April 20, 2024

Apple’s App Store Policies Are Getting Weirdly Aggressive, But Publishers Should Be Fine

I’ve written several times over the years about Epic Games’ legal challenge to Apple’s App Store policies.

(A Dime Store Summary: Apple maintains ultra-tight control over its App Store. It has to approve every app and every update. And if you want to sell users any kind of digital good within an app, you have to use the Apple’s built-in app purchasing system, which takes a considerable cut (usually 30%) of the payment. The use of an external payment system, such as allowing users to enter a credit card number, is prohibited. Epic Games, which makes the super-popular Fortnite, sued Apple, arguing that this monopolistic control over app distribution and monetization violates antitrust law. Apple, in turn, argued that it is not a monopoly (Android devices far outnumber iOS globally) and that this strict control was necessary to protect the privacy and digital security of users, among other things.)

Epic Games is obviously not a news publisher, but its arguments reflected more than a decade of complaints from publishers about, primarily, that 30% cut. (His other main complaint is that using Apple’s in-app purchasing system meant the user’s financial relationship was with Apple, not The Hometown Gazette, which limited how much a publisher could know about its customers.) .

It’s been more than three years since Epic’s lawsuit, and the case has fully worked its way through the American judiciary. The lower courts had ruled (mostly) in favor of Apple, and on Tuesday, the US Supreme Court, presumably too busy tearing down the modern administrative state, decided not to hear any of the appeals brought by Apple and Epic, letting the rulings of the lower courts stand. .

However, Epic scored a victory: Apple would no longer be able to prevent developers from linking to its websites from their apps, allowing users to transact there, outside of Apple’s ecosystem. Here’s Epic CEO Tim Sweeney on Tuesday morning: celebrating this small victory within your greatest loss.

But within hours, that victory was spoiled when Apple announced the details of how, exactly, it would enable this new freedom. Yes, you could put a link to your website inside your app, but now you would have to give Apple a good chunk of the revenue you made. there. A 27% cut: the standard 30% minus the roughly 3% you’d pay a credit card company to complete the transaction yourself.

Apple’s new policy, frankly, seems crazy to me. Stating that he deserves 27% of your income because there was a link in your app is a hell of the finder’s fees. (Actually, Apple says it deserves 27% of all revenue generated for the next seven days by anyone who hits that link – further a portion of each renewal of your subscription forever. You have to send that money to Apple monthly and reserves the right to audit your books if it believes you are not paying as much as Apple thinks you should.)

Think about what the rough equivalent of this type of system would be in other media:

  • Did you place a classified ad in the newspaper trying to sell your 1978 Plymouth Gran Fury? Please give 27% of the final sales price to The Hometown Gazette.
  • Did anyone find your local business by searching “topeka dry cleaners” on Google? Not only did you have to pay for that keyword-stuffed ad that appears at the top of search results, but you now also owe Google a quarter of what you get from each blouse and jacket.
  • Did you click on a link on Facebook that took you to an interesting news story? Sorry, editor, you now have to write a check to Mark Zuckerberg for 27% of the ad revenue from that pageview. Oh, and you found that link while visiting facebook.com in Google Chrome? Also add another 27% to the browser manufacturer.

Apple doesn’t even try to say what it is cattle this 27% stake, only this is how it has chosen to monetize its intellectual property:

All App Store developers, including those who place buttons or links with calls to action in their apps, benefit from Apple’s proprietary technology and tools protected by intellectual property, and access to its user base. Apple is charging a commission for digital purchases initiated within seven days of the link, as described below. This won’t capture every transaction Apple has facilitated through the App Store, but it is a reasonable means to account for the substantial value that Apple offers to developerseven to facilitate linked transactions.

This bait and switch has, rightly, made people angry. (Or, in the words of one Verge headline, big crazy.) Spotify said it is “scandalous and flies in the face of the court’s efforts to allow for greater competition and user choice.” Veteran Apple developer Brent Simmons called it “shockingly unfunny and a jarring but not surprising reminder that Apple is not a real person and is not worthy of your love.” John Gruber reports that Mac developers are very afraid that their apps will be the next to suddenly face a 27% fee to realize the substantial value Apple offers developers. (“I can’t emphasize enough how shocked many developers are, nor how offended.”)

Sweeney has said that Epic will ask the court to declare that the 27% fee does not respond to its ruling, so this rule may not last long. (And anyway, Apple will probably soon face a new antitrust investigation from the feds, not to mention increased country-by-country enforcement around the world.)

But in the short term, the question that worries news editors is: What about us? After all, things seemed to be getting better, not worse, for the publishers versus the Apple side. In 2022, Apple will create an exception for what it called “reading apps,” those that are primarily an interface for consuming content already purchased elsewhere, a group that includes newspapers, magazines and the like. Reading apps could request an oddly totalitarian-sounding “External Link Account Right” that would allow them to link users to the publisher’s website, where they can transact business.

Does this new 27% policy, which relies on the similar “External Purchase Link Right,” affect the good deal publishers were able to get before? When I looked at the docs, the reading apps policy never explicitly says that Apple won’t accept a portion, and the 27% policy never explicitly says that reading apps are an exception to the rule.

Apple declined to discuss this officially, but I can confirm that the reading app policy that existed before last week still exists and is available to publishers. (Aside from the 27%, there are other key differences between the programs. The new “External Purchase Link Right” requires The apps also offer Apple’s standard in-app purchasing system. The “External link account right” reading application requires that applications not offer in-app purchases).

So, at least for now, publishers’ iOS apps should not be affected. (Let’s be honest: if Apple somehow took over the total disposable app-to-web revenue available to publishers, it wouldn’t change the company’s bottom line one bit. After all, Apple has something like $162k millions in cash out there.)

That said, the broader idea here – a tech giant deciding that its effective tax on apps should extend its tendrils to the web – is deeply dangerous for the broader digital news ecosystem, which still lives overwhelmingly in the windows of news websites. browsers. In recent years, antitrust pressure against Apple has benefited publishers, as the company has made low-cost improvements to what it offers to its publisher developers while fighting more expensive apps in court. But recent years have also shown the immense power that platforms have over news companies, and you never know when even those considered relatively benign will decide to flex their muscles.

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