They're nuts. All they are doing is setting themselves up for another set of lawsuits.
Seriously: Apple should focus on selling hardware and be happy to facilitate those payments that people - and application developers - voluntarily process through their system.
All this stupid taxation of other peoples' businesses should stop, it is anti-competitive behavior that they themselves would never tolerate.
Imagine if in the past Apple would have had to pay 30% of their gross to Microsoft in order to be allowed to run their software on Windows.
I think Apple's stubbornness at keeping their commission ~30% underscores how critical that percentage is to their bottom line profitability - both present and future. "Services" is foundational to Tim Cook's vision to continue to grow the company and increase its revenue streams.
Based on latest Q4 earnings, Services is one of the highest growth segment of Apple at 25% YoY (others being Mac at 25%, Other Products at 13%). As the clamor for M1-based Macs subsides, monetizing its existing 500M+ users is the only major revenue-growth area. But what happens if their commission rate is cut in half to 15%? Apple doesn't break out the specific App Store revenue amount or percentage but it must be quite significant.
Hence they're willing to risk these continued lawsuits and regulatory backlash. The day that Services division no longer reports 20%+ YoY growth could well be one when Apple stock faces the reckoning like FB/Meta.
So Apple has around one billion customers. When you look at global income distributions there are not that many more people that actually have enough income to afford their products. Practically speaking while they may grow their customer base a bit further, they cannot double it without making far cheaper products or the world’s population becoming a lot more equally distributed income-wise.
The consequence of this is that they have to lean into inequality: get their existing high income customers to pay them more money. This is why services are such a good strategy and they are so unwilling to give up on that revenue, and it is also why they are planning to launch very expensive (and therefore high profit) new product categories like vr goggles and cars targeted at their existing customer base.
Apple is so ridiculously big that it is fun to map them back onto the world economy. Their yearly revenue is 0.4% of the world economy. Their market cap is 0.6% of global wealth. But that does present a real challenge to Tim Cook to keep growing. If apple doubles again they will be 1% of the world economy. Does that make sense for what amounts to a luxury brand?
And the problem for them is as they shed the luxury brand and become mass market general computing... the antitrust regulations will just keep accumulating, increasing the pressure. A vicious cycle.
Yes, ironically, a piece of software that becomes used by everybody, or at least everyone it ever might be used by, becomes worthless in the eyes of investors, because merely tracking with population growth would be seen as a sign of a dying business. This leads to self destructive behaviors as the product tries to monetize itself in unpleasant ways and expand into non-core competencies. Dropbox is an often sited example.
What if you planned a complete software product lifecycle and create a pool of talented teams / organizational modes that can adopt stewardship of the software at various life stages with the goal to smoothly transition between stages without harming users or workers?
Lets say it looks like this for the sake of argument: stage - organizational mode - goals
Idea / Proof of Concept - individual or team - prove the idea out
Growth Software Product - startup - carve a space for the product, grow its useful user base to a target number, transition to Utility
Utility Software Product - utility - maintain the project and optimize costs and delivered value, transition back up to Growth or down to Archived
Archived Software Product - library / anthropology - tell the story of the project, minimize costs, make it available to a wide audience, organize its community, transition back up to Utility
The idea is to have a pool of teams and organization templates where you aim to "pass the baton" between modes depending on the lifecycle stage of the software, and individual teams and orgs are rewarded based on how they meet their objectives including delivering a seamless transition to the next stage.
That's very well thought out. Sadly feels overly aspirational when just "keeping the lights on" is often underrated and neglected in many companies. Maybe eventually a good business will have the foresight to think of their organization in terms of different lifecycle stages.
Thanks. I agree that today's profit-oriented organizations are generally unsuited to act out this kind of product-centric methodology. Maybe future nonprofits or DAOs or something could pull it off.
How can you ignore this past week when this past week is _directly related_ to their account growth falling off a cliff because of the exact over-saturation of the market we're discussing here?
Yes, they're not valued on making $10 billion per year. That P/E means it would take 24 years to make your money back. They're valued so highly because they're growing and it's expected that in ten years, it'll $30 billion per year, cutting your return time. If growth ends, then this overvaluation corrects itself.
24 years to earn your money back works out to a 2.9% annual rate of return, which is a little bit above both the 20 and 30 year treasury yields (~2.23%), reflecting a small but positive risk premium for a big blue-chip company that is generally seen as a low-risk investment.
This looks like another example of how low interest rates cause stock valuations to run up until their long-term yields end up only slightly higher than bond yields. Investors expecting that rapid growth to continue might be disappointed.
When companies aren't growing explosively they're worth (looks at INTC) 10 P/E. If AAPL hit their ceiling they'd be overpriced by 2.8X. (Hand-waving away dividend and buyback differences)
Ironically, this 30% and the pivot to "Service" is why iOS devices get updates after 3 years while Android phones just become paperweights.
Android OEM are incentivized to sell as many phones as they can. They only make money on new hardware. Apple on the other hand still makes money on older hardware as long as the user still buy from the ecosystem. So it makes sense for them to keep the products working longer.
>Ironically, this 30% and the pivot to "Service" is why iOS devices get updates after 3 years while Android phones just become paperweights.
Apple's support window advantage long predates their services initiative.
Every flagship iPhone since the iPhone 4s in 2011 has gotten at least five years of OS and security updates.
If you count years where you only get a security update, but not an OS update the way the Android ecosystem does, they have devices that have gotten eight years of support.
If it's just a question of revenue, Google can certainly afford to update it's Pixel devices for more than three years. Heck, they can afford to offer customer service and technical support hotlines the way Apple does as well.
However, the claim made was that Apple only started offering a longer update period after they started calling out service growth. This simply isn't true.
They can except... They don't control the SoC! Qualcomm decides if a SoC gets to boot a newer Android or not. And it’s in Qualcomm’s interest to sell more chips, since they get no revenues post sales; only maintenance costs.
