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Apple rejecting applications which use Dropbox (dropbox.com)
723 points by dannyr on May 1, 2012 | hide | past | web | favorite | 348 comments

This has gone way too far. The other day I downloaded the Google Play Books app. I started it up, signed in.. and nothing. No prompt to go buy books online, no hint at what the app does... just a blank screen.

It's completely scummy. You can buy Apple's iCloud storage upgrade from within the OS, and now you can't even LINK to a place where you could link to a place where if you click the right link you could buy Dropbox storage.

It's awful, and it's painful for everyone -- not just those using the DropBox APIs. The origins of these clauses are with iBooks and the Kindle app for iOS.

I wrote about it in a recent blog post:


In terms of UX and as a consumer, I'd rather the Dropbox API not open a browser or even another app. That is not the best UX, it doesn't provide a security advantage, and it's simply not being done to benefit the consumer. This may not be Apple's primary rational for rejecting these apps, but I'm glad they're doing it.

As for the payment question, simply in terms of UX and as a consumer, I want only one payment provider and account on the device. I hate pulling my credit card out and remembering my password for the nth account.

Consumers are happy with the platform. Look at the sales numbers and earnings reports. Obviously companies like Dropbox see the value in the platform too -- I just wish they'd take the time to understand why it has that value, and why Apple has huge profits and very happy users.

The problem is Dropbox isn't exclusively an iOS app. So you can sign up for Dropbox directly and they get 100% of the fee or you can sign up through Apple and they get 70%. That might be more than their entire profit. They can't even make iOS purchases more expensive even if perhaps someone like you might pay 30% more for the privilege of a single payment provider.

The fact is that Apple is the one that requires apps to open the browser in the first place. It's rule upon rules upon rules. I'm an iOS user and I'm not happy with this aspect of platform, if that means anything.

> So you can sign up for Dropbox directly and they get 100% of the fee or you can sign up through Apple and they get 70%. That might be more than their entire profit.

(Emphasis mine) Sounds like it might be time to find a new business plan, then.

Many businesses (especially in the technology space) operate on far lower margins than 30%.

Really? Are you talking gross or net profit?

I would be surprised to find many software products where the gross profit margin would be less than 50%.

Why shouldn't we talk about net profit? Taking 30% off the top can quite easily mean the difference between viability and not, quite easily, when you factor in employees, rent, marketing, legal fees, and absolutely everything else. Isn't this precisely what the discussion should be about, whether it makes non-viable a lot of businesses that provide value to people?

Dropbox isn't a software product; it's a service. What's more, it's a service that needs to be priced to compete with Apple's own iCloud.

And it being charged 10 or 13 dollars a month doesn't make much difference, if it offers a compelling service.

Software and service prices seem mostly arbitrary to me anyway.

How else Aperture went from $300 to $100, Lightroom the same, BBEdit shed 70% of it's price in one day, etc etc... Same, why was iWork a $99 package and now it's 3 components are $10 each on the Mac App Store?

I haven't looked at Aperture or Lightroom, but iWork's price change isn't quite as dramatic or inscrutable as you think: the retail package was $80, and the 3 App store components are $20 each. Apple likely lowered the price as an incentive to push users into its App store, where it gets a cut from every piece of software sold. Dividing the components and selling them individually probably brought in quite a few new users such as myself who didn't want to pay $80 for the full iWork package since it's only Keynote I'm interested in.

Services are more deeply and negatively affected by price changes than software, though. A price change that seems insignificant to you can drive many users away. Look at the fiasco with Netflix last year; they changed their prices by about $6 and subsequently lost about a million subscribers within a few months. Some users see price increases as an indication of a service's instability in the marketplace (and therefore a cue to jump-ship). Most users have lower tolerance thresholds for price differences when comparing services than they do when comparing one-time purchases (like software).

Regardless, now would be a really bad time for Dropbox to increase their pricing. Many Mac & iPhone users are watching iCloud closely and realizing that it could make Dropbox redundant for them. A price increase, even one as small as a ~$30 a year change for their 50+ plan (corollary to your $3 a month change), could push enough users away from the service that Dropbox is better off sticking to its guns.

What business are you running that has larger profit margins than 30%?

Obviosly he is a drug dealer

How about one that you adjust your prices by whatever so that 70% is the old 100%?

If your competitors can offer lower prices and still give away 70%, then you're not competitive enough.

If your competition is the one that you have to give away your 30% to, maybe your competition is rigging the game?

just do like apple does with taxes.

create a subsidiary.

dropbox.com, charges $x for 5GB

idropbox.com, a dropbox company, optionally in the caymans, charges $(1.3 * x) for 5GB and has an app.

You clearly haven't read about the clauses apple put in about payments. You can't charge more in the app via apple than you charge outside the app via whatever other payment system you use.

They've rigged the game.

>You clearly haven't read about the clauses apple put in about payments. You can't charge more in the app via apple than you charge outside the app via whatever other payment system you use.

No, I know of that rule. Just jack the price everywhere --if the iPhone is an important market to you, that 30% is a factor you have to take into account in your overall pricing strategy.

The same holds true for all of your competitors, after all. Either they give up the iOS market, or they have to do the same. So it's not like someone has an advantage over you.

( And, I'd say, if it IS an important market to you, well, you don't get to both have all those customers with their credit cards at the ready in a system someone else built out of thin air AND complain that you have to give him a cut).

Then have fun signing up for Dropbox on you iPhone using IAP and then only getting to use Dropbox on you iOS devices (no Macs or PCs or the web), since IAPs aren't allowed to give you services outside the app

> 11.3 Apps using IAP to purchase physical goods or goods and services used outside of the application will be rejected

In app purchases are simply a wildly inadequate solution for many apps and services, and Apple forcing everyone to use them is absurd and helps nobody.

Are you willing to pay 23%[1] more for the convenience of not having to open a window? Because Apple's 30% cut introduces a new cost into the system. Dunno about you, but I'll almost always take the 23% discount and click a few extra buttons.

[1] 1 - (1/1.3) is the additional percentage that must be added to a price maintain constant revenue.[2]

[2] To be pedantic, Apple also handles payment card processing, which is ~3%. So the difference is really 1-(1.03/1.30) = 20.8%

> Are you willing to pay 23%[1] more for the convenience of not having to open a window?

Yes. If the choice is between UX and cost, I'll almost always pay more.

Not everyone will, but the people that don't are less profitable customers, as Apple is demonstrating.

I think we're actually in agreement about the positive effect of these clauses, at least for some users. I certainly want simplicity and unity in my experience too.

We perhaps disagree about the motivations behind the clauses, but without inside knowledge I suppose we'll never know for certain.

The piece that perhaps I didn't express clearly enough: there are cases where developers -- even the good ones, who care deeply about doing the right thing for their users -- are boxed in and, no matter how much they would like to play by Apple's rules, are unable to for one reason or another. The result is often worse for users.

It's the unintended consequences of the "Kindle Clauses" that I find so interesting; that was what motivated my original blog post.

I'd rather Apple give developers the choice and let user preference sort it out.

In the long run the open market always wins.

In the long run the open market doesn't behave independently rational and doesn't 'win' anything -- it simply is.

If Apple wasn't forcing the larger industry to learn how to turn a profit by putting users first, the market would simply saturate the app store with whatever existent concepts are popular today.

Remember, prior to iOS, the Mac OS X market was both cry user friendly and very insular. Now, iOS has gone mainstream, but Apple's user-friendly focus hasn't (yet?).

Of course, your open market does still exist -- users can choose Android, which thrives on the notion of 'user choice'.

     Of course, your open market does still exist -- 
     users can choose Android, which thrives on the
     notion of 'user choice'.
That's one reason why I, as a consumer, chose Android in the first place.

When I decided to buy a smartphone, I wanted one that allowed me to block calls and SMS messages completely, without leaving traces in the calls/sms logs. I wanted this because somehow my number ended up on a lot of spam lists and a smartphone should be smart about these things, right? If my email address is protected by spam filters, it should be a no-brainer for my smartphone to do the same for calls and SMS.

Imagine my surprise when I found out that such apps are banned from the iTunes App Store and that the only way to get such functionality on iOS was for me to root it and install software through Cydia. And why should I as a consumer go through so many hoops to use such software, when the company (that receives my money in the process) is actively hostile to my use case, a use case which is in no way immoral or unjustified.

When it comes to Android, building an app that blocks calls and SMS messages is still hard, as the APIs you have to rely on are private and keep changing, so the results are unpredictable. But upon a search on Google Play, I did find one that works well, installed with a single click. And I didn't have to root my phone.

Now that's what openness gets you - user experience is important, but it's all for nothing if the apps allowed don't solve your real problems.

In the long run the open market always wins.

The App Store is not an open market, nor is it intended to be an open market.

>In the long run the open market always wins.

I've never seen an open market in the wild, much less it "always winning".

You mean an open market like the "$1 trillion bailout not to collapse the whole economy" open market? Or an open market like "we enforce strict copyright laws to artificially limit each copyrighted product to one maker and it's pricing at his whims"? Or an open market with patents, for the same purpose? Or an open market with frequent cartels, to everything from dairy products to RAM? Last, but not least, an open market where a country with a military advantage has several army units deployed and several wars to secure resources and keep their prices down?

