Apple and Google face growing revolt over App Store ‘tax’

“A backlash against the app stores of Apple Inc. and Google is gaining steam, with a growing number of companies saying the tech giants are collecting too high a tax for connecting consumers to developers’ wares,” Mark Bergen and Christopher Palmeri report for Bloomberg. “Netflix Inc. and video game makers Epic Games Inc. and Valve Corp. are among companies that have recently tried to usurp the app stores or complained about the cost of the tolls Apple and Google charge.”

“Grumbling about app store economics isn’t new. But the number of complaints, combined with new ways of reaching users, regulatory scrutiny and competitive pressure are threatening to undermine what have become digital goldmines for Apple and Google,” Bergen and Palmeri report. “Apple and Google launched their app stores in 2008, and they soon grew into powerful marketplaces that matched the creations of millions of independent developers with billions of smartphone users. In exchange, the companies take up to 30 percent of the money consumers pay developers.”

“‘It feels like something bubbling up here,’ said Ben Schachter, an analyst at Macquarie. ‘The dollars are just getting so big. They just don’t want to be paying Apple and Google billions,'” Bergen and Palmeri report. “Apple and Google take 30 percent of subscription dollars and in-app purchases made on iPhones and Android phones using Google’s app store (effectively all those outside China). About two years ago, the companies lowered that cut to 15 percent in some cases. If app store commissions fell to a blended rate of 5 percent to 15 percent, that would knock up to 21 percent off Apple’s earnings, before interest and tax, by fiscal 2020, Macquarie estimated. Google could lose up to 20 percent by the same measure, according to the brokerage firm.”

Read more in the full article here.

MacDailyNews Take: It does cost money to run Apple’s App Store and it’s certainly the most visible, effective, and efficient means of distribution the planet has ever seen. Again, this is capitalism at work. If enough developers can avoid the App Store and make more money then Apple will have to address their App Store fees (and Google will follow, as always). If not, then the cost of deploying via the App Store is worth Apple’s asking price.

SEE ALSO:
Netflix tests a bypass of Apple’s iTunes Store billing in 33 countries – August 21, 2018

19 Comments

  1. Dont know about Google, but Apple charges 30% for developers to use the App Store. For that 30% outlay for developers, Apple provides the infrastructure, billings, back end the whole lot. Also when developers make popular apps, they have 70% of the income to invest in more app development. these companies and publishers who complain about the 30% charged by Apple should leave the app store and sell their crap on their own web sites. Problem solved. Too many people want everything for nothing. Apple and google is not forcing anyone to use their respective app stores.

    1. How do you sell iOS apps on your own without jail breaking. That’s the other big issue. Apple provides a high level of vetting for the apps that get on to their store.

      I like having a central place to go to for apps. I don’t care for Apple’s moral and political judgements being forced upon people, but the quality of their service in general has overridden my annoyance.

      1. That is true. Android devices can access 3rd party sites for Apps which may result in higher incidents of malware if you’re not careful. The same freedom could also mean significantly less impact on Google Play’s revenue than Apple’s App Store since there is already a 3rd party App market for Android Apps that developer’s can promote.

  2. Well, if you don’t like apple prices, don’t buy apple products, in the same way, if you don’t like to publish your apps in the largest and most profitable app store in the world, well, go to another app store, no body is pointing a gun to your head so you publish your apps at apple.
    If you don’t find one you like, well, you are very welcome to start your server farm and create your own free app store.. lets see how free you can start it.

    1. What you suggest will require users to jailbreak their iPhone or Apple to include a setting similar to “Unknown Sources” on Android devices before any iOS 3rd party App store can be realized. As I understand it, it is very difficult to install an App on multiple non-Enterprise associated iOS devices w/o use of the App Store.

  3. Personally, I’m more inclined to pay a little more to buy an app from the App Store than using some of the alternatives like Kagi, etc.

    The convenience of being able to easily reinstall apps when I change computers and easy updates is well worth it.

  4. Dear Developers,

    Do you remember when you had to pay 70% to display your SW on the shelves of a brick and mortar store with fewer eyes looking at it?

    Apple should have started with 70%, same as a brick and mortar store. Then the 30% would look really good.

    1. These developers don’t, because they’re the new guys. I remember when Apple announced they would be taking 30% and there was a gasp! “WHAT? Phone companies have been fleecing us for 60% to 90% regularly and they’re going to do this for ONLY 30%? WHERE DO I SIGN UP!!!”

  5. If you’ve ever built anything to sell, you would understand that a business proposition where somebody else does all the distribution, some aspects of the publicity and also handles the the transactions while you end up keeping 70% of the total revenue is a staggeringly good deal.

    Apple is offering app developers access to a market of a billion potential customers. How much would you have to pay to get that sort of reach by other means?

    1. I see what you mean. However, if you already have a ‘name’ like many of the developers/companies that are complaining, they are willing to forego the convenience of the App Store to sell their Apps via their own servers. A choice which they do not have at the moment on the App Store due to iOS devices not having any means to easily access 3rd party sources.

  6. This dramatic insight has some significant truth:

    “Generally speaking, petty Capitalists are rarely satisfied with the amt. of Capital they hold, earn, or steal; They are natural whiners, wanting more, perhaps all Capital from bigger Capitalists, then, when they lose Capital from mismanagement or acts of God, they expect a secular, Socialist bailout from big gov.’s tax dollars.”

    1. Talking about whinners… have assessed yourself layely? The only people expecting handouts, on daily basis, are the freeloading left hypocrites…. The group who feels entitled to having what others earn.

      1. Each corporation is a person. A corporation gets a disproportional amt. of Socialist handouts in the form of tax incentives, subsidies, tax breaks, sympathetic judges, ally legislators, eminent domain gifts, overuse of infrastructure (for example by heavy trucks), and general corporate Socialism by way of outright transference of money grants to a corporation than a human person does.

  7. Developers have this one backwards.

    I, as a consumer, am paying Apple a 30% premium. For that premium I expect Apple to make sure 1) the app does what it says it does 2) the app isn’t malicious and doesn’t steal my personal information 3) installing and paying for the app is convenient and consistent.

    To me, that’s money well spent.

  8. I’m sure these developers have factored Apples’ cut into their pricing. Yes, developers, you set the price, remember. If Apple drops their cut will the developers cut their app prices accordingly? Don’t think so.

    1. It is possible that income will be higher than the after-cut revenue they now receive. For example an App costing $10 (to make it easy to illustrate) could be sold by them for $8. They would be earning $1 more than currently and the consumer would be getting the App for $2 less. There is no incentive for Apple to do this so it may be something that requires a group of them to start a separate App ‘store’ and Apple to allow iOS devices access to such installations. I imagine though that this would only really work for Developers/Companies that have a ‘brand’/reputation respected by the consumer.

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