That claim doesn't hold water. If people doing unpaid community support can produce custom ROMs for older devices that are no longer supported, Google can support older devices too.
Not to mention the ability of any company to make demands of their suppliers. If Google can demand device makers not use a fork of Android, they can demand suppliers offer support for their products.
Google simply doesn't care, because the customers they care about are the advertisers, not device purchasers.
Great point. Apple is lauded for their 5-6 year of iOS updates but it's not an altruistic move - the updates enable users to keep using their apps/services.
Also there's an upper-bound on price for an iPhone Apple is able to charge and if I can speculate, the "Pro" lineup does not outsell the "base" iPhone significantly. For one, there isn't enough product differentiation for an average consumer to pay the $300/40% price premium.
So in the world of 3-4 year iPhone cycles, keeping up the walled garden and monetizing those within is the surest path to revenue growth.
Apple's approach is even simpler from a technical point of view. The oldest supported iPhone is the second generation of 64 bit processor. There were almost certainly problems with the first generation (of anything). The oldest supported Watch was the first with (a now mature) 64 bit processor. They made it mandatory for apps in the store to be 64 bit.
Android meanwhile supports 32 and 64 bit, multiple instruction sets, multiple (incompatible) SOCs etc. That is a lot more challenging.
>The oldest supported iPhone is the second generation of 64 bit processor. There were almost certainly problems with the first generation (of anything)
The iPhone with the oldest version of a 64 bit processor (the A7 used in the 2013 iPhone 5s) fell out of support after six years because it no longer had enough RAM for the new version of the OS.
Google figured out the game better than that. After a few years there's no ongoing costs for those devices, but they still take their vig if users continue to use them.
Please don't attack services in general. There's nothing wrong with selling your OWN services.
Apple TV+ and Apple Arcade are examples of good services where Apple are commissioning and paying content producers. The services are good value, good quality and have competition on a level playing field (e.g. Netflix directly compete against both and don't have to pay a commission to Apple despite both their games and video services appearing on the App Store).
Other services from Apple like cloud storage, Apple News and Apple Music are more debatable value but they have competition so if you don't like them, use something else.
The App Store is different because you don't have an alternative. It is a parasitic system where where 70% of revenue (not a guess, that's the real number according to emails in the Epic lawsuit) comes from loot box grifting in games and there's literally no alternative to Apple's 30% tax. It is a poison chalice from top to bottom.
I honestly prefer to use Apple payments and Apple "Hide My Email" as I'm sure a non-trivial number of users do. If they could just refocus on making developers prioritize that flow for users over outside payment systems (e.g. create a flow requiring users to agree to disclose their private information to the app maker and third parties in order to use an outside payment system) then they'd keep most of their customers in the Apple ecosystem and keep the payment processing.
The fact they are trying to keep a stranglehold on this revenue seems penny wise and dollar foolish. Clearly regulators are gunning for them and it's not long before they lose this and don't get to set the standard.
> I honestly prefer to use Apple payments and Apple "Hide My Email" as I'm sure a non-trivial number of users do. If they could just refocus on making developers prioritize that flow for users over outside payment systems (e.g. create a flow requiring users to agree to disclose their private information to the app maker and third parties in order to use an outside payment system) then they'd keep most of their customers in the Apple ecosystem and keep the payment processing.
It's pretty good stuff.
But they seem to be admitting that the payment processing is only worth a 3% cut. And you wouldn't charge apps for the email hiding.
They’re charging the apps for distribution, which is a lot of infrastructure and a lot of human-driven process that doesn’t come for free. There are good platform reasons for not allowing alternate distribution methods.
There are no wholesale prices for digital goods so they get tacked on as fees. All Apple is really doing is asking developers to give their customers an all-in price that they’ll display. You as a developer are free to raise your prices 30% on iOS, and many in fact do.
Every segment of every market does not need to be relentlessly competitive. Apple’s App Store rules are obvious, and if you don’t like them, you’re free not to develop for their platform (which itself is the product they sell to their consumers; not your app and of which the iPhone is only one component).
You are not entitled to be profitable any way you want; you have to find a niche in the market that’s profitable and if you can’t make money on iOS, the market solution is to just do something else. Countries — especially relatively small ones — that try to legislate around this are just as likely to be seen as more trouble for Apple than they’re worth to have an official presence in.
> They’re charging the apps for distribution, which is a lot of infrastructure and a lot of human-driven process that doesn’t come for free.
Yes but they're overcharging.
> Every segment of every market does not need to be relentlessly competitive.
It's significantly better for consumers if a 27% distribution fee faces competition.
Alternate app stores are a poor way to achieve this, but that doesn't mean the status quo is good.
> You are not entitled to be profitable any way you want
Same to apple. They want to control things they shouldn't have this much control over.
> Countries — especially relatively small ones — that try to legislate around this are just as likely to be seen as more trouble for Apple than they’re worth to have an official presence in.
If they get that aggressive, then thank goodness for the EU.
> Same to apple. They want to control things they shouldn't have this much control over.
I think that’s their right as a platform owner. They have no responsibility to sellers setting up shop in their walled garden. If the App Store was the busiest shopping mall in the world, they’re not obligated to make rent cheap; if your business model doesn’t work, apples rules are not new and you knew them before rolling the dice on an iOS app.
Under US law there is no guarantee it’s possible to craft a law that would stand up in court anyway.
> If the App Store was the busiest shopping mall in the world, they’re not obligated
If there were only 2 major places in the entire world to buy things from, and Apple had 57% of that shopping revenue, then yes, absolutely they would be obligated to do a lot of things.
Is it really nuts though? This should be a completely unsurprising move, given this is exactly what Play Store did in South Korea [0]. That's three months old, has anyone heard of a followup suggesting their solution is being treated non-compliant by the regulators? This solution also seems to be in line with what the US courts found in the Epic vs. Apple case.
