UK Launches Antitrust Investigation of Apple App Store

Posted on March 4, 2021 by Paul Thurrott in Apple, Dev, iOS, iPadOS with 40 Comments

It’s getting harder to keep track of all the regulatory bodies around the globe that are investigating Apple for antitrust violations now. But we can add the UK to the list.

“The Competition and Markets Authority (CMA) has launched an investigation into Apple following complaints that its terms and conditions for app developers are unfair and anti-competitive,” an announcement on the UK Government website reads. “The App Store … is the only way for developers to distribute third-party apps on Apple’s iPhones and iPads, and the only way for Apple customers to access them.”

That last bit should sound familiar by now as it’s the central complaint against Apple these days, that it acts as a gatekeeper for the billion-plus users on iPhones and iPads, and its rules are unfair to both developers and its users.

“All apps available through the App Store have to be approved by Apple, with this approval hinging on developers agreeing to certain terms,” the announcement notes. “The complaints from developers focus on the terms that mean they can only distribute their apps to iPhones and iPads via the App Store. These complaints also highlight that certain developers who offer ‘in-app’ features, add-ons[,] or upgrades are required to use Apple’s payment system, rather than an alternative system. Apple charges a commission of up to 30 percent to developers on the value of these transactions or any time a consumer buys their app.”

That bit should sound familiar, too: Developers being forced to use Apple’s payment system on Apple’s platforms is, of course, the other major complaint against the Cupertino electronics giant.

The CMA will determine whether Apple has a dominant position when it comes to distributing apps on iOS—which it does, of course, it has an absolute position—and, if so, whether Apple imposes unfair or anti-competitive terms on developers using the App Store, “ultimately resulting in users having less choice or paying higher prices for apps and add-ons.” That last bit is likewise obviously true: Prices to consumers would be lower if developers weren’t charged up to 30 percent for all paid apps and services, and if developers could use competing payment systems.

The CMA also notes that the European Commission (EC) currently has four open antitrust probes of Apple, all of which were launched prior to the Brexit transition. Three of those investigations concern the App Store. “The CMA continues to coordinate closely with the EC, as well as other agencies, to tackle these global concerns,” it says.

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Comments (40)

40 responses to “UK Launches Antitrust Investigation of Apple App Store”

  1. cavalier_eternal

    Prices to consumers would be lower if developers weren’t charged up to 30 percent for all paid apps and services, and if developers could use competing payment systems.”


    Credit where credit is do, developers have managed to repackage trickle down economics and convince people customers will benefit from from removing Apple and Google’s but on sales and subscriptions. It really takes an astounding level of gullibility to buy that. Here is a really easy test to see how accurate that is. Apple made a policy change awhile ago that reduced it’s cut of subscriptions to 15% after one year and more recently reduced it’s cut of all purchases for companies that make under developers that make less than a million dollars to 15%. Someone please show how either of these actions resulted in a reduction in price for consumers. It hasn’t happened.


    There is reasonable argument on if Apple and Google should get a cut of purchases facilitated by their stores and there is reasonable argument of what that amount should be. But anyone that thinks developers are going to take pass any reductions in fees on to consumers in the form of price cuts is absolutely kidding themselves. There is zero evidence to back that claim.

    • behindmyscreen

      In reply to cavalier_eternal:

      Apple can call their bluff and tell them "If you cut your price to the consumer by 15% we will cut our take to 15%"

      • dftf

        In reply to behindmyscreen:

        Wouldn't that also hurt Apple in the long-run?


        If there is an app that currently costs £10, then a 15% cut of that for Apple would be £1.50.


        If they force apps to reduce their prices by 15%, that same app would then sell for £8.50, and 15% of that would be roughly £1.28.


        So Apple reducing their cut by 22p, from £1.50 to £1.28 in that example, would be them winning?

        • hellcatm

          In reply to dftf: They're a trillion dollar company, the 22p is a piss in the bucket to them but a lot to the developers and their users.

          apple wouldn't cute the commission unless they're put against the wall. They're the embodiment of greed. They don't care about their developers, or users, they're just money to them, there is no heart in the apple company. Then again, most companies lack heart, but some at least pretend to care.


          • dftf

            In reply to HellcatM:

            Yes, but if they insisted that *every single app in the entire store* had to lower their sale-price or subscription-prices by 15%, as behindmyscreen proposed, that would cause a noticeable hit to them. We're not just talking a handful of apps who chose to; all apps.


            So, if they said they'd reduce their 30% cut to 15% for an app or monthly-sub that is say £7.99 a month currently, Apple would-go-from making a £2.40 cut, to a £1.20 cut (a 50% loss). But if they also insist on all app developers lowering their prices by 15%, that £7.99 app then costs £6.79, and Apple's 15% of that comes-to £1.02 -- a 57% loss (from their original £2.40).


