Saturday, August 15, 2020

Apple Can Be Hard To Work With But iOS Is Their Platform So Their Rules

By now, developers and users are taking sides - those who think that Apple is taking away the livelihood of developers by syphoning off 30% of what users pay in the App Store, limiting the freedom of choice for users, and being a big mean faceless corporation versus those who think that since Apple invested billions to create a safe, secured, and easy to use platform and playground with an app store that has created millions of opportunities for developers and users.  Oh, and that Apple has paid developers hundreds of billions, facilitated more than half a trillion dollars of transaction in 2019, and created more than 2 million jobs in the United States because of its economic activities since 2017.  

Attention to Apple's App Store practices, as well as those of Google's, has gained attention as lawmakers look into the supposed outsized influence of Big Tech and social media has on the public.  On July 29th, the CEOs of Google, Facebook, Amazon, and Apple were brought in front of House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law to face questions regarding their alleged unfair, anti-trust, and monopolistic behaviors.  If you saw any part of that, it was mostly grandstanding by the Republicans regarding perceived unfair practice of silencing fringe right conspiracies and falsehoods and almost nothing to do with how the business practices of these companies are illegal.  The Democrats were more on target with their questions but their minds seem made up even before the hearing.  Of course, there a few other companies like Microsoft and the telecoms that should have been there as well.  Sorry, guys.  Perhaps next time.

During the hearing, questions directed at Apple CEO Tim Cook was in regard to the App store policies and the 30% take that Apple levied on app developers to run the store.  From the recent fight initiated by Basecamp, developer of Hey email app, to this week's Fortnite fight started by Epic Games when it decided to add its own payment system to the app, thus violating both Apple and Google's store rules, resulting in the popular gaming app getting removed temporarily from both app stores.  In both cases, it was about money no matter what Apple or the developers are saying.

For developers, they simply don't want to pay Apple thirty cents per dollar.  For developers, they want to keep that 30% cut they're currently giving Apple.  Okay, not all developers.  Just like 99% of them.  Some might actually lower the price of their app and pass the saving to the consumer.  Right.  These are all first world issues.  

For Apple, they are basically saying that the 30% cut they take helps them keep the App Store running smoothly, curated, secured, and easy to use (this part is arguable).  On top of that, Apple most certainly make some money, not all of its cut gets through back into the store.  And if Apple does make a profit, so what?  After all, it has developed highly sought after devices and has spent decades acquiring valuable customers, as in those who are more likely to spend money than, say, those on the Android platform.  This is why developers has consistently made more money developing for the iPhone and iPad than from the larger Android market even though there are more app downloads on Android than on the iPhone and iPad over all.

And as Apple has said, developers have choices of app stores to sell on.  Android, Windows, Mac, and other indie ones.  The only difference here is that on the iOS and iPadOS platforms, there is only Apple's store.  So there are choices.  But developers want to sell to iCustomers so they have to accept Apple store, regardless of whether the developer, customer, you, or I think is fair or not.  Just because it isn't fair does not mean that it is not legal.

When I first heard Steve Jobs said that Apple was taking a 30% cut of all app sales, I was frankly surprised as how high it was.  I did not think it would fly with developers.  And for years, developers did not complain.  Well, not openly anyway.  The way I see it, these issues are coming up now only because developers are making money and they see how much they have to give up to Apple.  When the revenue was at zero, Hey's developer nor Epic said to Apple, "I want to charge my customers direct so if you want to keep my app off the store, so be it".  It was only after they've collected tens of millions that they decided they want even more.

Apple is also at fault - the rules are mostly clear but they did not think of all eventualities.  That's fine.  But when an issue comes up, Apple should admit that it is not clear and it will figure out how to deal with it.  It needs to provide developers clear answers and confidence that Apple will work with them.  However, it does appear that Apple has time and time again dropped the ball on this and failed to give clear concise answers.  If this continues, Apple could walk itself into troubles not only with its users but also lawmakers who do not always have a clear understanding of technology or existing laws governing antitrust.  

Here is an article from Tidbits I found very balanced regarding complaints about the Apple Store.  Do notice at the very top is the 30% cut that developers do not like paying.  I find the more compelling complaints are being Sherlocked, services that complete with Apple being at a disadvantage, and that not all developers are treated the same that result in arbitrary rulings.  The article does complain that Apple products and services are so sticky which makes it harder for users to leave and competitors to complete which I find to make zero sense - you want Apple to lower the quality of its products and platforms and make its services more sucky and less reliable?

Back to the benefit and riches that Apple has facilitated again.  For the sake of argument and say that 80% of the $50 billion in App Store payout is for gaming, let's look at the size of the video game industry world wide.  For 2019, the US market is $18.4 billion and the global market is about $135 billion (Statista, Archive).  Also Nintendo's 2019 revenue was about $11 billion.  By any standard, the App Store has generated a large percentage of the global gaming sales.

Regarding the transaction value through its ecosystem, I would be very interested in seeing the jump in revenue for 2020 as more people spent their time at home and shopping online.  As for the total number of jobs Apple has helped created or had a hand in creating, that figure is likely much bigger than 2017 - back then, Apple was not involved in the creation of games for its Arcade subscription or in the production of videos and films for the Apple TV+ service.

No one knows at this time how the battle between Apple and Google on one side and Epic on the other will play out.  Epic is losing a lot of money and so are Apple and Google.  However, as a percentage of total revenue, it is unlikely the loss of Fortnite revenue will even register on the tech giants' next quarterly earnings.  

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