> Imagine if in the past Apple would have had to pay 30% of their gross to Microsoft in order to be allowed to run their software on Windows.
Anyone making software for the Xbox has to pay Microsoft. Why is this different?
Edit: Good grief, people. I am not pro-App Store. But jacquesm is literally claiming that Apple is nuts and that their solution will never fly. But everything we've seen so far in analogous cases suggests it will.
> That's three months old, has anyone heard of a followup suggesting their solution is being treated non-compliant by the regulators?
Yes, reported on yesterday by Reuters [1]:
> As for Google's plan, the official said the KCC was aware of concern over Google's planned policy of only reducing its service charge to developers by 4 percentage points when users choose an alternative billing system, and the regulator is waiting for additional information from Google.
> "As a result of any policy, if app developers find it realistically difficult to use an alternative payment system and resort to using the dominant app store operator's payment system, it would not fit the law's purpose," the official said, adding that this stance would likely be reflected in the final ordinance.
Consoles are a super interesting comparison. In principle, I agree that they should have to be open too.
On the other hand, consoles' hardware is nearly always subsidized by expected future software royalties, while Apple makes a lot of profit just by selling the hardware alone.
But these are internal details that shouldn't matter at all when deciding if a business practice is valid or not. If I want to sell a toaster (regardless of whether it's sold at loss or gain) that only toasts bread that I bake, I should be perfectly entitled to do so. And if users flock to my toaster due to its simplicity, predictability, and ease of use, then the fact that other bakers are upset about this shouldn't matter in the least bit.
Whether a toaster or console or smartphone is sold at a loss or gain is an internal detail that isn't even public. It's totally irrelevant.
Well, sure, and you can try to and some even succeed in jailbreaking their iOS devices. That doesn't mean that Apple should be anything but hostile to such attempts.
We've reached the first point in recent history where we're really seeing products with actively anti-user features at scale. Coffe machines that only take proprietary coffe pods, printers that have DRM on ink cartriges, and more. These are all on a much smaller scale than a computing device that we use for a significant portion of our lives, both for management and entertainment.
Another comparison would be a car that can only drive to restaurants that agreed to give the car company 30% per customer that arrives in one of their cars, and there have to be fences around it to make sure you're not walking to the restaurant next door by foot.
I'm not sure I agree with "I should be able to sell anything with any anti-features I want" anymore to a certain extent, since it does affect such a large part of our lives, as general computing machines.
Arrangements that subsidize a large purchase (printer, paper towel dispenser, coffee maker, razor, smartphone, tractor, etc.) by locking the purchaser into an exclusivity agreement for consumables from the same company (ink, paper towels, coffee pods, razor blades, smartphone apps, tractor maintenance, etc.) are as old as these have been feasible. This innovation tremendously benefits both parties. I'm not sure why you'd dispense with it really.
A simple line of reasoning, like the Earth being flat. Big companies love it because it's the perfect way of avoiding competition, leveraging existing monopolies to build new ones, locking customers, using assimetry of information to hide true costs from them, etc... It has plenty of regulation against it, although it is not truly enforced thanks to deep pockets.
It's a line of reasoning that follows the original intended definition of liberty. Anything I should be free to do in my basement and sell to my neighbours I should be free to do at massive scale. There's no avoiding competition. If someone out there innovates the next generation of personal computing, they will eat Apple's lunch, just like Apple ate RIM's.
It's ideological because this whole idea of forcing terms onto Apple to open it's store is basically socializing parts of Apple infrastructure and parts of its workforce. To me this is totally unacceptable. Apple's innovation has advanced the state of the art a great deal. This company literally invented the concepts that we're now seeking to rob it of. Why can't we just be grateful that the free market was able to produce such a marvel, be glad for the nice devices we all carry around, and leave the org and its investors well enough alone?
Also which economic theory am I ignoring? Didn't Apple itself enter the smartphone market by massively disrupting the existing players and forcing the entire industry to play catchup for over a decade? Didn't they do this without any regulatory intervention to weaken the market incumbents at the time? Why can't we expect that the next smartphone-level innovation to personal computing will come without similar intervention on our parts?
Lol sure let's invalidate all patents for starters, if you want a free market. Copyright next. See how much will be left of Apple's hegemony. Or just admit that regulations are a thing we use to get socially optimal outcomes and not get trapped in market failures like monopolies, duopolies, and negative externalities. Your fetish for unregulated capitalism is not as popular as you think even in the US.
>Apple makes a lot of profit just by selling the hardware alone.
Do you suppose that means Nintendo, which has sometimes turned a profit on their consoles, should have an open system? Interesting take, and I wonder what, in your mind, the threshold is for "makes a lot of profit." I.e., if Apple cut the price of their devices to make as much profit as Nintendo, would they get a pass?
To be honest, I haven't thought about that much, and don't have the mental capacity right now to really think about the answer. It's a good point.
On the spot though I'd say that that would make Nintendo the ones that should open up their system in my mind though, provided they are making a sizeable (10% including stuff like R&D over the span of a few years) profit.
It would be interesting to see the reaction if consoles had to be open to other store (my opinion is that they shouldn't since their are not general purpose devices per se). When the Epic Game Store appeared, the pc gaming community was up in arms against it because it was a Steam rival (sort of a tribal reaction) but were complaining against the NVIDEA GPU monopoly
Why? Because how much you have to pay is determined by how much the platform owner can get away with. There is no fundamental logic to it other than market power. Why don't you compare to better, open platforms instead - desktop apps, the web. Why does everything has to be as shitty as something else.
I'm not comparing to those other cases because the question being asked was "what if Microsoft had been charging a fee", so it seems rather relevant that Microsoft has been charging exactly that kind of a fee for a couple of decades.
I hope we can agree that laws need to apply to everyone equally. For a long time, it's been fine for platform owners to charge e.g. licensing fees, for store owners to charge a fee, etc. Why is Apple different, such that they cannot charge such a fee while others can? If they're not substantially different, do we expect that going forward nobody can charge a fee?
