App Store chief says Apple aimed to level playing field

Apple

On Wednesday, Apple’s CEO Tim Cook will confront questions from US lawmakers about if the iPhone maker’s App Store practices give it unjust power over independent applications programmers.

KEY POINTS:

  • Apple’s CEO will face questions from lawmakers about its App Store practices
  • Questioning will likely focus around whether it has unjust power over independent applications programmers
  • Apple is notorious for its tight control of the App Store

Apple tightly controls the App Store, which forms the centrepiece of its $46.3 billion-per-year services business. Programmers have criticised Apple’s commissions of between 15 percent and 30 percent on App Store buys, its prohibitions on courting clients for outside signs-ups, and what some developers view as an opaque and unpredictable process.

But when the App Store started in 2008 with 500 programs, Apple executives seen it as an experiment in offering a compellingly low commission rate to entice developers, Philip W. Schiller, Apple’s senior vice president of worldwide marketing and high executive for its App Store, told Reuters in an interview.

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Nobody thought like that.

In the mid-2000s, applications sold through shops involved paying for shelf space and prominence, prices that could eat 50 percent of the retail price, said Ben Bajarin, head of consumer technologies at Creative Strategies. Little developers could not split in.

Bajarin said the App Store’s predecessor was Handango, a support that 2005 let programmers deliver apps over cellular connections to users’ Palm and other devices for a 40% commission.

With the App Store,”Apple took that to a whole other level. And at 30%, they had been a much better value,” Bajarin said.

But the App Store had rules: Apple reviewed each app and mandated the use of Apple’s own billing system. Schiller said Apple executives believed users would feel more confident buying apps if they felt their payment information was in trusted hands.

“We think our customers’ privacy is protected that way. Imagine if you had to enter credit cards and payments to every app you’ve ever used,” he said.

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Apple’s rules began as an internal record but were printed in 2010.

Over the years, programmers complained to Apple concerning the commissions. Apple has narrowed in which they employ in response. In 2018, it enabled gaming companies like Microsoft Corp, maker of Minecraft, allowing users log into their account so long as the games provided Apple’s in-app obligations as an alternative.

“As we were talking to some of the biggest game developers, for example, Minecraft, they said,’I totally get why you would like the consumer to have the ability to cover it on device. But we’ve got a lot of users coming that bought their accounts or their subscription someplace else – on an Xbox, on a PC, on the web. And it is a big barrier to getting onto your shop,'” Schiller said.

“So we created this exception to our own rule.”

Schiller said Apple’s cut assists fund a comprehensive system for programmers: Thousands of Apple engineers maintain apps to be delivered by servers and produce the tools to produce and test them.

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Marc Fischer, the leader of technology company Dogtown Studios, said Apple’s 30 percent commission felt warranted in the days of the App Store when it was the cost of global distribution for a then-small firm like his. However, now the Apple and Google have a “duopoly” on mobile program shops, Fischer stated, fees must be much lower – maybe the same as the single-digit fees payment processors cost.

“As a developer you have no choice but to accept that charge,” Fischer explained.

The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our content partners at Thomson Reuters. Reporting by Stephen Nellis in San Francisco; Editing by Greg Mithcell and Steve Orlofsky.

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