            Across every-single app on the entire App Store that could cause a noticeable hit -- not enough to make Apple suddenly go-under, no... but then I never suggested it would. My point was simply it's not a move that only works in Apple's favour...

          • cavalier_eternal

            In reply to HellcatM:

            What do you think it is about to the developers? The current slap fight between Apple and Epic isn’t about iOS or Fortnight customers it’s about which company gets to keep a giant pile of money. It’s about greed all around. The fact that users have taken sides and become unpaid pawns in this is just ridiculous.

            • Calibr21

              In reply to cavalier_eternal:

              No users have every right to and should care. It’s about passing laws that make your phone a general purpose device and keep apple from controlling multiple markets. Allowing apple too much control will make things worse off for users in the long run, it’s just most people don’t realize it yet.


              little things like safari suggesting strong passwords. Now I have to use my iOS device for everything otherwise I can’t log into my websites. I can’t just download safari on my windows pc.

        • wright_is

          In reply to dftf:
          Wouldn't that also hurt Apple in the long-run?

          You say that as if it were a bad thing... Apple is the richest company in the world, with a comparatively small user base (<20% market share last time I looked - Edit: under 20% since 2013, but climbed to 23% in December 2021).

          And, even if they drop their take to 15%, or even 10%, that would still be a lot more than they would make, if the developers jump to an alternate payment service.

          I could go with something like:

          25% for first time sales

          10% for annual renewals/subsriptions

          10% for "add-ons" that require digital delivery over Apple's network (E.g. additional content downloaded from Apple's servers)

          5% for sales of virtual goods that do not pass over Apple's network - i.e. pure payment transaction and nothing else on Apple's side - E.g. stickers or virtual currency in games, releasing additional features in productivity apps etc.

          Physical sales (E.g. online shop selling products) can go through the shops merchant system.

          At the moment, each of those categories require the developer to give up 30% of their sale to Apple, even if Apple does nothing more than a merchant card payment service, which is typically under 5% (there are a few exceptions, such as Amazon, but generally nobody else has the bargaining power).

          There is also the problem of identifying your customers. AFAIK, if you sign up for a service on the app's main website, they know who you are and can link you to the app when you log on, so you can enjoy their service in the app or on the website (E.g. newspapers), but if they sign up in the Apple app, their information isn't given to the app developer/parent company, so the user can't gain the same benefits as the first category of customers, when they visit the website, because they aren't know to the app developers, so they can't link their Apple ID to an ID on the website (and the app developer has to pay Apple 30% of the subscription for the benefit of not being able to identify the user and not providing the user with the same seamless service they would have had, if they had signed up directly).

          I'm not saying their whole history and all their personal data should automatically be handed over, but the user should have the option of providing, for example, their email-address through the app, so they can use the website as well as the app.

          • cavalier_eternal

            In reply to wright_is:


            Two corrections to your post.


            1. Apple doesn’t require use of their payment system for physical goods or services. Developers of Apps that sell physical goods and services are free to have their own billing system and pay Apple nothing.
            2. Subscriptions and renewals of digital services don’t have to use Apple’s billing system. Neither Netflix nor Spotify use Apple’s payment system. The caveat being that the said subscription has to be sold outside of the App. If they sell with in the App then they have to use Apples payment system.
            • dftf

              In reply to cavalier_eternal:

              On point 1, you could still argue the difference makes no-sense. So if you order a takeaway from Uber Eats, Deliveroo or Just Eat, or a physical item from Amazon, Apple takes no cut. But if you sign-up for streaming-services, they would (hence why for things like Stadia and whatever Microsoft's service for remote-streaming Xbox games is called again, they're turning to web-app versions of their services, rather than a native-app to avoid this). Even-though with a streaming-service, Apple incurs no extra costs when the user uses it: all of the data streamed, the bandwidth and the server storage is split between your Internet provider and the servers owned by the streaming-company. So I still don't understand the difference: Apple don't deliver the physical goods you order, so they take no cut. But Apple also don't use their infrastructure to stream songs, TV programmes or films to you, yet do take a cut?


              On point 2: they don't have to, but such services have complained that Apple's terms say they have to hide any information in the app that says this is possible, so it appears that Apple's IAP system is the only option. And for apps in some categories, the option to login with an existing account also has hidden, so signing in with your Apple ID looks like the only option.

            • nbplopes

              In reply to cavalier_eternal:


              The facts aren’t the point but it’s interpretation.


              The point is that considering there is no regulation, they could. Considering the 50% of US digital customer use the iPhone that would be devastating.


              Also, you completely go over the facts that you so well correct while not interpreting.