> Why is Apple different, such that they cannot charge such a fee while others can?
The difference is market power.
Yes, literally if a company is big enough, then they should be legally prevented from doing certain things that anti-competitively take advantage of it's market power.
For video game consoles, I am less concerned about the platform taking a fee, because there are 3 major consoles, as well as an absolutely huge PC gaming market, and the PC gaming market is very open
Where as for smartphones I am concerned, because it is a 2 company duopoly, and there is no major open competitor, with significant market share.
> I'm not comparing to those other cases because the question being asked was
The question being asked was specifically about windows, and wasn't about Microsoft being "good", but rather about how Apple benefited from platforms being open.
> If they're not substantially different, do we expect that going forward nobody can charge a fee?
Doesn’t Google allow alternative app stores to be loaded onto Androids though? If that’s the case I’m not sure the comparison makes sense because consumers aren’t forced to use the Play Store to install software. Give Google 30% of sales or have no sales at all the way it is for iPhone developers.
Yes, but side-loading, either directly or through third-party stores, prompts the user with dire warnings, making it almost impossible for developers to realistically use that method.
The exceptions are hardware manufacturers that ship custom versions of Android that have their own stores.
If it weren't for that detail, or that Google warned all installs about the same thing (even from their own store), I wouldn't have a problem with it.
> Anyone making software for the Xbox has to pay Microsoft. Why is this different?
Historically, writing software for the Xbox meant getting dev kits not sold to the public as well as access to private documentation. And there was a level of support from Microsoft game studios could expect. The deals between studios and Microsoft could also include co-marketing or exclusivity. Plus to get an Xbox tittle out you needed a distributor (remember brick and mortar stores) so it really was B2B. Today I wouldn’t be surprised to see Microsoft just going with the Store model and taking a very small cut from indies. But distribution is nowhere as hard and expensive as it was back in 2001.
I really don’t think it’s the same as Apple that advertise it’s developer program to individuals. Apple’s developer program almost seems like a consumer product (term and conditions are pretty much the same for every individual dev out there, it’s a flat fee).
I think that the Xbox should be an open platform. Microsoft has built in enough sandboxing and security that I’d hope they could handle arbitrary downloads while offering their store + online services for games that use their store (provide actual value for their cut).
It’s not like they make money off of the hardware, and their new push is in Gamepass subscriptions which people will still want.
There will of course be people who pirate, just like they do on the switch, but piracy is likely to be so small that it won’t affect Microsoft’s profits.
Right because you have data to show that piracy takes away more than 30% of small devs' desktop games' revenue? Given that most pirates wouldn't actually buy it if they had to pay?
Smaller developers publish PC games just fine, you know, choosing whichever store they like most, or choosing to entirely self publish. This is how it should be everywhere.
I'm not sure that Google Korea blog post supports your assertion. It says:
"97% of developers don’t sell digital content and are not subject to any service fee for having their apps displayed in the Play Store or for any of the services listed"
> Anyone making software for the Xbox has to pay Microsoft. Why is this different?
It's different because Apple sells and markets their hardware as general-purpose computing devices. An Xbox is a gaming console and that's what it's sold and marketed as.
There is literally no legal distinction whatsoever between general-purpose devices and non-general-purpose devices. I don't know where this legal myth on HN came from, but there's no law anywhere saying Apple has to be one or the other, or that marketing has anything to do with what a device should be allowed or not allowed to do, nor does the law define these terms anywhere.
Nobody's saying that this has anything to do with legality under current laws. Neither does whataboutism that this is usually in response to, for the record.
The part of the “general purpose computer” that Apple does not display in its iPhone marketing is the “computer” part including the original “there’s an app for that” commercial. Arguably also the “general purpose” part in that a general purpose computer will run any calculable task, and App Store + OS policies prevent this or at least make it difficult and the messaging around this also comes out of their crack marketing team. Feet to the fire, Apple would probably call iPhones pachinko machines before they ever called them general purpose computers in any part of their marketing.
What do I know, but I see Xbox as more than a gaming machine with its steaming and web browsing features, and iOS as less than general-purpose since I can’t execute code outside of a very narrow and curated api. OSX is general purpose, no doubt, but I’m not sure it’s relevant since I can basically run whatever I can compile.
I cited one campaign that very clearly answers the question posed. It was not incumbent on me to go through all of their campaigns and conferences and earnings calls and whatever else. Although, this campaign was hardly the first time Apple suggested their mobile devices could replace a computer.
> plus a computer is not by definition a general purpose device.
What are we even talking about then? It's not like this campaign was suggesting the iPad would be a fantastic purpose-specific replacement of my TI-89 or my web cam. What, based on the context of this discussion, are we supposed to understand "general purpose device" to mean if not the colloquial definition of a computer?
I looked at that ad you posted earlier and refrained from commenting at the time, but if you take the ad at face value, Apple is claiming that iPads are not computers, or at least not the general purpose ones that culturally we refer to as computers (desktops, notebooks) and do this in both the slogan (“your next computer is not a computer”) and by demonstration, inviting the user to think of iPads as something else. It’s not an ad for tablet computers, it’s an ad for iPads.
Technically, iPhones and iPads are absolutely computers. General purpose computers. In fact arguably they are even more general purpose because you can easily and non-trivially manipulate them in 3D space in ways you probably wouldn’t even manipulate a notebook computer, which makes the inclusion of various sensors in the body of the device more useful to a broader array of applications. I will absolutely use my phone as a wallet in the way I never would a MacBook Pro. Apple has absolutely never marketed them as general purpose computers though even though I think you and I can agree that’s exactly what they are. Duplicitous? I think so, but it’s also the exact same strategy that game consoles benefit from today and in either case I think both Apple and game console makers are at the moment on solid legal footing.