You might want to hold off on the ideological rant and re-read. I think cageface was talking about application markets. I didn't know Google was using their market to bail people out and wage a secret resource war.

Why is this downvoted?

There's no reason to hijack a fairly specific discussion with a much broader ideological rant. This sort of thing has been happening on HN lately and it bothers me. It takes a potentially interesting conversation and turns it into an ideology measuring contest.

I understand that the theory of free markets in general might be applicable here, but the point is the way the GP is framing the debate it can't be resolved without much wailing and gnashing of teeth.

> I think cageface was talking about application markets.

What application market is it that is open and always wins?

I can't read minds. You should ask the person who didn't appear to be referring to markets outside of app stores.

He said "open markets" you are putting words into his mouth to back up your own. ideology.

I've made no claims about markets. How could you even know if I have an ideology? That was an attempt at clarification so we could avoid the off-topic and inevitably unproductive political tangent batista was about to start.

>You might want to hold off on the ideological rant and re-read. I think cageface was talking about application markets.

The same hold true for application markets. In any market where money are involved and parties with interests of their own can get a stronghold on the rules, the results are the same.

>I didn't know Google was using their market to bail people out and wage a secret resource war.

Well, pushing their own apps to users with "picks" and front-page promotion is akin to a bailout. They can restrict apps that compete with their core businesses in a snap, they can change the rules of the game anytime, etc. They use it to do whatever offers them a competitive advantage.

Apple's marketplace is an even better example, as it is more closed. Google cannot close the Android marketplace at the same level, because they cannot do all the stuff Apple pulls and still attract developers away from more lucrative iOS at the same time (developers are the "scarce resource" here).

Btw: "ideological rant" implies that something I said re: "free markets" does not hold true and I say it because of my ideology. Can you point to it? Else it's not "ideological", it's mere empirical observation.

>"ideological rant" implies that something I said re: "free markets" does not hold true and I say it because of my ideology. Can you point to it?

I can. You didn't say (as in "state") anything. You asked a rapid fire succession of rhetorical questions. Rhetorical questions are one of the best indicators of ideology (as in "zealotry").

Each of the things you mentioned were instances in which the government interfered with the open market and made things worse.

The free market left to itself would fix most of it's own problems (I say most because I think some regulation is necessary and good). But it requires patience to let the market work.

Not so fast: http://en.wikipedia.org/wiki/John_D._Rockefeller#Monopoly

The free market left to itself will eventually converge into a monopoly.

What's true for railways or airlines is not always true for applications and web services. The barriers in the latter markets are much, much lower.

> The free market left to itself will sometimes converge into a monopoly.

>Each of the things you mentioned were instances in which the government interfered with the open market and made things worse.

No, all the things that I mention are instances of actual markets. Were is this free market? If it's possible, why it hasn't been seen anywhere on earth?

>The free market left to itself would fix most of it's own problems

I mean, to reason about what the free market will do IF it exists has no value.

The free market, even if it was imposed by some power for one second, would have to be forcibly sustained by human agents --namely corporations, consumers, workers and the government. Nothing tells us that it would, in fact history teaches us otherwise.

One might as well say: "If everybody always was pro peace and love, and never did anything bad, we would have world peace and love".

Of course, but the whole point is in how to achieve that. So, to say "the free market would fix most of it's own problems" has zero value, if the #1 problem is how to create and sustain a free market itself.

That is a fantastic rant about the open market. Do you mind if I use it and claim it as my own someday?

The rant is generic and uncompelling. I'm sure you can do better.

as an alternative to a full-blown rant, just remind people that market fundamentalism died in the '08-'09 superbubble implosion. E.g. the new Dallas Fed report about enhancing "market discipline" and restoring "faith in market capitalism."

Sure, knock yourself out.

[I have a zillion snarky type replies that itch to be free, but we'll keep that monster in the box today.]

"Way to far" is an interesting characterization. Apple has rules about their playground, they like their rules, they make Apple very profitable.

So the question becomes can Google leverage this liability to increase the penetration or market share of Android tablets? Once these tactics hurt Apple in the market they will change. Until then, well its their town and you either have to play by their rules or not play at all.

I think parent was speaking as a consumer, not moralizing about it. In the eyes of the law or economics, of course this is completely reasonable, it is absolutely Apple's right to do this. But the consumer experience is horrible, something parent is probably not used to from Apple.

Is it Apple's right to do this?

Didn't IBM lose the case where they said you can only run IBM software on IBM 360s?

IANAL but it sure would be nice for someone that is to speak up on why many of these old cases don't apply.

Is it that it is legal, Apple just doesn't have to feature it in their store? Phone companies were forced to allow 3rd party phones on their network. So where/are mobile companies as far as I know. Car companies are require to honor car warranties even if you change out the car stereo AFAIK.

Is there some reason similar rules don't apply to Apple (and Nintendo, and Sony, and Microsoft)?

> Is it Apple's right to do this?

It should be.

Well, the real problem is that "right" is a very broadly-defined term that sometimes refers to is and sometimes refers to ought. I was operating on the definition (which I think is more useful) that a "right" is something a person (or corporation) deserves regardless of whether they're actually given it, so it's appropriate for me to answer with ought.

Oh, and I forgot to add: did you read the article you linked? The is-ought problem is when someone confuses the two, which I clearly did not do.

Well, but as a consumer, you have options, and your number one way to make your voice heard is to switch to a better option. (The number two way is to threaten loudly, I think.)

You have to do the latter. If you just switch without making any noise, then the company just sees you as percentage of users using the competitor's product. Not very meaningful.

You have to write a short letter saying why you once used <product> or refused to purchase <product> because of <reason>.

Not according to the EU law, did you see how the microsoft IE case got resolved.

Microsoft got hauled through the courts and turned into the EU's personal cash-register for doing similar things in 'their town'.

But in this case, the town is not 90% of the geography. Last i heard Google's town is bigger and there is also RIM Town (mass exodus happening there), a new WP7 town (lots of airport signs) and a few others around.

I don't think you need a certain percentage of a market for this to start becoming a antitrust issue. And it could be argued that they have a strong monopoly on Tablets at this time.

If this doesn't feel like anticompetitive behaviour, I don't know what does. They are using their rather large position in the smartphone/tablet market to enter another market (in this case storage) and snuff out the competition. And there are other examples.


Be careful what you wish for. If antitrust laws can be applied even when there is no monopoly, indeed, not even a majority market share, you are basically giving the government a green light to do a WHOLE lot of bad things.

Antitrust laws regulate anti-competitive behavior. Coercive monopolies are simply one of the forms this behavior may take. It's possible to run afoul of antitrust laws without having a monopoly, and it's also possible to have a monopoly without running afoul of antitrust laws.

Anti-trust covers attempts to gain monopolies too (though I don't think Apple are in violation of either, as mentioned above).

Anti-trust law (where "trust" is an antiquated term for "cartel") is all about preventing multiple companies from conspiring to price-fix or monopolise a specific market via non-compete agreements and the like. For example Microsoft's famous agreements with OEMs to bundle IE and not Netscape. Having a monopoly is no sin, and Apple are no more obliged to sell non-Apple software for their phones as they are to sell non-Apple hardware in their stores.

Its not anti trust because developers can switch to android or wp7. There are no unmoveable market forces that will deem switching as market suicide, in other words there is no monopoly.

If it were so easy to switch, why wouldn't developers target all the platforms? It isn't market suicide, but it's not as easy as recompiling the code either.

Sorry, but this sounds a bit like "hey, they actually have a tablet worth something, let's punish them for that".

Interesting, because the comments on other HN posts read like "There is no tablet market, there is only an iPad market", "Apple makes 80% of the money in the cell phone market, Apple is the only one making any money", "If you want to make money selling apps, the App Store is the best since it has the paying customers, Android is full of cheapskate freeloaders who want your app for free and install adblock". With the obligatory links to Asymco and Gruber to "prove" it.

Now it's kind of funny to see some of the same people make the argument in comments here that Apple has no significant marketshare or dominance of anything.

There is no contradiction, Apple 'owns' the high end market where people actually pay for apps. But, as a percentage of overall phone / tablet OS there well under 40% so it's hard to call them a monopoly.

So... they have a monopoly on the end of the market where there is money?

Why is this a distinction?

because if linux had 60% marketshare and ms had "all the paying customers" nobody would have had a problem with the things they did. just because Apple's competitors don't know how to make money doesn't mean they don't have competition.

You can't have a monopoly on a portion of a market. The clue is in the first two syllables.

It depends on how you define the market. When Sirius and XM merged, did it become a monopoly on the 'satellite radio' market or did they just become a larger player in the 'radio' market?

This is all getting very murky.

Apple has a monopoly on the "market" (portion) that pays for apps. That's not as clean a definition of market as you would want. The defining characteristics of this market are also (arguably) inconveniently dependent on the offending practices. IE iphone user pay because it is easy, because there is a single payment provider, because users don't have to worry about a cheaper option some roundabout way, etc. etc.

