The single best move Europe could make would be to limit any digital stores to maximum 12% commission. That would truly reign in the monopoly power of these platforms (typically American) and dramatically boost the revenues of content creators (many of whom are European).
12% covers the overhead costs of the stores and still allows a healthy profit for the monopoly owner.
I hope that next on the target list is Valve, who charges a 30% regressive tax on Indie games but allows big-budget AAA games to get by with only 20% tax:
Why 12%? Seems like a completely arbitrary number, with 0 market input. Why shouldn't it be 40% for that matter, if a bureaucrat is going to set it?
This is the major issue in cases like this, who sets the number? How do they calculate it? How do you know if Apple will be able to sustain an app store with that number? I'm not saying they can't, but will that mean, for example that their approval process for apps won't be as vigorous and we get lots of scam apps?
The worst possible thing here is if some random number is set by some random person who thinks they're _very clever_.
Probably because the Epic Store takes a 12% cut. That they mention the Steam store is very telling - Epic and Steam have been in a spat over this. I highly doubt its a coincidence that their number matches Epic's exactly.
Maybe he tossed out a number he feels comfortable paying in taxes. I worked a bunch of overtime last year as a favor and ended up getting bumped into the ~30% tax bracket for income. I’m feeling pretty ragey about it myself.
That's arguable. You could say, not everybody loves is delighted that the value(to themselves) of their work goes down, the more they do it. I think most people accept some form of taxation but annoyance at idea of diminishing returns is very understandable.
> How do you know if Apple will be able to sustain an app store with that number?
I suspect part of the problem is that Apple could be creative with its finances and make sure that just about any cut that isn't 30% means they can't sustain an app store. Apple earns an insane amount of money, they could get by with 0% commission just fine, but it's not in their interests to ever admit that.
Sure, 12% is made up, but the result of just about any negotiation is a made up number that sits somewhere between what one party wants and what the other party demands. It's just the nature of it.
I'm not suggesting anything, I'm not the OP. But to my mind they were suggesting that it is the kind of number that could come out of a negotiation and seem appropriate.
The difference between steam and apples store is that if I want to install a game on Windows I can download a binary and run it or use a rival platform.
On Apple you don't have that choice so the onerousness of the store policies effects consumers by proxy but the lack of freedom for users directly is far worse.
Honestly the EU should threaten to force a requirement to allow third party applications to run, Android clears that bar already, Apple not so much.
I like your idea of 12% but can we make it 12.5% (pieces of eight..).
> On Apple you don't have that choice so the onerousness of the store policies effects consumers by proxy but the lack of freedom for users directly is far worse.
This is one of those "popular on HN because it impacts developers" points. Everyone I know is extremely happy with their iPhone in terms of apps and the appstore. Allowing a flood of apps will not make it better for a lot of developers - ones that followed the rules and didn't make shovelware. Now good apps will get drowned out in a sea of garbage.
Not sure they could get away with it (but would be amazing if they could, the push back would be collosal) but it's a hell of a sword to dangle over Apple's head.
And yes I agree that should be the case, having a side channel like that makes the App store behave better because if you piss users/developers off enough they will go around you so then you have to compete on ease of use, discovery.
We don't need to debate the tradeoffs, but we should acknowledge that there are tradeoffs. If a side-channel is available to all users, developers will spring into action making games, porn, and discount coupon apps that can only be installed via the side-channel...
Bypassing security review. Next thing you know, a goodly number of the world's phones have become surveillance devices, bank account emptiers, DDOS zombies, and bitcoin miners.
Whether the benefits of a side-channel for liberties outweigh the negatives of such a future is a worthy discussion, but we ought to at least acknowledge that the walled garden has some merits above and beyond Apple's stock price.
I believe security isn’t an either/or, there are a number of countermeasures, and they all serve a purpose. For example, sandboxing is the exact thing you’re speaking of: anti-malware built into iOS.