We'll have to agree to disagree. This ad to me looked just like the "Mac VS PC" ads, where Apple wanted to convey to you that their personal computers weren't "PCs", but something else, something better. But, they very clearly were advertising the product as a replacement computer.
They want people shopping for iPads, not tablet computers. I'll grant you that, but that's just a marketing gimmick as far as I can tell. This ad to me says "don't bother with another laptop because the iPad can do the same stuff, but better (and you might look really cool using it)." It's a marketing campaign, so it's going to resonate with people differently.
I still don't know anyone that went out and purchased an Xbox to replace their laptops, but I know plenty of people that have done so with iPads. And they're checking email, commenting on Facebook, taking pictures, editing video, surfing the web, managing todos, making video calls, watching video streams, playing games, and doing many other activities that they used to on a laptop or desktop, while Xbox users play video games, maybe consume media, and possibly deal with being called racist names on a voice chat.
We probably will have to agree to disagree, but I’m trying to see the message I think Apple intended to sell and I think trying to sell a replacement for or an alternative to computers is a lot more in line with how they’ve always marketed iPads. The reason to look at their intended message specially is because this is the marketing gimmick that colors their PR and lobbying campaigns.
I don’t think it is severable from the manner console manufacturers operate either. They sell locked down computers with operating systems and license the software that can operate on it. In terms of functions and capabilities, they’re as Turing complete as any other machine, you just have to jump through extra hoops to run unlicensed software and they take explicit action to prevent this or make it more difficult.
The intended use is basically irrelevant. A device that’s there to operate Facebook or Spotify or a device that’s there to operate Halo or HBO is functionally still just an entertainment device. Where they significantly differ is that Apple licenses a broader array of software and Sony, Microsoft and Nintendo license mostly entertainment software (games, video apps, music apps and comic book readers). If you actually bought an Xbox to do the functions you could on a Windows PC, you would be disappointed but not because there’s some inherent Xbox property preventing this, but because Microsoft does not license Xbox software in the manner Apple does iPhone and iPad software nor allow unlicensed software to run the way it does on Windows. That’s a corporate choice, and because that corporate choice was made, it would be a bad choice to buy an Xbox for those functions or else some people might actually choose to use an Xbox to check their email or do whatever else they do on their PCs. If you think about it, $500 is not bad for a decent gaming computer that lets you get rid of your PC.
I think it was pretty evident that computers were going to continue to get smaller, handheld, wearable, what have you. Apple didn't invent the space, they just made the product that got people to adopt the new form factor en masse. That's no small thing. But, I don't think they deserve near full control and a 30% tax on all revenue transacted on that form factor as a result. We wouldn't have tolerated it if Microsoft had done it on the desktop environment. We wouldn't have tolerated if Microsoft forced all purchases through their platform.
We've backed ourselves into a weird spot. It's essentially impossible for a new platform to develop in the computing space. Google did everything it could to kill off Windows mobile. Mozilla took a crack at it and failed. There's an illusion of choice, but it's quite difficult to get by without an Android or iPhone. That became very evident to me with the pandemic. Virtual doctor visits, check-ins, mobile passports, and so required a device running one of Android or iOS/iPadOS. My wife isn't fond of smart phones, but we had to get her an iPhone to participate in society. Companies don't want to support web sites for mobile and Apple's support for PWAs is pretty bad, forcing you back into their app ecosystem. Moreover, switching platforms is quite expensive and often impractical, in no small part because your purchases are bound to a particular platform (desktop licenses, on the other hand, often work across operating systems or charge a nominal fee to have licenses for macOS and Windows).
That's a very long-winded way of saying, sure let's start with opening up the App Store for iPads. I think we should do it for phones, too, but I'll take what I can get. For many people, their phone is their "computer" these days as well and as I said, I think that result was inevitable. We can argue about whether smart phones are general computing devices, but I'd argue the only reason they're not as "general" as desktops is because Apple won't allow them to be. Microsoft and Samsung both had interesting technologies (Continuum and Dex, respectively) that could turn your phone into a portable desktop that showed promise for what the space could be. But, people make do with the restrictions placed on them, if for no other reason than switching is expensive and hard.
Regardless, smart phones a completely different class of device than video game consoles. People run many of the same tasks on phones & tablets that they would on a laptop. Despite that, video game consoles are more open. I can buy video games from a dozen different stores, get them on a secondary market, and I can lend them out to people. But, let's open up the consoles too if that's what's holding us back with Apple and Google.
Well, first to set the context. Most money on the App Store isn’t being spent on the little Indy developer. It came out in the Epic trial that the large majority is being spent on games, in-app purchases and loot boxes on pay to win games.
Now, let’s talk about the challenges on the App Store for the Indy developer. 15% vs 30% is the least of it.
1. You have to be discovered among the millions of other apps. The App Store is horrible for discoverability. Even if you do get a one day pop from it being spotlighted, that’s fleeting.
2. The value of an application has been devalued. Back in the day, people didn’t mind spending real money on applications. People think spending $10 on a mobile app is overpriced.
3. No one wants to pay for upgrades even if the App Store made that easy. I once bought an app - Tempo Magic in 2010. I hadn’t thought about it for years. But 10 years later I looked for it. Downloaded it and it still worked. The developer has kept the app working for a decade and through the 32 bit to 64 bit transition. I haven’t paid a penny more for it. How is a developer suppose to sustain themselves?
The only business model where high quality productivity apps are sustainable are via subscriptions. That’s why you have MS Office available.
Apple's insistence on setting the terms of the sale is also problematic and all the more reason to support another store. I absolutely loathe IAP. The last thing I want to do is download an app and guess what parts are going to get unlocked when I pay for something. I'm in favor of having a paid upgrade path. And I'd love to see a trial option that wasn't tied to a subscription. And I think app prices are too low. It's another case of having made a few bad initial moves and then pushing the whole industry that way. The top selling app on the Google Play Store is a slot machine. This is not good for society.
