecurrent Apple stance. When the customer becomes the product the reality of economics is bent. This is not ,much different than the Ad business and Facebook. Apple charges access to you on top of theis and someone else’s infrastructure they get for free.


        How else can the company accumulate such huge amounts of cash? Simply put, they are not following the same rules as everyone else. They are creating they own rules and bullying digital service providers in the process.


        This practice is not in anyway reasonable..

        • lvthunder

          In reply to nbplopes:

          Of course the telcos don't charge Apple. They charge the customer. Are you saying you want Apple to charge consumers to run the updates instead of charging the developers?

          • nbplopes

            In reply to lvthunder:


            In the end who gets charged its the consumer unless you think the money in those 30% comes from Santa..


            So why not? Don’t you pay the delivery of goods to your home when you buy on Amazon? Why have that price included by default?


            So than you would see how much customers are actually willing to pay for Apple delivery of apps or updates on top of the costs of devices. Instead of diluting the actual value on some magical 30% of devs revenue. Ya?


            In the end of the day, the App Store, it’s not really a store comparable to street stores etc etc. It’s actually a App Service Provider. Much like an ISP. It’s an utility in the iOS ecosystem.

  20. will

    IMO there should be some sort of a “fee” that is paid to Apple for the work they do on the App Store and everything behind the scenes. But, I do not know what that should be. If apps, and I believe they should, could use another system for payment that is not tied to Apple such as their own service, then that would kill off anyone wanting to pay Apples higher percentage.


    I honestly do think this is something that needs to be fair for both Apple and the developer.

  21. lightbody

    Apple valued at $ 1.5 Trillion ....

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