But another thing is reviewing apps looking for dark patterns in the UX. That is not relevant to the hey.com situation, but it is one of the things I think needs to be done by humans at this point.
Next: You are speaking of “Freedom Zero,” the freedom to own your own hardware (and software, ideally). I am 100% in favour of everyone having Freedom Zero.
But! I think it’s a little like freedom of speech on the Internet. If every single social media site everywhere has moderation, and bans users, and every hosting company rejects web sites for %reasons%, then nobody has freedom of speech.
But if there is genuine choice, if some users can hang out on HN—where there is moderation—and some users can go hang out on (not listing names) where they can talk white supremacy and billg’s conspiracy to implant microchips in vaccines and why women have the real power in the world...
Well, then HN doesn’t have freedom of speech, but the internet as a whole does.
My feeling is that when a single walled garden reaches a certain dominant size, then it really impacts freedom zero. I’m not sure that Apple is there yet just because it makes a lot of money. Users still have a real choice in devices and ecosystems. I’m Apple, my own brother is Android.
But I agree that there is a point at which a company can become a de-facto monopoly. I don’t agree this means “over their customers.” A mall has a monopoly over those who enter, but that’s not relevant until either all the malls take over an entire town’s shopping.
But yes, “Freedom Zero” matters, and yes, there could be a point where a single company becomes dominant enough that users don’t have a realistic/reasonable choice when buying devices.
But indie publishers can choose not to sell on Steam - there are numerous online stores they can choose as well as selling it on their own site.
If you want to sell an iPhone app, you have absolutely no choice but to go through Apple, and that's where the real problem is. --They make it pay-to-play for devs and prevent customers from making their own decisions on what to put on the devices they own.
IMHO, that’s a feature, as long as it’s possible for apps to be malicious.
I’m a relatively experienced dev, but even I don’t have the tools or time to figure out whether some app is safe. So when I had Android hardware, I mostly didn’t install apps.
My kids and parents don’t even have the experience to recognize that an app could possibly be malicious; they wouldn’t be able to figure it out even if they had the source code.
So I buy Apple hardware for all of them, specifically because I like Apple’s gatekeeping. Because 99.99% of app developers might be great people, but if you have an open system, it’ll be abused, and I have better things to worry about.
Is there reason to believe apps on Google Play Store are significantly less safe than apps on Apple's app store?
I think that Android provides the best of both worlds: gatekeeping on the official app store, and the option (with warnings) to install from other sources. I believe that families and enterprises can also disable third-party installs.
The last Android phone that I had was a Galaxy Note 4. Along with the bloatware that Samsung pushes and can not be uninstalled, there was an app called Peel Remote. This app is also published to Google Play Store and updated from there.
So, after updating my apps from Play store to latest version, as you are supposed to do, at morning I woke up and saw my home screen was changed and showing an ad. Also, I realized, sometimes a full screen ad pops up, randomly when I was using the phone. After a lot of investigation, I found out the uninstallable app that is included in the phone, Peel "Smart" Remote (the irony), which is published and updated through Play store, silently decided that showing full screen ads and replacing my home screen with ads was a good move, through an update.
There is NO WAY that an update like this could be pushed to Apple's App Store.
It also has nothing to do with the issue. The Play Store could be (and has been made) more and more safe, while retaining the option of alternative stores and installation sources.
The approval and screening process were not adequate and stuff like this were always happening. Google still thought they are entitled to get 30 percent.
I am not sure how or when it has improved but my trust was breached and it was not restored still today. There are a lot of junk/fearmongering/placebo applications in Play Store, e.g. "RAM Cleaner" or random "Anti Virus" applications.
Apple should relax their requirements, sure, but I am really willing to stick to the Apple store to prevent stuff like this.
For example, the strict "All purchasing/subscription offers made in the app should be from Apple Store" should be changed to "You are allowed to inform your customers that there are other ways of subscribing, but you have to offer the same options through the app".