Then there is the problem that any platform, regardless of overall marketshare is something like a little local monopoly. Our definitions of monopoly don't really work here but platforms can still exhibit a lot of what anti-monopoly rules are trying to prevent.

Doesn't matter? Were they abusive? Did the new enterprise fix prices or stop competitors entering the whole market (Apple are not stopping consumers from signing up for Dropbox, just not through the App Store)?

I find it hilarious that you instantly switched arguments as soon as an example that showed you were incorrect was put forward.

Apple are being abusive, few would deny this. Few have. Why are you?

Except I didn't change the 'argument'. I asked a question. Was the new enterprise abusive? There is nothing unlawful about having a monopoly, controlling a market abusively is though.

Does a market exist where no money is being exchanged? If you are an abusive provider of things that you give away, are you a monopolist? If there are two providers of some product X where the first provider gives it away and the second provider sells it, is market share measured in units a meaningful metric of the economic activity generated by this product?

BTW, in antitrust terms, they do have a monopoly in that segment, and could be charged for abusive practices.

No. They don't. It is impossible to have a monopoly in a market segment and under the law, it is perfectly acceptable for a business to control a small portion of the marketplace.

Why do you say this?

A market segment just is a market according to the dictionary definitions. And legally, a lot of EU competition law concerns exactly how one individuates such markets/market segments.

Can you draw out what you're claiming more?

Not really as its very simple assertion. Apple do not have a monopoly. They control a segment of a rather large, and competitive marketplace. To say that they have a monopoly over their products is not a cogent statement as every manufacturer has such a 'monopoly'. The EU laws that you are referring to concern the abuse of a dominant position in a market, something which Apple as we are all too often reminded do not have.

The fact remains semantically and legally that you a monopoly of the segment or niche of a market is not possible. A company can be abusive (which is what you mean when you say monopoly - something which in and of itself isn't illegal), but unless they control the significant majority of the whole the it is legally not an issue. Morally is different debate.

> To say that they have a monopoly over their products is not a cogent statement as every manufacturer has such a 'monopoly'.

Well, I don't know what you mean by 'cogent', as that's generally taken to be a property of arguments and not statements (there may be loser notions, but as I say you'd need to spell out what one you intended). However, the statement that 'Apple have a monopoly over Apple products' is a true statement, which is all that matters to establish the semantic point. It might be trivial, but it's trivially true.

If I might try a helpful suggestion, it seems to me your confusion is arising because you're thinking something like 'if x is a market segment, then x isn't a market'. But of course that doesn't follow, as one can individuate markets at different levels (more or less fine grained).

"It might be trivial, but it's trivially true." It's trivial to the point of not being relevant. If the justice system were to punish every manufacturer that had a monopoly over their own product then nothing would get made. Cogent isn't perhaps the right word. As statements go "$megaCorp has a monopoly over their own products" is meaningless, yet it is constantly cited in these discussions as reason to pursue damages.

Look, there are several issues here. There's a narrow semantic point. On that point (which I think you explicitly denied), you can have monopolies over market segments. Personally, I like semantics, and think semantics is often less trivial then people suppose, but I accept others may be less interested.

Then there's a legal point about whether one opens oneself to legal action for dominance when operating in certain ways over market segments - I think it's also true you can be. But I'm not that advanced in my legal training, so don't take a strong position on that.

Further, there are normative and moral issues about what should be the law, and what one should do in these cases - but discussing those would take a long time...

If consumers face substantial barriers in switching to a rival then there might be an antitrust case. From the point of view of competition policy, the idea of "market for this" vs. "market for that" can be misleading

What barriers are they facing? As an owner of an Apple device, can they not sign up for Dropbox at all? Not being able to signup for a competing service that can involve a financial transaction is not anticompetitive if the consumer has other means, whit they do. Indeed if the consumer goes to the Dropbox website using Safari browser of their own volition, the can sign up immediately.

The issue here is one of sensationalism. As a community, we a far too quick to jump to the "$corp is evil!" conclusion without looking for a reason, however ridiculous it may seem. We, as a community, are too cynical for own good.

That only means that if you're a developer, Apple's App Store is a monopoly since that's where the people are that pay for apps. "Just go elsewhere" doesn't work because they can't make money there, like Netscape did have Unix and Sun CDE versions but they were of no consequence compared to the Windows one.

Apple have no monopoly in the mobile app space and the iTunes app store is noway, shape or form a monopoly in any sense of the word. There are (is) other options that have a significantly higher market share that developers can go to if they don't like Apple's terms.

> Now it's kind of funny to see some of the same people make the argument in comments here that Apple has no significant marketshare or dominance of anything

> "Apple makes 80% of the money in the cell phone market, Apple is the only one making any money"

Making the majority of the profits is not a monopoly in the Microsoft Windows sense, which I assume is what we're talking about here. iOS does not have that in the handset market (esp. if you include Symbian!), and the tablet market is very young.

I'm not sure these rules are what makes their playground profitable - only painful. If it goes on too long and too far I foresee it hurting them.

apple do not deserve 30% cut from everything sold through apps. apple can not use a single rule to measure everything. as simple as that.

I don't think people characterizing this as "too far" are ignorant of that fact that Apple is within its rights to enforce whatever they want to. I think the thread is more about "is Apple being a dick here?"...

Unfortunately, Google is probably not capable of exploiting these mini-resentments and I don't think anybody else is either.

Unfortunately, Google is probably not capable of exploiting these mini-resentments and I don't think anybody else is either.

I'd love to hear more about that.

This is my reasoning on why I think there is an opportunity there:

Lets say (patent issues not withstanding), you created an exact clone of the iPad and iOS and sold it at the same price but without the 30% 'apple tax' on purchases. It seems reasonable to assume that if that were the only differentiating feature you would get more developers (they get to keep more of the money) and so it would get more apps, and the platform would outsell Apple's iPad with its constraints.

Now granted that is a hell of a hypothetical, but if you can accept the claim that given two otherwise identical products, but one with more developer friendly policies, would allow the developer friendly one to be more successful, then we can talk about at what point the 'value' represented by that can overcome the fact that the product is not an iPad. Does that make sense?

The Android tablet ecosystem is currently horrible. Between the device diversity, the user experience diversity, and the release diversity, and the app experience diversity it is a wild and woolly place which has not been able to compete well with iPad. Contrast that to the Kindle Fire which started with Android, locked down a lot of stuff that Google doesn't, and that has gained more traction than any other Android based tablet.

To me, that shows a market for a non-iPad but with Apple like quality control and predictability. Depending on Amazon's success, Google might just wake up and fix their world (and of course they might not, it would not be the first time a large organization just didn't 'get' it)

But you also claim that nobody can exploit these resentments, and certainly Amazon is going to try and seem to have some modest success in that regard. Love to hear the counter point of view.

If your idea of waking up, fixing it and getting it right is to lock down Android as tight as Amazon and iOS did with their platforms for the sake of competing with the iPad then I'd rather Google just give up and leave it broke.

>so it would get more apps, and the platform would outsell Apple's iPad with its constraints.

Apple has that covered. You cannot make your services cheaper on other platforms. You have to charge atleast what you charge iOS users for the same service. This is to prevent the success of alternative app stores that will take only 20% or 5% cut. The new ecosystem won't take off because the existing developers cannot afford to completely drop the App Store to jump to a new platform.

So I can't charge less for an Android app equivalent to one that I'm selling for iOS? That boggles the mind, and it seems pretty anticompetitive to me. It's almost a means of strongarming their way to prime network dominance.

Surely in a world where the network effect rules and the stakes (the global marketplace) are so high, we shouldn't allow networks to entrench themselves too easily? Else we'd just have a behemoth in each sector, probably the same few companies even.

I believe the pricing restriction only applies to In App Purchases. The iOS edition of your app is unique to iOS so it stands to reason to price it independently. Sell a subscription to your service in the app? Then it needs to be the same price as on your website. It's protecting customers, not Apple.

It's protecting customers, not Apple.

That's one way of looking at it. Another is that it protects Apple from having their users find out that 30% of what they're paying gets nowhere near the person they think is getting all the money.

The 30% margin may be high, but the fact that the store keeps some of the money is not that surprising, is it?

I do not believe keeping the price equal to other helps the consumer, it's simply Apple keeping developers from charging the 30% straight to the consumer. I believe it would be interesting if they let this restriction slide. Perhaps the advantage of simple purchasing makes up for an increase in price. Convenience is also worth something, as supermarkets have found out.

>It's protecting customers, not Apple.

What? It's specifically set up to protect Apple's cut of 30% and to prevent other app stores from charging less.

Lets say you price a service at $14/mo. Apple takes 30% so you price it at $20/mo. Apple takes $6/mo. Windows 8 ap store takes zero if you roll your own in app mechanism, but you can't charge Windows 8 users only $14/mo. You have to charge them $20/mo if you want to stay in the iOS App store.

How is Windows 8 users being forced to pay $20/mo instead of receiving a benefit from their platform competing, protect Apple customers?

It's nothing so sinister as that. It's actually more simple: they're protecting their own users from being ripped off, by being charged a premium because they're iOS users. It has some negative effects but as a user it makes you feel safer buying something through an app if you know you're not being charged more than you would if you did it through the same supplier's website.