              In particular the fact that they cannot sell a thing in an app that it’s theirs, that they have built, to sell something that the App Store does not sell, create or distribute without going through its payment system.


              This practice should be illegal. It’s an extortionist practice considering that 50% of the US population uses iPhones. Period.


              In case you haven’t yet understood.


              All that seasoned digital services businesses are claiming is for the legal right to sell through all their properties without being forced to go through a middleman in any. Regardless of the software components and services they might use in their app.


              Its that simple. This is reasonable claim, a claim for what it’s theirs. Regulations should be in place tho assure this freedom in the digital space.


              Governments failing to do so and either implicitly or explicitly legitimizing such practice in any circumstances, billions of customers circumstances, will have devastating effects in how the market will be operating in the future.


              Because this will not stop in smartphones. Will spread to smart cars, smart houses, ... so on and so forth. In the long run, no digital business will be able to sell if not through OS owners.


              Facebook left Australia for being legally required to pay if necessary for the information they use to make their business useful.


              They are stupid. They should instead have information owners pay them as per their discretion to allow their content reach their customers in the FB social operating system. If that was the case there would be no problem, correct? After all, if this was FB narrative is doing them a favor. They should give News agents the option to pay to be there instead of simply removing their content, sell subscriptions to their content.


              They will regroup and come back stronger. But they need to do it faster than regulators can figure out what is going on.


              The difference between FB and Apple regarding their OS, is that one lost control of the narrative, the other smartly did not. Tim Cook knows it that is why they attack FB OS policies, keeping the spotlight away from their own.


              By the way. Google should also adopt Apple narrative about their OS, they would be left off the hook for way more time.


              The kids talk about 20% of global market share without even understanding the magnitude of what that really means relative to the Planet. But I’ll make it clear.


              They have about a 1 Billion active iPhones out there. Planet earth has about 7.8 billions people. That is the App Store super power gets through the devices sales indirection over digital businesses and their customers. Just over 12% of earths population along with digital services being commercially proxied by the App Store on iPhones. There is no miracle just policy and logic.


              PS: The FB social OS has 2.8 Billion by the way. Apple wants to get there too, that is why TC is shooting them down. I think will have a social OS from Apple soon, something called Faces or Hi Friend. Let’s make it simple and call it simply, Friends. Heck and hire the cast. Once it does that FB may be out.

              • cavalier_eternal

                In reply to nbplopes:

                Dude, all I did was point out what the App Store policy is with respect to physical goods and subscriptions. At no point in my post did I offer an opinion of if the policy was good or bad. I offered no opinion whatsoever.


                I get it, I have seen your posts, you really don’t’ like the App Store. Awesome, I’m not standing in your way. But that fact that you want to lecture me at length when you know absolute nothing about my opinions about he App Store is just obnoxious. Next time you want to unleash one of your mostly incoherent screeds on me please have it be relevant to what I’m posting about and drop the condescending tone.







                • nbplopes

                  In reply to cavalier_eternal:


                  As a customer I like the App Store, as a digital service businessman I find the policy contrived and invasive. If you are a small dev where the service start and ends with the app the Apple Store feature stack and pricing is competitive.


                  Yet, digital services go way beyond that. Some services don’t need the entire stack.


                  For instance some developers all they need is permission to install and update their apps on iOS devices securely as that is what they customers use. They don’t need Apple to process their sales in app, don’t need to be in a catalogue, don’t need Apple to do their marketing on the catalogue, so on and so forth. 30% of the revenue is a high price for what they actually need, yet have limited options to do so. This is akin to someone that only needs a tire to replace a busted one in his car, yet the only option is to buy an entire new vehicle. Arguing the benefits of the new car beyond the tire that it needed is irrelevant. It’s nothing but an very expensive tire replacement in context.


                  Just the other day a digital service received a notification requiring the business to put the subscriptions plans it had on their site in the App or else would be removed. Of course it complied, has not only the business would be crippled as its customers would stop having proper access, but also its would loose hundreds of thousands of dollars that he invested in building the App. The App was an email client backed by a cloud service that used some AI to make it easier for user to manage their emails. The developer wasn’t doing any in app sales. The core value of the service wasn’t of course in the App but in what went on in the back end. That is the power of the App Store to force developers into agreements. If every things goes ok, no worried, but a sudden policy change either you comply or lose hundreds of thousands of dollars if not millions.


                  Just the other day, xCloud was kept out of the App Store by Apple. The core value of the xCloud is provided by its backend, streaming games in real time. MS to be permitted to deploy on their customers devices, not Apple’s, Apple required each game stream to be included in the App Store. Apple decided to equate each game stream as an App so it would not only be granted the ability to charge for each game stream, but also veto it. I’s quite clear that such equation was not put in place to improve iOS users security or privacy, but to Apple’s interests in gaming even if that means denying 13% of planet earth population the access this service on their phones.


