Apple’s app store and other digital marketplaces [pdf]

https://www.analysisgroup.com/globalassets/insights/publishing/apples_app_store_and_other_digital_marketplaces_a_comparison_of_commission_rates.pdf

by mudil • 6 years ago

59 77 6 years ago

analysisgroup.com

herf• 6 years ago

This is a fine bit of research, but exclusivity should be the first question--the high-order bit. There has been essentially no market discovery of prices because of exclusivity.

Since 1992, there has been "free" distribution online for software (e.g., Quake launched this way in 1993), and makers of software were able to find their own distribution models without retail in the middle. This is also how the entire web happened, when Netscape Navigator launched in 1994.

To compare pricing in mobile app stores to things like brick and mortar boxed software is a mistake. It ignores the internet entirely, and how the industry worked for the 15 years before the iPhone launched. There are much more price-efficient models than this.

mattl• 6 years ago

Doom is 1993. Quake is 1996.

dfabulich6• 6 years ago

As the report shows, all of the major stores charge 30%, not just Apple, even when the store has no exclusivity.

Apple App Store charges 30%, and it's the only way to publish a native app on iOS, but the Google Play Store charges 30%, too, and Android supports sideloading. The Windows Store and Steam both charge 30%, too, even though it's trivial to download games for Windows from any web site.

It would be reasonable to guess that Apple would exploit its market position to charge higher rates than the Google Play Store or Steam, but that hasn't happened, and it doesn't seem like it's ever going to happen.

supernova87a7• 6 years ago

I'm no legal strategist, but I would take the position that even if Apple's store charged double or triple what others do, that is not the standard by which what is legal should be measured.

Apple (or any platform) provides a service for people / companies to voluntarily develop software to offer to the users of that platform. What cut they take is an agreement entered into based on people's assessment of the costs and benefits provided, and people are free to decline it and take their efforts elsewhere. Their terms for their platform are not hindering people from competing and offering services on another platform. Each developer is free to make his/her own judgement about whether that commission is tolerable and desired, for the value created.

If the agreement if free and voluntary, Apple could set any price it desires. You, in your own business are free to (and probably generally also try to) set the maximum price you desire. By some similar logic, all apps should charge the same price to be seen as fair. What principle says that one platform's price has to be in line with others? It's what your offering can justify, and what people are willing to pay, with free choice.

hadrien01• 6 years ago

Windows Store is not 30%, it's 15% or 5% depending on whether the user used the Windows Store search or a link from the developer's website.

RealStickman_2• 6 years ago

The thing is that you can easily avoid paying those cuts to these stores while still distributing your program on that platform. It is much more difficult to sideload an app to an iphone. You can not expect the average user to sign the app they downloaded every few days so they can keep using it. Hell, even the Android system policy favours Google way too much in my opinion and there you "only" have to toggle one switch.

SyneRyder• 6 years ago

The Windows Store and Steam both charge 30%, too...

That's probably the easiest way to discredit this report, their Windows Store numbers are wrong if they're claiming all sales are charged 30%. Microsoft only charge 5% for a sale referred from another website, and only 15% for a sale that originated in the store:

https://blogs.windows.com/windowsdeveloper/2018/05/07/a-new-...

Google seems to already be out in front of the likely ramifications. I got a Google survey last week asking opinions on spinning the Play Store off as a separate non-Google owned company, how much I would pay to use the Play Store, and opinions on competing sideloaded stores (eg Epic Games Store, Amazon)

simonh2• 6 years ago

Games consoles platform owners controlling access to their platforms to third party software predate the internet by decades. There is nothing whatever new about the model of commercially licensing access to a platform to software vendors, it’s almost as old as the consumer computer industry.

grezql• 6 years ago

whats more interesting is how much Apple paid for this report.

martimarkov• 6 years ago

I don’t see how that is more interesting when the data in the report is accurate. So I don’t think they made stuff up in the report. The data is pretty much public.

agustif• 6 years ago

Data can both be accurate and biased...

Who's footing the bill is relevant to the later

RealStickman_2• 6 years ago

If you torture the data long enough it will confess to anything.

neximo64• 6 years ago

How much did they pay for this report? It doesn’t seem to mention that

Despegar6• 6 years ago

I think this is mostly a response to David Cicilline's comment that Apple's 30% is "highway robbery" [1]. It compares it to other marketplace take rates showing that Apple's 30% isn't "highway robbery", but also that Apple does much more to earn their 30% than say GrubHub given that iOS apps rely heavily on Apple tools and technologies to create and distribute apps.

[1] https://www.theverge.com/2020/6/18/21295778/apple-app-store-...

damnyou7• 6 years ago

Do developers have a reasonable choice other than to use Apple tools? You can't even compile an iOS app on a server-class operating system and instead have to overpay for low-spec Macs for CI.

Despegar6• 6 years ago

No, but the market wouldn't even exist if not for Apple creating it. iOS apps by its nature depend on Apple's technology. It isn't the same as restaurants or hotels that acquire customers through GrubHub or Booking.

dfabulich6• 6 years ago

It's not practical to cross-compile an iOS app on Linux (or a macOS app, for that matter), but it's not an App Store policy to forbid you. Apple just hasn't shipped any software or documentation to let you do it.