I understand this clause is there to protect customers from shady apps that try to trick customers to pay for non relevant things (e.g. app asking people to purchase something else to activate the app outside of app store), while it is too convenient for Apple to guarantee that they will get their cut.
Apple's big lie is that their "curation" prevents bad actors, when historically we've seen that apps will track your usage, location, harvest contacts, etc. etc. even when allowed in the store.
There are other options for phones if you want to run 3rd party unapproved apps. I use an iPhone partially because there is less garbage in the App Store.
Are you upset that console manufacturers control who publishes games or software on their platform? None of the current (or past) major consoles allow third-party unapproved software (without bypasses), leading to the same situation.
> Are you upset that console manufacturers control who publishes games or software on their platform? None of the current (or past) major consoles allow third-party unapproved software (without bypasses), leading to the same situation.
All software is not equal.
Would you say that gatekeeping video games is equal to gatekeeping software that could be essential to people's lives(finance, health, social media, etc)?
What's the issue of Apple Runtime choosing what's running?
You are buying a bundle of apple hardware+runtime, that's what's in the box. For hardware that you can replace the OS choose another device.
To me the solution seems more with being able to choose which OS I can put on some metal. iOS is very sepecific OS for a specific metal, it shouldn't need to cater to everything.
The thing about Android and windows in the past (about IE and GApps) is very different in Apple's as it is selling a combo. That metal-runtime integration, those envirnment consistency, that cathedral instead of bazaar, is why people buy iphones, not Androids or Libres.
It's only 15% after year 1. Until then it's 30%. Also, I believe it's 15% after an individual subscription has been ungoing for a year (it doesn't apply to all subscriptions after the app has been out one year).
Finally - does anybody know how users unsubscribing and resubscribing affects this? I do this a lot with services if I'm not using them in a partiular month - when I resub is the counter back at zero and I need 12 consecutive months before the developer drops to 15% comission?
The problem is that Apple imposes a tax on _competing_ services, and has similar offerings and doesn't allow other payment options.
Even if the fee is only 1%, it will still tip the scales in favor of their products and services. That's 1% more that Apple can use to get better deals, better marketing, better prices. Long term as the market matures they should win.
They can impose any fee they want, but they should not actively obstruct different revenue streams and different payment mechanisms. I'm OK with an in-app Spotify subscription being €14.28 if it clearly communicates that €4.28 is the store and payment processing fee (VAT included), and allows for different payment options. It's no different when I choose a Paypal vs Credit Card vs wire transfer. Sometimes the consumer may go for the convenience of the more expensive payment mechanism, but that should be the buyer's decision.
Apple could argue they sell their Gift Card at 15% discount and they will not be disclosing / we will never know how much revenue of App Store are from those. Apple also give ~5 to 10% margin to Network Carrier for Apple Credit via Mobile Billing.
Which is to say 12% is a fairly low number.
I dont have a problem with 30% cuts per se, I have a problem with Apple forcing IAP, applying rules when ever they see fit aka Hey and Fastmail / Gmail Case, dictating price because you cant have your product more expensive than via the web.
Given the recent iPhone 11 pricing was actually lower than expected and Apple doesn't seems to be pushing ASP anymore, I would not be surprised if Apple moved some cost over to App Store department. Namely how the App Store revenue will support iPhone / iOS update model for 5 years that is much longer than industry average on Android.
I actually think if there were a limit it should be limited to whatever the average payment processing fee is, so about 0.3%-3% depending on the country. They already charge for ads, and benefit from the size and scale of the platform, so it's not like the thing is free.
However, the bigger move is just letting consumers pay how they like, without apple taking a cut.
Apple has a huge user experience advantage by being baked into the OS and can be a default option. It definitely doesn't help any consumer to prevent users from being able to use their payment method of choice, and preventing the app maker from having transparent payment methods.
I switched to Android years ago because of how irritating it is to have to go around apple to pay for things.