>It's actually more simple: they're protecting their own users from being ripped off, by being charged a premium because they're iOS users

Apple is trying to protect their own users from being ripped off by Apple? That's some _really_ twisted logic there.

That rule is in place to safeguard their 30% cut. I don't see how the user benefits from having to pay 30% extra instead of getting a 30% discount on the same supplier's website instead of paying Apple the tax.

It prevents suppliers from price discriminating (changing iOS users a premium) based on the fact that iOS users are more willing to pay up.

No. It prevents suppliers from price discriminating based on the fact that iOS has an associated 30% cost that the other platforms do not.

That cost goes directly to Apple. It protects Apple, not their consumers. Their consumers see no benefit from 30% of their cost, whether larger or smaller than the alternatives.

Wow, that's rather messed up -- and they're allowed to do something like that?

Are there a lot of examples, where an open and developer-friendly platform came from behind and usurped the incumbent that was also dominant in the market? I'm not sure the Mac-PC analogy flies here since Mac wasn't dominant - it was simply an incumbent. The only remotely-related example I can think of, given my limited knowledge and wisdom, is MySpace vs Facebook. But then again, I am not aware if MySpace was a walled garden and made its residents claustrophobic.

Based on the examples I have witnessed, I simply do not have any hope in the existence of an open platform with Apple-esque quality and eco-system (the assumption being viable eco-system automatically implies major market share).

Sorry if I spoke in circles!

There are not a lot of examples. However, the markets adjust. [And for those trying to second guess me, there isn't any hidden message in the message or anything]

One of the areas that hasn't been explored a whole lot in the product space is 'moderated open' which is how I think of the Linux Kernel. You can change it all you want, get the source, etc, but if you want to get into the kernel that everyone else sees you have to go through Linus. He keeps the quality pretty high by doing that. It was similar to FreeBSD as 'open source' but 'moderated commits.'

Now in the tablet space I have yet to see someone to take that path. There do not seem to be too many successes for business people to draw on for inspiration. That being said, as an example the Kindle Fire has sold a lot of units. And it is a completely legit argument that Amazon 'makes it up in book sales' (which is their business model) much like the iPod can be subsidized by iTunes purchases.

And I am sympathetic to mladenkovacevic's comment about a wild and free ecosystem can be more useful/desirable than a locked down one. But I also recognize that there are lots of folks who are interested in the product, not deeply technical, and chafe under Apple's restrictions on developers.

If anyone could 'afford' to make a run at this, Google could. And perhaps they will with a 'Google Experience' tablet that has been rumored.

I understand your lack of hope given the things you have seen so far. Back in the before times of personal computers when they had lights and switches on the front, the introduction of the IBM PC for the 'suits' was a huge pain. And really successful brands at the time got pushed aside. Google pushed aside Alta Vista, Sun pushed aside DEC, Compaq/Dell pushed aside the IBM PC, and Android phones at least have put a huge crimp in Apple's style.

Interesting to see how this evolves.

People don't like to talk about this, but MySpace to Facebook was less about developer APIs and more about urbs to suburbs.

If you're implying it was a race and class issue, well, let's just say that hasn't kept anyone away from Twitter. I think it had more to do with the fact that MySpace pages all looked like crap and played shitty music at you automatically when you opened them. MySpace to Facebook was more about user experience, and Facebook's ascendancy was a fait accompli by the time they launched their API.

>Lets say (patent issues not withstanding), you created an exact clone of the iPad and iOS and sold it at the same price but without the 30% 'apple tax' on purchases.

What "Apple tax"? Haven't you noticed that competitors have struggled to offer the same prices for their tablets for example? The iPad/iPhone is one of the cheapest products on their market segment.

Just consider that when everybody expected the iPad to be like $999 or $799 on introduction, it came out at $499 -- and the mostly useless copies (now forgotten) that appeared of it, where in the range of $700.

Apple has their margin's with huge economies of scale and huge massive pre-orders of RAM, solid state storage and screen panels.

Incorrect on the mostly useless copies part. The Asus Transformer is not a copy and is cheaper than its iPad counterpart. I've been using it since May 2011 and it can do pretty much what the iPad2 can do, and it has an IPS screen to boot.

He's talking about app and in app purchases, not the cost of the device.

Oh, I see, I was confused by the "exact clone" part.

Not capable? How about Google blocking Gmail, Youtube, Maps and Docs on iOS? They should do it now, Apple is playing hardball in the app store and the courts, time for Google to fight back.

No one in their right mind would punish their customers/users for making a particular product purchase decision.

They would be cutting their own nose off to spite their face.

You mean like how Apple punishes its customers that want Dropbox apps?


For what it's worth, Windows 8 App Store will not restrict in-app purchasing like the iOS App Store does.

It's great to hear that Microsoft intends to be accommodating. However, unless you can convince at least 5% of my mobile users to buy a Windows Phone it's going to be hard to justify the extra effort for a third app.

Personally, the idea of hardware-accelerated HTML5/JS apps makes my heart sing, so I'm really hoping it takes off with consumers. Maybe it'll be the best texting phone ever and every teenager in the world will swap. A dude can dream...

And the Mac App Store doesn't restrict anything either. What is your point ?

There will be iPad-like Windows RT tablets running on ARM with Metro apps from the Windows 8 marketplace. In that sense, it is directly comparable to the iOS App Store, at least to the extend of iPad apps.

Way TOO far. T, O, O.

Please share the snarky replies!

You're on their turf - stop complaining.

I wouldn't invest in app development ever, precisely due to these sorts of issues.

My complaint is not as a developer, but as a user.

First they came for the communists, and I didn't speak out because I wasn't a communist.

Then they came for the trade unionists, and I didn't speak out because I wasn't a trade unionist.

Then they came for the Jews, and I didn't speak out because I wasn't a Jew.

Then they came for me and there was no one left to speak out for me.

Nice one. I couldn't quite put my finger on what this reminded me of, but you nailed it: the Holocaust.

Ahh, the point is missed by the ignorant. I was not, in any way, comparing this at all to the holocaust. That you would think that says volumes about what your opinion means, however.

Sorry, my mistake. I see now that when quoting a famous poem about Nazi purges, you were actually talking about raising tulips and not the Holocaust. Of course, I was not in any way comparing you to the sort of naive moron who would draw parallels between the murder of 6 million people, and a hiccup encountered while installing an iPhone app. That you would think so says volumes about your self-opinion, though.

> Sorry, my mistake.

At least you realize it's your mistake. After all, what is written can only mean one thing, and one thing only.

Maybe one day you'll learn about context, and history, and how that poem was not about the Nazi purges, but rather people not speaking up about them until it was too late. That you would equate that poem to the purges implies you miss the meaning, the point.

> and a hiccup encountered while installing an iPhone app.

But it's not. Again, you miss the point. People are saying this crosses some line. But that line was crossed years ago by Apple. People defended their actions then, while others decried it, and this exact point (and poem) was raised at the time. People dismissed the warning. They said things like this would never happen.

Now they are complaining about Apple crossing a line.

Finally, I want to introduce to you a literary concept called hyperbole. It is an exaggerated statement or claim not meant to be taken literally. So, while you want the poem I pasted to be about the holocaust, it isn't.

Thanks, Reddit!

That's not from Reddit.


It's a poignant message and reminder that this is not the first time this has happened. It's especially important because the OP mentions Apple having "gone too far," as if everything they were doing before was acceptable.

As for your belief that this response is merely a quip from an recent migrant from Reddit, might I point out that your comment is, at the very least, far, far worse. I'm confident, however, they you merely don't care, and are at best a troll.

After reading through the thread it seems they are rejecting apps because a piece of the Dropbox SDK breaks the App Store guidelines. They are not simply rejecting Dropbox integrated apps.

It's well known that you cannot link the user to make a purchase outside of the iOS ecosystem. It was a huge issue with the eBook apps last years.

I'm not saying I agree with Apple's stance on that but they are not rejecting apps which use Dropbox because they don't like Dropbox. Dropbox is breaking the rules and as soon as they fix that (it seems they already have) there will be no more problems.

They are rejecting apps that use the v1.0 or greater of the Dropbox SDK, or apps that use the Dropbox OAUTH API.

Or, perhaps they're rejects apps that allow you to create a Dropbox account. That would cover all versions of the Dropbox SDK.

The specific reasons they gave are:

- "This app contains a link that takes the user to Dropbox via Safari".

- "The concern with this app is that the user is taken to Dropbox's website, if they do not have Dropbox installed on their device, where they have the option to purchase additional storage space."

How would you read that? They seem to suggest that you can't link to any page on dropbox.com.

The problem is that neither Dropbox's login page nor their create-account page provide any links for purchasing anything, nor do they provide links to Dropbox's main site. http://rfc64k.files.wordpress.com/2012/05/dj-xhtrivxl.png

So it seems that merely because the login page is hosted at Dropbox.com, it is forbidden because Dropbox.com can be used for purchasing things. That would rule out all forms of OAUTH.

Their proposed solution was to remove the "Create Account" link, but it's not at all clear whether that was the original problem, or whether it solves anything.