                  As for you not having shown an opinion about the the App Store, your use of qualifiers about its potential benefits, ignoring the downfalls either through successive corrections over supposed App Store policies misunderstandings or sometimes erroneous description of how the outside App Store world is working, with a focus on how special the relationship between Apple and devs is .... maybe I’ve erroneously came to the conclusion that you indeed had an opinion.


                  Sorry for the confusion.


                  PS: I didn’t call you names, was instead just qualifying what thought I about the way you took your stance over its critics. I often see such approach.


                  I’m not against App Store in particular. I’m more against the trend where for an digital service to deploy an a native app, it needs to give up a share of its revenue as well as having to go through an approval process owned by a competitor or potential competitor ... with no regulations in place to defend them. In particular, I’m even more concerned how this will effect the digital economy of the future as the digital smarts flow to other kinds of devices. The idea that the only way digital services of the future have to avoid this, is to than build their own device and compete in the device market in order to compete in the digital services market against big players will be huge barrier for individual digital service growth and will harm competition in the digital service space. You can see the App Store effect in comparatively micro systems, say in Gaming Consoles. It’s no coincidence that it spurred the need for massive acquisitions, such as Bethesda, in order to protect those game stores against other game stores, device use against device use, further funneling the value chain towards device and OS builders. A private layer over a infrastructure that is otherwise public. The dynamics of these systems lead to that. The notion of competitions moves up to another layer in the abstraction. Instead of discussing competition amongst game developers to serve the best games, its about discussing the competition amongst App Stores / Devices to serve the best games, which does not necessarily means that customers will get better games.


                  I worry that current judicial processes out comes will pave jurisprudence that will empower legal precedence to this practice and no one will be able to do anything about it in the future. This is not about Epic or whoever is complaining App Store policies looking to get a piece of of Apple, Google Play, Epic, Windows Store ... But assure that the digital economy that was built under the basis of a free market does not come to be ruled by a private group of companies with their own private and untouchable markets.


                  The time to discuss this is now.


                  EDIT: I guess this end up to be a lecture again. Sorry.


                  Roger out.

      • derekabraham

        In reply to behindmyscreen:


        Exactly - app developers have set their price points where they think the customer would buy while getting them a good profit after Apple's cut. This pricing is akin to some retailers charging an additional amount for using credit cards. None of the developers - including Epic, would pass on the saving to customers. They would instead keep the prices same. This fight is not about customers, it is about better profit margin and about the feeling that Apple is benefitting out of their hardwork or IP.

    • nbplopes

      In reply to cavalier_eternal:


      Lower prices or higher, that is not the point. Still probably be lower, or one would get apps with more features. Who knows. Again, that is not the point.

      • cavalier_eternal

        In reply to nbplopes:

        I quoted part of the article where Paul said prices for customers would be lower. So, that was in fact a point that he was making. It may not of relevance to you and that is all well and good but please don’t tell me what points I’m allowed to respond to.

  2. spiderman2

    oh no, how do they dare /s

  3. dftf

    One easy-thing Apple could do to instantly appease many developers is simply stop asking for 30% in year-one of a subscription, or a 30% cut for any one-off purchase, and just ask for 15%. If they automatically drop-down to this in year-two of a sub, it clearly implies they're happy with that, or otherwise they'd keep it at 30% the entire time. They could to that immediately.


    Another complaint I hear is that some apps are not allowed to make-obvious it's possible to sign-up for a subscription outside of the app, and then sign-in later. Apple require that info, or the option to "sign in with an existing account", to be relegated to hard-to-find screens for apps in certain categories. But even for apps within the same categories, this is enforced unevenly. Would it not be better to simply allow the option to be clearly present, but make it so a message is presented for users who do try to do it that way:


    "You're about to sign-up for this app using an account you'll make with the developer of this app directly. If the app requires payment, such as a monthly-subscription, this will also be handled directly by the app-developer. If you have any future billing issues, or if you want to reactivate the subscription on a new iPhone or iPad device, you'll need to contact that company directly. If you wish Apple to handle billing-related matters, and for your subscription or one-off payment licence for this app (if, and as applicable) to be stored centrally for easier future reactivation, choose Apple Pay instead."

  4. scovious

    When it rains, it pours.


    Apple charges twice as much tax as the Canadian government does, and doesn't even throw in a socialized free to use healthcare system. Apple has ~27 times more people under it's wing than the Canadian government, so perhaps Apple is getting too much money for doing too little?