Something often not accounted for is these stores offer gift cards at much higher payment fee rates (seemingly at least 10%). And you need to avoid a scam where developers just syphon that through.
I believe at least some of the time they also do currency conversion for you which typically nets another 3%
Of course they could always charge a variable commission based on the funding source etc and also charge less than 30 still (eg Apple Cleary thinks it can do 15%). But their cut is not always as simple as 3% or less.
Can be and is the only sole option. Even if Apple's app store is baked in, I wouldn't balk at any commissions they feel comfortable with and any draconian rules they use to extort developers as long as users would have the possibility to install apps outside of the store, but as it's impossible (unless you jailbreak which can be more or less impossible on some devices) it creates a huge issue.
There's definitely benefits on being listed on the app store and developers should have the option to weigh the benefits against the cons to see if it makes sense to allow Apple to dictate their publishing methods and cuts they're taking vs self publishing, but that's currently not an option.
I'm not in favour of governments setting prices, because it's not flexible enough, it's costly for tax payers, and it creates incentives for lobbying (or bribing) the regulator instead of becoming more productive and offering a better service.
What governments should do is make sure that markets work. The global app store duopoly with it's uniform 30% revenue cut is an egregious example of a dysfunctional market that allows rent seeking and absuse of power.
App stores should compete based on their own merit. OS platforms should be forced to offer a range of competing app stores with equal visibility. Then we'll see how much customers actually value Apple's app store.
If you want to destroy the profitability of smaller developers, this is exactly the strategy to adopt.
If you think that dealing with one set of App Store policies designed to benefit the store owner is a problem, how does having to deal with multiple stores with different rules solve that problem?
And maintain different versions to comply with the different stores requirements?
Upload in different ways to each store?
Deal with different liabilities that the stores allow to pass through to you?
Respond to bad reviews through all the different stores interfaces?
And for what? What percentage saving do you expect to see? Other stores will not be free.
Deal with when one of the stores gives your app away for free as part of a promotion that you agreed to without realizing it in the small print somewhere?
I don’t disagree that the current situation is bad for independent developers.
But competing stores will only makes that vastly worse.
I’d like to see people actually say what a competing store would do better to help indies.
>And for what? What percentage saving do you expect to see?
I would expect roughly 10% to 15% revenue cut, far more favourable terms, less bullying, less paternalistic content restrictions and above all the option to say no to any individual app store that makes egregious demands.
They have us by the throat. One mistake and you're out. You can be banned for life without recourse. Your career may be over, your skills worthless.
Ok - so assume a store opens with a 10% revenue cut, and ends up with 50% of sales.
You still have to support the Apple store otherwise you lose half your sales.
The effective commission is now 20%. So you pay 10% less commission but must deal with 2 stores.
That’s with just a single additional store taking 50% of the business, which is an unlikely scenario.
Consider that it is inevitable that new stores will not all be independent.
Google and Amazon will immediately open stores if Apple is forced to allow 3rd party stores.
Will their cut be lower than 30%? I see no reason for it to be. Google play is 30% right now. Maybe it will be 25%, but they have no reason to minimize the commission.
Will they get significant traffic? Yes - they both have the ability to push their stores via their giant advertising platforms. They will also use the opportunity to push browser based platforms that they control, and which will further fragment the user experience.
Why would they need to dramatically improve terms for developers?
Neither has any record of doing so.
Would they allow all kinds of App? No. They don’t right now. Why would they in future?
So you’re going to have to deal with all 3 of the big stores.
Now assume some independent stores get funded which actually do offer better terms for developers.
What percentage of the market will they realistically get?
And how can you benefit from their ‘less egregious demands‘?
If you want the percentage of revenue from the Apple store or from the Play or Amazon stores, you will have to meet their demands.
Therefore you will either make a lowest common denominator version that complies with the restrictions of all stores, or you will need to maintain multiple versions.
Requiring Apple to allow multiple stores will be more expensive and more restrictive and force developers to deal with even more rules.