The bottom line is that if your app currently uses any version of the Dropbox SDK or the Dropbox OAUTH API your app may be rejected and you're now in a state of limbo.

I agree with your assertions, and I'd like to bring a bit of rationale to this discussion rather than the "How can Apple be allowed to do this?" and other flamboyant language.

This is on Dropbox to fix, not Apple.

Imagine you provide a marketplace, and you curate that marketplace. And you say to customers who come to that marketplace "Don't worry, we're going to do everything we can to protect you from bad purchases". Then you say to sellers, "No deals behind closed doors. You want access to the marketplace? Sell out in public." Every time you use the iOS in app purchase API, Apple has a way to track the payment. Lets say the customer pays for a service inside of an app that never gets rendered. The customer can then contact Apple who can verify if the payment was processed, and can go about returning the customer's money while policing the marketplace. But if the purchase for a service rendered inside the app happens outside the app, then customers will have a much more difficult time getting recourse for making payments to a service provider (app maker) whose app doesn't work properly or doesn't provide the services that the user payed for.

Having said all that, Dropbox provided this API to developers. They should have built it to work inside these rules. They could let users create Dropbox accounts, they just would not be allowed to charge users from outside of an app for services that would then be rendered inside the app. It sucks, I know, but it's an important part of ensuring the quality of Apple's marketplace.

I fully appreciate and support Apple's efforts to protect the App Store from all potential abuses, but I'm not selling anything outside of the App Store, nor am I directing anyone to purchase something outside of the App Store.

Users who are directed to Dropbox via my app are not asked to purchase anything. They are not made aware that there is anything to purchase. They are only told that "Dropbox is a free service that lets you transfer files". They create an account and it just works, and they never have to think about Dropbox or their Dropbox account again.

This is on us to fix - we, the consumers. The way to tell Apple that this behavior is unacceptable is to stop giving them money.

By extension, since Apple is still in business, their behaviour is de facto accepted and thereby necessarily acceptable.

Dropbox accounts are free to start, and you don't have to give them your credit card.

That wasn't really linking the user to make a purchase, it was somebody following a silly path of links from the initial target to arrive at a place where they could buy something. Maybe it was an honest (if overzealous) call by an app reviewer. Or maybe it was one of Apple's regular and brutal attempts at keeping direct competitors from benefiting from their platform. We don't know yet which, though I guess we'll know soon enough.

It wasn't linking them directly but they eventually followed a path where the could make a purchase. I guess it's kind of a grey area but Apple's reviewers tend to side against you when it comes to grey areas.

I don't totally agree with their stance on this but I can see why it was rejected.

I had a simliar rejection because of my app's Rdio integration.

If the user had Rdio installed, my app would open the song in the Rdio native app.

If the user didn't have the app installed, my app would open the song on the Rdio web site in MobileSafari. Apple didn't like this since you could purchase an Rdio subscription on that webpage bypassing the IAP and Apple's 30% cut.

As I understand it Dropbox can work around the issue by presenting a plain login form (without any links) to its iOS users.

FWIW, the Rdio iOS SDK now avoids linking to the Rdio web site, or even talking about the existence of an Rdio web site :(

I am waiting for that research paper titled "What came first for Apple - the money or the user experience?". I can imagine Apple's thinking here - if we can squeeze every 3rd party service to adopt our 30% cut, then (1) we'll add more to our bottomline and (2) people will have a better UX (or more precisely can go back to their old smoother and better UX). Question is - did I get the order right?

The 30% "apple tax" on their App Store is not a major way that Apple makes money (more on this in paragraph 2). This leads to the conclusion that Apple is not attempting to hobble stores that undercut them: they simply like using their control of the store ecosystem to maintain the quality, simplicity, and consistency of the experience that allows them to provide to their customers, with the nice side effect of giving them massive leverage over their largest competitors and power over many external markets. I'd thereby reverse the order you have.

Checking the numbers, the profit margin on an iPhone is a little over $170, while the profit margin on an app is <<$1; most of the people I know who own an iPhone have purchased at least two of them (an upgrade a couple years later) and have purchased maybe, at most, 10 apps. If you check the Apple quarterly earnings reports Apple doesn't even bother separating App Store sales from iPod accessories: both are a tiny line item in comparison to the profit they make on their actual profit center (core hardware).

However, for content resources, such as books or music, the story is much different: I know people who have purchased many thousands of dollars of music, movies, and television shows from iTunes over the years. This is enough that the iPod and AppleTV can be effectively subsidized by iTunes (something you don't see Apple doing with the iPhone: they make certain to get their profit on that at the point of sale, possibly plus a carrier subsidy).

This is why this issue starts coming to the forefront for services like Rdio and Kindle: those actually hit Apple where it hurts, so Apple would prefer to use their control to hobble their opponents. But, Apple doesn't really want 30% of the revenue from these sales... it would be much better for Apple if they just went away, and people used iTunes instead. (I make this clear, as that is why I then don't feel it accurate to use this as an argument for the 30% being a primary concern.)

The point is not whether Apple makes money on its "apple tax", but how that affects us developers. In fact it is a pure transaction fee, and if you compare that to paypal or credit card, or even affiliate commission payments, it's way too high.

In the long run where does the App developer get to make any money? On app sales alone? You cannot survive by making a one off sale to your customers, and apps that seek to generate more income through in-app purchases need to pay fees that are equivalent to what they would do through credit cards or whatever.

But it's manifestly not just a transaction fee, it pays for the curation of the store, server storage space, bandwidth, royalty payments for patents which Apple have been shaken-down for, advertising on the Apple website, and finally the actual fee to MasterCard/Visa is all covered in that. It's a store, that's what stores do, provide some value-added and charge a markup.

No, the point was, quite specifically in fact, determining what "Apple's thinking" was and whether it included "we'll add more to our bottomline" as a concern, primary or otherwise, for why they are choosing to "squeeze every 3rd party service to adopt our 30% cut".

Please read the post to which I was responding to undersand the context; the only way in which we care how it affects developers is if that effect is one Apple wants (enough to have caused them to effect such an affect): the primary question is precisely whether Apple makes money.

It's also a subsidy for delivery of all the free apps.

I'm surprised it took Apple this long since launching (the relatively overpriced) iCloud before they started acting like they always do: anti-competitive and monopolistic.

In the name of UX ofcourse. It couldn't possibly be because unethical market grabs tend to generate money. Remember: Apple doesn't really care about money. They care about you and all that money they make is just accidental.

This is not a new thing. Apple have been clamping down on any revenue generating activity linked to from an app for at least a year now. They are forcing developers to pick between giving Apple a 30% slice of revenue, or don't charge for it, or don't link to it.

Most developers seem to be opting for the third option. The only one that doesn't impact usability is the one that involves giving Apple 30%.

Whilst I can see the reason why people baulk at giving Apple a cut, what doesn't ever seem to be widely discussed are the reasons why that cut might be justified or even well worth it.

The user experience of in-app purchasing on iOS is very good. Compared to the myriad online purchasing systems I've experienced in over a decade of buying things online, it's easily the most reliable and satisfying I've encountered. Case in point: I've had two separate third-party apps crash or stall during in-app purchase (one because of a loss of network connectivity, another where the app just crashed). Upon relaunching, iOS was able to work out where I'd gotten to with the in-app purchase and reassure me that I wouldn't end up paying twice.

This kind of reassurance is invaluable to consumers who aren't tech-savvy, and will almost certainly lead to higher conversion rates. In fact, it means that the user experience of a customer buying in-app purchase with a completely different product makes them more likely to use in-app purchase with your product! Where else can you benefit from this kind of self-reinforcing behaviour? Apple realises that providing this seamless experience is important, and so does what it can to discourage alternatives where a worse experience (an experience which might lead a customer to erroneously blame Apple or the device) might be the result.

Another important point to remember is that Apple targets the iTunes store to run at break-even (http://www.appleinsider.com/articles/12/02/23/tim_cook_addre...), so accusations that this is motivated primarily by profit are wide of the mark. Yes, that 30% cut helps run at break-even, but let's not forget what other benefits you're getting as part of the deal. And if you're certain those benefits aren't worth it, go try the Android Marketplace, and let us know how that works out for you.

Well we can all see the benefit to Apple. Apple are making a killing with the App Store, this much is easily visible in their earnings reports. However, I think you are way off the mark with the value that 30% generates for users.

What Apple are doing with the App Store is not expensive for Apple. They hire a few people to run some servers and a couple more to filter apps. It's incredibly cheap and as many of us know you can run a content vending business pretty cheaply as it is. Sure, the benefits of using Apple's UI are nice but they are not, in my humble opinion, worth 30% of every purchase.

To put this another way, I read an excellent article about iTunes (http://thetrichordist.wordpress.com/2012/04/15/meet-the-new-...). Apple takes on zero risk in its iTunes business and nets 30% minus trivial operating costs for vending out some files over the internet. What do you call a business model that asks for money without taking risks? Rent seeking. The App Store and iTunes are both examples of rent seeking behaviour.

It's not true that Apple is making a killing with the App Store. Where is it visible in their earnings reports? Are you sure that you're not confusing revenue with profit?