Let’s stick to the crux of the matter - people don’t want to pay for stuff. If an alternative App Store set a minimum price and sn upgrade path, not many people would buy the apps.
The only successful model so far has been subscriptions for productivity apps. For arcade quality games, the streaming services have a chance and Apple is subsidizing non slimy games via Apple Arcade.
Just out of curiousness, does the Xbox have a shell like my iPhone? Can I ssh from my Xbox? I can from my iPhone, for all intents it seems like a personal computer (PC) and can do anything my computer can do. My phone wasn’t marketed as a gaming console either. I’m not sure comparing an Xbox and a phone is anywhere near the same thing. I could be wrong though.
The Xbox certainly has sufficient hardware and software capabilities to run a shell or a ssh client; it is basically PC hardware and a PC operating system, just locked down. If it doesn't have a ssh client, it's only because Microsoft didn't let the app onto the Xbox store. If that's the line you draw, then the obvious thing for Apple to do is to remove ssh clients from the store.
It has Edge on it so if you can do a browser version you can do whatever. If you plug in a keyboard and mouse you can gamedev on our platform for example.
Imagine how well the xbox would sell if there was a PC "homework" mode, where you could just boot into windows. I doubt Microsoft would do that to their PC making brethren though.
Heh, that’d actually be entertaining. After that it would be image editing, then text editors, then, actually just delete the utilities section from the App Store…
The latest models of Xbox and PlayStation are basically just Ryzen 3700X + Radeon 5700XT PCs, with the former running a Windows variant and the latter running a FreeBSD variant. They’re pretty similar in stymied potential to iOS devices.
You just made Apple's point though. The Microsoft ecosystem of flexibility introduced so much variation that lots of people moved to Apple BECAUSE of it's enforced uniformity. Microsoft's ecosystem of flexibility allowed their system to be abused and exploited by bad actors more easily resulting in people MOVING to Apple to get away from this. If you want flexibility, develop for Android or Windows. You don't have a right to have access to people who moved to Apple for the express purpose of living in a managed ecosystem that just worked and simplified their lives. Everyone is talking about the developer's rights but no one is talking about end users, many of whom choose Apple for the very reason this is trying to negate, even if they couldn't articulate it as such.
> many of whom choose Apple for the very reason this is trying to negate
I already use apps in iOs that bypass the store to transfer money, pay for train tickets, parking, etc. Many people in Sweden likes Swish and probably will be ok with being able to choose it for all their transactions.
I could be wrong, but I don't think that there is data to support the opposite either.
There is absolutely nothing is preventing Apple from creating an easy to use 'checkout' process that pretty much every single e-commerce websites have. Developers can choose to integrate with Apple payments, pay pal, square or whoever. Its no different than Amazon. Users can check a payment processor as a default and never be bothered. In my opinion, this is simply Apple being a bully, for commercial reasons, not technical, or UX ones.
The industry could build platforms which are both safe and flexible. They just do not want it. Some for keeping their revenue other for sticking to backward compatibility
You’re not wrong, it what does this have to do with App Store commissions? I (an end user) would be quite happy to see iOS remain a restricted environment for developers, while also lowering App Store commissions, such that more business models will be competitive on iOS.
When they eventually lose a major lawsuit, any 'record setting' settlement or judgement is likely to be a tiny fraction of the profits they were able to reap in over a decade of bad behavior. Name a single multinational company in the last 20 years where the consequences were more than a fraction of the profit they made from their bad behavior.
It's pretty straightforward, assuming that you have the standard charge amount correct. (I don't know)
Between the two approaches, the costs break even when 30c = .27*cost.
Apple's 27% exceeds the 30c whenver the purchase costs less than $1.11. 27% of .99 is 26.73c.
So, this is a strong case Apple has calculated the other processor's charges for all app sales of .99 or less. It seems they are trying to charge more than normal processors for all micro-transactions.
> By the same logic BestBuy, Verizon, and other hardware retailers should get a cut of Apple’s revenue.
Best Buy, Verizon, and other hardware retailers buy Apple products at a discount and sell them for retail price. So, in a way they do get a cut of the revenue that Apple would make when Apple sells products at Apple's retail stores.
When Develop X sells IAP for their app, Apple demands a cut. Apple didn't ship that IAP or have anything to do with it.
When Apple collects their cut from an app, they don't pass any portion of that on to Best Buy, who sold that device.
Apple insists that Developer X wouldn't have made that profit without Apple's support, and they're due that cut. By that same logic, Best Buy is due a portion of that because they enabled Apple to make that money in the first place.
It's bonkers, which is why everyone's mind rejects that Best Buy would be entitled to anything of the sort. But Apple has managed to sell that line somehow.
> When Develop X sells IAP for their app, Apple demands a cut. Apple didn't ship that IAP or have anything to do with it.
Apple provides hosting for IAP content, if developers wish to use it
> When Apple collects their cut from an app, they don't pass any portion of that on to Best Buy, who sold that device.
So far I don't believe Best Buy has asked for such a thing. They do ask for fees on things like customer acquisition for cellular plans AFAIK. In the past they have gotten customer acquisition fees for other subscription services, such as ISPs.
Apple's various stores are based directly on this same model (portion of revenue on directly sold products, money for customer acquisition on subscriptions).
> Apple insists that Developer X wouldn't have made that profit without Apple's support, and they're due that cut. By that same logic, Best Buy is due a portion of that because they enabled Apple to make that money in the first place.
Apple has looser restrictions for so-called reader apps (for consuming digital alternatives of physical goods), but generally their restriction is that a consumer-directed app be usable without requiring out-of-app purchasing, and that apps do not direct users to out-of-app purchasing options (either marketing their availability or linking to them).
This is again analogous to what you would expect in a brick-and-mortar store. For example, subscription revenue games are way harder to negotiate for sale at a Best Buy than episodic content. There is no way you'd see such a storefront stock a game that sold for $.99 but required a $19.99/month subscription to play without the retailer getting a major acquisition payback.