>Will their cut be lower than 30%? I see no reason for it to be. Google play is 30% right now
Yes, I'm sure of it. For instance, Microsoft's fees are just 15% because they are less powerful right now. The more stores there are, the less powerful each of them would be and that would create an incentive for all of them, including the incumbants, to cut fees and offer fairer terms.
We might well see new entrants beyond Google and Amazon - people like Microsoft, Stripe, Puddle, Shopify, Valve, Facebook or startups that don't exist yet. Maybe the content side and the payment/billing side of stores would be run by different companies. Who knows.
As soon as you have credible alternative stores with equal visibility, the most profitable customers will leave the incumbants if they don't relent on fees. Small developers will be able to tag along, because everything else would be seen as obviously unfair.
If you claim that the balance of supply and demand has absolutely no bearing on prices and terms, then I will never be able to convince you. But you're going against every single historical example of how markets work.
I don’t claim that the balance of supply and demand has no bearing on prices and terms. That is clearly a straw man.
I agree that the balance will end up with some stores with reduced fees. Perhaps they will all be forced down to 15%, but you if you are denying that those with greater reach will have pricing power, then you are the one who is going against every single historical example of how markets work.
However unless there is another monopoly outcome - I claim that the result would be utterly destructive to independent developers.
You have now posited the requirement to support as many as 8 stores. That alone will easily offset the benefit of paying 15% less in commission for small developers.
Every app release will be more expensive, and that ignores the fact that the overall system will be less efficient, since every release will result 8 separate app reviews, etc.
Commissions will go down, but costs will go up.
All the benefit of the lower commission environment will be transferred from independent developers to larger corporations for whom the cost of releases is a smaller percentage of their total.
It’s also worth pointing out that Android already allows alternative stores, and yet Google somehow manages to keep charging 30% for the play store, and there are no common alternatives in the US.
How can your theory be correct when this clear counterexample exists? For that matter why hasn’t Google just reduced the commission to 15% or even lower to induce developers away from iOS? Surely they could have done so at any time.
>You have now posited the requirement to support as many as 8 stores
That's a surprising read of what I said. I named a couple of companies that might be interested in running a store. I do not belive for a second that all of them will, nor did I suggest that that developers are required to support every single one of them.
I highly doubt that there will ever be more than three general purpose stores per platform, and perhaps some specialist ones that most developers don't use (e.g. for games, enterprise apps or to serve specific countries).
That and the threat of possible new market entrants will be enough for stores to compete a little bit more for developers and lower their fees from the current egregious rent seeking levels. It will also reduce the risk of getting banned outright from your target platform.
It seems the only point we really disagree on is the additional burden developers would face if there was a bit more choice. I understand what you're saying, but I believe your fear is grossly exaggerated.
Yes, reviews will cost a bit more overall. But that will easily come out of the incredible margins of current oligopolists.
I think part of our disagreement on the burden is the idea that developers would be able to choose which stores to support.
Of course in principle they would be able to choose, but in practice, by doing so they give up a percentage of revenue.
If price competition brings commissions down to say, 15% on average, developers must support a combination of stores with a minimum combined market share of 85%, just to break even on where we currently stand.
Even if the majority of purchases are made from a few large stores, developers will likely be worse off unless they also support some of the smaller ones, and even then, the fragmentation means that the full cost saving of the reduced commission will likely never be realized.
And in this world where there are 3 major stores and some smaller ones. Every serious developer will be required to support all of 3 of the major stores to get close to the current revenue.
The improved margin just isn’t that much once you start losing access to addressable market.
On top of this, as I have said elsewhere, to actually get into all these stores, your app must comply with the superset of regulations.
I think it’s fair to assume that that Apple, even if they are forced to reduce commissions, will not be likely to ease regulations significantly.
The notion of a safe, well policed store, is a core value and one of the reasons people choose the brand.