The App Store runs at just above break even: http://www.macobserver.com/tmo/article/apple_app_store_runs_... http://news.cnet.com/8301-13579_3-20008540-37.html -- figures of less than 1% or 2% of gross profit. That is not "a killing."

Percentage of Apple's overall revenue doesn't matter here.

It is amazing Apple somehow spends so much money on reviewing apps and providing the app store that they can't make much money on a 30% cut.

What I find amazing is that people find it so easy to dismiss the cost of running an online store with almost no downtime, delivering music, television episodes, movies and apps to customers all around the world, with fast download speeds, with all the recovery facilities that iCloud offers for past purchases. Apple's famous North Carolina data centre cost about $1 Bn to construct (http://arstechnica.com/apple/news/2011/02/apples-nc-data-cen...). At that price, you'd need to collect 30% of $3.3 Bn in revenues just to break even.

Yeah, but who spends a billion dollars on a datacenter??? Only a company with more cash than they know what to do with.

I'm surprised it took this long for an extremist, reactionary post like this to reach the top of the comments.

Remember: Apple couldn't possibly be a large corporation whose objectives and principles occasionally conflict in a way which causes collateral damage to their users or developers. They only care about squeezing out the competition through any means necessary.

So what?

They are acting monopolistically and unethically; this is a fact. The "collateral damage" is OK, if you don't have the majority; Apple does, however.

Ethics are objective now? I personally think it's a dodgy move on Apple's part, but I think the knee-jerk reaction is over the top, particularly given how Apple's policies on in-app-purchase are still quite nascent.

It's easy to castigate this as a monopolistic move intended to benefit iCloud, but the reality is that Dropbox and iCloud aren't directly competing services. Really this is about how third-parties offer purchasable services from within iOS. There is a trade-off to be made between what offers the best user experience and what is practical for third-parties though, so I have to imagine Apple will eventually be more flexible.

Apple has been fighting for their 30% since the beginning. Step by step any exceptions to the 30% rule have been removed.

Is it more ethical to give Dropbox special treatment? Should Dropbox-enabled apps be given that competitive advantage?

Apple has been fighting for their 30% since the beginning. Step by step any exceptions to the 30% rule have been removed.

The most important question (for both customers, and developer partners) is: should Apple be trying to extract 30% from every transaction on their devices? Should they be trying to expunge any links to the internet in all apps (the logical conclusion of their current path), in order to ensure that no payments for anything digital go through anyone but them? If they get away with this, will they then come after companies like Amazon selling physical products later and try to enforce a 30% cut and equal pricing outside the app for products sold through any other system?

Is that a sustainable model and one which we as consumers and developers want to support? If the answer to that question is no, Apple is pricing themselves out of business with their partners (who made all these wonderful apps which they are making money on), and their customers, who pay all the money for those apps and devices (because they have apps). They rely on those people to make their money, and annoying your customers and partners is never a good strategy in the long-term, as Microsoft found out to their cost when they lost customer loyalty in the late 90s.

In this example the developer wasn't even explicitly selling something - they were just linking to the internet, which then meant that someone could possibly buy some digital service from dropbox without paying Apple a finder's fee. If they push this too far, we'll see more and more companies abandoning the Apple ecosystem and selling things direct over the internet instead - there have already been some high profile defections like the Financial Times who decided that it just wasn't worth dealing with Apple, and abandoned their high-profile iPad app for a web app.

I can not be the only one thinking there is an antitrust issue here? I would guess the book thing means Apple is under quite a bit of scrutiny.

While I'm not involved in mobile, I've had similar experiences for over half a decade dealing with the banal, highly questionable, and non-uniformly enforced rules Google imposes on its own advertisers. Some of the stuff is bad enough it makes you think it would fall under RICO if this wasn't a large company but rather an Italian owned waste disposal company.

AFAIK, it would only be an antitrust issue if it were shown to be anticompetitive. If Apple is a monopoly or acting as part of an illegal trust, yeah, they're going to get smacked down. But I think the general consensus is that Android is a credible competitor to iOS and Windows is a more-than-credible competitor to Mac OS X, so Apple is not a monopoly.

Can most hn participants abstain from commenting on the law unless they actually have real knowledge of it, please?

It is so complex. I'm blown away daily with the knowledge of the hn community, it runs so deep. And everyone seems like a genius because they only comment seemingly on what they know.

Yet everyone seems to think they know the law. On the surface programming and the law seem so similar, yet they are so disparate. So, so far apart.

Ask an attorney what determinalistic is, and you'll probablly find a blank. Ask a programmer, and they think what is the law is the law if it maybe sort of fits part of what they heard about the law.


Anti-trust is based on behavior, not strictly market size.

If you're going to pull in market size, you've got to play to the relevant market as well.

One of the difficulties of anti-trust law is that it's fundamentally about power, which is not something economists have a particularly good measure for, nor are they particularly equipped to find (or be interested in finding) measurements for.

Even in a monopoly/monopsony or oligopoly/oligopsony cannot dictate both price and quantity (supply/demand curve), though in the traditional economic efficiency argument of the Chicago (free market) School, the concentration of buying/selling power means that (for sell-side concentration) prices are higher and quantities are lower, or (for buy-side concentration) prices are lower and quantities are higher, and more net value accrues to the side with greater concentration. The Chicago School cries tears over lost market efficiency.

But that's a far smaller problem than that monopoly allows the monopolist to choose winners. Maybe not for all time, but it's the same argument that's been used against command economies, bailouts, and even just plain government regulation. Generally wrongly in the last case, and mostly in the second.

Free markets are based on the principle that buyers, sellers, and ideas meet on equal footing. Where an entity or cabal can select winners, what you've got is no longer a free market.

Which is a pity, as free markets are generally powerful forces for good.

Significant market share is enough for antitrust to be a concern. You don't need a monopoly, and indeed most companies engaging in anti-competitive behavior don't.

An example of an antitrust case for someone with market share similar to Apple's in phones would be helpful. To head you off at one unproductive pass: it is unlawful to collude with other companies to fix prices even if you have a minority market share.

Note though that it is an open question whether the relevant market is "phones" or "smartphones".

That's true, but obviously Apple doesn't have a monopoly in either market (obviously, they are dwarfed by the total phone market).

Apple doesn't have anything close to a significant market share.

There is LOTS of competition in the market place.

Apple has significant market share. They just don't have anything close to a monopoly.

Apple has a near-monopoly in Tablets right? Doesn't have to be about phones.

So if Apple and Samsung independently do this, there can be norecourse since both of them aren't monopolies even if they have around 90% marketshare together. Even though the harmful effects on the market is the same.

I guess that explains why the US wireless and cable franchies suck and have the lowest consumer ratings.

That's a weird example to use, since US cable franchises are in fact usually monopolies.

Err, in the age of directv, dish network, dsl, vdsl, fiber, u-verse, 4g, etc I don't think ye olde cable monopoly is an excuse anymore.

dsl, vdsl, fiber, u-verse, 4g are extremely location dependent (I live in a top 100 MSA and don't have access to video over any of those modes at home), and even directv/dish have certain requirements (namely clear LOS to the satellite). For me it's Comcast or nothing, and I suspect that's the case (substituting "your local cableco" for "Comcast") for a majority of the USA.

"So if Apple and Samsung independently do this, there can be norecourse since both of them aren't monopolies even if they have around 90% marketshare together. Even though the harmful effects on the market is the same."

No, abuse of oligarchies and cartels are illegal too.

It is generally understood that small numbers of entities can form oligarchies with no explicit coordination, so independence isn't necessarily a defense either.

i'm not too sure on the exact details of antitrust but this seems more ethical then antitrust. They are not disallowing the users from NOT being able to purchase more dropbox storage - as long as it goes their stream to purchase it (which results in them getting 30%). Wouldn't antitrust be that they are not allowing it all together on their platform? Wouldn't the same idea of you going to a movie theater and not allowing you to bring in your own food/candy - you must purchase it through them since they make more money from a transaction you would have done elsewhere?

1) Research antitrust. It doesn't mean what you think it means.

2) Apple has done nothing different than has been done before. It is an existing in app purchasing rule.

"Competition law, known in the United States as antitrust law, is law that promotes or maintains market competition by regulating anti-competitive conduct by companies."[1]

One could argue that rejecting apps that make use of (or in this case encourage signup to) Dropbox is anti-competitive conduct since Dropbox is a competitor of iCloud (isn't it?)

[1] http://en.wikipedia.org/wiki/Competition_law

It is hard to name any proprietary product platform, from cars to KitchenAid mixers, which would not run afoul of this common nerdly definition of "antitrust".

In reality, the presence of very viable substitutes in the market for the iPhone (to wit: Android) probably moots the argument here.

To go further with this argument, you will need to venture beyond Wikipedia summaries.

sorry. no real desire to go further. I was simply pointing out that perhaps "antitrust" does mean what AJ007 thought it did. I believe there is a hint of that here. Probably not enough to make a legal case but enough to add another example to the "Some times Apple can be a real dick" list.