A better comparison would be to compare a wild fictitious example against another retailer, Whole Foods.
It would be wild to imagine Amazon selling a high quality refrigerator that only allowed you to place perishable items from Whole Foods inside of it. Independent of whether Whole Foods was selling things at a reasonable rate and of reasonable quality, the expectation is that you would not need to purchase a different brand of refrigerator in order to get food from other markets. No matter what sort of concessions they made, such as offering to sell food at lower margin for local farmers and smaller suppliers, the mere existence of such a closed system would offend some people.
But ironically, those people are just as likely to buy into in other closed systems without blinking an eye. Perhaps they have an EV which is only repairable by its manufacturer. Perhaps they have a game system which requires games to be sold in its store or be pressed onto its CDs, and requires hundreds or thousands of dollars for game developers to sign up to participate. Perhaps they have a smart thermostat or smoke detector which refuse to interoperate with any other vendor.
The reality is that people are offended by the grocery example because they _understand_ the grocery example. Enough to feel that some company is pushing them through bizarre restrictions because of the revenue model they chose to pursue. And those restrictions impact them.
They're not. Apple is essentially acting like a government, and they're certainly way more powerful than the Dutch government:
- They have an income tax -- 30% (wait until they come up with a capital gains tax, and a property and inheritance tax as well)
- Use monopoly of "force" by removing us if we "evade taxes"
- Have their legislation branch to come up with their own set of "laws" - they call it "terms", but can't be "terms" if we have to swallow it without coming to terms with it
- Their judiciary branch judge our actions with no recourse
- Have their executive branch to put into practice what their judicial branch decides (usually in an automated fashion)
Netherlands has a strong voice in the EU; I'm betting that Apple doesn't want to cease all business in the EU. Heck, they bent to China.... they'll bend to EU, make no mistake.
This is an mind-blowingly-risky move on Apple's part. They show malice here - if they are acting like a government, they invite governments to fight them. I.e. they're nuts.
And it's not even just the EU. The U.S., South Korea, Australia, India, Russia- a lot of countries and markets are taking notice. This is a global phenomenon. The sharks are circling.
I think 30% is only unreasonable if apps in their ecosystem start to leave. Honestly, when the marketplace votes by staying on the platform at 30%, then it doesn't matter how ridiculous it seems to some of us, they're going to keep doing it.
No idea. We released a new Windows version around the same time which introduced DXVA support and sales overall went up. So if Apple users left, they were overcompensated by additional Windows users.
They are doing everything they think they can get away with. I agree that ethics and morale should factor into corporate decision making, but at this level I'd argue that corporate decision making is purely an optimization game between profits over various horizons.
If they think this maximizes their payoff, they'll do it. I'm 100% certain that they realize that this may/will invite further lawsuits and have factored this into their calculations.
Or not. Short term bonuses are key, achieving quarter goals is extremely important, that the company crashes and burns in 10 years may be someone else problem.
Big corporations are giants with clay feet. From inside one can see the real humans behind the curtains.
So, you could be right and its a long term strategy, but it's also possible that they are just thinking about their next bonus.
That's pretty much what I wrote. You are disagreeing with a strawman.
> corporate decision making is purely an optimization game between profits over various horizons. If they think this maximizes their payoff, they'll do it.
Keyword being "various horizons". Sometimes it's a long term strategy, often it will be just maximizing the next bonus..
I think Apple would actually have more of a case if they charged different rates for different types of apps based on technical reasons (i.e. Basics - web/touch/image/audio, video media, gaming/ARKit):
1.) web view/touch/audio streaming app - 10%
2.) accelerated web view/SDvideo app - 15%
3.) HDvideo H.264 app - 20%
4.) 3D Graphics/ARKit SDK app - 30%
3D and ARKit which are pushing the boundaries of the silicon probably do have associated R&D costs as well as silicon COGS costs that perhaps do need to be recouped in a manner similar to gaming console SW licensing agreements (i.e. Xbox, PS, Nintendo royalty payments).
In the court of public opinion it would also minimize the effectiveness of "think of the solo iOS dev" type scenarios that the big guys such as Epic, etc. like to hide behind.
I wonder if that would run into net neutrality-type issues, but setting different rates is definitely a novel way of looking at things. Charging higher rates for publishers of larger app binaries would also make sense. Certainly tech giants such as Facebook and Uber who have bloated app sizes could pay the extra expense for the hosting and so forth.
> I wonder if that would run into net neutrality-type issues
It absolutely would. Who is Apple or anyone on HN to tell one developer that their app is more important/costly/uses higher priority SDKs than another?
Well, maybe app binary sizes are an objective metric. Apple could even raise the existing cap and give Uber a bit more room to breathe, while charging them for the inevitable expansion of their app.
I think the analogy would be more equivalent to AWS. There are different costs associated with using the various SDKs (i.e. Lightsail, EC2, S3, SageMaker).
I'd also say the more it can be defined in terms of technical reasons the better.
There are R&D costs to maintaining a cutting edge, industry leading 3D Graphics SDK for iOS that the primary users beneficiaries of said library (i.e. Epic, Xbox) should contribute to.
This would require a bit of mindshift and context.
>Imagine if in the past Apple would have had to pay 30% of their gross to Microsoft in order to be allowed to run their software on Windows.
Sure, instead Best Buy would record a 22% gross margin for selling the software on a CD [0] (I know it's not a perfect example since Best Buy sells a lot of things, but Software was 22% of sales in the linked period)
So you're argument is that an online digital store justifies a higher fee (30% vs 22%) even though it's significantly less expensive for Apple to run a digital store than it is for Best Buy to operate physical retail stores?
If anything, that's just evidence that Apple is grossing abusing its market position.
If Best Buy doesn't sell the software, they lose money, because A. They already paid the developer for it. B. It takes up space that could be used to sell something else. If Best Buy wants to sell it at a discount, it doesn't affect the developer, they were already paid by Best Buy.