  5. ebraiter

    Unsure if still true but a while back Apple took 30% cut for basically storing and advertising but if the developer had a recall which require a refund, the developer would have to pay back all 100%. That's their 70% cut plus the cut that they gave Apple.

  6. tomb1776

    Of course the main issue, down the road will be, when an app goes rogue due to a ruling... does anything think these authorities will say sorry? Ah.. we all know the answer to that question...

    • Usman

      In reply to tomb1776:

      If the app sideloaded not through an AppStore, that becomes the user's responsibility.


      The store is just a distribution model, the primary purpose of the store is to push the application to the device, once the package is on the device, the operating system does the installing.


      If an application goes rogue, that's down to the application platform, the AppStore does prevent the existence of exploits that can be taken advantage of.

  7. nbplopes

    I believe the core issue is that the 30% comission, 15% if one does not really have a business yet, is simply way above market price for such a cloud service. Apple paints it as a Store, but no regular Store demands what Apple demands. In particular, the in app sales policy it’s an abuse.


    Say Amazon sells The Xbox and the iPhone, it does not than demand 30% of the sales made through these things. This is the standard operating procedure of a Store. Now in the last decade some distortions to the standard appeared in niche markets, case in case the Xbox and PlayStation stores. But the smartphone / market is no niche.


    One of the concerns of opening up in-app payments to other forms of payment is that devs would than not pay the App Store for the cloud service provided, of cataloguing and managing app installs and updates. Well, simply charge that separately like any cloud service. A plan based cloud service is quite common.


    Its not 2010 anymore. Devs are quite used to Cloud Service plans.


    Apple has many many options to bring a more reasonable policy with no need for side loading or third party App “Stores”. All while fostering growth, privacy and security to the platform and keep profits up. They simply have to give up this entitlement sense that lead to justify charging for delivering things that they don’t .

    • dftf

      In reply to nbplopes:

      It's been said before the 30% comes-from the brick-and-mortar world. So in a typical supermarket, for example, the difference between what they buy at and the price they sell to you at averages that.


      But for an app-store, 30% does come-off greedy as there are many costs they don't incur.


      An app-store doesn't deal with any movement of physical goods, so there's no fuel-costs, warehouse costs, or "Goods In" or "Goods Out" teams. They also don't need to pay rent on 100s of physical stores -- only their data-centres, some of which they may own outright. They will have minimal customer-service (as usually app refunds are dealt-with automatically, and if you have a comment or suggestion for an app, you just contact the people behind the app itself, either by e-mail, or via an in-app option).


      I mean, compared to say a random online website that hosts downloads, how is an App Store much different, besides the fancier look, and the security-vetting of the apps that go into it. I guess it's up-to the end-user if they feel a 30% cut justifies that...

      • nbplopes

        In reply to dftf:

        As I’ve said, brick and mortar world of Stores does not charge for 30% of the businesses that goes trough the devices they sell. No way Apple can argue that its so called “Store” is selling music streams for Spotify, os video streams for Netflix, or eBooks, or whatever the businesses sell through their apps. It’s selling none of that. It’s service that catalogues and distributes one thing, apps that can be installed on the devices they sell, yet aren’t no longer theirs.


        So no it really does not come from that. It’s a horse, Trojan horse, that a marketeer called donkey. Due to mere resemblance at a distance, people get fooled.


        It could be like a Shopping Center/Mall. Imagine, App Mall, Apps being shops. But then Malls usually, rent spaces and fixed rate based on a number of factors, not volume of sales and don’t go after businesses for selling elsewhere cheaper, etc etc.


        Also in the brick and mortar world, there is a thing called right of passage .... anyway ...


        It looks more like a private government if you thing about it, with its own tax and justice system. Let me see: The State taxes for things its does not create, build, distribute or sell. Also sometimes “forgets” to apply regulations or laws. Governs an Operating System called Country created by its citizens ...


        So why can Apple do that? 50% of digital business customers are using their devices while out and about and hence through it they have the opportunity to hijack the customer / digital business relationship. Customers themselves don’t see this. Because a customer does not care less who he has to pay to get what he needs. They only see a button ... “Buy”.


        Furthermore, when Apple talks about security and privacy implicitly is talking against digital businesses. It’s protecting their customers against rogue ... Heck much like the Gov isn’t it?


        It should be called App Gov.


        The longest Govs keep from regulating software licencing and digital businesses practices, the more citizens will become prays of big tech. Eventually even unbalancing the relationship power between democratically elected governments and big tech ... well if its not already. I think it is. The Apple vs Gov thing about unlocking the iPhone of a known criminal was a clear indication of that. Big tech is implementing a mass surveillance system while keeping away Uncle Sam arguing again, reasons of security and privacy ... so on and so forth.