Is it your view that Apple has an ethical responsibility to ship cross-compilation build tools for Linux? (Is that because it's unethical to ship a closed-source operating system with a closed-source build tool?)

donkeyd3• 6 years ago

Don't Microsoft and Google create these tools too? They don't explicitly stop you from installing content from outside of their stores. I can easily install any APK on an android phone and any EXE on a Windows computer (maybe a bad example, because Mac).

Despegar6• 6 years ago

When I say "tools and technologies" I'm not referring to just Xcode but all the SDKs and APIs as well.

henryfjordan• 6 years ago

It's also almost certainly setting up for an anti-trust fight over the app-store. See Apple v Pepper from last year allowing a suit to go forward about the App Store and lot of other anti-trust news against the tech sector in general.

Apple is trying to show regulators that they're not the only ones taking a platform-wide 30% rake.

PaulHoule• 6 years ago

When you're comparing your client to Ticketmaster you are in trouble. You're out of touch: go work for a politician that needs a few Mooks.

mthoms5• 6 years ago

Exactly. They also managed to compare themselves (favorably) to high end auction houses like Christies. What a bizarre comparison.

supernova87a7• 6 years ago

Hacker News readers are a pretty biased sample of people -- they generally have direct interests in lowering commissions paid because they run businesses paying such commissions. And advocating that any platform provider is a monopoly restricting free exercise of selling goods. Often, the arguments will be phrased in terms of "should" or "fair" or "can't".

But this is the oldest position in the book and is a fight that comes naturally with commercial activity -- everyone wants to not have a middleman, and fight against it.

The question is, are you entitled legally to have some certain % charged to you? As a matter of "fairness"? Is a platform that controls access to a fraction of mobile device software sales an exclusionary monopoly? Has that prevented you from selling software elsewhere, or exercising your trade as a programmer? I personally (and I have no financial interests either way) think the issue is not as principled as some people make it out to be.

jedimind2• 6 years ago

Hacker News readers are a pretty biased sample of people

That's a vacuous statement. Is anyone working at Apple or benefiting from Apple's monopolies any less biased? The essential question is rather if such behavior is fundamentally anti competitive and contrary to the spirit of the law.

Why was Microsoft's installing Internet Explorer on their own OS a cardinal sin worthy of punishment, while Apple is getting away with behavior far worse than Microsoft's, yet it goes unpunished, so they get encouraged to behave even worse. I guess it's all about proper lobbying nowadays.

supernova87a7• 6 years ago

As a consumer of mobile apps, I'm generally farther removed from the argument, and not going to benefit from the decision either way. Are you going to be charging me less if Apple gave a discount on your app commissions?

App developers are highly likely to claim that the platform is monopolistic because they would benefit from such a decision. And argue from a "principle" point of view, when really all it is is a price dispute.

twblalock2• 6 years ago

Why was Microsoft's installing Internet Explorer on their own OS a cardinal sin worthy of punishment

It probably wasn't, which is why the government didn't follow through with the breakup of Microsoft.

Shortly after the government claimed that Microsoft was a monopoly that could not be competed with, Microsoft was outcompeted in a number of areas that the regulators never anticipated, including Google Chrome taking over the browser market, as well as other areas Microsoft directly competed in such as search and smartphones.

It makes you wonder, how can a company be an unassailable monopoly yet get its butt kicked by other companies competing in the same market?

mthoms5• 6 years ago

Good points. I think the thing that irks people is Apple's bullying. They just don't seem to be operating in good faith. For instance, from the report, here are Apple's "Anti-circumvention Policies":

2. “Multiplatform Services: Apps that operate across multiple platforms may allow users to access content, subscriptions, or features they have acquired in your app on other platforms or your web site,... provided those items are also available as in-app purchases within the app. You must not directly or indirectly target iOS users to use a purchasing method other than in-app purchase, and your general communications about other purchasing methods must not discourage use of in-app purchase.”

Apple is dictating what I can tell my customers in "general communications" where Apple is not involved. That's not a free market, it's abusive. If a customer comes to my site from a search I should be able to say "Here are the purchase options. Please note that Apple takes 30% if you purchase through their store. If you purchase direct, our processing fees are only %2.5".

In that statement, I'm not making any judgement call on whether Apple is good or bad. I'm simply stating a verifiable fact. If the value proposition of Apple's store has benefits to the consumer then its merits should stand on their own.

For the record, I believe the App store offers many solid benefits to consumers. I'm just saying we should let the consumer decide if the benefits of the App store outweigh their other chosen criteria.

TL;DR Apple has no business inserting itself in my customer communications on my own website so long as I only state facts.

Edit: This is from the perspective of say, an eBook author or MacOS developer. I realize that iOS apps can only be purchased through Apple so the point there is moot.