With Apple, its the opposite. If Apple sells something at a discount, the developer suffers (or Apple has to pay the difference in some countries). If it doesn't sell, no one gets any cash. Apple has no incentive to market something and/or move inventory. Apple has only the incentive to market things that you spend money on vs. Best Buy that has to take a risk on something by spending money to buy it from the publisher first.
We receive vendor allowances for various programs,
primarily volume incentives and reimbursements for specific
costs such as markdowns, margin protection, advertising
and sales incentives. Vendor allowances provided as a
reimbursement of specific, incremental and identifiable
costs incurred to promote a vendor’s products are included
as an expense reduction when the cost is incurred. All other
vendor allowances, including vendor allowances received in
excess of our cost to promote a vendor’s product, are
initially deferred and recorded as a reduction of
merchandise inventories.
As much as Best Buy did, since they required vendors to reimburse them for markdowns and unsold investory.
We receive vendor allowances for various programs,
primarily volume incentives and reimbursements for specific
costs such as markdowns, margin protection, advertising
and sales incentives. Vendor allowances provided as a
reimbursement of specific, incremental and identifiable
costs incurred to promote a vendor’s products are included
as an expense reduction when the cost is incurred. All other
vendor allowances, including vendor allowances received in
excess of our cost to promote a vendor’s product, are
initially deferred and recorded as a reduction of
merchandise inventories.
Right, but there are at least many competitors to Best Buy all competing for your business, driving down margins. Running physical stores is costly. If Apple allowed competing digital stores, I would expect margins would be less than 30%, and even less than 22%, and the value would end up in consumer and developer's pockets.
They have armies of economists, lawyers, and accountants. Do you really think that they are naive and you simply understand the situation better than them or do you think it's possible that they've run the numbers?
Nonsense. Most of those businesses only exist because of the App Store. Apple can ask whatever they want as users can buy whatever they want. There is no need for whining.
> Apple should focus on selling hardware and be happy to facilitate those payments that people - and application developers - voluntarily process through their system.
Why don’t you apply that to the Xbox, PlayStation, etc.?
> All this stupid taxation of other peoples' businesses
Exactly. Stop trying to overthrow Apple from the ecosystem they built.
The problem is that people can easily be induced to install software that negates the benefit of Apple’s hardware. Apple can’t deliver their hardware benefits without also controlling the operating system.
> Apple can’t deliver their hardware benefits without also controlling the operating system.
Nobody is talking about loading something besides iOS on Apple mobile devices. The argument that "The OS is everything" failed over 20 years ago in US v Microsoft.
So you mean how WeChat and Alibaba do it, and are allowed to do so by the App Store. Then why hasn't Meta done that? Perhaps they don't care to? Not that the Facebook app isn't already hugely overstuffed.
Because Apple bent down for WeChat and Alibaba, but Apple won't do it for Facebook?
I'm 100% sure that if Facebook could have an iOS app store, they would start one. It's worth all the work for the improved tracking alone, as app download ads are a big part of Facebook's mobile revenue.
The GP is talking about Meta embedding its own app store within the Facebook app, not about Facebook creating its own iOS app store. An "internal" app store would still be subject to the same restrictions and security that the actual Apple App Store already has. I don't believe the mini-apps within WeChat or Alibaba's apps can flout those regulations, but it's China and those are big apps so who knows.
From a technical perspective, I'm not sure how hosting littler apps within your own app, which is already on the Apple App Store and subject to its review process and rules, would allow you access to improved tracking.
On the subject of a Meta third-party app store independent of Apple's control- yes, there is motivation there to do that, but I am dubious of how much of a threat that is to the end user because:
1. Apple still maintains control of iOS and can restrict invasive tracking from the OS level.
2. I'm not actually convinced that Meta, Google, Amazon, et al are really capable of executing successful alternative app stores. They would need to make it a sufficiently seamless and friction-free experience, and offer enough incentives for users to overcome having to sign up for yet another service just to use the apps they already have access to.
> The problem is that people can easily be induced to install software that negates the benefit of Apple’s hardware. Apple can’t deliver their hardware benefits without also controlling the operating system.
Apple is less concerned about this than profits.
They could make their hardware ecosystem more open, that's easy, but that wouldn't make them a significant amount of extra money, so why would they?
Again, even if that was true, and I believe you are conflating profits and revenue here, it has nothing to do with my comment, which was about Apple refusing to make the ecosystem more open because it wouldn’t bring any significant financial profit.
It is true. It’s not hard to check it. If you want to proceed with this line of discussion, you should do some googling rather than persisting with false claims.
"Apple CFO Luca Maestri said that Apple's install base of devices hit a new all-time high as well, which helps drive services growth."
"Cloud services, Apple Music , advertising, video, and payments saw all-time revenue records, while the App Store saw a new June quarter revenue record."
"Services brought in $17.5 billion during the quarter"
> Imagine if in the past Apple would have had to pay 30% of their gross to Microsoft in order to be allowed to run their software on Windows.
iPod wouldn't have happened and Apple wouldn't exist today. Apple relied on the fact that most of its customers used Windows and that they got to transact for free on the platform. Heck, they didn't even need Microsoft's approval to offer iTunes downloads.
Think about all of the small businesses and startups that are getting snuffed out today by Apple's aggressive over-harvesting.
Some non-trivial percentage of Apple's $3T market cap owes itself to a system of feudalism and mafia-style tactics rather than innovation and product sales. Imagine of those dollars were instead represented just about anywhere else.
Seriously: Apple should focus on selling hardware and be happy to facilitate those payments that people - and application developers - voluntarily process through their system.
All this stupid taxation of other peoples' businesses should stop, it is anti-competitive behavior that they themselves would never tolerate.
Imagine if in the past Apple would have had to pay 30% of their gross to Microsoft in order to be allowed to run their software on Windows.