        Anyway, this will be sorted our sooner later.


        Cheers,


        Nuno



      • cavalier_eternal

        In reply to dftf:

        Apple has argued that they do have costs that brick and mortar stores don’t and there is some truth to that. The have to develop iOS, APIs, Developer tools and provide developer support.


        Probably the most compelling thing they offer is simplifying international sales. Different countries have different legal and tax requirements which often required setting up a legal entity in country. For example, I worked for a small game shop with revenue of around 10m a year. We sold in the U.S, Canada and U.K. To sell in the U.K. we had to set up a legal entity there and pay taxes. For other countries we simply didn’t sell our stuff because the revenue wasn’t worth the work it took to set up a legal entity. When Apple opened the Mac App Store it solved the international challenges. The way the App Stores work is Apple Licenses the rights to sell the software. They then offer it for sale in any country where the App Store is available, pay the local taxes and we were just paid us in USD. For a small company it was a big deal as we were now able to sell in markets where we previously couldn’t, we didn’t have to worry about international taxes, pay to convert currency or get taxed on money that was repatriated to the U.S. We were able to close the U.K. entity which had a single employee, the lawyer that helped navigate doing business in the U.K. Was all of that worth 30%? IDK, you would have to ask the CEO of company.


        Of course the above situation does nothing for a larger company like Microsoft, Epic, Spotify or any of the many big players that have an issue with Apple’s cut. They can afford to solve the challenges that go into being a global player and in most cases had already done so prior to Apple having an App Store. It seems like there needs to be tiers of what Apple offers developers and their cut is based on that but I also imagine that is easier said than done.

        • RobertJasiek

          In reply to cavalier_eternal:

          Simplifying international sales, ok. This justifies up to 4%; compare PayPal's fees, which are at the upper bound for such payment transactions. Add some percentage, say 3%, for the physical storage and downloading of apps. Therefore, up to ca. 7% are explained including the simplified international sales. However, Apple's rates of 15% or even 30% are not explained. They are just greed being 8% or 23% beyond the up to 7% necessary rates, i.e., 2 to 4 times too high.

        • nbplopes

          In reply to cavalier_eternal:


          “Probably the most compelling thing they offer is simplifying international sales. Different countries have different legal and tax requirements which often required setting up a legal entity in country. “


          Its an error to assume that App Store provides any form of legal or tax base for a digital business to market it service in a country. That is why digital businesses can specify which countries they product can be sold. This is the case of eBooks, Video Games, movies and series or TV broadcasting ... and others.


          As far as Tax goes, the App Store only provides VAT based assurance because its the App Store that charges (proxy). Other taxes that you may owe to the country of the customer is up to your business. For instance, businesses like Spotify, Netflix and many other need o acquire the necessary liscnces to operate in each country directly ir indirectly. Example, HBO Max t the moment is only US based ....


          PayPal charge 2.5% fee for currency conversation. International sales mostly you aren’t supposed to charge VAT. You are supposed nevertheless pay import / export tax. But for that matter, digital services and good lack regulation.


          If you operate mainly in your country of origin there is no advantage in using the App Store. Considering that most sales happen there, in particular in US you can imagine how much money you are leaving on the table for Apple.


          Finally you have business that don’t need none Apple to VAT for them in any country, much less give a percentage of their revenue for that matter.


          So it simplifies a bit in certain aspects, but it does little more that say PayPal does in that regard. Yet it charges at least an order of magnitude more.


          Look. I think Apple did well in the beginning. It needed a simple way to charge digital services to enter the iOS green field. Back than, you just put an app on the App Store and bling. That was the main value. Not anymore. The green field is gone. With that gone, it maintained the same rates, that aren’t really competitive in comparison with the alternatives. Now as I explained the reason what it gets away with it is because it is holding ransom digital business customers devices.


          Today its a very unfair model. You have small businesses paying for the usage of very large businesses such as Microsoft as people subscribe to their services elsewhere. In turn you have very large businesses paying for services that they do not need. The tip of it all, is that you have the App Store charging for digital goods that they do no sell, distribute, produce or created. This is the case for instance when you sell a eBook , or video classes, or whatever in your app. None of that is the App Store catalogues ... In app, it’s your shop that it’s selling and Apple is collecting and you have no option but let it be reach your customers through their devices.


          No system is perfect. True. But don’t see Apple be inclined to change anything to a fairer model


          Cheers.

          • cavalier_eternal

            In reply to nbplopes:

            Please re-read my comment. I am not assuming anything, I’m providing a first hand account. Your comment is someone difficult to responded to as you don’t fundamentally understand how the App Store works or what the legal agreement is between a developer and Apple. What is really strange is when faced with someone who has worked in the space you want to reject what you are being told in favor what assume to be the case. Probably a good time to listen and learn.


