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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