‘This isn’t the 1990s’: Apple under pressure from app developers

Facebook may be the home of international conspiracy theories, Amazon the bane of high streets everywhere and Google slowly tightening its grip on the entire web but it is Apple that is rapidly becoming the most friendless of the big tech companies.

Even its attempts to make new allies are starting to come back to bite.

The company’s rigid control of the iPhone App Store, long a source of friction for developers large and small, became a battleground over the summer, as Apple began to tighten policies requiring developers to pay the company a cut of commerce on the store.

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That led to a noisy public standoff with $99-a-year (£74) email app Hey, which was blocked from the App Store over its refusal to allow subscribers to sign up in-app (so avoiding the 30% cut that Apple would have demanded otherwise).

“We thought we knew all the written and unwritten rules,” David Heinemeier Hansson, the co-founder of Hey’s developer, Basecamp, told the Guardian. “But then we, with all this knowledge … can be a victim of their capricious policies. If they kick you out of the App Store, it’s like you don’t exist.”

Just as that standoff thawed, with Hey agreeing to build features for users without a subscription, another, noisier conflict started, with Epic Games, the developer of Fortnite. That fight, still ongoing, resulted in Epic introducing its own payment processing into Fortnite, breaking Apple’s rules in the process. Apple removed Fortnite from the App Store; Epic sued, alleging abuse of monopoly.

But even when Apple tries to make friends, the company has found itself diving into new conflicts. In April, Amazon made a surprising announcement: Amazon Prime customers would be able to buy streaming movies and TV shows on iOS using the credit card they have saved on file.

At first glance, the move appeared to be exactly the same switch that would later lead to Epic being unceremoniously expelled from the store but, Apple revealed, it was actually a sweetheart deal: “premium” video apps were allowed to use their own payment systems, in exchange for supporting the company’s troubled Apple TV hardware.

Now others want the same deal. Digital Content Next, a trade organisation representing some of the largest US news organisations including the New York Times and the Washington Post, has written to Apple asking the company to offer the same freedom to its own members.

“Nearly all of DCN’s members offer apps in the Apple App Store and … many offer subscription-based access to a wide variety of content,” wrote Jason Kint, the organisation’s chief executive. “The terms of Apple’s unique marketplace greatly impact the ability to continue to invest in high-quality, trusted news and entertainment particularly in competition with other larger firms.

“I ask that you clearly define the conditions that Amazon satisfied for its arrangement so that DCN’s member companies meeting those conditions can be offered the same agreement,” Kint’s letter concluded.

The push to offer special deals to individual developers may allow the largest companies to thrive on the App Store but risks undercutting Apple’s favourite defence of its model: that it underpins the broad-based success of the “app economy”.

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In June, citing a study commissioned by the company and carried out by Analysis Group, Apple claimed “the App Store ecosystem supported $519bn in billings and sales globally in 2019 alone”.

“The direct payments made to developers from Apple are only a fraction of the vast total when sales from other sources, such as physical goods and services, are calculated,” the company said. “Because Apple only receives a commission from the billings associated with digital goods and services, more than 85% of the $519bn total accrues solely to third-party developers and businesses of all sizes.”

But keeping less than 15% of a market defined, in effect, as all money spent on or near an iPhone, is still enough to concern analysts. “I hope the company will at least consider the possibility that this isn’t the 1990s, they’re not about to go out of business and that being perceived as an asset to developers and not a tax opens up the possibility of growing the pie, not simply taking their slice,” writes the influential analyst Ben Thompson, the founder of Stratechery.

“If that is the outcome of this summer of App Store turmoil, it will be a win for everyone: developers, Apple and the users that want both security and innovation.”