Sure. If you wanted to take this further, a source linked from DOJ's website:


Jefferson Parish Hosp. Dist. v. Hyde

    (b) No tying arrangement can exist here unless there is a sufficient
    demand for the purchase of anesthesiological services separate from
    hospital services to identify a distinct product market in which it is
    efficient to offer anesthesiological services separately from hospital
    services. The fact that the exclusive contract requires purchase of
    two services that would otherwise be purchased separately does not
    make the contract illegal. Only if patients are forced to purchase the
    contracting firm's services as a result of the hospital's market power
    would the arrangement have anticompetitive consequences. If no forcing
    is present, patients are free to enter a competing hospital and to use
    another anesthesiologist instead of the firm.
Obviously, substitute "iPhone" for "Jefferson Parish Hospital", "iCoud" for bundled "anesthesiological services", and "Android" for "competing hospital" that customers are "free to enter".

Here, let me help you with that ;-)

    No tying arrangement can exist here unless there is a sufficient
    demand for the purchase of cloud storage separate from a smartphone
    OS to identify a distinct product market in which it is
    efficient to offer cloud storage separately from the smartphone
    OS. The fact that the exclusive contract requires purchase of
    two services that would otherwise be purchased separately does not
    make the contract illegal. Only if user are forced to purchase Apple's
    services as a result of Apple's market power would the arrangement
    have anticompetitive consequences. If no forcing is present, users
    are free to purchase a competing smartphone and to use another
    cloud storage provider instead of Apple.

Right, but they're not forced to purchase Apple's services; just like the patients at the hospital who have no choice of anasthesiologists, Apple customers can simply select a different vendor.

Your argument would be more effective without the unnecessary ad hominem. i.e.:

> In reality, the presence of very viable substitutes in the market for the iPhone (to wit: Android) probably moots the argument here.

I do not think the word "ad hominem" means what you think it means. An "ad hominem" argument is one that targets a specific person advancing the opposing argument. Ad hominem arguments are fallacious when the characteristics of those people aren't germane to the argument.

Obviously, no part of my argument focuses on whoever it was who said Apple's Dropbox rejection is an antitrust violation.

You are implying that your opponent's knowledge of antitrust law is limited to a "nerdly" definition he has read on Wikipedia. Perhaps it was not your intention, but that's how it came off to me.

My argument isn't that such a definition of Sherman Act violations is "nerdly". It's that it's wrong. "Nerdly" is just color commentary. And, for what it's worth: it's from one nerd to another.

Happy to clear that up for you.

For what it is worth... I was not offended. I've a thick skin and enjoy a good debate. Psssssstt... half the time I don't even know much about what I'm talking about... but I usually learn something every time. :)

In light of your recent rantings about "nerds"[1] and the law, it's hard to see your post as anything other than a continuation of your angry attacks on anyone who dares speak on the subject of the laws governing our hypothetically-democratic society. Your authoritarianism has degenerated into simple mockery. Even when you are right (which I think you largely are on this matter), you no longer contribute anything of use because any meaningful content is wrapped in an opaque blanket of anger and hostility.

[1] I do not consider myself a "nerd", by the way, nor do many other people that you probably seek to apply that label to. Some of us find it quite insulting. Call yourself whatever you want, but speak only for yourself.

You’re missing the point of tptacek’s criticism. He’s not trying to mock nerds, but rather to point out that their mental model of how the law works is woefully mismatched to how the law actually works, with a great deal of resulting whining and handwringing that could be avoided if they bothered to learn and think a bit about it. That I’ve seen, there’s been very little anger or ranting coming from his direction, and the label “nerd” is only barely pejorative (if at all) in the context of this forum: hardly a deep insult.

I think maybe this is an example where tone of voice is transferring poorly to internet text, and you’re interpreting his statements to have quite a bit more bite than he intends (or most others are reading)?

Speaking as somebody who enjoys intentionally mocking others (go ahead, check my comment history. Fuck, I picked this username just to make the then-popular diet discussions on HN more interesting), if he's honestly not trying it (and I have a hard time believing that, he is as far as I can tell a reasonably intelligent person and should be able to analysis himself objectively) then he is damn good at doing it by accident. Damn good.

I only wish I could convey such attitude through text intentionally.

EDIT (posted after jacobolus' reply):

When I first came here, I was annoyed at the entire HN attitude of "a better discussion board". Good clean discussion is great, but at the time it seemed too dismissive of the great conversation that happens elsewhere on the web; too arrogant if you will. Furthermore, I saw that attitude as a sort of challenge: could I game the system and be just helpful enough some of the time to allow myself to be an utter asshole the rest of the time without getting banned?

You see, somebody who is an asshole some of the time and useful the rest of the time is not a valuable community member. Even if most of the time is spent being useful that is still not a person that you want in your community; in short, the karma system is broken. Of course HN isn't quite as broken as a pure karma system would be, hellbanning still kicks in for people with positive karma, but it is broken nevertheless. It's pretty easy to keep individual comments at positive or at least neutral karma by picking your topic correctly, which gets you around (to my knowledge) all but manual banning. (I suspect an improved banning system would involve flagging people for manual inspection after they have too many comments with large amounts of up and down voting. I can't speak for the false positive rate of such a system except to say that my honest productive comments rarely seemed to swing)

But I'm done now. tptacek does a better job of what I wanted to do than I think I ever could.

I think I'm past due on closing this account anyway. I'm out; apologies for any grief I've caused. I probably owe a good number of you a beer.

I should clarify: he surely is trying to mock them sometimes, but (a) it’s a pretty friendly ribbing, and (b) the mockery isn’t the purpose, it’s just a rhetorical device. By my italicized “mock”, I meant something closer to: “he’s not trying to shame them into submission, as some kind of ‘authoritarian’ bully power play”.

Edit: maybe it’s better to say that he isn’t trolling them (i.e. intentionally riling people up just for the sake of being a jerk), but is trying to be genuinely helpful and advance the conversation, even though sometimes that takes a teasing sort of tone. Notice all the smiley faces.

Like hell he isn't. Go back through his comment history. He's arrogant, dismissive, presumptuous, and yes, outright mocking. This is, intermittently, his MO on other subjects as well, notably infosec, but it's been particularly bad of late in legal subjects.

I've often corrected many of the kind of misapprehensions he seems to see himself as on a crusade against, and it has never been necessary for me to adopt his abysmal attitude in the process.

Edit: To answer your added bit at the end, which has changed several times, I'm interpreting it in light of him. Hence my references to his past history. Some months ago, he went through a particularly nasty period, and when I called him on it, he outright admitted he was intentionally being a jerk.

See this, right here, is an actual ad hominem argument. :)

You don't think that maybe this sub-thread is a waste of time? Your opinion of me --- which you can probably guess I don't organize my thoughts around --- does not change the fact that product tying isn't "per se" unlawful.

No, Thomas, it isn't, because I'm not arguing you are wrong because it's you making the statements. On the contrary, as I said, you are largely correct. I'm arguing you're being an ass. Separate issue.

Thanks for clearing that up.

I think you guys have gotten off topic..

Little bit, yep.

Now that's an ad hominem attack.

There's a link that I like to give in response to erroneously declared "ad hominem"s. http://plover.net/~bonds/adhominem.html

Since it's so full of examples, even the thickest of nerds can learn!

I swear, it's like a few months ago somebody somewhere introduced tptacek to the concept of using "nerdy" as an insult (and to the debating tactic of attaching an insult to a position with the goal of forcing people to distance themselves from that position).

What part of "I'm a nerd, the term is a shorthand, not an insult" are people having so much trouble with?

I've been a systems programmer since 1994. I do not believe that you honestly believe that I think "nerd" is an insult. It beggars belief. Please find a better way to be irritated with me; this is such a stupid one.

Why not just go the extra mile and call me a "self-hating nerd"? At least that would make sense.

You could argue that but you would lose. Generally there needs to be overwhelming market power by the company engaging in anti-competitive behavior. Even when restricted to the mobile phone market Apple doesn't exert nearly enough power to make a case.

One could also argue that producing a better quality product at a lower price is anticompetitive. That's why I've never understood laws banning "anticompetitive behavior."

Not really - producing a better quality product at a lower price is pretty much the definition of (successful) competition. Anticompetitive would be actions preventing such a company from winning more of the market.

In this case, Apple's IAP rules are preventing apps from selling products/services at their 'natural' prices in rival marketplaces, which could be considered anticompetitive depending on the various factors involved.

True. Except for two little things:

1) There are specific scenarios for when antitrust takes effect. This isn't of them.

2) Apple is NOT rejecting apps specifically for using Dropbox. It is because of the well known and well established in app purchasing rules.

It sounds like the in app purchasing rules are not that well established if they can arbitrarily be applied to some n-depth linking to a spot on the web where the user can make a purchase. They would kind of have to reject any app that has the ability to open a link to Safari. Once in Safari (which technically means you are no longer "in app") you can browse anywhere and make a purchase. So maybe it is not an antitrust issue and just an anti-user issue.

To take it to the antitrust level may require confounding variables. Whatever Apple's status is when it comes to a monopoly, they already have enough meaning in DoJ's eye that they currently have an antitrust case against them.

I suspect it would take only a few small additional variables to trigger an anti-trust issue when it comes to forcing payment forcing. What those could be, I don't know. Agreements involving a payment processor? The point is its a small step away. What they are doing now is extremely anti competitive and it would not require much to push things over the edge.

