Apple’s business model for the App Store is infamous. Apple takes a whopping 30% cut of sales of apps and in-app purchases for all iOS apps. They also take 30% of the first year of subscription costs, and 15% for every year after that. Finally, they charge developers $99/year just to publish apps on the App Store. Basically? Developing apps isn’t cheap.
Russia this week proposed a law to limit any company’s marketplace collection to 20%. Apple, Google, and anyone else selling apps in Russia could charge no more than 20% of the purchase price per item. The proposed law also states that Apple would have to allow multiple places to buy iOS apps. Google takes the same 30% from Google Play sales that Apple does, however users can also get apps from other sources, like sideloading, allowing developers another option for releasing games. Russia’s proposed law would force Apple to allow competing stores. Finally, of the 20% that companies can take, 33% of that collected money would have to go to an internet technology training fund. Basically, a 33% tax to drive software development in Russia.
The proposed law lives in a murky area. On one hand, Russia doesn’t want to limit business details or contracts. On the other hand, Apple does have a monopoly, and without legislation, they’re not going to give that up.
Apt Timing
Hey’s “Imbox”
Russia’s proposed law comes on the heels of a few issues at Apple. First, they blocked updates to the app Hey. The developers weren’t allowed to get fixes in for an app-breaking bug because Apple claimed that, despite previous approval, the app was in violation of the App Store guidelines. The App Store guidelines hadn’t changed, Apple just approved the app without checking it well. Eventually, they allowed the developers to push the bug fixes and work out terms for removing violations later.
Most recently, Epic flagrantly and intentionally violated Apple’s App Store guidelines. They had an entire campaign, complete with videos, prepared for the battle. Then they released an update to Fortnite. It allowed users to bypass Apple’s in-app purchases to buy V-Bucks directly from Epic. They even charged users less for the versions from Epic. Apple removed the app immediately. Epic would later attempt to push two bug fixes, as well as the update to add the latest season to the iOS version of Fortnite. Apple, tired of the apps not fixing the problem, revoked Epic’s account, banning all Epic games from the App Store. It was exactly what Epic wanted. However, Epic’s ban could also prove problematic for the Unreal Engine, which Epic also owns, and is in use in many iOS apps.
Russia’s proposed law comes at a time when Apple has challengers to their App Store policies. It could be the first of many laws made to undermine Apple.
New App Store Guidelines, Progress?
Fortnite’s V-Buck workaround lead to an App Store ban
Russia’s proposed law hasn’t been fleshed out or passed yet. Apple will likely fight it, though they did make some progress on answering developer criticism this week. Apple’s new App Store approval process allows developers to appeal decisions as well as suggest changes to the App Store guidelines. Apple may or may not follow through on those suggestions, but with enough developer support for changes, Apple could decide that making small rule changes is better than losing developers.
Apple now also allows bug updates. For developers, like Hey, who find themselves in limbo, with an app that needs a bugfix for existing users, but also needs to fix rule violations, Apple will allow developers to update their apps without reintroducing it to the App Store for new users. This means developers can fix their apps and work on fixing guideline violations later. This was a direct response to the negative attention Apple’s treatment of the Hey email app received. Apple responded to users and developers once, perhaps they’ll continue to evolve?
Russia, EU, and Beyond
If I had money on what governing body would be the first to force Apple to change the App Store and app distribution on iOS, my money would not have been on Russia. In fact, I’d have bet on the EU. After all, the EU has been excellent for protecting privacy and consumer rights, as well as busting monopolies. They forced Microsoft to open their platform and allow users to choose their browser at startup. That’s exactly what has to happen here: developers need to have a choice on who to host their apps. Russia’s proposed law could cap Apple and Google’s profits from developers at 20%, and other countries could follow suit.
Apple has survived criticism of their App Store before, but this time feels different. They’re being attacked by some very large brands. As a result, public opinion is changing and even politicians have begun to consider drastic changes for the iOS platform. With enough pressure, Apple could finally make changes, even if it’s a law forcing them to do so. They wouldn’t give up a monopoly and 30% of all revenue on their platform, a massively profitable scheme, any other way.
We could be looking at the beginning of the end of the App Store exclusivity on iOS. Finally.
Sources:
- Apple
- Ed Hardy, Cult of Mac
- Mike Peterson, AppleInsider, [2]
- Nick Statt, The Verge
- Nadezhda Tsydenova, Reuters