Despegar6• 6 years ago

Apple is dictating what I can tell my customers in "general communications" where Apple is not involved. That's not a free market, it's abusive. If a customer comes to my site from a search I should be able to say "Here are the purchase options. Please note that Apple takes 30% if you purchase through their store. If you purchase direct, our processing fees are only %2.5".

Everyone that argues against the rule that says you can't advertise in your apps ways to bypass the App Store for payment are basically arguing that they should be able to free ride on the platform, something discussed in this study.

In addition, for their business model to be successful, digital marketplaces often have to rely on rules that prevent customers from free riding on their services. Free riding involves buyers and/or sellers avoiding fees after the platform has helped connect them, which means that the platform is not compensated for the successful match and the use of the platform’s technology, tools, and services to facilitate and promote valuable transactions between buyers and sellers. A review of the policies and rules of large app stores and online marketplaces that distribute physical goods and services — marketplaces for which the risk for free riding is particularly high — shows that digital marketplaces routinely forbid behaviors aimed at avoiding fees.
In addition to the commission on paid apps and in-app purchases of digital content, services, and subscriptions, Apple imposes guidelines that govern the use of the App Store. Among those policies are rules about in-app purchases to prevent users and developers from free riding on Apple’s App Store services and investments. Apps cannot explicitly steer app users away from in-app purchases — for example, by providing external links that bypass the App Store.

supernova87a7• 6 years ago

Plenty of apps themselves do what you seem to be classifying as none of their business to intervene in.

Doordash or other delivery apps tell restaurants they can't hint to their customers to order outside of the app. In fact they monitor communications with restaurants to ensure it's not happening, which is pretty gross. Uber/Lyft don't allow drivers to see who's asking for a ride and then ask the customer to pay outside of the app. If you're an eBook platform app, are you going to allow authors to hawk their books with a first teaser sentence "feel free to buy this eBook from my personal site instead of on this app"?

I wouldn't say Apple is "inserting itself" into a transaction where it has no business. The app developer agreed that in offering the app, Apple's terms would be agreed to, and those include not offering or suggesting methods to circumvent the financial transaction that the app is directly relevant to.

AnthonyMouse5• 6 years ago

And advocating that any platform provider is a monopoly restricting free exercise of selling goods.

It's not any platform, it's a platform which actually has a monopoly.

Amazon is a "platform" for selling boxed software but they haven't got a monopoly on it. You might make a few extra sales from being on Amazon than not, but even most of the sales you make through Amazon would only be diverted to Walmart or Best Buy or your own website if your software wasn't for sale on Amazon. If they insisted on paying you 30% less than competitors, you would make more by refusing them and then losing 10% of those sales while 90% of them get diverted to other distributors who take smaller cuts. Which in turn prevents them from doing that, because getting the normal distribution margin in a competitive market is better for Amazon than getting nothing.

That isn't true for Apple because there is no diverting those sales to a different distributor because there is no other distributor. You can sell a Windows app to the same customer with a Windows device through any number of distributors, but nobody but Apple distributes apps to iOS devices.

supernova87a7• 6 years ago

It will turn quite heavily on what is the market in which you assert a monopoly exists. There certainly are alternatives to someone developing mobile apps -- Android, others.

The more narrowly you define it, of course you can make anything seem like a monopoly. Whether that narrow market is truly what is in dispute, is the question.

But you should listen to Thiel's talk on this -- is a restaurant that is the only British food outlet on Main Street, Springfield a monopoly over the British restaurant industry on Main Street?

pjmlp8• 6 years ago

With a world wide market share of about 20% and being absent from many countries where Android, or classical feature phones rule, hardly makes it a monopoly by letter of law.

saurik• 6 years ago

To me a core problem is that the market is segmented into a handful of oligopolies. People sometimes say "can't you sell your software elsewhere", and while I can sell a chair at another store, if somehow chairs had to be compatible with tables and somehow there were only like two or three kinds of table in the world and all of them had this weird chair restriction and it was all based on weird artificial interoperability barriers... I just don't think the people who thought through these laws--even the DMCA (which is all about this stuff and wants it... but only so far! it has explicit exclusions based on principled stances taken by congress that are now obsolete) and even the people at the EFF who try to fight it (based on my work with them and extensive discussions with some of their people on our shared projects)--considered what asymmetric encryption and tamper proof module digital rights management technology does to competition (where the case law and legislative intent had always been that these kinds of restrictions should not have much merit: see Sega v. Accolade as a landmark case, wherein Sega hadn't no right to try to lock Accolade off their platform _and everyone liked that and consisted their lack of such right to be important for competition_ and yet now you can build that lock out of encryption and no amount of reverse engineering is guaranteed to break it and all of the assumptions that "software interoperability" is even possible have been destroyed).

t0ughcritic• 6 years ago

The anti trust case can’t come soon enough. Apple is definitely taking advantage of its position, the fact that they also ‘help’ developers remove many reviews where users complain of price proves that costs are pushed to end users which is not good.they get them deleted so there is no evidence for anyone to say it’s a problem. Well played.

Apple’s app store and other digital marketplaces [pdf]

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