Apple quietly run ads via Google search for high-value subscription apps to capture In-App revenue

Apple is quietly buying Google ads for high-value subscription apps in order to collect potentially millions of dollars in subscription revenue, John Koetsier reports for Forbes, citing “multiple app publishers.”

Apple's App Store on iPhone
Apple’s App Store on iPhone

John Koetsier for Forbes:

Impacted businesses include major brands such as dating apps like Tinder, Plenty of Fish, and Bumble, media giant HBO, education and learning publisher Masterclass, and language learning service Babble.

“Apple is trying maximize the money they’re making by driving in-app purchases that people buy through the Apple Store,” one source, who asked not to be named for fear of retaliation, told me. “Apple has figured out that they can make more money off these developers if they push people to the App Store to purchase there versus a web flow.”

iPhone apps that offer subscriptions to ongoing services can route payments through Apple or, if they have multiple means of delivering the service, can charge customers on their own websites. If apps take the default path and charge customers on Apple’s platform, Apple takes a 30% cut of first-year revenue and an ongoing 15% cut for every subsequent year. If businesses like Amazon or HBO sell an ongoing service on their own websites, however, they can bypass the Apple fee and collect all of the revenue.

The obvious question, of course, is: Isn’t Apple advertising your business a good thing? …Perhaps surprisingly, according to multiple major mobile brands, the answer is no. “It’s hurting developers’ businesses,” one said. “You’re building your growth based on what you think a customer is worth, and if a customer is worth 30% less, your margin is gone.”

MacDailyNews Take: The apps we see mentioned above also happen to be the ones who seem to be most intent on bypassing Apple’s In-App Purchases and/or In-App Subscriptions.

In other words, these developers are trying to use all of the benefits of Apple’s App Store for free.

Apple’s App Store, by the way, actually has rather significant operational costs.

If Apple can mitigate some of this freeloading by advertising high-value subscription apps with direct links to their App Store, so be it.

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[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]

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