Even if they only retain 20% of app sales, developers will still need to comply with their regulations if they don’t want to be worse off than before, and in addition will have to comply with whatever the other stores require.
I don’t think there is any gross exaggeration here.
There just isn’t as much gain to be had.
It would be a different matter if Apple could be pressured into reducing margins without fragmenting the store landscape.
>If price competition brings commissions down to say, 15% on average, developers must support a combination of stores with a minimum combined market share of 85%, just to break even on where we currently stand.
I doubt that. I think if there were two or three major app stores, almost all consumers would use all of them.
And even if they didn't, I would still feel far more confident committing to a platform where one particular corporation cannot take away 100% of my customers over night for some frivolous reason and ruin my entire business.
Another upside is that I wouldn't depend as much on the ranking algorithm of one specific app store. My livelihood would simply be far more secure if it wasn't so completely dependent on the whim of one or two global corporations.
I don't have to comply with a superset of regulations. If I'm making something that is only allowed on specialist app stores (such as porn for instance) then my users will find me there. That's better than reaching 0% of users.
Well these points weaken some of your earlier ones.
For example - if it becomes a duo or tri-opoly there is no reason for them to race to the bottom on commission - remember the store’s customers are the app buyers, not the developers.
Stores from Amazon or Google simply wouldn’t need to lower commissions as long as they had more than 15% of the customers to bring to the table.
I agree that the ranking algorithm is a problem and I think Apple should at the least provide an alternate storefront API, but you contradict yourself here by saying you’d be more secure if You weren’t dependent on the whim of one or two global corporations, because you also said you think two or three stores would be used by almost all consumers.
If you are a porn developer it’s true that you’d only need to comply with the rules of a specialist porn App Store.
However the vast majority of apps are not porn and are of mainstream appeal. All of these apps would have to comply with the superset of regulations so this is not a counterargument.
Breaking up the App Store will simply harm the majority of indie developers. I grant that it may help porn producers.
> The single best move Europe could make would be to limit any digital stores to maximum 12% commission.
An app store ballot with mandatory permission for third party stores (save perhaps a small list of rules such as not a dedicated piracy service, but with no editorial lines at all) would be the best.
Then Apple's app store would have to compete in the market. If customers love it's curation as much as some people claim it has nothing to worry about.
The likelihood is that there are less than five stores.
The amount of extra work is trivial.
They would receive substantial extra revenue - stores wouldn't have to race to the bottom with IAP revenue, could do things like upgrade pricing, and the margins would fall to a fraction of what they are today. They could make their user experience better than the current mess of having to go to the web to purchase things and then come back to the app, boosting purchases. App stores would have to compete in providing useful toolsets for developers. Developers could attract new userbases of topics frequently censored by Apple, of which there are many.
Independent developers are being choked by the iOS app store and there would be a financial bonanza for them with more stores.
Stores would of course race to the bottom, because they would be competing for customers, not developers. If you think a store with higher prices for the same Apps is going to attract customers, I respectfully think you are wrong.
Developers would have to support any store with customers. New stores would not be developer friendly. They would belong to people with the reach to get the stores to be downloaded.
Guess whose stores those would be - Google’s and Amazons.
There will be no bonanza. No amazing indie stores. It will just be 3 bad stores racing to the bottom, and making things harder for people.
> 12% covers the overhead costs of the stores and still allows a healthy profit for the monopoly owner.
What’s so special about 12%? How would it cover the costs for every platform? Why shouldn’t capitalistic companies in a capitalistic market charge more (like 30%)? Book publishers and Amazon routinely take significantly much higher commissions. So why is the App Store to be treated badly while letting the other industries and companies continue their practices?
12% covers the overhead costs of the stores and still allows a healthy profit for the monopoly owner.
I hope that next on the target list is Valve, who charges a 30% regressive tax on Indie games but allows big-budget AAA games to get by with only 20% tax:
https://variety.com/2018/gaming/news/valve-revenue-split-cha...