            Anyway, you are incorrect in your understanding of how taxes work in the App stores. When a customer buys something from the App store they are buying from Apple and not the developer. Because of that Apple carries the business tax burden in every country that the operate an App Store not the developer as the developer isn’t selling anything. The company I worked for only made Mac products, we technically stopped selling to customers when we moved all our business to the App Store. Our entire business was based on granting Apple the rights to sell our software. So despite the software being sold globally we were only paid by Apple in the U.S.


            As far as the examples you are using, Spotify, Netflix and others they have to set up legal entities because they operate outside of the App Store. Also, the reason that stores have regions controls is because sometimes the content publisher doesn’t have the rights to publish in all regions. Books, music and video are all examples of that. A U.S publisher of a book or song may not have the rights to sell it in another country. In the case of the company I worked for we developed the software and owned all the rights.


            The rest of your comment is based on your fundamental lack of understanding of how the App Store works which makes it hard to address. You are working with the incorrect perception that Apple simply provides hosting and transaction processing. While it is understandable why someone would have that impression, it’s incorrect.


            Ultimately we agree, Apple’s one size fits all solution doesn’t work for everyone and they really need to modify it.








            • nbplopes

              In reply to cavalier_eternal:


              Hi. What is really strange is that your are assuming that your experience in selling game copies that you do not specify if they are analog or digital is pivotal to all kinds of businesses.


              Let me give you a little more about myself. I’m a digital business service owner that sells globally and does not have a single app in the App Store or a Google Store. We sell a little over than a million a year and feel that we still don’t have a business ... even though we started two years ago give or take.


              My expenses in app distribution and billing cost is nowhere near 30%. If it was I would not have a business, would make a free app, or some shitty app, made with love, say an RSS reader, just to get some passive income.


              The biggest costs are in the product development and Marketing. To a less degree product support. And there than R&D. Putting an app on App Store would not reduce my Marketing costs,, so I don’t have money to use my marketing resources to direct my customers to the App Store so thy can charge me 30% of the sale.


              Also previously in other projects worked with “analog” retailers banking, insurance and stock brokers. In the area of IT.


              So I believe I have a little understanding of how retail works, how digital business work, how sales work ... so on and so forth.


              The legal agreement you may have with the App Store does not preclude the you legal obligations with each country.


              That is why for instance certain businesses don’t simply go global in the App Store. But if you creating and selling your games all issues might be covered. But there is more than games in the App Store.


              Cheers.

              • cavalier_eternal

                In reply to nbplopes:

                I specifically said that my experience with the App Store doesn’t apply to all businesses. How you managed to turn that into me assuming it is applicable to all is beyond me.


                Also, I have never said you don’t understand how retail or digital business works. I said you don’t understand how the business relationship between developers and Apple works. My statement is correct, by your own admission you have no experience with this and on the number of things you say that are incorrect it’s really clear that you don’t.



                Cheers



                • nbplopes

                  In reply to cavalier_eternal:


                  Fine. So I'm not ignoring anything you said. Simply counter argued some of your points.


                  As for the relationship between devs and Apple, must be something really difficult to understand, totally out of shape with anything else.


                  "Anyway, you are incorrect in your understanding of how taxes work in the App stores. When a customer buys something from the App store they are buying from Apple and not the developer. "


                  Never said the customer was buying directly to third parties!!! That is why I wrote:


                  "As far as Tax goes, the App Store only provides VAT based assurance because its the App Store that charges (proxy). Other taxes that you may owe to the country of the customer is up to your business. For instance, businesses like Spotify, Netflix and many other need o acquire the necessary liscnces to operate in each country directly ir indirectly. Example, HBO Max t the moment is only US based ...."


                  So before you state that people aren't understanding what you say, please go and get a level knowledge to understand what others are saying. Because its seams that these simple statement went completely over you head. Or maybe you are simply a bit distracted.


                  “As far as the examples you are using, Spotify, Netflix and others they have to set up legal entities because they operate outside of the App Store.”


                  This is plain wrong at many levels.


                  The idea that the App Store legitimizes legally your business to operate indirectly in a country just shows how little you understand the “special” relationship you might have with the App Store.


                  This is the level of misguided knowledge that is dragging “everyone” to the App Store arms. Stop spreading stupidity.


                  EDIT: I we (Me and my co-founder) have not went to the market looking for VCs, But if I were a VC would and you idea was not fundamentally and absolutely fab, I would be concerned with the business splashing 30% of its revenue to be in the App Store. And if it was, probably you would not need it .. who knows. If the App Store was still a green field, that would be another matter. I might be worth investing 30% of the revenue.