The original post indicates that a link in an app had another link in it for something that users could initiate a purchase through. What would happen if Google forced all indexed sites to go through Google Checkout and on non-compliance wiped all references and sites that linked to other payment processors from their search results? That wouldn't fly. Is the only difference that this is Apple's App Store and Apple is not a monopoly?

How many number of links is the limit? If the mobile site had a link to Google, and Google had an ad for Google Apps, because it's within the webview, does that still mean it's in app purchasing?

It sounds like it is entirely possible. Of course, like everything else in the App Store it probably depends on whether Apple A) thinks your service is a competitor to theirs and B) has anchovies for dinner last night.

Read the linked thread. Apple's issue is quite specific and the fix appears obvious and has been implemented. Don't land on a page selling something bypassing IAP.

Check out the linked post in this comment (esp the screenshot) http://news.ycombinator.com/item?id=3916971

Looks like he had to remove anything that seemed to be a domain name.

I thought Apple was all about giving consumers the best UX and that revenue would automatically follow... how does a move like this help UX?

How come Apple's reviewers are so freaking vigilant about in-app purchases while letting a fart app or a tethering app (or even, until one point, those uploading address books without any alert) slip through so often?

They make up very generic rules and selectively enforce them whenever they view some app / service as directly competing with Apple's own offering.

See: The initial Apple - Google spat with google voice, Kindle - Apple, Dropbox - Apple.

The UX mantra is just BS like Google's "Don't be evil".

Because the training of the reviewers doesn't cover those cases. Apple is no startup!

For a company whose figurehead once railed against porn, I find awfully amusing that its reviewers allow the fart apps. (You don't have to lecture me how fart != porn, although I have seen some overlap between the two)

Rule 34 there?

This is linkbait because it suggests that Apple is rejecting any app that uses Dropbox. That's patently untrue. For example:


It looks like Apple is rejecting apps that use the Dropbox SDK in a way that violates the TOS. But then the headline may as well read, "Apple rejecting applications which use code."

Based on what Apple seem to be indicating to the people in the OP thread, it's the behavior of the Dropbox SDK itself that they're objecting to. If Drafts made it through by anything except dumb luck, Agile Tortoise must either a) have gone out of its way to circumvent how the SDK normally works, or b) be using a deprecated SDK version from before Apple started objecting. (I don't have Drafts or I'd check to myself, but feel free to check the SDK version if you do.)

You should look up what "linkbait" actually means. A forum discussion between developers about a problem using the Dropbox SDK in the iOS app store assuredly does not qualify.

I think he's referring to the article title, which makes an implication that seems designed to cause anger over a policy that isn't quite as corrupt as the title might suggest.

So bloody what if it is linkbait? The issue at hand deserves attention and debate.

Is anyone really surprised? This is what happens if you give a single company so much control over your use of devices. It'll only get worse, we all know that, right?

In my view, it only gets BETTER -- hopefully this is the beginning wakeup call that will get people off of OSX. This has been going on for a long time too, Apple slowly making things more annoying for its users. Especially its developers. (For the record, I own 2 Macs, an iPhone, two Android devices, an iPod, and a PC, so I am not really biased in any given direction...)

With "PC", you mean Windows. Right?

Yep, a bit of a vague term, but PC has kind of become a synonym for "Windows Machine" -- even though a Mac or Linux box is technically a PC as well...

Well, isn't this because that Apple somehow forgot about existence of such a basic concept as FILE?

Are you referring to iOS not exposing a filesystem? If so, could you explain how it is relevant?

Yes, and dropbox is used as a workaround (besides other things of course). I've even seen ios apps where file saving is done by e-mailing it.

What's remarkable is that Apple is suppopsedly desintined to be the most profitable company in US history and they still feel the need to do this kind of thing. It says a lot about the character of the company. Pretty sad spectacle, no matter how much money they make.:wq

There are reasons they're the most profitable company in US history, and doing stuff like this is one of those reasons.

Is that really true, or just an assumption?

How can we be sure that doing stuff like this was a contributing cause, let alone a necessary cause?

It also says a lot about you that you posted this whilst having a fundamental lack of knowledge about the situation.

Did you even read what you linked to ?

I understand that you've been trying to make the point that this is a non-story (and I would agree with you, to an extent), but that was just rude and uncalled for.

Is it wrong for the GP to try and start a conversation about the morality of a company as large as apple, demanding such a large degree of separation between users and the ability to make purchases outside apple's control?

I'm about as 'anti-apple' as they come, and even I can see it was just a case of Dropbox's sdk doing something against apple's rules, but that doesn't mean what that what apple's doing is 'right', or even necessary for a corporation as large as them, which is what I believe the GP was hinting at.

In my opinion it's just business as usual. Just look at wall street, and all the large oil corporations and such; a company as large as apple doing something dubious is not exactly shocking. If anything, that's what got these large corporations to where they are in the first place. Is it sad? sure, but it's nothing that we haven't seen before...

What did I link to? I'm well aware of the Apple "rules" as well as the rationale behind them. If you have superiror knowledge about Apple that puts them in a better light, then please share details.

Your title claims that Apple is rejecting apps which use Dropbox.

Which is completely and utterly wrong.

My "title"?

u mad?

What Apple is doing seems to be completely legal and completely disgusting (and not at all new). Given that there's no ground for legal action, here are a few things we, developers, can do:

1. Don't work for Apple. This one is really the easiest to implement, there's more then enough fine alternatives in the Valley.

2. Don't develop for Apple. Unfortunately, not really an option for most mobile developers. So, the next best thing is "don't develop just for Apple". Make sure that if your customers want to switch, your app is available on other platforms.

3. Don't buy from Apple. Again, not really an option for developers because of #2 (and that's also another example of walled garden - you have to have a Mac to develop for iOS).

One place where government regulation might be needed is to help create secondary market for apps. If I have many dollars worth of apps (or, say, books) and no way to sell them, this is obviously a big barrier to switch. I'd like to see a law requiring companies that sell digital goods to provide a way to transfer those goods to other users.

As a consumer, I stopped buying Apple products some time ago. The last thing I bought from Apple was an iPhone 3GS. I still have to use Apple products at work.

Now, I don't think that other companies are inherently more moral than Apple. That would be a foolish assumption. It's just that one company dominating an entire market is bad for almost everyone.

If you develop mobile apps, only having one channel of distribution / platform is such a high risk. I don't understand developers that only target one platform.

I like certain actions of my country's government (Singapore) in promoting competition:

- forcing cable/telco companies to share the cost of broadcast rights to a major soccer tournament, despite the tournament corporation's remonstrations (previously the companies bidded for the exclusive rights against each other and passed the costs to consumers)

- requiring telcos to provide number porting services so people can switch telcos without losing their numbers, thereby freeing them from lock-in

These two actions cut the profits of the cable-telcos here but benefited consumers significantly. We would have been paying out the nose for soccer broadcasts otherwise, and been stuck with our old mobile providers even when competitors were offering better prices.

In a marketplace as huge as the smartphone+app+media ecosystem, I'm quite sure governments should be stepping in with regulatory tweaks to make sure users can use multiple services on each platform - even buy from competitors.

Antitrust law shouldn't just be against monopolies - it should be actively pro-competition.

In my mind, Apple has always had the objective of trying to maximize purchases and forcing users who start to upgrade as often as possible. Everything else is secondary.

yes, i will consider moral values over convenience in my future purchases and also i am going to favor platforms that are more open in future. freedom trumps everything, more profits doesn't necessary make you happier.

This is really going over the line. People are content in the walled garden, but if it starts getting too stuffy in there people will want to leave. Unfortunately it makes "business sense" (read: nonsense) for Apple to raise the walls of their walled garden as high as they can make them. Hopefully at some point there will be enough discontent to remove things like this.

I would argue that the success of the entire Android ecosystem is because users are unhappy living inside of Apple's clenched fist. It's not like people buy Android because the UX is better. You can't even claim it's because of AT&T anymore.

I would argue it's because they've become the default freebie phone.

That doesn't explain the success of the expensive Android phones.

I did and will. Your blanket denial of whole markets is rather ignorant.

You mean the same line that has been in place for nearly 2 years ?

Pretty sure most people don't care.

Sure. Not right now, they don't. My point is that if Apple keeps pushing the walls higher on its garden at some point people will start complaining. iOS could very well become the Windows of mobile. I can imagine a future where a lot of people will complain "I don't want to use iOS, but it has all the apps!". I personally have owned an iPhone, iPhone 3G, iPhone 4, and iPad and I will probably buy the upcoming iPhone. Apple's walled garden restrictions get on my nerves, but they've been a subtle annoyance. I can live with them, but at some point they'll stop being a nuisance and become a problem.

You seem to be confused.

This Dropbox is the same rule that has been in places for years. In fact the walled garden is less evident than in the past.

No I don't think hes confused, I feel the same way.

What made the Kindle issue "OK" is that Kindle was undermining the Apple marketplace. This is simply not the case here. Apple are just being 'assholes'. A link to a link, to a link that sells disk space - not even CONTENT. How does it undermine Apples business model, or hurt end users? Answer is, It doesn't.


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