                  So to end, If eventually want to provide my customer with an smartphone experience, either I can give up potentially 30% of my revenue or develop some web app for a mobile browser / safari that has little to no features for PWA, a tech that aims to provide app like experience but using standard web tech. Given that in the App Store no other browser can exist outside Web Kit, all need to use Apple WebKit, reaching 50% of the users is fundamentally in the hands of one company.


                  Steve Jobs itself, someone I admire, had the idea fundamentally apps in iOS would be Web Apps. What he did not predict was the devs would flock to a green field, completely ignoring the 30% revenue share. He would be furious if any business would require him to potentially share 30% of its business revenue because it needed a component to reach its customer in any context. Furious!

                • cavalier_eternal

                  In reply to nbplopes:



                  “The idea that the App Store legitimizes legally your business to operate indirectly in a country just shows how little you understand the “special” relationship you might have with the App Store.”


                  That isn’t what I said and I’d happily talk about the legal arrangement developers have with Apple and the implications of said arrangement. I have the notion that any discussion of how well the policy works and how it could be changed to better meet developers needs starts with a factual understanding of what it is. Unfortunately you prize talking down to people and name calling over good faith discussion. Good luck you, I’m not engaging further.

                • nbplopes

                  In reply to cavalier_eternal:


                  “I have the notion that any discussion of how well the policy works and how it could be changed to better meet developers needs starts with a factual understanding of what it is.”


                  I fully agree with this one. Furthermore, if one is in a discussion over improving the policy I believe it is required that people have a reasonable understanding about digital services and their needs beyond the App Store policies. Furthermore an understanding of the services that exist in the market for such measure.


                  I am not disputing the idea that simplifies for some devs, in particular tax compliance as they end up not selling directly to their customers. If you are a dev that simply wants to build an app, and sell it as fast as possible exclusively to their customers using iOS devices , the App Store is a fast way to do with even if predicated with the fact that is the only way. It's great for that purpose.


                  But if you are more than a dev that made an app that needs to sell and emancipated from that to become a digital business service, some of the value delivered by the App Store become moot. In particular, digital services that go beyond iOS, they serve customer wherever they are. iOS, Android, Windows, Chromebook, Web .... And then there is B2B! This is mostly the norm.


                  In such an environment digital services setup an international billing and tax compliance platform. It's not that difficult. Some services exist such as HelloTax, 1stopVat, CSS impact, Vertex, Sovos, and many others


                  Also, I’m giving a hint distributing your app and sell international billing along with tax compliance does not require 30% of your revenue in case you want to do it. Not even close, its a fixed anual cost that fo sure if you have a business you can easily cover. Just check some price plans on these services. Neither the taxation is that complex.


                  Once you have this in place, something that you will need to do if you are a digital business serving beyond iOS driven customers. the App Store advantages in terms of tax compliance is 0. Its just something you need to pay to distribute and update the app in order to access. you customers in iOS devices.


                  Why should these be forced to use the entire App Store stack if they don't need it considering it overlaps with other services that need to use and are already paying with far lower costs?


                  I’m disputing the idea that because some need such simplification other needs to relinquish 30% of they services sales in iOS for services that they do not require. Bu than it comes the other argumento ... oh but its a Store .... Well its not a Store, its fundamentally the only way digital services have to distribute native apps to their clients using iOS devices ... 13% of planet earth population. This problem is not only concerning the App Store, but all companies that through their OS market presence can force others to sign specific deals against themselves to reach their customers devices.


                  What is wrong with this policy?


                  "3.1.3(b) Multiplatform Services: Apps that operate across multiple platforms may allow users to access content, subscriptions, or features they have acquired in your app on other platforms or your web site, including consumable items in multi-platform games, provided those items are also available as in-app purchases within the app."


                  What is wrong is specifically the fact that Apple this comes based on the principle that it can state the opposite. This is not clearly to protect iOS users at any level. So its indeed governing how digital business operate in order to be able to access their customers through their devices. What if suddenly Apple changes their mind say to protect some of their services against global competition? It can clearly damage digital businesses. Their power is incredible, 13% of earths population give or take.

    • samp


      Things went 0-100 real quick

  8. behindmyscreen

    I think the result of all of this is going to be Apple moving to a model where you can choose to side load apps but still require the app store participation use the libraries and tools they provide.

  9. jbinaz

    I don't think that Apple being the sole place to get apps on your iOS device is the issue. The complaints about having to use Apple's payment system, the situations where Apple feels they get a cut where they probably shouldn't, developers' inability to own (or access) the relationship to the customer seem to be the real problems.

  10. garrygbain

    I wouldn't worry about it Apple fans, your being over charged enough to cover any financial loss :)

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